Importance Of Leveraging

TWT Newsletter #18

Leveraging is something you might have heard of conceptually, but it is hard to understand. And harder to implement. So we will do a dive into the topic that will add more value to your current understanding.

In my opinion, leverage is one of the most important skills you can learn to gain more financial abundance and get more of your time back to create a better quality of life.

What is leverage?

The definition of leverage

The action of a lever or the mechanical advantage gained by it

My definition is any advantage or system that has an input; where you can get more output from the input. The input can be any type of force, resource, etc. Your system is leveraged.

Naval Ravikant, one of the most influential entrepreneurs, and founder of AngelList wrote a book called The Almanack Of Naval Ravikant: A Guide to Wealth and Happiness. He talks about leverage and that there are 4 forms of leverage.

The 4 Forms of Leverage

1. Labor/Collaboration

2. Capital

3. Tech/Code

4. Media

I believe this is true as the highest form of leverage in our modern day. And looking at each one of these I’ll explain how these are applied to businesses. Apple is a great example. The World's biggest company, leverages all these forms. Creating a trillion dollar business using systems of leverage.

It has factories all around the world leveraging labor to create its physical products. The system is raw materials, people’s labor, and transportation of goods to sell these products and make money. More output from their input.

They use their immense capital to invest in R&D to get better products and offerings. Giving them massive returns on their investments through these revolutionary product/technology developments. They use Tech and Code to run their proprietary software on top of Apple hardware. The proprietary iOS platform built by their in-house team and brand brought them over 85 billion last year accounting for 67% of the company’s revenue. Because of this proprietary technology they leverage it so that every app purchase on the Iphone they take a 30% cut. If that's leveraging tech and code.

On top of that, using advertisements on news outlets, social media, and other forms allows them to leverage media to promote their brand and products. They leverage media so much that Apple is known for its simple yet elegant design and on the forefront of innovation from their media presence since the 2000s. It all started when they rolled out a multi-year advertisement. When they were underdogs, they began making commercials and media ads about boring PC vs young hip MAC. They advertised themselves as the young hip go-to computer hardware to go for a younger audience. This drastic change and leverage of the media changed their brand view at the time. They took outsize bites of PC / Windows sales year over year until they became the preferred brand over time.

Leveraging is pretty cool right?

Now you know the basics of leverage. So How Do You Apply Leverage to Your Own life?

If employed right, leverage can make you a millionaire quickly.

I believe to make 100k you really have to be above average at a small set of skills. To reach 250k, you should get really good at 1-2 of those skills or those sets. But to get to 500k is to start building leadership skills, learning and employing the basics of leverage. Then to get to 1 million and beyond you need leverage systems on top of your leverage, which is the next level. Where your leverage compounds on itself.

Leveraging can improve your quality of life in many ways. Here are a few examples:

Media

Using social media to leverage your existing business, product awareness, and affiliate marketing.

Tech/Core

Automating and creating workflows are some of the things you can do..You can use AI to come up with new ideas and create your itinerary for a trip to Japan. Booking the cheapest flights to your desired destinations is now possible with plugins !Saving you time and money.

Labor

Keeping your home clean and tidy - VA, cleaners. A clean workspace is a clean mind in my opinion. Also, you can hire out cooking labor by ordering to go or getting food from restaurants. Grabbing something quick from Chipotle can save you time and potentially money, than cooking at home and dealing with cleaning dishes and all the things you have leftover.

Capital

Capital to get invested in real estate, stocks and your business ventures.

Apply leverage to your personal and business lives.. Watch how quality of life improves as you get more results from your inputs and effort.

Hope you learned and enjoyed my newsletter!

If you want to learn more about building a wealthier life for yourself through mindset and investing - subscribe here. Also, share with someone who might gain value from this newsletter. Remember you can make magic happen daily. Have an awesome day!

- William Thing