A few years back, I heard about this Naval Ravikant guy who had just published a "tweetstorm" on twitter about all of these crazy ideas on wealth, happiness, finding passion and a bunch of other things.
Who? Naval? Like the orange? Why should I listen to Naval?
Naval is an angel investor and founder of a few successful companies. He was born poor in India, moved to Queens when he was 9 and hung out mostly in libraries as his baby sitter since his mom worked. He got into good schools and went on to found startups and now he invests in new startups and tweets a bunch.
Twitter is a weird place. There are many sub-communities of Twitter, usually characterized by their members as "x-twitter", eg. startup-twitter, venture-capital twitter, knitting-twitter or whatever else. Despite the downsides of Twitter, it really is a good platform. What other place in the world can you ask CEOs of Rocket companies about exhaust flow of their engines and get a reply?
So once you get influential, knowledgable people on this platform, interesting things happen.
And thus, the Naval tweetstorm was born. The knowledge was almost prophetic and "startup-twitter" blew up, re-tweeting, sharing etc. Did Naval write this beforehand? Had he planned it in advance and scheduled it in his favorite tweet scheduling app? I have no idea, but it seems like good advice.
Naval blew through 40 tweets on "How to Get rich without Getting Lucky". His advice covered productivity, "business" skills (even though business isn't a skill), wealth, capital, accountability, finding your passion and my favorite, leverage.
Leverage is more with less. Its efficiency in what you do. It's tooling that allows you to get more output with the same amount of input.
It's that lever that Archimedes talked about.
Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. - Archimedes
In finance and stocks, it's trading assets with more money than you have.
It's the code running your entire company.
Naval defines 3 types of leverage:
Labor / People
People working for other people is the oldest form of leverage and what most of us spend our careers doing. An early-stage company bringing on employees finds leverage in hiring people specialized to do things they aren't skilled in doing, don't have time to do, or just don't want to do. Human leverage can be messy because managing people and leading teams is a difficult thing.
"You're one short hop from a mutiny or getting eaten or torn apart by the mob".
Money leverage is all about multiplying decisions with cash. Capital is more modern than labor and has made people extremely wealthy. Think of bankers, CEOs and fund managers. People who move large amounts of money around strategically. Money is more scalable than people leverage.
Products with no marginal cost of replication
Labor is nice, money is cooler, but products (with no cost of replication) are the best. It's the type of leverage most of us who are not privileged with banker credentials and Ivy-league networks can probably attain.
This refers to books, media, movies and code. This blog post is a product that after I hit publish, will cost me nearly nothing to reach nearly anyone in the world. And I don't need permission to do so. Some years ago, you had to submit your idea or content to someone with authority who made a decision on if it should be distributed. Not today. Fuck you. I don't need your permission. It feels very hacker-ey.
Labor leverage requires someone to follow you. Capital leverage needs someone to give you money to invest. Products need no such thing.
The Old Way - Permission
Approach program directors at the local radio station. Pitch them on your song and hope they like it enough to give you a chance and play your creation.
The New Way - Permission-less
Grow up in the projects of Atlanta, learn to produce music, buy a beat for your next song for $30. Record at home or a cheap studio for $20/hr. Promote it with memes, go viral, blow the fuck up and hit #83 on the billboard chart. Lil Nas X did this when he generated over $1 Billion in revenue with Old Town Road.
The examples go on and on, PewDiePie is worth $30-50 million because he streamed himself playing games on the internet. Joe Rogan struck a 100 million dollar deal with Spotify to exclusively distribute his podcast.
Coding, writing blogs or books, YouTubing, tweeting, TikTok-ing and whatever-the-latest-social-network-is-ing all give creators a way to distribute their work without permission.
No cost of marginal replication
Leverage started with the printing press, gained acceleration with broadcasted media and hit compound-levels with the internet and code. Your efforts are multiplied 10x, 100x or 1,000,000x without hiring people or having access to large amounts of capital.
An Army of Robots To Do Your Bidding
"Every great software developer, for example, now has an army of robots working for him at nighttime, while he or she sleeps, after they’ve written the code and it’s just cranking away."
"An army of robots is freely available - it's just packed in data centers for heat and space efficiency. Use it." - Naval Ravikant
Developing software is more accessible than ever. Compute resources are more accessible. Digital Ocean, Linode, Ramnode, AWS, GCP and many more all provide cheap servers to host your software on. This blog runs on a $5/mo VPS.
Don't want to learn to write code? Great. Use no-code tools, gain leverage, bring in that MRR and hire a developer once you've made enough revenue to do so.
What value could you create for the world with a terminator-like fleet of machines?
Input Doesn't Equal Output
Traditional, "real" work like chopping wood or carrying water are tasks where the input and output match. 8 hours put in equals 8 hours of output. Leverage allows a large impact without the same amount of time or physical labor.
You're never going to get rich renting out your time.
You have to use leverage.
I hope you enjoyed reading about leverage as much as I did. I was inspired to write this by both Naval and the Naval Almanack which is available for free. I encourage you to give it a read and take whatever info may apply to our own life.