“Arm yourself with specific knowledge, accountability, and leverage.”
As knowledge and skills are refined and developed they becomes less common. That makes them more valuable. Pair your skills with accountability, and you will produce. Then, use available leverage to multiply the products of your labor.
Direct Your Life Using Specific Knowledge, Accountability, and Leverage
Today, the problem is not a lack of opportunity, but too much opportunity. Instead of being the source of excitement, the torrent of possibilities tend to cause stagnation. In order to break free from that stagnation, one must now where to begin. Naval, the founder of AngelList and investor in over 100 companies (a few being Uber, Twitter, and Yammer), lays out the three rules-of-thumb to keep in mind when choosing what to pursue: specific knowledge, accountability, and leverage.
Specific Knowledge is Rare
Though many people possess the ability to grasp a concept, not many will ever become experts in it. During a podcast interview, Josh Kaufman, the author of The Personal MBA, explained the difference between conceptual knowledge and skill.
Conceptual knowledge, he explained, remains almost entirely unapplied and thus has a ceiling on its ability to offer a complete education. Skill on the other hand is focused on application. Through cycles of problem-question-exploration-solution-repeat true comprehension is likely. In the non-fiction novel “Grasp: The Science Transforming how we Learn,” the author explains that the goal of education is not to learn about history, or calculus, or chemistry, the goal is to learn how to apply history and calculus and chemistry.
Bruce Lee is quoted saying, “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.”
Building specific knowledge is about choosing to focus on one area, embracing repetition, and refining one’s ability. The more refined and specialized a person’s skills are, the less common that skillset will be. The rule of scarcity declares that the more scarce something is, the higher its value is.
Accountability Increases Integrity and Decreases Resistance
Accountability is about standards and responsibility. One can find accountability in friends, colleagues, values, personal principles, etc. The goal in creating accountability is to increase integrity while decreasing excuses. Accountability looks different for each person, but the more accountability, the better. My rule of thumb is to diversify accountability — don’t just find it in one thing, or one area. Accountability keeps people consistent, and consistency, as Naval explained in a prior post, compounds.
How to Find and Use the Three Types of Leverage: Labor, Capital, and Products
Leverage is the last objective that leads to disproportionate success. Leverage is about maximizing influence and effectiveness while minimizing personal costs. Leverage can be divided into three categories: labor, capital, and products.
Labor, though Effective can be Complicated
Labor, as a form of leverage, utilizes the abilities of multiple people, i.e. a workforce, to produce a greater product than one individual might be capable of.
Though labor is effective, it must be noted that it is only effective insofar as a labor force is united. Uniting many people is complex, and therefore, using labor as a form of leverage can be difficult and time-consuming. Be aware of this.
Capital – Anything Money Can Buy
Capital is another form of leverage. Its influence is obvious in politics, businesses, history, and so on. Using capital as leverage is about recognizing all of the things that money can buy. This must be clear: money, the USD, has no inherent value. We, as a society, have a social contract in place: We exchange our time and work for money, then we exchange money for goods. Money acts as a medium. That is why it is a form of leverage. Ask yourself: What do people want, and can they use money to get it?
Products, the Most Powerful Form of Leverage
The last form of leverage is products that have no marginal cost of replication. “Marginal cost of replication” simply means that producing more is free.
In the past, an increase in business was linked to an increase in operational costs. Today, this doesn’t have to be the case. The creation of the printing press sparked a revolution in which a person could create something once, and benefit exponentially.
As man progressed, he took this notion of exponential benefit and extended it. Today, it be applied to many other areas such as podcasts, YouTube, code, courses, movies, etc.. Additionally, there are historically fewer barriers to entry.
This is the most powerful form of leverage because the potential reward is asymmetric to the risk. In all other forms of leverage, and throughout history, the greatest hindrances to leverage were bureaucracy and scope. Someone had to approve, or sanction the factory line-up, or the money transfer, and someone had to promote or back your ideas. By removing approval from the equation of leverage, these products allow you to scale in ways that no other form of leverage has historically been capable of.
With the existence and widespread availability of leverage in its three different forms, the only thing keeping us from utilizing the great opportunities that we are privy to is ourselves and our beliefs.
Choose Your Direction Wisely
Armed with specific knowledge and accountability, we must choose to learn the skills that will allow us to create. Then, employing a combination of the different forms of leverage, we must execute.