Leverage: the key to making millions

Leverage is a key concept in business and investing that refers to using something to amplify or multiply your efforts or resources. 

Without leverage, it’s very hard to make large amounts of money. 

Using leverage is a way of increasing your potential for profit or success by using outside sources to help you achieve your goals. Leverage can come in many forms, and it’s an important tool for anyone looking to make millions of dollars.

The main kinds of leverage explained

The 4 primary forms of leverage are:

• Capital (using other poeple’s money – i.e. loans or investment capital)
• Code (software that will run day and night automating tasks for you)
• Network (such as the internet – the power of having access to the network allows you to broadcast your business communication globally for free basically)
• Digital media (the cost of a digital media product is  zero (after you create it), because making copies is free)

All of these 4 types of leverage allow you to multiply your efforts without additional work on your part. This is the key difference between a person doing a task like building furniture or painting houses, and another person selling millions of things online.

Person #2 is using several types of leverage:  Software is running the operation, the goods being sold are digital media items: books, courses, photos, music, videos, etc., and the customers are coming from the network – the internet. There are 3 distinct types of massive leverage here, whereas the house painter has none of that and can never scale.

Scaling is the key to making millions – and leverage is how you achieve large effective scale in your business. 

One common form of leverage is software or digital leverage. This refers to using technology to automate or streamline processes and tasks, allowing you to scale your business or investments more efficiently. For example, if you’re running an e-commerce business, you might use software to automate your inventory management and fulfillment, freeing up time and resources that you can then use to focus on other areas of the business.

Another form of leverage is using other people’s money, also known as OPM. This can come in the form of loans, partnerships, or investments, and it allows you to access capital or resources that you might not have otherwise. For example, if you’re starting a new business, you might use OPM to finance the initial costs of setting up shop, or you might partner with someone who has expertise or resources that can help you grow.

Human leverage refers to using other people’s skills, knowledge, or expertise to help you achieve your goals. This can come in the form of hiring employees, outsourcing tasks, or partnering with other professionals. For example, if you’re starting a new business, you might hire a team of experts to handle various aspects of the business, such as marketing, finance, or operations.

Finally, the size and availability of the internet network leverage refers to the ability to reach a global audience through the internet. The internet has created unprecedented opportunities for businesses and individuals to connect with customers and clients around the world, and it’s a powerful tool for anyone looking to make millions of dollars.

Self-employment makes applying leverage much easier

Can you utilize leverage enough to become really wealthy if you’re sticking with your day job, or working for someone else? It’s a lot harder, but not impossible. It depends on the arrangement you have with your employer – for instance a salesperson working on commission could potentially make huge sums of money if they’re great at sales and earn a healthy commission. 

But generally speaking, most people find that in order to really apply leverage in a meaningful way, you will need to work for yourself, or be a founder or principal of the business. This is a key reason so many people decide to work for themselves.

In conclusion, leverage is an important concept for anyone looking to make millions of dollars. It’s a way of amplifying your efforts or resources, and it comes in many forms, including software or digital leverage, OPM, human leverage, and the size and availability of the internet network. By using leverage wisely, you can increase your potential for profit and success, and take your business or investments to the next level.

 

More reading on this topic:

There is a very famous Twitter thread from Naval Ravikant on this topic. Be sure to read it here for more context and information. Naval also has a podcast version of this famous thread.