Why Is Leverage So Powerful?
In as much as hard work is a prerequisite, the right thing to do to get ahead, it still isn't enough on itself to really get or stay ahead, especially in the modern world.
There are many examples to support this claim such as the hardworking farmer, teacher or doctor who works all year round and has nothing to show for it in terms of financial gain or betterment.
When I ponder about the difference in gap between input and output, an explanation that comes to mind is that the dynamics of the input-output equation has change, in that there are new levers that tip the scale in favour of one direction or the other.
Perhaps, a better way of saying it is that the rules of the game has expanded to accommodate new set of principles.
Traditionally, a founder usually bootstraps their business , reinvesting profits slowly to grow. This is organic growth, which can be slow and limit the company's ability to scale rapidly.
A leveraged approach will be a startup that secures venture capital funding or takes on debt to fuel rapid growth.
This approach allows them to acquire resources, hire talent, and expand their market reach much faster than bootstrapping would allow. While risky, the potential payoff can be exponentially higher if the venture succeeds.
Employing Leverage To Make A Huge Difference
Leverage is an inherent aspect of the 21st century, which is built with technology as a key driver. In a not so trivial way, we leverage social media to build a network of friends around the globe and get a glimpse of different cultures and ways of life.
Essentially, leverage is a multiplier, a force that takes our efforts and magnifies them, which sometimes can turn traditionally good outputs to exponentially great outputs.
Some venture capital firms have a good track record of turning small startups into global unicorns. Sequoia Capital is one of them.
For instance, a photo-sharing app, born in 2010, secured early funding from the venture capital, which help propelled it from a San Francisco startup to a global phenomenon.
This crucial investment fueled rapid growth for Instagram, attracting over 100 million users within two years. In 2012, recognizing its soaring potential, Facebook acquired the company for a staggering $1 billion, solidifying its place as a social media powerhouse.
In some ways, this exemplifies how leverage can make a huge difference in speeding up the growth of startup from humble beginnings to global impact.
In contemporary times, this volatile yet transformative world of cryptocurrency provides another compelling case for leverage.
Early adopters who invested a few hundred dollars in the early days of Bitcoin without ever selling have accumulated a good fortune today.
Of course, nobody knew Bitcoin will perform extraordinary well, so prudence is always important in this dynamic space. However, the potential for leveraging small investments into life-changing wealth is undeniable.
While venture capital fuels financial empires and crypto unlocks wealth creation, social media as a platform offers leverage for amplifying voices and driving positive change.
Remember the hardworking farmer mentioned earlier? Imagine them leveraging Instagram to share their story and showcase their products, while also connecting with potential donors and garnering support for their community.
Social media can act as a megaphone, amplifying their voice from a local field to a global audience.
In Closing
Leverage is a force, and a force by default is a powerful thing. Anything that is powerful becomes akin to double-edged sword, in that it can be used for good or bad.
With leverage, it isn't only about how we use it but also the outcomes we get. Financial leverage for example can lead to devastating losses and social media can equally be leveraged for misinformation on a global scale.
However, I prefer to view leverage as a tool with much randomness. In other words, control the input, embrace the uncertainty of the output. This aids in using it responsibly.
Leverage as a tool is powerful and it is not a luxury reserved for the privileged few in this day and age, since there are many forms of it nowadays.
With the right approach, anyone can tap into its potential. Start by identifying areas where your efforts could be multiplied – your network, your skills, your creativity. Then, explore strategic ways to employ leverage on them, with the help of appropriate tools.
Thanks for reading!! Share your thoughts below on the comments.
Posted Using InLeo Alpha
I do agree with what you've stated. It is incredible to see how a lot has changed in our world today with the presence of social media, just like the farmer cited. With the presence of social media, there's a lot they'll gain. Bringing visibility to their work.
And, truly, no one knew Bitcoin would expand so well and be an eye opener to many.
I found your name through the zealy campaign hosted by #inleo. It'll be nice to see you share part of this post on the thread. You can mention me if you'd like.
Yes, social media is a great multiplier, especially in terms of visibility and anybody can harness in to build a global audience. I think opportunities in that aspect are almost limitless.
Thanks for the suggestion. I'll give it a try and share it on threads. Thanks for stopping by too :)
Yes, opportunities are limitless.
You are welcome 😁 .
These are things that we may well know but lose a grip of through the rat race called competition.
The key to leveraging can not be overemphasized and these highlighted points can be ‘reformative’. I need to get back to the planning board and set things right. Thank you for this.
Right! The first highlighted one is my favorite, because I think it's a key one that we always miss. Leverage is great only when used in the right way, it can backfire heavily when used the wrong way as it is a multiplier.
Thanks for stopping by :)