When it comes to work, business, or wealth creation, as individuals, we are limited in what we can do and achieve ourselves.

If you want to achieve anything substantial, what do you do?

You use leverage.

“Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” - Archimedes

Leverage is using an acquired experience, skill, knowledge or tool to achieve a desired outcome.

Humans evolved in societies with limited/no leverage, where inputs were equal to outputs.

Back in the day, if I was working in the fields or hunting, I knew 8 hours of input would equal about 8 hours of output.

Today, through labour, capital, code and media, leverage is available to disconnect the link between your inputs and outputs.

Read on to learn more!

Labour

The oldest form of leverage is labour.

This is people working for you; instead of me doing all the work, I can have people working for me, and just by my guidance and direction, much more can get done.

Most of us understand the labour form of leverage because it is how society has evolved over time. Because of this, society hugely overvalues labour as a form of leverage.

This is why your parents and friends get excited when you get a promotion, and you have a lot of people working under you.

People ask business owners or managers how many employees/reports they have because they are trying to establish credibility and measure how much leverage and impact they have.

People just automatically assume that more people are better.

Labour is a challenging form of leverage. Managing people is very messy and requires tremendous leadership skills.

The key is to aim for the minimum amount of people working with you that will allow you to benefit from the other forms of leverage.

Next, capital.

Capital

Capital is a trickier form of leverage than labour. Money markets are inventions of humans within the last ~3000 years, to make it easier for us to trade products and services with eachother (rather than bartering).

People have used capital to get ridiculously wealthy over the last century.

These are people who move large amounts of money around. Think bankers and corrupt politicians.

Many people dislike capital as a form of leverage because it is this invisible thing that can be accumulated and passed down through generations and suddenly results in huge amounts of wealth.

It feels unfair.

But capital is very powerful; it can be converted to labour or other forms of leverage and scales well.

If you are good at managing capital, you can manage significantly more capital much easier than managing more and more people.

The difficult thing about capital, is how do you obtain it?

Code and Media

The most modern, interesting and important form of leverage are products with no marginal cost of replication.

What’s interesting about these forms of leverage is that they are permissionless. They don’t require somebody else’s permission for you to use them.

For labour, somebody has to decide to follow you. For capital, you must find a way to make large amounts of money (which requires leverage) or convince someone to give you their money to invest or turn into a product.

Creating content, coding, writing books, blogging, recording podcasts, and YouTubing are examples of permissionless leverage. You don’t have to get permission from anyone to do them. With the adoption of AI, these are more accessible than ever.

Think about it…

If you create a piece of content or software, once it’s out in the world, it’s out in the world. You don’t have to work any harder on the product for 5 people to receive it than for 50,000. If you sell this content as a product, you make it once and can sell it many times.

The work that went into making the product, ie your inputs, does not match the output. If the inputs and outputs were connected, you would have to make a new product for every new customer.

This is the power of products with no marginal cost of reproduction.

Final Takeaways

As a worker, you want to be as leveraged as possible to ensure you have the biggest impact without as much time or physical effort.

A leveraged worker can out-produce an unleveraged worker by a factor of many thousands.

Leveraged workers focus on judgement, which is far more important than how much time or effort they put in.

How can you apply leverage in a more impactful manner?

Source

This is a paraphrased section from the Almanack of Naval Ravikant. If you want to dive deeper into these topics, you can find the book here.