Naval views being a founder as the ultimate expression of authenticity in business, a path to both wealth and happiness. “Artists are, by definition, authentic. Entrepreneurs are authentic, too. Who’s going to be Elon Musk? Who’s going to be Jack Dorsey? These people are authentic, and the businesses and products they create are authentic to their desires and means.” This authenticity becomes a form of leverage: no one can compete with you on being you.
The difference between a founder and an employee is the difference between a principal and an agent. “A principal is an owner. An agent works for the owner, so you can think of an agent as an employee.” This distinction shapes everything about incentives, equity versus salary, and how compounding benefits flow to ownership rather than labor.
Naval sees founders as naturally seeking founder-product-market fit, a three-body problem requiring exceptional judgment. “The most important thing for any company is to find product-market fit. But the most important thing for any entrepreneur is to find founder-product-market fit, where you are naturally inclined to build the right product for a market.” This alignment often emerges from the founder’s specific knowledge: building what only they can see needs to exist.
Founders must embrace evolution through iteration. “You get many, many shots on goal. You can take a shot on goal every three to five years, maybe every 10 at the slowest. Or once every year at the fastest, depending on how you’re iterating with startups. But you only have to be right once.” This process requires reading everything, learning constantly, and adapting faster than competition.
Naval’s own path to founding companies began with social pressure and desire for freedom. “The way I started my first tech company was I was in a working inside a larger organization, and I told everybody that I was going to start a company. I was like, ‘I hate this place. I’m going to do my own thing. I’m going to be a successful entrepreneur.’ Six months passed, nine months pass, then people started, ‘You’re still here? I thought you were going to go start a company. Are you lying?‘” He weaponized social consistency and reputation to force himself into action.
The founder’s relationship with employees involves a fundamental game theory paradox. “At some level every founder has to lie to every employee of the company they have. They have to convince them, ‘It’s better for you to work for me than to do what I did and go work for yourself.‘” Naval resolves this through teaching: showing employees how to develop their own specific knowledge and eventually become principals themselves.
For Naval, the accountability that comes with founding creates exponential leverage on all outcomes. “The hardest thing for any founder is finding employees with a founder mentality. This is a fancy way of saying they care enough.” The founder mentality becomes the bridge between labor and capital, between following and creating, between consuming and build the future.