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