Why does Naval believe that "treating collaborators well" is an investment?

Okay, this question is really interesting. This viewpoint of Naval's is essentially a cornerstone of his business philosophy. Let me try to explain it in plain terms without using too many fancy words.

Why Does Naval Believe "Being Good to Your Collaborators" is an Investment?

Imagine you're playing a game that lasts a lifetime—like "life" or "business." In this game, there are two types of players:

"Quick Wins" Players: Their goal is to win every single encounter by any means necessary, even cheating or deception. They might squeeze an extra $100 from you today, or take advantage of someone else tomorrow. On the surface, it seems like they're always "winning," but very quickly, no one in the game wants to play with them anymore. Their path becomes narrower and narrower.
"Long-term Game" Players: Their goal isn't to win every single encounter, but to ensure they can keep playing indefinitely, and playing better and better. They understand that to play long-term, the most important things are reputation and relationships.

Naval champions this second approach. In his view, "being good to your collaborators" is one of the most crucial investments you make in this long-term game.

1. Investing in Your "Reputation Bank"

You can think of "reputation" like a bank account.

Taking advantage, acting unfairly: This is like withdrawing from your reputation bank. Every time you treat a partner, employee, or client unfairly, you're overdrawing your account. When the money runs out, you go bankrupt—no one trusts you anymore, no one wants to collaborate.
Being decent to people, sharing fairly: This is like depositing into your reputation bank. When you're fair, generous, and keep your promises, your "savings" grow. The "interest" in this account compounds; it snowballs.

What's the payoff? When your reputation is strong enough, the best opportunities and the most talented people actively seek you out. Because everyone knows that working with you is safe – they won't get screwed, and there's potential for growth. This is far more effective than spending money on advertising or headhunting.

2. Investing in a "Lucky Charm" / Creating a "Luck Magnet"

Naval has a concept called "Create your own luck." Treating collaborators well is a way to create this luck.

Short term, it seems like a "loss": For example, sharing a bit more profit with a partner, or giving a junior employee an opportunity and mentorship beyond their expectations. At the moment, your own gains might seem smaller.
Long term, it's "planting seeds":
- The partner who got the extra profit will think of you first when that huge, great project comes up next time.
- The employee you invested in might become an industry leader in ten years. They'll remember how you believed in them and could bring you unimaginable returns.
- Clients you treated well become your most loyal "fans," advocating for you for free.

You don't know which seed will sprout, but the more you plant, the greater the chance you'll reap a whole forest in the future. This payoff is asymmetric: what you put in (a bit of profit, some time) is limited, but the potential future return could be limitless. Squeezing a partner dry might get you marginally more profit (e.g., $10K); treating them well could lead to a multi-million dollar opportunity later.

3. It's About Attracting "Compounding Relationships"

In the business world, the best relationships are those that generate compound returns—relationships based on long-term collaboration and mutual success.

If you're always thinking, "I can't lose out," you'll attract equally petty people. You'll waste massive energy on mutual suspicion and haggling—this is internal friction.

But if you're known for fairness and generosity, you'll attract others with big-picture thinking who also look to the future. You'll focus your energy on growing the pie together. This is mutual benefit (win-win). 1+1 will yield far more than 2.

Let's Recap

So, when Naval says "being good to your collaborators is an investment," he's fundamentally saying:

Don't just focus on the money right in front of you. Look to the long-term future. Every act of kindness, fairness, and generosity you give isn't an expense; it's an investment that builds your most valuable assets—reputation, connections, and future opportunities. These assets compound over time, bringing you immeasurable returns.

This is a smart, rational form of long-termism, not naive "being a goody two-shoes" philosophy.