Naval: Labor and Capital Are Older Forms of Leverage
|David Senra||Apr 25, 2019|
The first tweet in the tweet storm was a quote by Archimedes: Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.
Our brains are not evolved to comprehend is how much leverage is possible in modern society. And what the newest forms of leverage are.
The oldest form of leverage is labor - other people working for you.
Society overvalues labor as a form of leverage.
Naive people want to know how many people work at your company. They are trying to measure how much leverage you have. We just automatically assume that more people is better. I’d argue this is the worst form of leverage. Managing other people is incredibly messy.
You want the minimum amount of people working with you that will allow you to use the other [more interesting] forms of leverage.
The 2nd type of leverage is capital. Capital is a trickier from of leverage to use. It is more modern. It is the one that people have used to get wealthy in the last century.
Capital is a very powerful form of leverage. It can be converted to labor. It can be converted to other things. It is surgical. Analytical. It scales very well. If you get good at managing capital you can manage more capital easier than you can manage more people.