The Best Type of Leverage For Your Personality
The Different Types of Success Leverage & Choosing the best one for you.
Currently I’m focusing on two main things (should be one, I know…)
These are: building (and earning) from sports betting models and creating an ecommerce start-up.
Both are very different and difficult but in different ways, they also contain very different forms of leverage.
Leverage is one of the single biggest factors I use to understand if someone is legitimately thinking about business in the right way.
Leverage, in the words of the wise Naval, when it comes to business can be in 4 forms:
Labour
Capital
Media
Code
You want to have at least one but ideally as many of these as possible.
Labour
This is the oldest form and the weakest.
This involves hiring people (real humans) to do things for you.
It’s a very misunderstood and over-valued metric people use to gauge someone’s success (in business). “How many people do you have?” — Generally the higher the number the more successful you are.
Because just asking “how much money do you make” is not really a thing in the UK.
You then need to hire labour to manage labour and on and on.
Of course this works as a form of leverage, but it’s a weaker one.
Capital
Capital is what most people think of when they hear the idea of leverage in business or investing.
If you start with a million pounds, at 10% a year, that’s £100k/year. If you only had £100 to start, that’s pointless.
Capital is where most of the 20th century wealth was made.
Deploying capital in assets that grow over time and playing the broken wealth game we discussed last week to your advantage.
This can be the banker or the Warren Buffett, there’s levels to all types of leverage.
Capital is a good form of leverage, you can deploy capital to make more capital with zero additional “units of effort” on your part.
This is why it’s greater than labour, which needs to be managed, taught and watched in most cases.
Media
Media’s leverage comes from attention.
This is why platforms, news channels and influencers win.
They have leverage as they can say “this product is good” and drive millions or tens of millions to a product they own or are associated with.
It’s so clear how effective this is and even how manipulated this is, yet it continues to work with even traditional media as well as (generally more effectively) modern platforms and influencers.
Code
How the most recent billionaires have been made.
Utilise technology (in the form of code) to have zero or marginal additional costs to sell or produce a “unit”.
Think platforms: Amazon, Facebook, Chat GPT, Google etc.
But even on a smaller level; apps you use, SAAS products.
Code is the most potent form of leverage especially when mixed with another (media or capital).
Network effects is also probably the purest form of leverage but that’s tough to build so we’ll ignore for now.
Code and media are permission-less (you can start today), while capital and labour are permission-required (you need investors or employees to say yes). This flips the difficulty equation - the “best” leverage types are actually the most accessible, which is why they’re crowded.
Scale vs Leverage
I was having a conversation with a business owner earlier this week and we got onto how scaling is a very misunderstood concept.
It’s something I personally did very wrong as well, building processes to run at £100k/month before reaching £5k/month.
I think people think about scale or scaling before they’ve understood leverage.
Decide your leverage first, then implement/build the business, then worry about scaling as you go along.
Thinking leverage first solves scaling issues anyway.
Think about what your leverage will be and decide what it is then build the business.
Select the form of leverage that works best for you personally.
Understand effort vs reward —> Effort of labour leverage is lower than software/code, making code/media leverage more difficult (because it’s better).
The reason why everyone is flooding to SAAS vibe-coding slop builds at the moment is because the barrier to entry is so low and these people intuitively know SaaS has leverage.
But of course the issue is, because everyone is doing it, it’s becoming incredibly saturated, making it not a great opportunity.
Leverage Types Compound at Different Paces
Labour: Linear (more people = more output).
Capital: Exponential but slow (10%/year is good, decades not months).
Media: Exponential but delayed (audience building for years, then monetizes).
Code: Exponential and fast (one algorithm can scale instantly).
As a result, each leverage type is more difficult than the one before especially at the highest level.
Labour: Hire/convince someone to work for you (very easy).
Capital: Save some money + invest it (easy).
Media: Create excellent content for a long time (hard).
Code: Build something valuable with zero or marginal unit costs (very hard).
That’s why earnings (both on the individual level and the business level follow the same trajectory). A laborer will be less well paid than someone who can program an algorithm that creates immense value.
Personality First Leverage
Start with finding the leverage type that suits your specific skill set (aka what you are good at and what works best for your personality).
If you are a creator, leverage media in the right way, build a following and monetize in the future, you don’t need to do this now.
If you are the analytical type, think code first, think how can I build a model that will earn forever based on a one-time-effort to build.
If you are a good manager and operator, think labour + local first, it’s the quickest way to earn as well.
If you’ve started the capital game, play it properly, actually aim for mastery of an industry and utilise that leverage.
But just understand the game you are trying to play and if you are made for it.
People sometimes can naturally gravitate to leverage types that don’t suit them because they think it’s the QUICKEST way to make it, (introverts forcing media, code-averse people building SaaS).