If you’ve spent any amount of time scrolling through the tweets, articles, or YouTube videos of the ‘life advice’ community in the last few months, you’ve probably been bombarded with the word ‘leverage’.
Warren Buffets investment success, scaling a multi-billion dollar company, building an engaged audience, improving your life satisfaction, these are all merely problems of leverage. If we can get more leverage we can exponentially increase our returns in any walk of life, from our relationships to our career, or so we are told.
I’m skeptical of any ‘silver bullet’ approaches to an improved life, but over the last few months, I’ve been trying to embed this idea of leverage as one of myprimary mental models. I have to say, it’s working. I’m seeing better results in a lot of areas of my life, with a lot less effort. And who can complain about that?
In this article, we’ll examine what is meant by the word leverage before exploring the problems with gaining huge leverage. Then we’ll go over 5 simple ways you can start getting more leverage in your life, right now.
There’s a lot of wishy-washy, circular definitions of leverage out there. As far as I can make out, the simplest definition for leverage is this:
Doing work that takes up a relatively small amount of effort, compared to the rewards your receive from that effort.
Give me a lever long enough, and I’ll move the world….
If this still sounds a bit wanky, let’s break it down into examples.
To be clear, I’m not saying low leverage activities are bad. Some of the greatest satisfaction in life can come from mindfully cleaning your room, fixing something up in your house, or doing a job you love, even if it’s not well paid. The only distinction I’m making is between low and high-leverage activities.
The acid test for deciding if an activity is highly leveraged or not is to ask these questions.
If the answer to either of these questions is yes, the work is not high leverage. But how do we put ourselves in positions to do highly leverage work?
Leverage is obtained when we can utilise resources other than our own effort to get results. Let’s take a look at the different types.
Founders of companies (employers) have human leverage. They can give orders to employees. This giving of orders may take the employer 10 minutes of effort. These employees may then work for 10 hours to execute these orders. That founders 10 minutes of time has grown into 10 hours of productive work. That’s leverage at work.
Investors have financial leverage. They can invest millions into the market and, in most cases, get an 8% year-on-year-return. They are putting their cash to work, while they sit back.
This is similar to human leverage, in that through a small amount of work we can capitalise on hours of productivity. The difference is that with automation leverage rather than using other humans, you are utilising machines. Buying machinery that creates widgets and automating frequent tasks on Zapier are examples of automation leverage.
Influencers have network leverage. They have the ability to connect influential people at their fingertips. By connecting two people together they can perform a powerful service. If Tim Ferris bought together the founder of Uber and a great venture capitalist together he would be using his network leverage. Tim would be able to capitalise on the upside of these two connections coming together. Maybe by getting preferential treatment in future funding rounds. This is actually how Tim has built his substantial wealth, not through selling books.
Perhaps now you are seeing the problem with leverage. 3 of the 4 leverage types above involve having something incredibly rare. Leverage follows a typical power curve. 1% of the population holds 90% of the leverage. You could argue that leverage is a pretty good proxy for power.
This is a problem. If we really want to achieve true freedom in our lives, if we want to have the biggest impact in the world we need to maximise our leverage.
The question then, is how do we go from 0 to 1 with leverage? Here are a few ways anyone can get started.
This is a necessary precursor to any work involving improving your leverage. You need to know what your time is worth. Please don’t make the mistake of just working out what your 9–5 currently pays you and taking that as your hourly rate. You will be massively underselling yourself.
I think the best way to work out your hourly rate is to project yourself at least 5 years into the future, and imagine what you will be earning for an hour of your time then. If anything your time now should be worth more than that, as to get to that number you are going to need to free up a lot of time to focus on high leverage activities.
For guidance, even though my net hourly rate is around £20 / hour, my personal hourly rate is £100 / hour.
Now you have your hourly rate, start being ruthless about tasks you delegate. Do you spend a few hours every weekend cleaning? Would getting a cleaner cost less than your hourly rate? Unless you absolutely love cleaning, get a cleaner.
Similarly, are there elements of your job that could be outsourced? I was taking 4–5 hours to edit a YouTube video, a cost of £400-£500. I’m not particularly good at editing nor do I particularly enjoy it. I now outsource it for £10 per video. That’s an ROI of 40x.
One caveat to this is my golden rule of outsourcing. Don’t outsource work you have no clue how to do yourself. With most skills (of course, there are exceptions) you can learn the basics and do a semi-decent job with a few weeks of focused learning. I’d advise going through this learning period and then outsourcing. This means you are outsourcing from a place of efficiency, not a place of ignorance. There is a difference. Outsourcing due to ignorance means you are likely to get overcharged, and not be able to communicate effectively about what it is you want.
Do you know the best thing about computers? They are fucking cheap, and they are fucking fast. You would be a fool in this day and age to not be using computers to automate as much of your workload as possible.
Most of us likely have repetitive tasks we do on a daily basis that take up hours of our time. Whether this is copy and pasting data from one table to another, sharing a piece of content on multiple platforms, or back and forth communication with clients (or friends) about when to arrange a call.
With only a bit of skill, you can learn to automate tasks on excel using VBA, you can create automated workflows using Zapier. With no skill, you can utilise no-code tools such as Calendly to schedule meetings.
Dedicating 5% of your time each week to identifying and automating processes in your life will free up so much of your time in the long run. It’s an incredibly practical thing that anyone can get started with right away.
We all have a mind. Without getting too metaphysical, it may actually be all any of us have. Anyone can use their mind to generate great ideas and make great decisions.
One great insight, correctly followed through on has the power to change your life.
If you want to generate consistent insights and make incredible decisions, you should invest some time in learning the mental models and frameworks of the world’s best thinkers. Farnham Street is a great starting point for those wishing to improve their thinking. If you are looking for something a bit more practical I also created a Notion system to help you think better.
The two best decisions I’ve made in the past 2 years have come from my ability to gather a team around me to solve an interesting problem. If you know talented people, and you have a problem you want to solve you are halfway there.
I founded simpl.rent with my friend Piotr Pajda, because I thought the problem of shit experiences between landlords and tenants was worth solving. I also thought that Piotr was exceptional. What started as an idea pitched over a coffee is now a team of 7 operating with some of the largest property companies in Poland.
You do not need to be exceptional to pull off something like this. I certainly am not. My superpower is seeing problems and bringing in the right people to solve them. The great thing about forming a team to jointly solve a problem like this is you don’t need cash or a particularly strong network. You just need a vision.
There are many more ways we can improve our leverage, from learning desirable skills to single-mindedly focusing on a mission, to building an audience. For the sake of keeping this article concise, I’ll leave these for Part 2, be sure to let me know if you’d like to see it.
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