Leverage
A framework introduced by Naval Ravikant that describes how inputs and outputs become disconnected. When inputs and outputs are tightly coupled (as in salaried labour), wealth creation is structurally impossible. Leverage is the mechanism that breaks that coupling.
Naval identifies four types, with a critical distinction between leverage that requires permission and leverage that does not.
The four types
| Type | Description | Permission required? | Marginal cost |
|---|---|---|---|
| Labour | People working under you | Yes — recruit, manage, retain | High (salaries, management overhead) |
| Capital | Money deployed at interest or equity | Yes — raise or earn first | Medium (opportunity cost, risk) |
| Code | Software running at scale | No | Near zero |
| Media | Content copied and distributed | No | Near zero |
The key distinction
Labour and capital are the traditional forms of leverage — they are how most people throughout history have compounded their output. But both require gatekeepers: you must convince people to work for you, or convince investors to back you.
Code and media require no one’s permission. One engineer can deploy software to millions of users; one writer can reach millions of readers. This is why technology and media companies produce disproportionate wealth for their founders relative to companies that rely primarily on labour and capital.
Naval’s conclusion: the most powerful career strategy for an individual today is to build the skills to produce code and/or media — the leveraged forms that require no external permission.
Relationship to specific knowledge
Leverage amplifies Specific Knowledge. If you have specific knowledge but no leverage, your output is limited to what you can produce personally. If you have leverage but no specific knowledge, you are applying it in an area where others can replicate and compete. The combination of irreplaceable knowledge with permission-free leverage is what makes wealth creation durable.
In the wiki
- Naval Ravikant on How to Get Rich, Specific Knowledge, and the Four Types of Leverage — primary source; full framework discussion.
- Naval Ravikant — speaker page.
- Agentic Engineering — code leverage at the individual engineer level; AI agents as a new form of capital-free leverage.