Leverage

post by lsusr · 2021-12-15T05:20:46.287Z · LW · GW · 2 comments

Contents

  Delegation
  Capital
  Brand
  Network
  Inventing Technology
None
2 comments

If you want to change the world then you need to act on scale. A single human being cannot act on scale directly. You need leverage. Leverage is mechanism by which you can cause an impact several orders of magnitude bigger than yourself.

Sam Altman gives five examples of leverage: delegation, capital, brand, network and technology.

Delegation

The most obvious way to obtain leverage is to manage other people. A disadvantage of managing people is cost. Salaries are expensive. Communication is expensive. Your employees interests are often unaligned with your own.

The biggest disadvantage of managing people is that some tasks cannot be parallelized. A hundred mediocre singers cannot work together to write You Belong With Me or Thunder Road. A hundred mediocre writers working together could not produce Harry Potter or The Fault in Our Stars. A hundred mediocre Age of Empires II players could not work together to compete with TheViper because only one player is allowed at the keyboard at the time.

Capital

If you want Carly Rae Jepsen to produce a new hit song then the first thing you should do is throw as much money at her equipment as you can. Carly Rae Jepsen shouldn't just have the best microphone in the world. She should have an entire sound crew setting things up for her. She should have a limo taking her wherever she needs to go. Carly Rae Jepsen is a bottleneck. Any time she spends thinking about sound or makeup or scheduling is time she's not spending writing or singing or practicing songs.

Buying infrastructure is optimal when you have plenty of money and are bottlenecked by talent.

Brand

Brand is when people trust a symbol. Trust reduces transaction costs. The disadvantage of brand is it cannot be bought; trust must be earned.

Network

Networks are another form of trust. Usually the hardest part of building a network is bootstrapping it. After that, you can grow your network organically with little effort.

Inventing Technology

Buying technology is amassing capital. Inventing technology creates a way to amass capital. Technological invention is leverage squared.

The disadvantage of technological invention is it is hard to do and hard to delegate. But if you can do it, technological invention is among the highest leverage activities there is.

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