Why does Naval advocate 'avoiding substitutable labor'?

Okay, absolutely. Let's talk about why this Silicon Valley guru Naval Ravikant constantly talks about "avoiding fungible labor".

Simply put, because "fungible" means "no bargaining power," and the first step to wealth freedom is having bargaining power.

Imagine this scenario:

There are two coffee shops under your apartment building.

Shop A's barista follows the SOP (Standard Operating Procedure) strictly. The exact grams of beans, the precise temperature for steaming the milk, the specific pattern for the latte art—it's all predetermined. If this barista quits, the owner can hire a new one tomorrow, train them in a day, and have them operational immediately. This barista is performing fungible labor. Their salary is determined by how many people in the market are willing to do this job, making it very hard to increase.
Shop B's owner is a master of coffee. He traveled all over Yunnan and Ethiopia to discover a unique coffee bean blend; he designed the whole shop's aesthetic, making it feel incredibly comfortable; he also created a unique membership program that keeps regular customers hooked. This person is very difficult to replace. If he sells the shop, its soul might disappear. He is performing non-fungible labor. His earnings aren't calculated by the hour; they're tied to the unique value he creates.

When Naval says "avoid fungible labor," he wants us to strive to be like Shop B's owner, not the easily replaceable barista in Shop A.

Let's break down further why "fungible labor" is a trap:

Your Value is Set by the Market, Not by You Fungible labor is like being a standardized screw. Thousands of identical screws exist in the market, so the price is naturally transparent and low. If your work can easily be done by someone else, your salary will be pushed down. Working overtime, exhausting yourself, just means you twist screws faster than others. Fundamentally, you are still just that screw, with a fixed ceiling on your value.
You Trade Time for Money, and Time is Finite The most typical model of fungible labor is "payment by the hour." Work 8 hours, get paid for 8 hours. Want to earn more? Work overtime. But you only have 24 hours a day; you can't trade unlimited time for money. This path doesn't lead far, nor does it lead to financial freedom.
You Can Be Easily Replaced by the Times What kind of labor is easiest to replace? Standardized, repetitive tasks. This is precisely the area where AI and automation excel at displacing humans. Today you might be tightening screws on an assembly line; tomorrow, it could be a robotic arm doing it. Today you're doing basic data entry; tomorrow, a script might handle it entirely. You've put yourself on the track competing with machines, and you can't win.

So, what should we pursue? – "Specific Knowledge" and "Leverage"

Naval doesn't just point out the problem; he offers a solution. He advocates developing your "Specific Knowledge."

What is "Specific Knowledge"? It's not knowledge you can get by rote learning in school, nor skills you master by reading a few books. It's a unique combination of skills rooted in your innate talents, genuine curiosity, and deep passion, developed through long-term commitment.
- For example, if you're good at programming and have a deep knowledge of classical music, you might develop an app to help people learn music theory.
- For example, if you're a great writer and a seasoned gamer, you might become a top game critic or narrative designer. This knowledge is ingrained in you; it's very hard for others to replicate quickly. This is the source of your "non-fungibility."
After Finding "Specific Knowledge," What Next? – Add "Leverage" Once you have non-fungible skills, you no longer work alone. You need to find "leverage" to amplify your abilities. Naval believes that in the new era, the best leverages are:
1. Code: Creating software or an app that can serve thousands, even millions, of people worldwide, 24/7.
2. Media: Creating a podcast, video channel, or blog, allowing your ideas and insights to be seen and heard by vast numbers of people. Using the earlier Shop B owner example, his "specific knowledge" was his unique taste in coffee and business philosophy. His "leverage" was the physical store he built and his membership community. Through this leverage, a single unit of his effort served hundreds of customers, generating returns far exceeding a salary.

To Summarize

The core idea behind Naval's advocacy to "avoid fungible labor" is:

Don't be an easily replaceable screw; be the one who designs the machine.
Stop trading your finite time for money; build systems that generate money for you.
Discover your unique value (specific knowledge) and amplify it with leverage (code/media/etc.).

Your career goal shouldn't merely be to find a "job," but to transform yourself into a unique product through continuous learning and practice. When you become hard to replace, opportunities and wealth will naturally gravitate towards you.