Naval Ravikant is a prolific entrepreneur and investor in Silicon Valley, best known as the co-founder and CEO of AngelList. Naval says the biggest secret to finding success is to focus your efforts on playing long term games with long term people. In this episode, we explore this notion - what is a long term game, and who are these long term people? How effective is this strategy? What historical proof can we find to demonstrate this theory? And how can we practically try this out to be closer to Naval and "play long term games with long term people."
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Hunter Powers: Welcome to the ONE. I am your host, Hunter Powers, broadcasting live from our nation's capital, Washington DC. Today's ONE idea is "Play longterm games with longterm people." This quote comes to us from Naval Ravikant. Naval is a prolific entrepreneur and investor in Silicon Valley, probably best known right now as the CEO and co-founder of AngelList. AngelList is the largest online platform for startup fundraising, but even outside of AngelList, Naval has invested in well over 100 companies, including Twitter and Uber and many other names you have inevitably heard.
Hunter Powers: One of Naval's central ideas on work is to "play longterm games with longterm people." That is the idea that we are going to take a look at today. What does it mean? Do we agree with it and how can we use it? "Play longterm games with longterm people." What does it mean?
Hunter Powers: A game, in its most traditional sense, is a collection of players, fixed rules, and some agreed-upon objective. If you have at least one competitor, you have a game. Naval says to "play longterm games." What is a longterm game? I think what Naval is getting at here with the longterm game is what Simon Sinek might refer to as an "infinite game" or what we have referred to in previous episodes as a "positive-sum game." These games can be very different in definition than the one we just gave.
Hunter Powers: That definition, while definitely the traditional definition, is more tightly coupled with a short-term game or put another way, a "finite game" or put another way, a "zero-sum game," a game of winners and losers, but Naval says that we should focus on playing longterm games.
Hunter Powers: How is a longterm game different from a short-term game? How is infinite game different than a finite game? How is a positive-sum game different than a zero-sum game? The biggest difference is the objective. There is no real winning of the game. The objective is to stay in the game, to continue being a player as long as possible. While in the finite game, the short-term game, the rules are really well-defined, in the longterm game, the rules can change and the players can change. You might start off with one group of people, but then by the end, it's an entirely different set of competitors.
Hunter Powers: Naval says that we should focus on playing these longterm games," these games where the objective isn't to win, but to last. Then the second part, that we should play these longterm games with longterm people, what are longterm people? Well, they're not short-term people so they must be very tall. That was a bad joke. Longterm people are people that are invested in the longterm game. They aren't so much concerned with the immediate result as they are concerned with the longterm result.
Hunter Powers: I think the easiest analogies to understand here are in finance, we're dealing with money. Let's imagine that we have $100 right now and our goal is to outlast everyone else with our $100. A finite game might be going to a roulette table and placing your hundred dollars down on red and in 30 seconds, you will either have $200 or zero. That is a short-term game, that is a finite game.
Hunter Powers: If you were going to play the longterm game, you might take that $100 and put it into a bank account, a bank account that returns interest. A year later, you have a little bit more money and another year you have a little more money and that money starts compounding over time. The rate of increase of your initial investment grows and grows as time goes on because it is a longterm game.
Hunter Powers: The goal is not to get to $200 the quickest. The goal is to outlast everyone else. If we take that idea and bring it back from money to people, longterm people are those that are not there to merely win in the moment. They are not people who would sacrifice everything, sacrifice their relationships, the structures around them just to have this one victory. They are people that are interested in the longterm compounding effect of the relationships and the games or business that they are in.
Hunter Powers: Naval says that one of the secrets to his fortuitous outcome is that he is focused on playing longterm games with longterm people, that he went out to Silicon Valley and started building relationships and building companies with the same group of people that were interested in this longterm vision. While in the beginning, the returns were very, very small, but over time those returns start compounding and compounding and compounding and now, he is an incredibly wealthy person, but that wealth, and the wealth is not only a fiscal wealth, but also wealth of relationships, he could have never found that by playing a short-term game or a finite game, he had to play the longterm game.
Hunter Powers: That's what it means: Play longterm games with longterm people to focus your business relationships on a group of people that are interested in working on it for the long term because that is the way that you will maximize the compounding effects that exist from those relationships.
Hunter Powers: Now, do we agree with this? Well, it sounds all right on the surface. "Yeah, sure. We'll surround ourselves with people who are serious. Great insight there." No, it's deeper than that, but I think if we're going to ask ourselves, "Do we agree with it?" we need to look at the inverse. What'd the inverse be? Play short-term games with short-term people. Would that be a valid strategy towards maximizing longterm results? Well, there's a couple variations on short-term games.
Hunter Powers: One of the things Naval talks about in his other works are the impacts of staying within one industry and that by staying in an industry, that's how you develop these relationships that ultimately give you these outsized outcomes and that every time you switch industries, you have to start over. You don't know any of the players, you don't have a reputation in that industry. Maybe a little bit of it comes over, but you've got to take a few steps back and so that compounding effect that you're looking for is going to take longer to get to. One answer to what would it mean to play short-term games would be to constantly switch between industries, always chasing the shiniest coin.
Hunter Powers: Another variation on short-term games might be that the decisions you make in the business or industry that you're in, while good in the exact moment, are not good in the long run. Maybe this is some negotiation that you're doing and you have the opportunity to really stick it to everyone else that's involved and come out way ahead on this one deal, but these people and this industry is something that you're going to have to deal with for many, many years to come.
Hunter Powers: While, yes, you got away with murder in this one deal, you're never going to have another deal again. Why? Because you played the short-term game. Then what are short-term people? You have short-term games and short-term people. Well, in part, short-term people are the people that are playing the short-term games.
Hunter Powers: If you surround yourself with the people that are always looking to only optimize in the moment versus to optimize in the longterm, can that be successful? Well, it's certainly going to have a lot of variants. You play a lot of short-term games, you're going to have a lot more crazy ups and downs. You surround yourself and work almost exclusively with these short-term people, it's going to be a wild, crazy ride.
Hunter Powers: I don't think that it's impossible to find great success doing that, but that's also not what Naval was saying, or at least not in this quote. Naval says that "The greatest outcomes will happen when you focus on playing longterm games with longterm people." I think we can say that this idea or this strategy is going to give you a better, more consistent result. There might be a moment where you do need to switch to get the absolute best result overall, some sort of a blended strategy, but in general, play longterm games with longterm people and that is going to give you the compounded effect, which is the most surefire way of getting to those oversized returns.
Hunter Powers: Yes, we agree with this. We agree with Naval that we should be playing longterm games with longterm people. Arguably, that's what we are doing right now, you and me on this podcast together. There is no short-term game to be had here, we are building up some degree of rapport, learning a little bit about each other, diving deep on interesting things, and building relationships that, over time, will hopefully compound and turn into something much bigger.
Hunter Powers: Now, the final question: How do we use this? I think we've touched upon this through the previous two parts and you probably have some idea of how you might use this. You're like: "Well, I would just play longterm games," but I want to get into a few more specifics. I want to take a little sidebar journey before we go deep into how you can use this.
Hunter Powers: I mentioned his name earlier on in this episode, Simon Sinek, his most recent book, The Infinite Game, touches on some of these ideas and there's very strong corollaries. One of the most interesting examples that Simon covers in his book is the story of the Tet Offensive, which happened during the Vietnam War. A Tet, if you don't know, it's one of the most important holidays in the Vietnamese culture. It's their celebration of the new year. It translates to "The Feast of the First Morning of the First Day." You could broadly compare it to Christmas in the Western world, that's its level of significance.
Hunter Powers: In the Vietnamese culture, there is never any fighting on Tet, but during the Vietnam war, in January of 1968, the Northern Vietnamese Army launched a surprise attack against the American forces. They broke the tradition and the goal was to overwhelm the American forces and bring a quick end to the war, so the Northern Vietnamese send 85,000 troops to attack and they catch the Americans completely off-guard. They're largely in town celebrating Tet, assuming that there is no fighting for this day.
Hunter Powers: The Northern Vietnamese, they attack over 100 strategic locations, deploying these 85,000 troops, but the Americans, who don't even know that this attack is coming and are largely away from their bases, still get back and still succeed in holding off every single one of these attacks, most of them ending within about a week with the exception of Huế, which goes on for about a month. The Americans lose less than 1000 soldiers. Again, 85,000 were attacking them. The North Vietnamese, they lose close to 35,000 of their 85,000 troops.
Hunter Powers: Simon uses this battle as a model of the larger Vietnam War, where over the course of 10 years, the US lost 58,000 troops and the North Vietnamese lost 3 million. He points out that the US actually won the vast majority of the battles that they fought, so he asks, he posits, "How is it that you decimate your enemy, that you win all of the important battles, and yet still lose the war?" Because the US lost the Vietnam War. They won the battles, the casualty numbers were far on their side, and yet they lost the war, at least that is the general truth.
Hunter Powers: His answer is that "There must be multiple definitions of what winning and losing means." He goes into this idea of finite and infinite games, finite games being short-term games and infinite games being longterm games, Naval's longterm games. What Simon suggests is that America was playing a short-term game, a finite game, they were just trying to win the battle, but the North Vietnamese, they were playing a longterm game, an infinite game, their objective was to survive.
Hunter Powers: When a short-term player goes up against a longterm player, they are stuck and they can never win because winning is not one of the options. There is no winning of a longterm game. Our quote from Naval is focused on business. There is no winning of business. You don't one day be like, "That's it. I won business." Business ceases to exist because you have won and maybe there will be another business tomorrow. That's not how it works.
Hunter Powers: If you are in business with people who are obsessed with winning business and there is no winning, there is no end to business, those players will find themselves in much the same situation that the US found themself in the Vietnam War. They might win in the moment, they might win in an individual battle, they might even rack up the most wins, the most dollars over this short period of time, but because they are playing a short-term game, they are, by definition, never going to win. They are, by definition, always going to lose. They're going to drop out first and the infinite player, the longterm player, will win. That's a little bit different than the strictly compound interest argument of Naval's, but it brings to point another value in playing longterm games and the strategic advantage of being a longterm player with other short-term players in the field.
Hunter Powers: Once again, our question is: How do we apply this? What are tactical things that we can do to make sure that we are playing longterm games with longterm people? One thing that Naval points out is trying to stay within the same industry and acknowledging that if you change industries, you are changing the group of people and, therefore, starting over. Number one: Try to stay in the same industry.
Hunter Powers: Then number two would be to find the longterm people and align yourselves with them. At any organization, the most longterm person is usually the CEO. They are the captain of the ship. They are the most longterm person associated with the company. Their reputation rests on the company, so often choosing to align yourselves with them is to align yourself with a longterm person.
Hunter Powers: Next to that is then looking at the other individuals in your organization and trying to identify those that appear to be in it for the long haul. Now, of course, one easy way is by looking for people who have been in it for the long haul, but I would suggest that without that, what you're really looking for are the people that have a natural inclination towards this work and it's really the motivation. Why are they here? The degree to which that motivation originates in a natural curiosity can help you identify who these longterm people are. Another word for that might be "passion." Who is most passionate about what they are doing. Now, there are other dangers with passion, but the passionate more often than not is the longterm person.
Hunter Powers: Then at the same time, we can apply this by being careful to not align ourselves with the short-term player. The short-term player is the one that is making it all about themselves, that is quick to burn a bridge to get just the slightest advantage. They are playing a short-term game and the degree to which you associate your identity with their short-term game makes you more and more of a short-term person. You want to distance yourself from that person to the degree possible so that you continue to be associated with the longterm people. This is your best chance at success and not necessarily success in this individual opportunity, but success within a career, within a lifetime, within you yourself becoming a successful person.
Hunter Powers: The short-term game is closer to, "I'm just going to go out and buy a lottery ticket," and I guess you can hedge, you can go spend your dollar every week buying that lottery ticket and maybe it comes in and maybe the short-term game runs out, but you wouldn't want to bet on it. You bet on the longterm game because it's really hard for the longterm game to not work out, it just takes time and patience. The journey of the longterm game is far more rewarding and engaging than the short term and that is the real success that you inevitably discover along the way.
Hunter Powers: That is your one idea for today: "Play longterm games with longterm people," so said Naval Ravikant. If you like to help us spread the word, please give us a five-star review and tell your friends to subscribe. We're available on Apple Podcasts, Spotify, and every major listening app. You can visit the website, it's one.hunterpowers.com and you can listen to the entire archive. If you still want more, you're like, "That's not enough," well, then, you can follow @thehunter on Twitter. I am Hunter Powers broadcasting live from our nation's capital, as we say in the city, DC Proper. Until next time.