How to Use Leverage to Build a Fortune
The difference between those who build modest businesses and those who create fortunes isn’t luck, connections, or even raw intelligence. It’s leverage.
Every day, I see founders working 80-hour weeks, grinding away, trading their precious time for money. But the harsh truth is: you cannot work your way to extraordinary wealth. The math simply doesn’t work.
Even at $1,000/hour, working 80 hours a week, 50 weeks a year, you’d make $4 million annually.
Impressive, but not fortune-building. Meanwhile, founders who understand leverage can generate tens or hundreds of millions while working fewer hours.
“You’re not going to get rich renting out your time. You must own equity—a piece of a business—to gain your financial freedom.” – Naval Ravikant
The Four Types Of Leverage
Naval Ravikant, angel investor and founder of AngelList, identifies four critical types of leverage available to modern founders:
1. Code Leverage
Software is the ultimate leverage—it works while you sleep, scales nearly infinitely, and costs almost nothing to replicate. A single engineer can write code that serves millions.
Naval’s Insight: “We’re in an age of infinite leverage, and the economic rewards for genuine intellectual curiosity have never been higher.”
At AngelList, Naval built a platform that automated processes that traditionally required hundreds of people in venture capital. With a small team, they created a system that matched thousands of startups with investors, tasks that would have been impossible to scale manually.
Action Step: Identify one repetitive task in your business that consumes time. Could it be automated with software? Even simple tools like Zapier or Airtable can create powerful automations. If you’re not technical, find a technical co-founder or use no-code tools to start building leverage.
2. Media Leverage
Content that works for you 24/7, building your reputation and attracting opportunities without ongoing effort.
Naval’s Insight: “The internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.”
Naval’s tweetstorms on wealth creation reached millions, established his thought leadership, and opened countless doors. Each piece of content continues working for him years after it was created.
Action Step: Start sharing your specific knowledge. Begin with Twitter threads documenting insights from your work. Create a simple newsletter sharing what you’re learning. The key is consistency over time, not perfect production quality.
3. Capital Leverage
Money working for you, buying other people’s time or appreciating assets.
Naval’s Insight: “Labor and capital are much more evenly distributed than they were in the pre-internet days.”
Naval’s early investments in companies like Uber multiplied his wealth while requiring minimal ongoing effort. His initial capital continued working and growing without consuming his time.
Action Step: Start small. Reinvest profits into your business rather than increasing your lifestyle. If you have savings, consider angel investing in areas where you have specific knowledge, giving you an edge in evaluating opportunities.
4. Labor Leverage
Working with and through other people effectively.
Naval’s Insight: “Learn to sell, learn to build. If you can do both, you’ll be unstoppable.”
Naval built teams at his startups by hiring for complementary skills, not replicas of himself. He focused on defining outcomes rather than micromanaging processes.
Action Step: Identify one task you’re currently doing that someone else could do 80% as well. Hire a freelancer to take it over, freeing you to focus on higher-leverage activities only you can do.
Specific Knowledge: The Foundation Of Leverage
Before you can apply leverage effectively, you need something worth leveraging—your specific knowledge.
“Specific knowledge is knowledge you cannot be trained for. If society can train you, it can train someone else and replace you.”
Specific knowledge is:
- Highly technical or creative
- Cannot be outsourced or automated
- Built through genuine curiosity, not formal education
- Often at the intersection of multiple fields
His specific knowledge came from founding multiple companies and angel investing since the early 2000s. This knowledge couldn’t be taught in schools—it was learned through experience and pursuing his natural interests.
Finding Your Specific Knowledge:
- What do you know that feels like “common sense” but others find difficult?
- What topics do you read about voluntarily, when no one is watching?
- What problems can you solve that others struggle with?
Playing Long-term Games
The final piece of Naval’s wealth creation framework: understanding the power of compound interest in business.
“All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.”
The most successful founders play long-term games with long-term people. This means:
- Building businesses in areas with lasting importance
- Cultivating relationships based on trust, not transactions
- Making decisions that might reduce short-term profits but increase long-term value
- Focusing on reputation as your most valuable asset
Naval’s long-term relationships in Silicon Valley compounded over decades. His early investment in Uber came through connections he had maintained for years. His reputation for honest dealing made founders seek him out as an investor beyond just his capital.
Identify one decision you’re facing where the short-term “easy” choice differs from the long-term right choice. Choose the latter. Your future self will thank you.
This Month’s Challenge
Choose one form of leverage from this newsletter and take specific action:
- Code: Identify and automate one repetitive process
- Media: Create and publish content sharing your specific knowledge
- Capital: Make one investment where you have information others don’t
- Labor: Delegate one task that doesn’t require your specific knowledge
“The purpose of wealth is freedom; it’s freedom from having to wear a suit to work, freedom to choose who you work with, and freedom to work on what interests you.” – Naval Ravikant
The most powerful insight I’ve gained is that these frameworks compound each other.
Specific knowledge helps you apply leverage effectively. Ownership gives you the incentive to apply that leverage. And playing long-term games gives leverage time to compound.
Start small, but start today