Naval thinks wealth creation is positive-sum. Everyone wins.
“Wealth is a very positive-sum game. We create things together”. This collaboration differs from status games. “They’re playing a different game. And it’s a worse game. It’s a zero-sum game, instead of a positive-sum game”.
The time horizon matters. “In a longterm game, it’s positive sum. We’re all baking the pie together. We’re trying to make it as big as possible. And in a short term game, we’re cutting up the pie”. This requires patience and compound thinking.
This housing example shows how positive-sum creates network effects. Knowledge spreads. Building gets easier.
Software amplifies this at infinite scale. “It’s the nature of code and media output that the same product is accessible to everybody. It turns into a positive sum game where if Jeff Bezos is consuming the same product as a thousand other people, that product is going to be better than the version that Jeff would consume on his own”. Great founders understand this multiplier effect.
Naval connects this to virtue. “Virtues are a set of beliefs that if everybody in society followed them as individuals, it would lead to win-win outcomes for everybody”. This is pure game theory. When people act with integrity, “we all get along better and we can play win-win games”.
It requires good judgment to spot positive-sum opportunities. Naval’s reputation comes from consistent positive-sum behavior. His angel investments create equity for both sides.
This thinking shapes Naval’s politics. “I believe everybody can be wealthy. Everybody. It’s not a zero sum game. It is a positive sum game. You create something brand new, you exchange it with me for something brand new I’ve created, there’s higher utility for both of us”. Creating utility instead of fighting over scraps.
“We should be all for playing positive sum ethical games”. This is how freedom spreads.