Trading your time for $$ is the least efficient form of leverage available to you. There is a limited supply of time and often a misconception of the value of your time, by both yourself and whomever is on the other side of the deal (i.e. employer, client, etc.).
To best strategize avoiding this common dynamic, we will review the available alternatives!
(inspired by writing/media from Naval Ravikant and Myron Golden)
First step: Understanding the 3 main types of leverage
Second step: Learn how to use them to decouple your time from your earnings; the ultimate abundance acceleration tool
Third step: Execute.
3 forms of leverage:
1- Labor
2- Capital
3- Product
1- Labor Leverage
What it is: Using yours or other people's time and skills to amplify your impact (e.g., your own time exchange for money, employees, contractors, or freelancers). THIS IS THE MOST COMMON FORM OF LEVERAGE USED IN THE MIDDLE AND LOWER INCOME CLASSES.
How it works: This is the traditional form of leverage, used by employees, and on a larger scale, businesses to scale operations through teams.
Advice:
Labor is permissioned leverage because you need others to agree to work for you. Ideally we would stay away from this, as it doesn't feel as productive for society as whole. Putting others into the Catch 22 to get ourselves out, doesn't feel great long term. Why would you sell someone on a deal that you wouldn't take yourself? In a choice between zero sum game vs positive sum game, we want to take the positive sum approach.
Managing people can be hard, so this involves focusing on hiring high-output individuals and creating processes and systems.
Labor is less scalable than newer forms of leverage like code or media.
When considering your own time/labor trade for money it is locked to how much time you have in a day/week/month/year
Often times this is the least effective and most strenuous for the laborer
This can often create resentment in spending / costs of life because of the subconscious correlation between trading your life for the things that cost you the money
2. Capital Leverage
What it is: Using money to make more money (e.g., investments, businesses, lending, or arbitrage).
How it works: Capital lets you decouple your time from earning potential because money works while you sleep or scale your efforts.
Advice:
Accumulate and deploy capital effectively.
Capital leverage usually requires upfront work to either earn or attract capital (e.g., investors or partners).
In the modern economy, capital-intensive businesses are no longer the default path to leverage due to better options like media and code.
3. Product Leverage: Media and Code - THIS CENTURY’S HOLY GRAIL
What it is: Creating products, software, or media that scale infinitely without requiring permission or ongoing labor input.
Code: Software, apps, and systems that run automatically after initial development.
Media: Books, videos, podcasts, blogs, or other content that scales your voice, expertise, or brand globally.
How it works: These forms of leverage are infinitely scalable, cost almost nothing to replicate, and don’t require ongoing human involvement.
Advice:
Focus on creating something valuable and evergreen.
Media and code are “permissionless leverage,” meaning you don’t need anyone’s approval to use or distribute them.
They are the most democratized and accessible forms of leverage today.
These creations have infinite return on investment
Example: a youtube video can be watched millions of times for all of time based off of whatever the labor put in to create it. The return on investment can grow exponentially without further effort from the creator. Same with any other piece of media (book, movie, tv show, educational course, etc.)
Execution:
The suggested strategy, best derived from these relationships, is simple;
Learn how Capital Leverage works, so that once you acquire capital, you know how to protect it and deploy it effectively to create more of itself. Learn at least to a small degree, how to invest... Or you can outsource this task, for a cost, to an investment advisor or fund, to free up your time for more of the next step. Though, you will still need to learn how to best find the right advisor or fund that fits your goals.
Some media that can help with this
A more passive approach:
Psychology of Money - Morgan Housel
The Bogleheads guid to investing
A more active approach:
The Tao of Charlie Munger - David Clark
Beating the Street - Peter Lynch
Algebra of Wealth - Scott Galloway
Mastering Market Cycles - Howard Marks
Videos from Berkshire Hathaway annual meetings
Other notable voices:
Monnish Pabrai, Guy Spier, Ray Dalio, Paul Tudor Jones, Stanley Druckenmiller, George Soros, quant: Jim Simons, Walter Schloss, Charlie Munger, Warren buffet, and more
There is an abundance of investing information out there. I like to stick to the market wizards who have shown long enduring proven results.
Use the 3rd and most powerful form of leverage: Product Leverage, to generate more capital for yourself. Think about what you love, what would you do or create if you had ultimate freedom of choice with your time? If it's an activity, film it. If it's a creation, form a product and brand around it. If it's studying and education, then create a platform for sharing what you've learned. You are a unique and special individual that has inherent knowledge and expertise that others do not currently have in their journey, and you can share that in exchange for value.
One you've started your journey on 1 and 2 and you start receiving value or capital in return for your product, funnel that capital back into 1 and 2. This will create a cycle where you keep the value and capital in your ecosystem. You should, at this point, be conscious to when you are funneling value and capital into the products of OTHERs, allowing it to escape your ecosystem (buying things from other companies, people, stores, etc.) and when you are funneling it back into your own growth. This is the unlock!
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MAY YOU FIND YOUR PATH TO LEVERED FREEDOM!
-Gene James McAward
Excellent article!