The Number One Wealth Building Tool
The Amplified Impact Podcast
January 18th, 2023
Join us in today’s episode of Amplified Impact where we talk about the concept of leverage as the number one tool that wealthy people use to gain and maintain wealth.
Anthony explains that the effectiveness of a tool is dependent on both the person using it and the context in which it is being used.
Anthony also shares his personal experience, how the concept of leverage helped him go from living in the back of a van with $80,000 in debt to a better financial situation.
He also mentions that he has used leverage poorly in the past and shares both the positive and negative aspects of using it as a tool for achieving wealth.
Anthony laters expands on the concept of leverage by discussing different forms of leverage.
TWEETABLE QUOTE:
“Whether the tool is good or bad is dependent on two things, and it’s neither of those things are within the tool – the craftsman wielding the tool, and the context in which it’s being used.” – Anthony Vicino
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Episode Transcript:
Anthony: [00:00:00] Welcome back to your Daily Dose of Amplified Impact. Let’s just jump right into it because this is a meaty topic and I don’t want you to be taken up your entire diet listening to me unless you want to, in which case, very cool. I appreciate you being here. Okay, so. Last week, or maybe two weeks ago, I made a post on Facebook that went kind of viral.
Anthony: People really responded to it in a way that I hadn’t really expected that they would. it was an interesting post from my perspective, but, the way that people really, resonated with it, I thought was amazing and interesting. So whenever that happens, I think, okay. Let’s unpack this a little bit. . So that’s what we’re going to do here today, is we’re going to impact the, the tool, the number one tool that wealthy people use to get wealthy.
Anthony: I think that was like, to some effect, that was like the name of the, the, the post is like the number one tool wealthy people use to get wealthy. but before we dive into that, like the, the first thing that you got to know about the tool is that tools are neither good nor. [00:01:00] Whether the tool is good or bad is dependent on two things, and it’s neither of those things are within the tools.
Anthony: Control number one is the craftsman wielding the tool. So whether or not the tool is good or bad is like dependent on how good you are at using the tool. Number two is in what context that tool’s being used. So you could be a master craftsman, but using a hammer in a situation where you need a screwdriver isn’t going to help the situation.
Anthony: However, if you’re really just a terrible craftsman, then, you know, having the, the hacksaw might not actually do you much good in creating that beautiful wood sculpture or whatever. . And so those are the two variables that are going to make the tool good or bad, is your skill wielding it in the context in which you yield it, wield it.
Anthony: And that’s important because specifically when we talk about one of these, there’s many manifestations of the tool that we’re going to talk about, but in one of these manifestations that often gets a very, very bad wrap as being. Bad. And so I just wanted to put a pin in that because I [00:02:00] don’t think that there’s such thing as good and bad just, you know, context and, and ability to use the thing.
Anthony: So that number one tool that the wealthy use to get wealthy is leverage. Okay, so leverage can come in a lot of different ways and I’ve, I’ve probably talked about this on the podcast a lot in the past. And if, if, if you want to do a really deep dive, probably more than I can do justice, you should probably go listen to Naval Ravikant who talks about these four aspects of using leverage to generate and maintain wealth.
Anthony: I am going to use them and share my personal experience with them and how I went from where I was over a decade ago, living in the back of that van, which I’ve talked about a lot. as $80,000 in debt life was not going very good for me at that point. And how I started using these leverage tools, these tools of leverage to get from there to where I am now.
Anthony: which is no longer living in the back of the van, so like things going, going way better. But I don’t just want to share the story of like how I’ve used them successfully, the, these tools because, I think that [00:03:00] does a disservice because each one of these different types of leverage I’ve also used very poorly and gotten burned and, and, and hurt.
Anthony: And I want to share that because in the beginning, whenever you use a new tool, remember like your ability to wield it is one of the variables that decides whether or not it’s a, it’s a good tool to begin with. And in the beginning, you’re going to really, really suck. And that can be discouraging for a lot of people then to think, I’m not going to use this.
Anthony: but I want to share both sides of the coins that you get the full breadth of picture. So you go, oh, okay. we fail our way to success. Anthony has had had both successes with this, but he’s also really, really sucked more, probably more times than I’ve actually succeeded. So let’s talk about it. The four different types of leverage are you have labor leverage, you have capital leverage, technology leverage, and media leverage.
Anthony: So, let me take a sip of my water. We’ll dive right in. All right, so labor leverage. Is the first, first form of leverage that most people are familiar with, which is you can only do so much work [00:04:00] yourself. So your ability to, you know, build the pyramid or build that machine is going to be largely dependent on your ability to motivate other people to come and work with you or for you.
Anthony: in pursuit of that thing. So instead of me doing all the work myself, I can only go knock on so many doors. I can only fulfill so many services or sell so many products. But if I have a team of 10 who, you know, this guy’s selling and this guy’s fulfilling, and this guy’s doing the other thing, like now those 10 people can do far, far more than 10 x of what I on my own could do.
Anthony: That’s like a hundred x. Okay. So that’s the first form of leverage. It’s the one that most people are familiar with. It’s the one that society puts a. , price of, status on, or, a significant amount of like, oh, if you have people working for you, you must be a very successful entrepreneur or business owner.
Anthony: Whereas truthfully, as we get into the other form of leverages, like this is the least interesting to me. Like getting people to work with and for you is actually a very cumbersome form of leverage. But it’s where a lot of us start. So for me, , for instance. I [00:05:00] used labor leverage when I first started my, my first business, which was window washing, went out there, bought a couple hundred dollars of supplies, and then it, it, it started.
Anthony: Going out there, knocking on doors, asking people if I could wash their windows. And I did everything myself. Knocked on the doors, washed the windows, took payment, all that stuff. And then as I started, growing and getting more, money coming in, I, I hired somebody who would come in behind me and I would knock on the doors, I would get the people lined up to sell, and then they would come in and wash the windows.
Anthony: We would do it together. We’d do it faster, and then we’d move on to the next thing. And pretty soon like that one person spawned to two and that spawned to three. And so now I had two people going out there washing windows and I had one person knocking on doors and like, next thing you know, we have like, you know, a pretty robust little machine going here.
Anthony: And we were doing about a million dollars in revenue per year. So that’s one form of labor, leverage where it went really well for me. But the, another form where it didn’t go so well was a couple years later, I had moved back to Minnesota and I had, my friends, they had started this climbing. and the gym was focused on high performing youth [00:06:00] athletes who wanted to go to Nationals Olympics.
Anthony: And we actually trained an Olympic athlete there, which was pretty, pretty dope. , but it was in financial woes because the business model that they had created fundamentally didn’t work for a lot of reasons. but at that point in my career, I didn’t have the perspective or the humility to look at it objectively and understand like what was actually happening and why it wasn’t going to work.
Anthony: But I told them I could fix it, and so I stepped into the role and started trying to turn this thing. , but the number one product, and here’s, here’s, there’s a lot of issues with the economics of this business, but fundamentally, the, the big problem was we had a, we had a couple of high quality coaches who were capable of coaching at the, the National Olympic level.
Anthony: However, as we were growing, when we were having to grow out the base, the feeder program, bringing in, you know, younger athletes and, newer athletes who could then progress upwards, we had to hire more and more coaches. And so we were very, very good at training the athletes, but what we lacked was the ability to train the coaches.
Anthony: and turned coaches like a, like an [00:07:00] average coach into an exceptional world beating coach. Right? Well, labor is only as good as, as you know, the labor itself. And so we had this issue whereas the program continued to grow, the quality of the project increasingly diluted itself because the skills that we had, which were training athletes, did not cross over to training coaches.
Anthony: And eventually that business failed. So that’s an example of where. The labor leverage really did not work out well for us, and in fact, it was the thing that ultimately put us under because as we grew and put on more people on the payroll, that was more overhead. But then we didn’t get a consummate, a commensurate amount of increase in revenue because the coaching, the quality of the product wasn’t sufficient.
Anthony: So that’s labor leverage. That might be where you start. The next form of leverage is the one that we utilize the most frequently these days at Invictus Capital. It. Capital, capital leverage. It’s using money to go out there and [00:08:00] do things and buy things and infrastructure and, and putting the money to work so that the, the dollar that you earn is earning for you as well.
Anthony: And this is, this goes back to like Warren Buffet’s whole concept of like, if you can’t find ways to make money in your sleep, you’ll work until you die. Capital’s a great way to do in this, because as you get money, you can go and invest it and then that money’s earning money. And so that’s effectively what we do at Invictus Capital.
Anthony: How I started my real estate career was I went out and bought a triplex, used an f h a loan. That’s a perfect example of capital leverage, where the bank gave me, I believe 97% loan to value. Pretty much like I only had to come to the table with $7,500. And so I was able to buy a building worth, you know, around $300,000 and all I had to do was put up 7,500.
Anthony: So that’s a great form of leverage where I get this very, very valuable asset. In exchange, I only give a couple, couple thousand dollars. Now I’m owning this, cash generating machine. It’s appreciating, I’m getting the tax benefits, all of the, the, the pluses. But that’s an example of using capital leverage to go out there, or debt is another way of looking at.[00:09:00]
Anthony: To go out there and acquire a cash generating asset. And that’s a great way of using debt, the bad way of using debt. And, and if you remember back at the beginning, I said not no tool is good or bad, it’s just context in the, the ability of the wielder. And this is, this is the reason I wanted to talk about debt.
Anthony: This thing goes is because a lot of people look at debt as being bad. Like the Dave Ramseys of the world will say like, all debt is evil and there’s no such thing as good debt. And that’s, that’s not true. It, it’s not, it’s not accurate. There is good debt. , but it’s used to acquire assets and there is in fact bad debt.
Anthony: It’s the type of debt that’s used to go out there and, you know, acquire commercial products that you couldn’t afford otherwise. Liabilities, things are taking money out of your pocket like a car or new shoes or like that fancy new house or whatever that you’re going to be living in, but it’s not going to be putting money into your pocket.
Anthony: And that was the type of leverage that I used really poorly when I was, when I was younger. And if you think back to like I was $80,000 in debt because I was using credit cards. taking out money to, [00:10:00] buy a lifestyle that I fundamentally could not afford. And I think a lot of people find themselves in that trap as well, where they don’t know how to use debt.
Anthony: And because it cuts both ways, a lot of people end up getting mortally wounded because they just, they misuse the tool. the third type of leverage is maybe the most interesting one in the new world, which is technology leverage, because with the advent of coding and more specifically, no code softwares where pretty much you don’t even need to speak the language of the computer anymore.
Anthony: You have, you know, wick or Beaver Builder divvy WordPress websites and Shopify and Amazon e-commerce, where you can just go and you can set up a, a landing page and you can build out a company in a completely digital environment without having any knowledge of how to actually speak the language. And it’s a great equalizer in, in one.
Anthony: But it’s also the most powerful form of leverage in the grand scheme of things because [00:11:00] the marginal like cost of replication when it comes to technology is so, so small. So like you can go build your Shopify store and then you put a product up there and then you put another product and you know, for one person to come and buy that thing.
Anthony: It’s the, it doesn’t cost any, any additional revenue, right? And so this is why, technology companies have such crazy multiples and they’re like, why we see so many unicorns and billion dollar companies, based in tech is because you can do the work one time. You can have a really sophisticated software engineer write the code and build the product, and then you can sell it to a billion.
Anthony: and you don’t have to do anything new each time. It’s just the same product over and over and over. And so for me, like a good example of how I’ve used this one recently in my life is, earlier about a month ago, this was, was in August. which gives you some context of when I’m recording this, it, I, I built a course that, I, I sold like 20,000, $25,000 in the [00:12:00] span of like a week or something.
Anthony: and in the, in the, in the course of building that, that product, I use Teachable, just an online platform. I’ve created the tech, the, the, the, the product and put it there. And then I’ve been able to sell it over and over and over and over. I haven’t touched it since. It’s been over a month and it continues selling just one time built it sits there and it just continues to sell.
Anthony: And that’s a great, that’s fantastic, honestly. there’s other forms of technology leverage, like email lists. where you can get people into your ecosystem and then continue to, to sell to them into future. But this is like the most interesting and probably the most powerful form of leverage these days because anybody can access it.
Anthony: It just requires the, the desire and intention to sit down and learn it and build it and then sell it. So, but that’s not always the case that it’s going to work out. I shared an, just to hear an example of, a product that I built that sold really well in the last month. However, a year ago I built a similar product that sold like $275.
Anthony: So case in [00:13:00] point, like, not everything you’re going to build is going to crush it. And so take that, take that into mind. Like, but the plus side of technology leverage is like, you can get infinite number or swing at bats. So you just keep showing up and just keep pumping out product. Like keep trying, keep trying.
Anthony: Eventually it hits and, you can do extraordinarily. . The, the fourth type of leverage is media leverage, which is the ability to like, create content that is evergreen, is going to have the ability to reach, say, a million people, right? So like this, this podcast is a perfect example of using media leverage where I’m creating this podcast, it’s going to be about 15 minutes of work.
Anthony: I’m going to put it out there, it’s going to cost a couple hundred dollars for hosting over the course of its life. And then, you know, all the marketing that goes into it. But this is something that thousands, if not millions of people could theoretical. Encounter and it’s not going to cost me anything additional other than my, you know, my input of my time and my energy.
Anthony: So that’s a great example. Another one is, we wrote a book about a year ago that over the life of it, over the last 12, 13 months, it’s probably made like 15, [00:14:00] $20,000. But it’s brought in. Investors who have invested over 3 million with us, right? So the, the amount of leverage that you can get from media these days, and again, it’s like technology because technology has like reduced the expenses of like creating a podcast or writing or publishing and distributing a book.
Anthony: Like it makes it so easy to do these things that I don’t see any reason why everybody shouldn’t be using this form of leverage to its max through social media. all the different ways of, of putting out content into the world, a way that this is, One of the things with media though, is just because you make it doesn’t mean people are going to consume it.
Anthony: And I think our podcast, multi-Family Investing Made Simple is a really good example of this. We started that over two and a half years ago. We’re almost to 300 episodes at this point, and for the first 50, 60 episodes, we got like zero traction, zero like. Very, very little listenership. if you go back, I, I think we’re getting like a couple hundred listens per month.
Anthony: So it’s like very, very small [00:15:00] these days. We’re getting, you know, thousands and thousands and thousands of listens every single month. And it’s incredible. But, there’s a very long period of time where it was not getting that. And if we had just given up and quit, then we would never have gotten to the point where that media leverage could actually be fully utilized.
Anthony: And I think this is the reason why most people fail to use media leverage is because, They don’t stick with it long enough. They don’t put out enough content, they don’t put it out, good enough content. And so it never gets discovered and ends up being a waste of time. So that, that, this is one of the longer episodes that I’ve done.
Anthony: hopefully this brought some value as we’re discussing leverage in all the different ways in my personal life that it’s helped me get from where I was to where I am now. And maybe it’s given you another way of looking at your companies, your own business, your own, life, and maybe gives you another way of thinking about how can I use leverage more effectively in what I’m doing?
Anthony: Like, okay, could I be using labor better? Maybe I go get a VA for like 20 bucks an hour and like now that it takes some work off [00:16:00] my, my plate so I can go focus, focus on higher, a dollar per. Tasks, maybe I figure out how can I use capital? Maybe I can start figuring out how to use debt more effectively to go get assets.
Anthony: Or how can I u leverage technology to create a product that, you know, billions of people could use? And you know, the marginal cost of application for you is like zero. And then how can I be creating more media? And if there’s no other takeaway here, like that last one, I think I know in my own personal life as a creator has been incredibly powerful.
Anthony: And so I encourage you, if you’re listening, And you want to have more, reach, more, revenue for your business or, and more income for your personal life, like media is, is my personal favorite of all of these. But again, like I’m a little bit biased, so if you got any value out of this, that’s awesome. I’m psyched to hear it.
Anthony: Maybe you could just go drop a review real quick on iTunes. I’d be really, really rad. if you get any value and you think that somebody else in your life would get some value out of it too, maybe just slide it into their DMs and say, Hey, take a look at, take a look at this. Otherwise, for those that don’t know, I’m Anthony Vicino and just.[00:17:00]
Anthony: From a high level, I’m just a guy who is fumbling his way through business and real estate investing and, just trying to live a life of amplified impact. Ensure everything that I’ve learned along the way, and hopefully it brings you a little bit of value. And if it does, awesome. If not, well, I’ll try again tomorrow.
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