Founder's Journal

Mental Models #6: The Power of Leverage

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Nov 19, 2021
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INSIGHT

Leverage as a Multiplier

  • Leverage multiplies input (time, connections, money) for greater output.
  • Naval Ravikant categorizes leverage as permissioned or permissionless.
INSIGHT

Permissioned Leverage

  • Permissioned leverage, the oldest form, needs someone else's approval.
  • Examples include capital (loans), operational (labor), and knowledge leverage (networking).
ANECDOTE

Mortgage as Capital Leverage

  • A home mortgage exemplifies capital leverage: a small down payment secures a much larger asset.
  • This requires the bank's permission to lend, making it permissioned leverage.
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