The Naval Tweetstorm Series, Part 3: Wealth games and status games
Part 3 of 39 short essays in response to Naval's famous thread.
Series intro
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“Ignore people playing status games…”
“Ignore people playing status games. They gain status by attacking people playing wealth creation games.”
Wealth vs Status
Much of the focus in the first three of Naval’s 39 tweets is on identifying and driving home this key difference, a difference which may have eluded you as you looked out on the world for however long you’ve been here.
Wealth is not the same as money and neither are the same as status.
The word “status” is mentioned four times in the first three tweets. Naval says to ignore people playing status games, and Naval plays by his own rules — the word “status” is not mentioned again in the remaining 36 tweets.
Wealth is complimentary and positive sum.
If you create wealth it doesn’t mean I can’t create wealth. Indeed, there’s a cluster effect — more wealth creation happens when people are creating wealth in close proximity to one another. This is why Silicon Valley has been the home of tech wealth, New York the home of financial wealth, Florence the home of creative wealth in the 15th century. William Shakespeare, Christopher Marlowe, John Webster and Ben Jonson all wrote plays in London in the 1590s. Wealth of any kind feeds off its own wealth. If you have a chance to open a coffee shop, it’s best to open it beside lots of other coffee shops. The old adage “location, location, location” points to the mutual benefits of being in the right place.
Status, on the other hand, is a zero sum infinite ladder. You can a rung by clambering over someone else, and you lose places when others clamber over you.
Examples of people playing status games:
Television news anchors who get to set the tone and ask the questions (and cut off interviewees whenever they feel like it)
Editors deciding what goes on the front page of the newspaper
Anyone who engages in party politics at any level (note: political power overlaps with, but is fundamentally different from, party politics)
A social media influencer’s analytics reports
A brand manager who hires a social media influencer on the back of the analytics reports
Arts critics and reviewers
Attention-hungry stock analysts
Twitter trolls
Art dealers
Most people at the Oscars, the Emmys and the Cannes Film Festival
Dress designers who design dresses for the Oscars, Emmys and Cannes
The Booker Prize
Golf club captains
Having wealth can suck you into status games
The line between wealth and status can be vague. People who think they’re playing a wealth game often get sucked into playing a status game. Tech founders who strive to get into venture capital-backed startup accelerators such as Y Combinator might notice that they’ve gone from a positive sum wealth game to a zero sum status game where they’re fighting for the approval and backing of a tiny number of investors.
This is because the state of having wealth can often bring status. But having wealth, or more accurately being seen to be wealthy, is a different thing than creating wealth.
This is, in part, why Morgan Housel, the author of The Psychology of Money, argues so persuasively that getting rich and staying rich are fundamentally different skill sets.
Many people experience the upside-down U-curve, going from having very little wealth, to having lots of wealth, to losing that wealth.
The tipping point of the U-curve, when they go from having wealth to the start of losing wealth, can often be traced to the moment they stopped creating wealth and instead sought to use the wealth to gain status.
The billionaire businessman and the media
To better understand the detail of status games, let’s consider the story of an Irish businessman called Sean Quinn.
Quinn rose from an undistinguished Irish country background, created a series of astonishingly successful companies in industries as diverse as cement manufacturing, insurance and sports betting.
In doing so he created plenty of wealth for his home locality, an unfashionable — some would say deprived — area near the Republic of Ireland/Northern Ireland border.
By 2008 Quinn was worth almost €5 billion, and Forbes listed him among the top 200 wealthiest people in the world. But then, it seems, he changed from the game of creating wealth to the game of seeking status. At some level, Quinn felt like he was still an outsider in Ireland’s elitist social set. So he set about scoring points and climbing ladders, leading to reckless decisions such as getting involved in billion-dollar loans backed by worthless bonds in a bank that was had become over-leveraged in Ireland’s property bubble. The bank crashed, taking Quinn’s wealth with it — he was declared bankrupt in 2011 —and leading to years of bad blood and legal battles over control of the assets that were formerly part of his empire.
And then came the final piece in the status game.
The Irish media in Dublin, the insiders who had always looked down on the countryman Quinn as an upstart outsider, relished in devouring the carcass, gleefully taking their man down a peg or two through years of court case news coverage, the tone of which was much more than balanced reporting.
Two points to all this:
When you gain wealth, you’ll be tempted everywhere you turn by status.
When you gain wealth, people will want to score points by attacking you.
Many men have found it impossible to avoid that temptation.
And it is, of course, mostly men, driven as us men are by the competitive urge not just to win but also to make sure someone else must lose.
Avoiding this win-lose mentality might feel like it’s going against your nature.
And maybe it is.
Maybe, when you gain wealth, you will find it impossible to turn your back to the temptations of the status game.
Or maybe thinking differently about this — thinking about the differences between wealth games and status games — can help you step past the pitfalls.
A final addendum.
I expect that it takes a rare form of maturity to avoid these pitfalls.
The practical reality of Naval’s tweet means that people who have gained wealth (remember: wealth = having assets that earn while you sleep) will inevitably find themselves attacked by people playing status games.
Getting attacked is hurtful to the ego.
And when the hurt ego is left unchecked, and the hurt ego has access to money, it can lead to bad decisions. A few bad decisions, on top of a few other bad decisions, can make your castle crumble.
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Till next time.