The 3 Broad Classes of Leverage
π§Ά Tags:: #literature_Notes
π Resources:: The Almanack of Naval Ravikant (2020)
2024-10-21 - 14:23
There are three broad classes of leverage:
Labor
Other humans are working for you. It is the oldest form of leverage, and not a great one in the modern world.
This can be the worst form of leverage one can use. Managing other people is incredibly messy. It requires tremendous leadership skills.
Money
It means every time you make a decision you multiply it with money. Capital is trickier form of leverage to use. It's more modern. It's been the dominant form of leverage in the last century.
It scales very well. IF you get good at managing capital, you can manage more and more capital much more easily than you can manage more people.
Products With No Marginal Cost Of Replication
It can be anything from books, media, movies, code. Code is probably the most powerful form of permissionless leverage. All you need is a computer.
The most interesting and the most important form of leverage is the idea of products that have no marginal cost of replication. This is the new form of leverage. This was only invented in the last few hundred years. It started with the printing press. It accelerated with broadcast media, and now itβs really blown up with the internet and with coding.
Now, you can multiply your efforts without involving other humans and without needing money from other humans.