July 30, 2019
The Naval Podcast – Net Present Value: What Future Income is Worth Today
Check out Naval’s Episode Page & Show Notes
This podcast clip is part of a conversation between Naval Ravikant and Babak Nivi. Unless otherwise noted, quotes are from Naval. For reference, check out Naval’s famous How to Get Rich tweet storm.
Key Takeaways
- NPV = Net present value
- NPV answers the question – “That stream of payments I’m going to get in the future—what’s it worth today?”
- An example:
- You’re joining a startup and get 0.1% equity as part of your offer
- The founder claims the company will one day be worth ~$1 billion, equating your 0.1% to $1 million worth of future valye
- BUT – you have to figure out what it’s ACTUALLY worth (after accounting for the massive risk startups face)
- So, if the founder just raised a $10 million round, your 0.1% is really only worth $10,000 today
- Get very comfortable doing net present value calculations in your head
