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What Does Leverage Over Labor Mean?

There are two ways to grow a business:

1. Get people to work more hours. Hire more people. Do more things.

2. Get more output from the same input. Automate. Systematize. Multiply your efforts.

Most founders default to option one. They grind harder. They hire faster. They build bigger teams.

But the smartest founders choose option two. They don't scale labor, they scale leverage.

This is the difference between a $2M business with 20 people and a $2M business with 5 people.

Same revenue. Different approach. Completely different quality of life.

The Three Types of Leverage

Naval Ravikant of AngelList breaks leverage into three categories:

1. Labor — Other people's time
2. Capital — Other people's money
3. Technology — Software and content that work while you sleep

Labor is the oldest form of leverage. You hire people to do work you don't have time for. But labor is expensive, slow to onboard, and doesn't scale infinitely.

Capital is powerful but requires giving up equity or taking on debt. Most microteams don't have access to cheap capital.

Technology is the new leverage. Software automates tasks. Content reaches millions without additional effort. And both cost almost nothing to replicate.

The best microteams stack all three. But they prioritize code and media over labor.

Because hiring is expensive and slow. Software is cheap and instant.

Nomad List and More: The $5M Solo Founder

Let me tell you about Pieter Levels.

Pieter built multiple million-dollar businesses—Nomad List, Remote OK, Photo AI—mostly by himself.

No employees. No office. No meetings.

Just code, automation, and a willingness to do things that don't scale... until he could make them scale.

How he does it:

1. Automate everything possible

  • Customer onboarding: automated emails

  • Payments: Stripe subscriptions

  • Support: AI chatbot + self-service docs

  • Marketing: SEO-driven content that ranks for years

2. Outsource what can't be automated

  • Payment processing issues → Stripe handles it

  • Server management → Managed hosting

  • Legal/accounting → Contractors

3. Do only what only he can do

  • Product vision

  • Core feature development

  • Community engagement

Result: $5M+/year in revenue. One person. 30-hour work weeks.

Pieter didn't build a team. He built leverage.

Why Smart Scaling Teams Must Choose Leverage Over Labor

Here's the math:

Scaling with labor:

  • Year 1: $500K revenue, 3 people = $166K per person

  • Year 2: $1M revenue, 6 people = $166K per person

  • Year 3: $2M revenue, 12 people = $166K per person

You doubled revenue twice. But revenue per person stayed flat. You're working just as hard (if not harder) managing a bigger team.

Scaling with leverage:

  • Year 1: $500K revenue, 3 people = $166K per person

  • Year 2: $1M revenue, 4 people = $250K per person

  • Year 3: $2M revenue, 5 people = $400K per person

Same revenue growth. But now you're 2.4x more efficient. You work less, not more.

The Leverage-First Playbook

Here's how to build a high-leverage team that scales first with leverage, not headcount.

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