Using Leverage to Scale Smarter- Webinar with YEDI and Noah Murad
AUTHOR: PAULINA PENA
Picture this. Two woodchoppers start work at the same time. One of the woodchoppers chops all day without stopping while the other leaves around lunchtime for two hours. The woodchopper who is putting in longer hours notices he is not producing as much wood as the woodchopper who leaves in the middle of the day. When he asks the woodchopper putting in less hours what his secret is, the woodchopper responds by saying “I go home everyday and sharpen my axe.”
This analogy leads us to the theme of the blogpost which is productivity and applying your time to things that enable you to perform better.
This past month, Noah Murad, Managing Partner at Bluestar Equity joined the York Entrepreneurship Development Institute (YEDI) for a webinar on “Using Leverage to Scale Smarter.” During the session, Noah explained what leverage means in a business context and how founders can apply it intentionally to increase impact, productivity and results, without unnecessary complexity.
In this blogpost, we will highlight some of the key takeaways from Noah’s presentation, showing you how you can apply them to your work life and help you work smarter.
What is Leverage?
Leverage means more output for less input. Investing your time, skills, capital and other tools will result in more leverage.
In the webinar, Noah brings up an example of spending your time studying a particular skill such as sales. He explains that while people can be working a nine to five job every single day or working on a business 15-16 hours a day and it may not look like you’re working as hard, but in reality, you’re creating leverage by learning a skill and investing in yourself.
“You’re getting way more productivity than everyone else because you’re spending your time focusing on learning a specific skill,” he explains.
The Four Types of Leverage
In the webinar, Noah makes a reference to Naval Ravikant, an entrepreneur, technology developer, angel investor, and thinker best known for his ideas on wealth, leverage, startups, and happiness. He explains that Naval created four categories of leverage: people, capital, content and technology.
- People: the most important type of leverage, refers to yourself or the knowledge you’re building within yourself, especially a specific type of knowledge. The more
specific you get, the more you can charge for your time. Additionally, if you have a specific type of knowledge, you can charge more and leverage your hour. This category may also refer to people within your business such as sales people, distributors, operators and anyone that applies their time to your business. Furthermore, anyway you can think of applying someone else’s hours to your business is a form of leverage.
- Capital: accelerates ideas that already work. When you have an existing product or service that you can sell, but the distribution will cost more. Although this is going to cost you, you know you’re going to generate the profit. By taking in more capital (investors’ money, bank loans, lines of credit), it can potentially allow you to distribute the product and earn profit. Furthermore, you’ve applied capital to a model that already works.
- Content: media content costs almost nothing to create. Today, there are a multitude of ways to increase your business’s visibility. Filming a video can generate 100 or 200 views and have a larger reach than manual outreach. Content is one of the cheapest forms of distribution and is one of the highest levers that people have right now, especially when they’re starting their business and wanting to grow it. You may not see any positive feedback for a year or two posting videos, but similarly to a compound interest chart, most of the gains happen at the end and trust and people will start to notice your business once you’re consistent.
- Technology: this is meant to reduce costs and increase speed of fulfillment. However, in today’s time, the biggest change with technology in terms of leverage is AI. With the introduction of AI, you’re able to try a lot of different products and services at little to no cost. Today, you can try 20 or 30 different ideas that cost a few thousand dollars and this also enables you to experiment with technology with less risk.
How do I know if I am using leverage now?
Noah brings up an example of the Pareto Principle or the 80/20 rule. The Pareto Principle states roughly 20% of the inputs of anything account for 80% of the results. This includes song sales, podcasts, book sales, sales commissions and even students’ grades. This concept is the driving factor behind results, which is why it is so crucial to pay attention to the key 20%.
“Right now if you looked at yourself and how you’re applying your time to your business or to ideas or projects, you’re already taking actions that are driving 80 percent of the results,” he says. “You may not have looked at it this way, but that is scientifically the case. You’re
already using this principle a bit, but now you have to focus your mind on applying most of the time to the 20 percent that’s resulting in the 80 percent.”
However, while you may be using in your everyday professional life, there may also be signs you are misapplying it as well. The following signs indicate leverage or your time is not being used or it is being misapplied:
- You are busier, but revenue is flat
- The hours you are putting in do not result in progress
- The business is completely dependent on you
- You’re constantly saying you need to raise capital
- Work resets from zero ( a person constantly needing to start over such as a sales person who hasn’t nurtured their list of contacts and needs to rebuild it)
Picking the Best Leverage Option
So, how do you know what the best leverage option is and what would work for you? Noah discusses his experience working as Managing Partner at Bluestar and what leverage worked best for him.
“The easiest thing for me to do is look at all the activities I’ve had,” he explains. “I say ‘here’s my day, here are all my opportunities. How am I organizing my day.’ I look at how much of what goes into my day contributes towards the opportunities I have and how they relate to my goals or business parameters that are set.”
Noah then dives further into detail, explaining that it is important to eliminate everything you have that doesn’t impact the business well.
As a next step, he talks about the importance of establishing your goals and what actions you’re taking into making up 80% of the results. Thus includes looking at what setting out clear, specific goals such as skills you need to improve.
“I took content marketing courses and physically did all of the content ads and managed Google accounts just to understand what that skill was,” says Noah. “Once you learn this skill once, you save on ad agencies later and you can leverage that time to you spent to grow your business.”
Key Takeaways
Growing your business consists of a lot of moving parts and the whole process may be an overwhelming feat. However, it is important to stay consistent, build trust and most importantly, work smarter, not harder. Focusing on the 20% will get you the 80% you need to succeed. To watch the full recording of the webinar, please visit our Youtube channel.