The Three Forms of Leverage

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·Nov 3, 2024

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There are three broad classes of Leverage. One form of Leverage is going to be labor, which is the oldest form of Leverage—other humans working for you. That's actually not a great one in the modern world. It used to be great in the old world, but in the modern world, people are onto it. So, everyone's always playing a status game and trying to become the lead monkey in the tribe.

Having people work for you is a difficult form of leverage. Then there's Capital, which is a more recent invention. It's only about, you know, a few thousand years ago. It goes back to the agricultural age, and so that's money. If you have money as a form of Leverage, that's a good one. It means like every time you make a decision now, you multiply this with money, and that's why fund managers and Venture capitalists and so on seem to do well.

Then the final form of Leverage is a brand new form of Leverage, and that's like the most democratizing one. That is products that have no marginal cost of replication. So that would include books, it would include media, it would include movies, it would include code. Code is probably the most powerful form of Leverage that is permissionless. All you need is a computer; you don't need anyone's permission.

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The Three Forms of Leverage

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