Leverage

The language of physics (in this case finance as well) can be subtle. Words and concepts like leverage can morph from their original meaning and intention into a model of how to understand the world.?

“Give me a lever long enough and I could move the world” - Archimedes

Without getting into? the physics of it, what Archimedes figured out was that given a rod and fulcrum (a hinge), a lever amplifies an input force to provide a much greater output force. What I would like to investigate in this essay is how we think about this principle in terms of the work that we do.

According to Naval Ravikant, we live in an age of infinite leverage thanks to the internet and technology. Capitalising on this moment of history begins with following your genuine intellectual curiosity. The economy asymmetrically rewards ingenuity i.e knowledge that you or a very few people possess. This is where it gets personal, being honest with yourself about what you enjoy doing, the topics that you are genuinely curious about, devoid of any external reward or recognition.?

The question you need to ask yourself is do you enjoy the process? The less you worry and obsess about outcomes, the more you do it for yourself in a natural way, the more you stick with it, the more you get good at it ..and the more likely you will acquire skills that society does not yet know how to train other people.

Creator of the cartoon strip Dilbert, Scott Adams, has another view: Everyone has a few areas in which they are mediocre. He suggests finding a way to combine your mediocrities and create a category of one. As he says in his book “Everyone has at least a few areas in which they could be in? the top 25% with some effort. In my case, I can draw better than most people but I'm hardly an artist. And I’m not funnier than the average standup comedian who never makes it big, but I’m funnier than most people. The magic is that few people can draw well and write jokes. It's the combination of the two that makes what I do so rare. And when you add in my business background, suddenly I had a topic that few cartoonists could hope to understand without living it"

To be leveraged you want skills that are unique and cannot be trained. If your job is procedural, instructive and they can train you to do it. Eventually they can train a computer or an A.I to do it. It is also prudent to follow your intellectual curiosity over what is ‘hot’ right now. What is ‘hot’ has a short lifespan. Your intellectual curiosity should last a lifetime.

Be an ‘Artist’

While you are gaining this knowledge and skill set, it's important to build your brand, on social media or youtube, or a publishing platform like substack, or start a podcast. Take a risk, be vulnerable. Or in Seth Godin’s words create ‘Art’. Here is how he defines Art

“Art isn't only a painting. Art is anything that is creative, passionate and personal. And great art resonates with the viewer not only the creator. Art is a personal act of courage, something one human does that creates change in another. Art is the product of emotional labour. If it's easy and risk free it is not art”

While you are engaging in this process you are ‘skating to where the puck will be’ to paraphrase Wayne Gretzky. When the time comes to move on an opportunity i.e capitalise on your skillset you can do so with maximum leverage

Types of Leverage:

According to Naval Ravikant there are three types of leverage: The first is labour i.e have other humans working for you. But this is incredibly messy and requires real leadership skills. The second is money, however this is tricky as you have to work to accrue capital or someone has to give you money to invest. It's also risky as it involves getting into debt.?

The last form is the most interesting, the newest and the most democratic. It is ‘products with no marginal cost of replication’. These started with the printing press, accelerated with broadcast media and exploded with the internet. It includes books, media, movies and code. This type of leverage is also permissionless. You do not require anybody's tick of approval to build a body of work. You could write, code, start a podcast, a youtube channel or just start tweeting. You can multiply your efforts without involving other humans or more importantly other human’s capital

We are entering a new phase in the zeitgeist of how fortune’s are made. In the very near past fortunes were made by capital i.e those who could manage it i.e the Warren Buffets of this world or capital allocators ie top CEOs. We are now in the creator economy where people like Joe Rogan gets paid in excess of $100million for his podcast, BabyShark whose youtube channel is reportedly worth $125 million and miss excel who apparently makes $100,000/day doing excel explainer videos on Tiktok. Or the Zuckerbergs, Bezo’s, Jobs of this world whose wealth could be argued is code-based leverage

Time for Money

The concept of leverage is counterintuitive. That is because for most of human history, we lived in an un-leveraged world. If I was chopping wood, ploughing a field or working an assembly line, the expectation would be eight hours put in would equal to about eight hours of output. There was a 1:1 relationship between input and output. In a ‘leveraged’ profession inputs don't match outputs.? The higher the creativity component, the more likely it is to have disconnected inputs and outputs. You want to be in a position where you control your time and you are tracked on your outputs. You want to create a huge impact without as much of a time investment or physical effort up front.

The way knowledge work is produced needs to be reassessed. The 9-5/40-hour work week is a relic of the industrial age. Knowledge workers need to mimic creators or athletes in how they function i.e train, sprint, rest and reassess. In that way you earn with your mind and not your time.?

However the journey starts with intellectual curiosity, becoming a category of one, sticking to a process, creating ‘art’ and taking a risk.