Eric-Jorgenson The-Almanack-of-Naval-Ravikant indd

ALL THE 
RETURNS IN 
LIFE, WHETHER 
IN WEAL
TH, RELA
TIONSHIPS, 
OR KNOWLEDGE, COME FROM COMPOUND INTEREST
.
PLAY LONG-TERM GAMES.
PLAY LONG-TERM GAMES WITH LONG-TERM PEOPLE
You said, “All the returns in life, whether in wealth, relation-
ships, or knowledge, come from compound interest.” How 
does one know if they’re earning compound interest?

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B U I L D I N G W E A L T H · 47
Compound interest is a very powerful concept. Compound 
interest applies to more than just compounding capital. Com-
pounding capital is just the beginning.
Compounding in business relationships is very important. 
Look at some of the top roles in society, like why someone is 
a CEO of a public company or managing billions of dollars. 
It’s because people trust them. They are trusted because the 
relationships they’ve built and the work they’ve done has 
compounded. They’ve stuck with the business and shown 
themselves (in a visible and accountable way) to be high-
integrity people.
Compound interest also happens in your reputation. If you 
have a sterling reputation and you keep building it for decades 
upon decades, people will notice. Your reputation will literally 
end up being thousands or tens of thousands of times more 
valuable than somebody else who was very talented but is not 
keeping the compound interest in reputation going.
This is also true when you’re working with individual people. If 
you’ve worked with somebody for five or ten years and you still 
enjoy working with them, obviously you trust them, and the 
little foibles are gone. All the normal negotiations in business 
relationships can work very simply because you trust each 
other—you know it will work out.
For example, there’s another Angel in Silicon Valley named 
Elad Gil who I like to do deals with.
I love working with Elad because I know when the deal is being 
done, he will bend over backward to give me extra. He will 
always round off in my favor if there’s an extra dollar being 

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delivered here or there. If there’s some cost to pay, he will pay 
it out of his own pocket, and he won’t even mention it to me. 
Because he goes so far out of his way to treat me so well, I send 
him every deal I have—I try to include him in everything. Then, 
I go out of my way to try and pay for him. Compounding in 
those relationships is very valuable. [10]
Intentions don’t matter. Actions do. That’s why being ethical 
is hard.
When you find the right thing to do, when you find the right 
people to work with, invest deeply. Sticking with it for decades 
is really how you make the big returns in your relationships and 
in your money. So, compound interest is very important. [10]
99% of effort is wasted.
Obviously, nothing is ever completely wasted because it’s all a 
learning moment. You can learn from anything. But for exam-
ple, when you go back to school, 99 percent of the term papers 
you did, books you read, exercises you did, things you learned, 
they don’t really apply. You might have read geography and 
history you never reuse. You might have studied a language 
you don’t speak anymore. You might have studied a branch of 
mathematics you completely forgot.
Of course, these are learning experiences. You did learn. You 
learned the value of hard work; you might have learned some-
thing that went deep into your psyche and became a piece of 

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B U I L D I N G W E A L T H · 49
what you’re doing now. But at least when it comes to the goal-
oriented life, only about 1 percent of the efforts you made paid 
off.
Another example is all the people you dated until you met 
your husband or wife. It was wasted time in the goal sense. 
Not wasted in the exponential sense, not wasted in the learning 
sense, but definitely wasted in the goal sense.
The reason I say this is not to make some glib comment about 
how 99 percent of your life is wasted and only 1 percent is 
useful. I say this because you should be very thoughtful and 
realize in most things (relationships, work, even in learning) 
what you’re trying to do is find the thing you can go all-in on 
to earn compound interest.
When you’re dating, the instant you know this relationship 
is not going to be the one that leads to marriage, you should 
probably move on. When you’re studying something, like a 
geography or history class, and you realize you are never going 
to use the information, drop the class. It’s a waste of time. It’s 
a waste of your brain energy.
I’m not saying don’t do the 99 percent, because it’s very hard 
to identify what the 1 percent is. What I’m saying is: when you 
find the 1 percent of your discipline which will not be wasted, 
which you’ll be able to invest in for the rest of your life and 
has meaning to you—go all-in and forget about the rest. [10]

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