Product Leverage Is Egalitarian

Labor and capital are much less egalitarian, not just in their inputs but in their outputs. Let's say that I need something that humans have to provide; like if I want a massage or if I need someone to cook my food. The more of a human element there is in providing that service, the less egalitarian it is. Jeff Bezos probably has much better vacations than most of us, right? Because he has lots of humans running around doing whatever he needs to do.

But if you look at the output of code in media, Jeff Bezos doesn't get to watch better movies and TV than we do. Jeff Bezos doesn't get to even have a better computing experience; like Google doesn't give him some premium special Google account where his searches are better. It's the nature of code and media output that the same product is accessible to everybody, and it turns into a positive sum game. Where if Jeff Bezos is consuming the same product as a thousand other people, that product is to be better than the version that Jeff would consume on his own.

Whereas with other products, that's not true. If you look at something like buying a Rolex, which is no longer about telling time, it's a signaling good. It's all about showing off, "I have a Rolex." That's a zero-sum game. If everybody in the world is wearing a Rolex, then people don't want to wear Rolexes anymore because they're no longer signaling; it's canceled out the effect. And so rich people do have an advantage in consuming that product. They'll just price it up till only they can have Rolexes, and then poor people can have relaxes, and relaxes resume their signaling value.

But something like watching Netflix, or using Google, or using Facebook, or YouTube, or even frankly modern-day cars; like rich people don't have better cars, they just have weirder cars. You can't drive a Lamborghini on the street at any speed that makes sense for a Lamborghini. So it's actually a worse car in the street. It just turned into a signaling good at that point. Your sweet spot where you want to be is somewhere like a Tesla Model 3 or like a Toyota Corolla.

It's an amazing car; a new Toyota Corolla is a really nice car. But because it's mainstream, the technology has amortized the cost of production over the largest number of consumers possible. And the best products tend to be at the center, at the sweet spot, the middle class, rather than being targeted at the upper class. So I think one of the things that we don't necessarily forms of leverage have gone from being human-based, labor-based, and being capital is too big; more product and code and media based that most of the goods and services that we consume are becoming much more egalitarian in their consumption.

Even food is becoming that way; like food is becoming cheap and abundant, at least in the first world, too much so to our detriment. Jeff Bezos isn't necessarily eating better food; he's just eating different food, or he's eating food that's prepared and served for him. So it's almost like more, again, that human element performance. But the labor element out of food production has gone down massively. The capital element has gone down massively. And so even food production itself has become more technology-oriented.

And so the gap between the haves and the have-nots is getting smaller. So if you care about ethics in wealth creation, it is better to create your wealth using code and media as leverage because then those products are sort of equally available to everybody, as opposed to trying to create your wealth through labor or capital. Because what I'm referring to here is scale economies. Technology products and media products have such amazing scale economies that you always want to use the product that is used by the most people.

The one that's used by the most people ends up having the largest budget; there's no marginal cost of adding another user. And so, with the largest budget, you get the highest quality. So the best TV shows are actually not gonna be some obscure ones just made for a few rich people. They're gonna be the big-budget ones like "Game of Thrones," "Breaking Bad," or "Bird Box," where they have massive, massive budgets. They can just use those budgets to get to a certain quality level.

And then the rich people, to be different, have to fly to Sundance and watch a documentary. Because you and I aren't gonna fly to Sundance because, you know, that's something that bored rich people do to show off. And we're not gonna watch a documentary because, frankly, they're not actually that good.

All right, again, if you're wealthy today, for large classes of things, you spend your money on signaling goods to show other people that you're wealthy and you try and convert them to status as opposed to actually consuming the goods for their own sake. People and capital as a form of leverage have a negative externality, and code and product have a positive externality attached to them. If I was going to sum up your point, I think that capital and labor are also starting to become a little more permissionless, or at least the permissioning is diffuse because of the internet.

So instead of labor, we have community now, which is a diffused form of labor. For example, Mark Zuckerberg has a billion people doing work for him by using Facebook. And instead of going to raise capital from someone who's rich, now we have crowdfunding. So you can raise millions and billions of dollars for a charity, for a health problem, or for a business. You can do it all online.

So capital and labor are also becoming permissionless, and you don't need to necessarily do it the old-fashioned way, where you have to go around and ask people for permission to use their money or their time.