A brief history of leverage and power
20 years ago, Robert Greene published The 48 Laws of Power. Let’s be clear — if you follow all of them, you will wind up in prison. (Come to think of it, that might be why the book is so popular with… prisoners ¯\_(ツ)_/¯)
Looking at it today, it’s clear that Greene’s book is really all about how power used to be. Historically, power was in the hands of very few people, and it was entirely permission-based. If you wanted power, at some point, you’d need the authorization of someone who had the backing of either 1) an army or 2) a religion (with an army ;).
That type of old power is only found today in terms of tradition. You’ll show respect to the Queen of England, but it’s not because she has any power. If you go to Buckingham Palace and cut in front of her in the tea line, she can’t throw you in jail, let alone cut your head off. That’s tradition, not power.
It isn’t just the internet that changed how things work, but the internet definitely made everything move faster and further from those old power structures. And the internet did invent something new: permission-less leverage, which has taken over for power. Today, if you want to build something, you don’t need anyone’s permission. People still try to act like gatekeepers or experts, or try to be “the guy you need to know”, but it’s not real — the internet undid all that, just by being open to anyone and everyone.
So when we talk about “power” today, what we really mean is “leverage”. Leverage is the ability to get more for your efforts than the energy you put in. Leverage is how you can get a bigger-than-hoped return on investment on your efforts.
Take Mark Zuckerberg. He doesn’t have power — he has leverage. All it takes is for his users to get angry, to get organized and demand something, and he’ll apologize. No king with power ever apologized; but if you’re one of the new masters of the universe, and what you have is leverage, you apologize - a lot.
This goes back to a theory of equality that we’ve been working on for centuries, where you’re judged for what you do, not for who you are. Democracy isn’t a voting system, it’s a state of mind. It’s about believing that at the end of the day, everybody here is equal to one another, that we don’t have to bow down to anyone.
So let’s go through a few of Greene’s rules to see why he didn’t understand how the world was changing:
1. Never outshine the master. We still have a tendency to do this in our personal lives. There are all kinds of people we might be awed by if we met them. If Beyonce walked into The Family tomorrow, Alice would go nuts. But that’s a personal thing, it’s not going to get The Family anywhere. That’s because we’re at least two generations into a different power paradigm.
Take what it was like to be the head of a TV channel or a movie studio in the 1960s. You were the one people had to please. You decided who was on at what time, you decided whose career went up and whose went down. But then in the 1980s we started to get more channels, and that power started to spread out — people would zap away if they didn’t like what was on. Then 10 years ago we got YouTube, and entertainment became totally permission-less.
Now you don’t need to suck up to anyone to move up the ladder. The people who are on top of the business world today know that there will be fresher, younger challengers coming to knock them off (they’ve even found a way to make that work for them — they become investors ;) But they know they can only do so much. They can make some recommendations and try to help out people they like, but success today is an ACTIVE process. If the people don’t like what they’re offered, they aren’t going to buy it. It’s like Snoop said, “I can’t make you a star.”
2. Never put too much trust in your friends, and learn to use your enemies. Nobody today should be thinking about “enemies”, at the most you’ve got competitors. If you’re treating competitors like enemies, you’re going to waste a lot of time and energy. And really, you shouldn’t be thinking about competitors at all.
Before, competition was real because distribution wasn’t liquid. It was hard to reach out and talk to customers, so it was easier to steal them from your competitors than to go find new ones. But today, the cost of distribution is so low that trying to get new customers by convincing them to leave your competitors is a loser’s game. Just build your own market, widen your funnel, and make your own rules. Having friends you trust can only help in that process :)
3. So much depends on your reputation — guard it with your life. Donald Trump is president of the US, I don’t think this one stands anymore. Trump is the first president of the Entrepreneurial Age, and that should scare you. I’m not going to tell you that everything’s better in the Entrepreneurial Age, some things are worse. But we need to understand what’s happening here.
Trump revealed that there was a hidden assumption in the idea of reputation, namely that it was determined by very few people. If you were a businessman in the 19th century, and you wanted to start a factory, there were what, 25, maybe 50 people in the world you could ask for the money to get started? Then, reputation mattered. But today, there are literally hundreds of thousands of people who you can talk to.
That’s why Trump doesn’t care about his reputation. The establishment can hate him, they don’t have the power to decide anymore. He realized that what matters is having people who love him SO MUCH and having others who hate him SO MUCH.
Today it’s not about your reputation — it’s all about sincerity. That’s what so many people don’t realize about Trump, even when he’s lying (so most of the time), he actually, truly, sincerely believes what he’s saying. And people love nothing more than someone whose sincerity pushes them to take a super-high degree of personal risk.
4. Know who you’re dealing with, and don’t offend the wrong person. We’re in similar territory here — you can offend tons of people today, so long as there are just as many or more people who love what you’re saying.
5. Avoid stepping into a great man’s shoes. Clearly untrue today — the higher you aim, the easier it is for people to get behind you. Revolut set out to bring down the big banks, institutions that have been around for hundreds of years. When you do that, it doesn’t matter if the product isn’t quite there, people come along because they love the mission. So aim high and be clear about who you’re going after.
Ok, if you can’t follow Greene’s book, what can you do? What is leverage today?
Leverage is about producing something that works even while you’re sleeping, so that you get more and more out of what you put in. It’s about building a machine that lets you do less work as time goes on, not more.
The first source of leverage is money. Money became a commodity 10 years ago, and there’s too much of it going around. That doesn’t mean everyone will get it, but those who do get it will get too much. If no one wants to invest in you, no one will invest. But if people do want to invest, everyone will want to, and you’ll end up with more money than you need.
The second leverage is media. Today, media falls into two categories: authorized and unauthorized. If you want to get an article into the Financial Times, you need to know the right people. But you could just go onto YouTube and do a great video that gets millions of views — and you don’t need to know anyone to do that. There’s a huge amount of permission-less media today, and way too many entrepreneurs underestimate how they can use it. I never get why so many of them are obsessed with getting traditional press coverage, which can only help if your audience is very traditional. For most startups, they’d do better to stay away from the press and publish more and better content.
The third big leverage is code. In today’s permission-less time, code is one tool that is absolutely scalable. When people ask me if they need to learn to code to launch their startup, they need to realize a subtle difference between two questions:
- Do I need to learn to code to launch my startup? No.
- Do I need to learn to code to build an amazing startup? Yes.
There’s no need to wait, because you can learn a ton about entrepreneurship in a startup where you don’t know how to code. But it’s also true that because code is so important today, an amazing startup will probably grow out of founders who know how to leverage their coding skills before needing to raise funds to hire more engineers or anything like that.
So go do that ;)