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Product and Media are the Leverage of the New Wealth (Listen) | Episode 21

* The most important form of leverage is the idea of products which have no marginal cost of replication (aka product leverage)

* You can replicate your efforts without having to involve other humans

* Ex. – A podcast

* Long ago, to get similar reach, you would have had to give a public lecture

* 30-40 years ago – you would have had to get on TV

* But today, thanks to the internet, anyone can launch a podcast

* Product leverage is how fortunes will be made in the digital age – using things like code or media

* Ex. of people who utilized code-based product leverage – Mark Zuckerberg, Jeff Bezos, Sergey Brin

* Ex. of media-based product leverage – Joe Rogan, PewDiePie

* Combining labor leverage, capital leverage, and product leverage is a magic combination for tech startups (for more on labor and capital leverage, check out these Podcast Notes)

* You use the minimum, highest output labor – engineers and product developers

* You add capital which you can use for marketing, advertising, and scaling

* You then add lots of code, media, and content to get everything out there

* Product and media leverage are permisionless – they don’t require someone else’s permission for you to use them or succeed

* For labor leverage – someone has to decide to follow you

* For capital leverage – someone has to give you money

* But coding, writing tweets, making podcasts, YouTubing – these are permissionless

* The robot revolution has already arrived – we just keep them in data centers/servers

* Think – every great software developer has an army of robots working for him/her at night, while they sleep, after they’ve written the code and they’re just cranking away

* Robots do web searching for you

* Robots handle customer service inquiries

* Over time, this will progress to autonomous vehicles/planes/trucks

* Coding is a superpower because it allows you to speak the language of the robots and tell them what to do

Product Leverage is Egalitarian in its Outputs (Listen) | Episode 22

* Product (both code-based and media-based) leverage is egalitarian in its outputs

* Compare this to labor and capital leverage – which are much less egalitarian

* In general – the more of a human element there is in providing a service, the less egalitarian it is

* “It’s the nature of code and media output that the same product is accessible to everybody…The best products tend to be at the center, at the sweet spot of the middle class, rather than being targeted to the upper class.” – Naval Ravikant

* For example:

* Things like Netflix and Facebook – everybody can use

* Compare this to Rolex watches or a Lamborghini – using/owning them is much more related to status-seeking

* As the forms of leverage have gone from being labor-based and capital-based to being more product/code/media-based – “Most of the goods and services that we consume are becoming much more egalitarian in their consumption”

* Things like food – rich people don’t eat better food

* Technology and media products have amazing scale economies

* “If you care about ethics in wealth creation, it’s better to create your wealth using code and media as leverage. Then those products are equally available to everybody as opposed to trying to create your wealth through labor or capital.” – Naval Ravikant

* “If you’re wealthy today, for large classes of things, you tend to spend your money on signaling goods to show other people that you are wealthy, and you try and convert them to status as opposed to actually consuming the goods for their own sake” – Naval Ravikant

Business Models Have Their Own Leverage (Listen) | Episode 23

* Some business models give you “free leverage” – Examples:

* Scale economies = the more you produce of something, the cheaper it gets to make

* Technology and media products have this great quality where they have zero marginal cost of reproduction

* Thinks like podcasts and YouTube videos

* Ex. – Joe Rogan is working no harder now than he was on podcast #1, but it’s now generating millions more

* Then there are network effects businesses

* A network effect is when each additional user adds value to the existing user base

* Like language – The language becomes more valuable the more people who speak it

* “Long-term, the entire world is probably going to end up speaking English and Chinese” – Naval Ravikant

* It’s thought that the value of a network is proportional to the square of the number of nodes of the network

* A network of size 10 would have a value of 100, while a network of size 100 would have a value of 10,000

* “You want to be in a network effects business” – Naval Ravikant

* Things like Facebook, Uber, Twitter, YouTube, Google

* “You should always be thinking about how your users or customers can add value to each other because that is the ultimate form of leverage” – Naval Ravikant

* When you’re picking a business model, aim to pick one where you can benefit from network effects, low marginal costs, and scale economies

An Example: From Laborer to Real Estate Tech Company (Listen) | Episode 24

* An example from the real estate business

* A day laborer on a construction site, unless you’re in a skilled trade, doesn’t have specific knowledge

* Even if you’re a carpenter or electrician, other people can be trained to do your job – you can probably be replaced

* You don’t have much accountability – “You’re a faceless cog in the construction crew”

* They don’t have much, if any, leverage

* A general contractor, who someone hires to come and fix/repair their house, has a little more accountability

* They’ll make more money than a day laborer, but they take more risk (if the project runs over budget, they’ll eat the loss)

* The accountability gives them more potential income

* They have labor leverage (people working for them)

* A property developer is one level above a general contractor – these are people who go around looking for beaten-down properties which have potential and then buy them to fix them up

* They can make a healthy profit by selling a building for 2-3x what they bought it for

* A developer has more accountability/risk and much more specific knowledge

* They have to know which neighborhoods are worth buying in, which lots are good/bad, and what makes/breaks a specific property

* They have capital leverage and labor leverage

* Beyond the property developer might be a famous architect/developer where just having your name on a property increases its value

* Above that might be a property developer who builds entire communities

* Above that – someone who funds real estate through an investment trust

* Beyond that – someone (or a team of people) who understands the real estate market and the tech business (how to code/recruit developers/build a good product), and knows how to raise money from VCs

* Think – something like Zillow

* This team/individual would have all forms of leverage – labor (people working for him/her), code, capital (money from investors)

* As you climb the chain – You layer in more knowledge which can only be gained on the job, more accountability/risk-taking, more capital, and more labor

Judgment Is the Decisive Skill in an Age of Infinite Leverage (Listen) | Episode 25

* First aim to get leverage, and once you have leverage – your judgment becomes the most important skill

* How do you get leverage?

* Get it permisionlessly – learn to code, create podcasts, become a good writer

* Through permissi...