Which Form of Leverage Should you Master First
The Amplified Impact Podcast
November 30th, 2023
Ever wonder how different types of leverage can shape your success?
In this episode, I dive into four key forms: labor, capital, technology, and media.
Reflecting on my journey, I started with labor and later moved into technology and media.
But would I change that order if I had the chance?
I realized it’s more about understanding your strengths. For me, media leverage suits me best.
But for you, it might be different based on your skills and preferences.
Quick rundown on each: Labor leverage? Quick cash, but operationally complex.
Capital leverage? Super passive, yet reputation-dependent.
Technology? Potential for fast billions, but risky.
Media leverage? Low downside but needs time and consistency.
Finding your starting point? It’s about aligning with what you’re good at.
TWEETABLE QUOTE:
“Once you have a million people who are looking to you and listening to your words, you can do tremendous. You can hire, use labor leverage, you can get capital, you can have access to the best technology startups, the game changes.”
– Anthony Vicino
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Episode Transcript:
Anthony Vicino:
What’s up guys? So I got a really, really good question the other day from somebody asking about leverage. In particular, I did a post about leverage. I got a video on the YouTube channel diving into the four different types of leverage, specifically labor leverage, which is you get other people to work alongside you, and together you can do work that one person alone could not do. The other form of leverage, number two is capital leverage. So you use money, this is what we typically refer to as investing. You use your money to go out there and it makes more money for you. And then the third type is technology leverage. This is code.
Anthony Vicino:
This is the ability to sit down, write a piece of code, write a software, create an app that is then replicated millions and millions and millions of time, or create a social media platform that billions of people use is one of the most powerful forms of leverage. And then the fourth type is media leverage, which is exactly what we’re doing right now. Like this podcast is a form of media leverage where I can communicate to you, I can communicate to the tens of thousands of other people that are listening to this at any given moment. I can take this content, I can repurpose it onto Twitter, onto LinkedIn. That’s media leverage, okay? So those are the four. They got labor, capital, technology, and media. And in that post, I shared specifically how I have used each one of those different forms of leverage over the course of my entrepreneurial journey to make money. And the question that this person had was, if you had to go back and do it all again, would you acquire the mastery of these different forms of leverage in the order in which you did? Or would you do this differently? For context, I started with labor leverage.
Anthony Vicino:
I had a window washing company hired people to work alongside me. Then I started with capital leverage by investing into real estate. And then I eventually moved into technology and media leverage much, much later in the equation. So I started media a couple of years ago. By comparison, I started learning labor leverage back in 2012. It was only as of like 2019, 2020 that I really started diving into media leverage. And it was only as of 2022 when I launched my first, I would say, digital product using technology and code. And so that was kind of the order in which I learned and mastered.
Anthony Vicino:
This was labor, capital, media, then technology. And so the question is going back, would you do this all differently? And I had a couple of thoughts on this. One is that for me, it’s all about understanding the context of you and what you’re uniquely skilled at? For me, technology was never going to be the thing that I was extraordinarily good at. If I was looking back on it now, I would actually say the thing that I am best suited for is media leverage, not labor. I’m a terrible manager. I hate leading people. I can’t do technology. But media and capital, those are the two that do suit my personal context of skills or suite of skills.
Anthony Vicino:
But that might not be the same for you. You might be a great leader, a great manager of people, a great organizer of teams. So labor leverage might be a great avenue for you to go down. Then again, you might be very detail oriented. You might speak the language of machines and coding could be the better path for you. And so first is just understand that these forms of leverage are dependent more on you than on anything else. But a couple initial thoughts here is as I think through these different forms of leverage, ways to think about how to tackle them. So labor leverage is typically the fastest way to start making money, but also the most operationally complex.
Anthony Vicino:
And what I mean by this is you can go to Craigslist and hire somebody in the next hour to come work for you and then you can go and start making money with them washing windows like later today. You could start generating profit immediately, right? It’s not going to be a lot of profit, but you could do it. But it’s operationally complex in that as you’re doing this, you’re going to have to manage another person. And as you hire more and more people, the complexity of communication gets more and more chaotic. And so it’s the quickest way to make money. It’s not necessarily capped in its earning potential because there are companies out there with big workforces, but it’s a very operationally complex machine that you’re going to be building that way. For me, that’s how I got started because I needed that cash initially. So labor leverage was what I went with.
Anthony Vicino:
But it might not be the right choice for you. The second form, capital leverage, it’s the most passive. You literally just deploy your capital, like investing in the stock market or buying a bond, as passive as it gets, right, in terms of the work that you’re required to do. But it also requires if you want to do it at scale and have other people giving you their capital to invest on their behalf, it requires a lot of reputation and that takes years and years to build and it takes a track record. And so you might want to be the next Warren Buffett, but nobody’s going to give you a billion dollars unless you’ve proven yourself capable of managing that. So that one takes many years. It takes a lot of reputation, but it’s the most passive and it’s awesome in a lot of ways. But it also carries the most potential downside because people are entrusting you with their capital.
Anthony Vicino:
Maybe that’s debt, maybe it’s just equity, but there is a lot of personal reputation on the line and therefore you have a lot more that you could potentially lose. Whereas with labor leverage and the other forms, like if it doesn’t work out, it doesn’t really matter, but with this one, you could go to jail, you do it wrong. So something to think about. The third form is technology leverage. And this one can make you a billionaire faster than all the other forms of leverage. Or it could be a complete waste of time. And that’s the trick with it, right? Like if you get it right, you can scale a technology company to a billion dollars overnight. It can be done.
Anthony Vicino:
The downside is that you could also spend all that time and energy doing this thing and have the right idea, have the skills to execute it, but for whatever reason you were the MySpace and Facebook won the whole kitten caboodle. It could happen. You could just go to zero. And so the variables of skill, timing and market matter most in technology than in any of the other forms of leverage. Not to dissuade you, just saying you need to be aware of the pros and cons of each of these because there are ups and there are downs. The media leverage, that’s my personal favorite because it has typically the lowest downside risk, but it requires the most time and consistency. Now the thing I like about it is I love creating and that leans itself really well towards media, but it takes a really long time to get that flywheel going. Like I said, I started making content like 2019, 2020, it’s taken like three, four years to start building meaningful traction and start getting to the point where people recognize me on the street, right? So that wasn’t the goal.
Anthony Vicino:
But if we’re using that as a metric for how long it’s taken, that’s taken a minute. So if you’re relying on media leverage to try and make an income, that’s going to take a bit. And so I don’t usually recommend that you start with that one as like your primary means of trying to make money. But I think you need to start building that one as soon as possible in conjunction with the other forms of leverage because it takes the longest to get going. But once it does, it compounds the fastest of all. Because once you have a million people who are looking to you and listening to your words, you can do tremendous. You can hire, use labor leverage, you can get capital, you can have access to the best technology startups, the game changes, and so that’s why it’s my personal favorite. But not everybody’s going to be cut out for it.
Anthony Vicino:
And it also takes a really long time, a lot of consistency of showing up and most people just aren’t going to be willing to do that. But those are the four different types of leverage. Those are some thoughts on the different pros, different cons, which one you should start with again. It just kind of depends on you and your personality. I can’t give you that advice without having sat down with you and getting to know your context, but hopefully this brings you guys a little bit of value, new way of thinking about leverage and catch you in the next episode. But until then, stay hyper focused, my friends.
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