039: Eric Jorgenson – How to Increase Profits Exponentially by Using Leverage

Eric: [00:00:00]
Munger said the best thing a human being can do is to help someone else to know more. Everyone has something to teach. Everyone can participate as a student and as a teacher at different points in their lives. There’s always somebody who’s one step ahead of you to learn from, and always somebody who’s one step behind you that you can help.

I think counseling and learning keeps us humble and keeps life exciting. Teaching is rewarding. The fact that we can all kind of be a part of it is really fun.

Nathan: [00:00:29]
In this episode, I talked to Eric Jorgensen, who is the author of one of my favorite books. It’s actually the book that I have gifted the most recently, and that is The Almanac of Naval Ravikant, which is a distillation of the wisdom writing podcast episodes of Naval. So Eric did this awesome project where you compile all this edited down into a book.

And I know we talked about that at the end of the episode, but throughout the episode, we talk about online education, leverage—we spend a lot of time talking about leverage—which is sort of this thing that Naval has really made the centerpiece to a lot of his content that he’s produced.

Eric has gone even further and produced a course on and talked about so much great stuff. Really important concepts that I think you’re really gonna enjoy. So I’ll get out of the way and we’ll just dive in.

Eric, thanks for joining me.

Eric: [00:01:18]
Thanks for having me. You’re on like the Mount Rushmore of heroes of like bootstrappers, turned content creators, turned bootstrappers. So like I’m super excited to be talking to you in any context. This is going to be fun.

Nathan: [00:01:30]
Well, good. And now, now I’m curious who else is on Mount Rushmore?

Eric: [00:01:33]
I knew you were going to ask me that. And I don’t, I, I don’t know. I have not prepared for it, but we can start Photoshopping it up later.

Nathan: [00:01:41]
Yeah, exactly. That’d be a really good use of both of our time.

Reading through all of your stuff online, you are obsessed with education, specifically online education. You’ve got Course Correctly where you’re like reviewing online courses with a friend of yours.

You’ve got like there’s a lot going on and you truly care a lot about the details of online education, and I’m curious, like why, where does that come from? Where does the interest turn into obsession?

Eric: [00:02:12]
So long-term I think like going to Mars is awesome, and curing cancer is awesome, and like solving world hunger is awesome. But education is the variable with the biggest coefficient into all of those things over the long term. So, like all of us who are alive right now are kind of like, Oh God, we’ve got to solve all these problems that are like affecting us.

But if we just kind of look at the species over like a few hundred years or a few thousand years, like our ability to educate ourselves. And then the next generation is like a huge, huge, heavily weighted variable. I guess into like the outcome that we achieve over a long period of time and like how we can affect that.

And I think like there’s no, you know, the, the first principles kind of like where’s the laws of physics limitedness is like, we have the ability to be so much better at education than we are, and we are. There’s some specific context where we’re incredible educators. Like our doctors are incredibly well-educated; the rigor of like a pilot’s education or doctor’s education compared to, you know, somebody who maybe like a writer, like different creative pursuits or do an MBA, like is just, we’re just missing easy opportunities to kind to become significantly better.

And the internet lowers the cost of that and increases the accessibility of it. And so I think we’re going to see like a really kind of cool transformation of that over our lifetimes. I was excited to kind of see it, see it come together.

Nathan: [00:03:40]
Yeah. So what I hear in that is there’s individual pursuits, you know, that will like advanced civilization. You know, in like one very specific and highly effective area, but then education is like the rising tide for everything of like, if you can help people teach well, you know, learn well, any of those things and make those, those tools and Content, everything available, then that can go in any, any, and every direction.

Eric: [00:04:09]
Yeah. Yeah. I mean, like Munger said, like the best thing that human being can do is to like help someone else to know more. And I think that’s a really, like everyone has something to teach and. We are all trying to learn. And, it’s something that everyone can participate in as a student and as a teacher at different points in their lives.

And there’s always somebody who’s like one step ahead of you to learn from, and always somebody who’s one step behind you that you can help, kind of all the way. You know, through your, through your life. so I think it’s a really interesting thing and I think constantly learning keeps us, keeps us humble, and keeps life exciting.

And teaching is fun and rewarding in a way to kind of solidify the things that you’re learning. It’s just a really, it’s an exciting thing. And like the fact that we can all kind of be a part of it is, is really fun and that the internet is making it much more accessible for everybody, and change, transforming it, right?

You can learn while you’re doing while you’re like in the context of a project that you’re already trying to accomplish, is really cool and kind of a new thing. And. I, the rate of change is just so crazy that like the rate of learning has to match it and where I don’t think we’re quite ready for that yet.

Nathan: [00:05:23]
Yeah, there’s a lot of stuff in there, but what about when someone is maybe when someone’s starting a newsletter or starting online, like coming into this world of online business and audiences and all of that, what are some of those things that you really try to teach them that. Are like those two or three really pivotal things where like, when you understand this, you will see the world differently.

Eric: [00:05:45]
Yeah. So I think there’s. The first thing. I mean, if somebody is at zero, like the first thing I was, I was like, start doing like you, you will learn much better in the context of doing, which is not a thing I used to appreciate. And I actually wasted a lot of time, like trying to learn before I did. I think,

Nathan: [00:06:02]
You had a tweet at one point. I think you were saying like, and I’m trying to remember if you were like, find yourself reading something for the third time, or like learning about something for the third time. Like it’s time to start doing instead.

Eric: [00:06:15]
Yeah. Yeah. And it’s like, it feels good to learn and like, feel like you’re getting closer to knowing how to do it, but like, Learning how to do something is a cheap way to get a fraction of the dopamine of actually doing it. But it doesn’t really get you that much closer to doing it, especially if you’re on like your second or third rep through.

So yeah, I would think like, you know, start that newsletter, like send an email to like five people throw up a Google form, like. It’s really, it’s easy to get started. And when you encounter a roadblock, like go learn how to remove or overcome that roadblock. but don’t try to anticipate too many steps out, just like get work done.

Even if you do end up down a dead end, like that proof of work and effort will help you. Kind of contextualize when you hear the right answer or when you go, you know, find a friend or mentor or teacher and say like, Hey, look, I tried this thing and like, it didn’t work. And I don’t know why I’m like, that happened to me this morning.

I was like working on this XY project and like, like I’m in a dead end and I don’t know what to do. And I call the front and he’s like, here’s what I would told you if you talked to me two weeks ago and I was a part of me was like, shit, that was, that was like expensive. Mistake time-wise. but it’s also like a lesson, a cute lesson learned. So I’m going to remember that one, much more.

Nathan: [00:07:37]
I like the idea of working towards something like until you get stuck. it’s probably 2011 to 10, somewhere in there is really getting into designing and building an iPhone applications, which I didn’t have a strong background as a developer. I was, I knew the design side, but you know, I was like objective to like, let’s learn this.

Let’s dive in. And. One app that I was building, I would code until I got stuck and could not figure it out in one direction and be like, okay. But then there’s also the other feature I’d code that way until I got stuck in like stack overflow, couldn’t help me anymore. And you know, and I do that like three different directions.

So I’m like, okay, I actually can’t really meaningfully work on this anymore before I, either get help or substantially level up my code knowledge. And so then on like a Saturday, I would go over to a co-worker’s house and. Say like, okay. Here’s the areas that I’m stuck, you know? And he’d been developing iOS apps for a couple of years.

Well, it’s still pretty early, so yeah, I guess two years, three years at that point, And he’d be like, okay, I see where you’re stuck, but let’s take a step back. Let me under, like, let me explain number of types to you. Do you know about floats and integers? And I’d be like, now he’s like, alright, well, computer science one-on-one, you know, like some of those things, but it was really important to go far enough to where I got stuck myself. Rather than just being like, I don’t know. I need somebody to teach me how to build life on apps.

Eric: [00:09:00]
Yeah, that like is he has a similar thing. So when you were, w were you writing that book at the exact same time that you were like learning that stuff yourself for the first time?

Nathan: [00:09:10]
I had learned the design side pretty extensively and that’s what the book was about. and so it was probably a year before I wrote the book. and so I had been doing a lot of the design side and then I was also trying to do the development because sometimes there’s this weird debate that happened.

Of like, is it better to be a designer or a developer, which is the dumbest debate you could ever get into, but you’d see it like popping up all throughout the internet. And I remember thinking in my head like, well, office is better be a designer because I am a designer. But then I had this moment where I thought about it and I was like, wait if a developer build something, it will function, but it’d be ugly.

If a designer design something, it will look pretty. And it won’t do Jack, like it’s not actually useful. And so like in that realization, I was like, Oh, I guess I’m going to, like, if I want to keep doing like indie projects on my own, I’m going to learn to code. And that’s when I got into that side. And then probably a year later I wrote the book on, designing iPhone applications.

Eric: [00:10:11]
Yeah. That whole period, everybody, every designer was trying to become a developer and every developer is trying to become a designer, but like the same time

Nathan: [00:10:17]
Yeah, I it’s interesting. let’s see, where were we going with that?

Oh, particular things that, so that people should learn. So we’re talking about like, the first thing is actually do it,

Eric: [00:10:29]
Yeah, just let’s start, like, yeah. Start putting skin in the game, like set a goal, set a mission.

Nathan: [00:10:35]
Yeah.

Eric: [00:10:36]
You know, open up a page, build something tiny, no matter how small, like, just start doing before you start learning. Cause learning like as important as education is like, you can spend your whole life learning and no time doing.

And like it’s a lot like a designer designing an iPhone, have those like a very pretty wireframe. It’s like, wow, you have a lot of PhDs. Did you ever do anything with Elvis? He was like, Nope.

Nathan: [00:10:59]
Yep. That makes sense. One of the other things that you’re like really obsessed with that I’m also obsessed with and I love talking about, which would probably be what I would put in the list of like the second thing to teach people. it would be leverage you and just. How, how that works. I feel like so much of your personal brand online now is tied into like being the guy, talking about leverage, which is amazing because more people need to learn that.

So how do you think about leverage and, and what are the parts of that fascinate you the most?

Eric: [00:11:28]
Yeah, I think it’s, I think leverage is super important to know. I mean, I think everybody should know the mental model at the very least, especially when they’re starting out. even if they don’t know a ton of the mechanics, it’s like compounding, right? Like. You’re told you’re supposed to like save money, but you’re not really sure, like what the point is, unless you get compounding.

And then you’re kind of like, Oh, like I should be saving and investing because it means I’ll be able to retire like 20 years earlier. And leverage is kind of the same way. Like when you’re first starting out, you’re trying to figure out like what you want to do and how you want to do it and how to kind of plan for growth in your career over time. And if you don’t understand if you’re, if you are blind to leverage and like where that leads you, you’re going to end up down a little bit of a dead end or in a spot where, you know, you’re maybe in a job where you’re just trading time for money or you’re in a job that’s extremely unlevered and you end up feeling like you’ll never earn more than $60,000 a year because you don’t have a way to apply, leverage to what you’re doing.

So I think like, it’s, it’s really interesting to see all the people. I think you are a prime example of this who kind of like without ever, probably using the word leverage, you’d like intuited, what it was and how to get more of it and build it over time, the last like 10 years. so I like leverage from my perspective and the way I kind of organize and share thoughts around this, kind of comes in four forms, which is tools, product people, capital.

So tools being like anything from a hammer to a chainsaw, to Xavier, product being any form of like capturing and preserving your judgment or experience in code in media, you know, we’re, we’re recording a product right now. but it could be a blog post. It could be a book. it could be a movie and then working into people.

So everything from like, Fiber. So task-based labor up through like building a whole team. and capital kind of comes in a variety of forms, but like usually money. so all of those kinds of things build on each other and you can sort of trade them for each other and you’ll end up with like constraints and bottlenecks and things, but like over time, you know, you go from.

Starting a newsletter to writing a book, to building a course, to building a software platform. and you go from, you know, some very specific tasks based help. to maybe a part-time assistant to maybe hiring an agency to maybe a hundred people full-time, and the capital grows and the margins grow.

And like you sort of increasingly reinvest in higher margins of leverage that are more self-sufficient and longer levers so that they can move, you know, have quote unquote heavier loads, and help you kind of accomplish more with the time and experience and judgment that you have.

Nathan: [00:14:14]
Yeah, it’s as simple as an example of that, like in my life would be going from designing iPhone applications for other people, you know, which is very. One-to-one like conveniently, it’s a high paid skill, so that’s better than other activities, but you know, it’s still not there. And then teach, you know, creating a, running a book, creating a course teaching that.

Now there’s real leverage because money and time are disconnected. And then going up from there would be. What did I do now? I mean, I guess the next thing was like creating that leverage from software in a recurring way, or like the number of people that are going to buy a course or consume content compared to the number of people that now use ConvertKit.

And the other thing is the. Because, like you said, the compounding effect and that’s the magic in SaaS and they’re occurring in the, you know, the recurring business. It’s like, you don’t even have to have that good of a growth rate, but it compounding over time, and continuing to do it for a long time, then it gets to the point that the leverage is just pretty incredible.

And like now, you know, 350,000 people use ConvertKit and it’s like, Oh, well, that’s sort of a different scale than. You know, the, the like the hours I put into designing an iPhone app for, you know, an individual client .

Eric: [00:15:32]
Yeah. And it would have been correct me if I’m wrong. Like, I don’t know that the details of the story there, but I think it would have been really tough to just make that huge leap. Right. Like even if you knew you wanted to end up building a SAS app, you know, in a high margin business, like even if you knew that that was your destination, would you have been able to just kind of like jump straight there without some of those intermediate steps?

Nathan: [00:15:54]
I don’t think they think. So there’s so many lessons that you have to learn along the way of like, well, so I’ve read about this a little bit. In my blog posts, the ladders of wealth creation is like making some of these leaps between steps of like me selling you on something. One-to-one that there’s a certain amount of skills that I have to understand why you would want to buy it.

And other things like that. But then me. Getting you to go to a website and buy the same thing without me talking to you when there’s real leverage in that, because now like a thousand people or one person could read the website and it works the same either way, but it’s really hard. Like that is a whole skill in building trust and copywriting and understanding and all of that.

And so when you’re like, I’m going to go from a client work to a SAS application, there’s like a thousand of those skills. You know, there’s probably actually like 50, if we’re gonna break it down, you know? But,

Eric: [00:16:48]
It feels like a thousand. Yeah.

Nathan: [00:16:50]
Yeah. It feels like a thousand and that’s why like it’s so insurmountable.

And if you want to try to learn all of those things in a single step, you, you can, there’s plenty of people who do it, but then don’t be surprised them that step, instead of you’re like, Oh, it should only take six months. and it takes six years instead, like, just know that because there were six years worth of lessons that you chose to do in one step. Whereas other people chose to do it in incremental.

Eric: [00:17:15]
Yeah. And, and in my experience has been that each kind of, one of those steps is gives you increasing resources and confidence and skills to like, know that you’re, that like the next one is in reach. Right. I actually use your ladders of wealth creation as an example in the book it’s like, of course the laboratories, it’s a very similar kind of framework to like, Hey, look, leverage is like this big, important idea.

And it’s going to define your life. If you let it in the same way that compounding can, but one, you have to be willing to start small and be patient, but look at how we can connect the dots going forward. but you do have to. Respect to the idea and kind of pay homage to it in each little decision that you make for years before you start to see that payoff, just like compounding.

I like that. It’s a painful, you watch that graph for so long. Look really flat until it takes off. And when you can layer, actually have some like graphs in the, in the course that show like, You know, here’s the margin of a book. Here’s the margin of a course. Here’s the margin. And when you layer these products onto each other, with increasing skill and increasing leverage in each one, the top of the graph looks exponential, but you can break it down into like what’s actually stacked up on top of itself.

And it’s this very similar idea to ladders and wealth creation.

Nathan: [00:18:38]
Yeah, that that really resonates. And I think one thing that you reminded me of in there is like the leverage of relationships, because it takes so many relationships to build the SAS company. You know, not only in who you need to, like you’re talking about, you know, the cat, like, human leverage, you know, like getting wrangling a whole bunch of people and getting them to go in, in a single direction.

You know, if you have relationships and reputation, that’s so much easier to do. And, you know, and see if you’re jumping right into that, people are like, no, I don’t want to come and work for you for less money for, you know, any of these things. I don’t even want to work for you for more money. No. You know?

But in. In compounding reputation, from like the first, you know, the first of all iPhone app. So the book, so the building audience, then when it comes time to do this thing, you know, I hate when you buy this, people are like, Oh, I trust you from this. Like, I was just having a conversation with, Justin Jackson, over Twitter DMS.

And so he’s the founder of transistor, who we used to host this podcast and doing amazing things. He’s actually the longest running, paying customer of ConvertKit. And I know him, you know, from like, blogging’s like that whole world, you know, it nine years ago. and like that relationship has been super valuable, I think for both of us, but it started. You know, way back here and is
now, you know, valuable to both of us as we run software companies. So I’m curious for you, like what’s your take on, on relationships and how those play into leverage and compounding.

Eric: [00:20:16]
Naval originally called it labor leverage, and I think I’ve reframed it as people because I think that’s so like, what you said is exactly true and people leverage is so much broader than labor, right? Like if you, if you’re stuck

Nathan: [00:20:27]
Labor implies that, like I founded Walmart and now I’ve got a hundred

Eric: [00:20:31]
Yeah.

That is permission that I’m compensating people directly, that it’s like all or nothing that it’s, you know, you just kind of have that image of like people, you know, dragging stones around building the period pyramids. And you’re like today, People leverage, it looks much more like a network of kind of trusted, like high credibility people.

It looks more like an audience. and that’s not, it’s not compensated leverage, right? Like some of those influential, like highly leveraged people on earth are just people with big fan bases. And that’s all kind of like double opt in. People are expressing themselves through their dedication to a person and an artist, you know, a writer, a musician, Or so there’s the, there’s kind of like the audience fan base.

And then there’s the, kind of what you’re alluding to though, like friendship, credibility, network support, and then, then all the team and people that actually like who skills and vision and belief you need to kind of. Build a product that takes more than one person’s skillset. you know, we talked about building those 50 skills, but like practically what happens is, you know, you build 10 or 15 and you find other people with 10 or 15 and you kind of combine them into like, Hey, I’ve got this credibility and this experience and this audience and this product idea.

And they’re like, Oh great. I have this engineering expertise in this, you know, this credibility and I can build a team and I can make architecture decisions. And somebody else comes in with like, You know, some, some Content expertise and like those, you, you are all, each other’s leverage. Like that’s the other thing that people want, which is like, leverage is a little bit of a.

There’s this connotation that it’s like to get leverage over somebody like the mafia kind of leverage. and I think that some people will kind of hear people leverage and they’re like, Oh, I don’t like it. which is totally fair. Like this is not about coercion or persuasion or anything. This is about like, we are all using each other’s skills and expertise.

And like, you know, you are writing a book to serve your readers. They are buying a book to serve, you know, to reward you for that. And like they’re getting 10 years of your experience. For $40, like that’s a bargain of a lifetime. so there there’s a lot of, you know, I think we need to get comfortable with that.

You know, we’re all, we’re all serving somebody. We’re all somebody’s customer. We’re all, you know, somebody’s, somebody’s chef somebody somebody’s waiter, somebody Writer, somebody entertainer like.

Nathan: [00:22:57]
Yeah. And I think. Even on the relationship side of having the ability to email someone, and then, you know, have them say like, yes, I’ll make an introduction to this person or, or like you and I have built leverage in like personal brands where in both ways, right. I’m emailing you and say, Hey, will you come on my podcast because I’m a fan of your work.

And you’re saying like, yes, I would love to come on your podcast. Cause I’m also a fan of your work.

Eric: [00:23:24]
I’m a fan of your work. Yeah, exactly.

Nathan: [00:23:26]
You know, and so that’s because we’ve both built leverage in those areas from like ultimately, but started with writing and teaching and, you know, in some way, and then that just compounding over time.

Eric: [00:23:37]
Yeah. And there’s no, one of the questions I get from people is like, do I have to like go be a public internet person in order to like, build leverage? and I know Lisa, like the short answer, I think there’s, you know, every, like, Industry probably has their own version of this. Like you still have reputation yourself, credibility, you still have network.

You know, you don’t have to be out there writing blog posts in order to build, leverage through network and friendships and experience and, all those things. Although there is a unique dynamics to like an uncapped audience, like worldwide audience, that I think is worth people paying attention to.

Nathan: [00:24:14]
What are some of those other things? Right. So if someone’s saying I don’t want to be. The public internet person, which I think is something that people wrestle with a lot, especially today, as you see it, like it’s always been a really high upside thing, but we’re also seeing, like, it can be fairly high downside, you know, especially if you don’t have, a thick skin or, you know, like if you, you, there’s more to lose now.

There was always a lot, but I think maybe there’s more examples of, the negative side of things.

I’m curious. What other types of leverage you would point people to when they’re thinking of like, I don’t like the whole audience blogging podcasting thing, like I’ll stay as a reader, listener things.

Eric: [00:24:55]
Yeah. I think so. There’s, there’s definitely there’s people who are increasingly doing it anonymously. so there’s, you know, there’s, there’s the pseudonym, there’s the anonymous route.

Nathan: [00:25:05]
What do you think about that?

Eric: [00:25:06]
I support it. I support it.

Nathan: [00:25:07]
Yeah. Would you have, like, have you considered doing it yourself of like, as you, you know, spinning up?

Eric: [00:25:13]
Yeah. Yeah. I’ve always, I’ve always thought about like, if you had to just like drop a match and like get rid of your identity and like start over tomorrow anonymously, like what would it be like, how would you do it? What could you do? Like, I think that was like a fun mental exercise. And then people were doing, I saw some, I saw, I don’t know if it was a guy actually tweet the other day.

He’s like, I just like abandoned my public persona with 30,000 followers and like started over with an anonymous account. And like, I’ll never tell you who I was, but like, here we go on while you’re unplugging and plugging it back in. and I think for some people that’s like, I think it will be increasingly common in the crypto world.

Like we’re we can see a bunch of that already. I mean, there’s like. Anonymous accounts at the head of like a billion dollar Dow, treasury, like that’s crazy. but makes sense. It’s also like I was, I was thinking about this earlier. There’s like, have you read the sovereign individual and like all of the logic of violence and it’s like a very fashionable will kind of like crypto book to read.

It basically says like the logic of violence determines the structure of society. and you can kind of get into this thing where like, if. No one knows who you are. Like the safest thing you can be as anonymous, in a world where like anybody could show up at your house at any time. Like the safest thing to do is just have nobody know who you are and where you are.

Because if they know you’re in control of a billion dollar Dow, treasury, that’s not a good thing like this, like there’s no physical thing that can protect you or as much more expensive than just being digitally anonymous and untrackable. to the extent that you can. So I think there’ll be increasingly common.

I think like it’s a very simple solution to kind of like workplace equity and fairness is just like your, your track record is associated with a pseudonym. not, not a real world identity or name or photo and like, that’s fine. I would have no problem hiring anonymous people. I kind of do it accidentally online already through marketplaces.

Right. I don’t know if the person I hire on Upwork. Is that real name or no, there’s a real photo. Like I just know that they have a bunch of good reviews and I pay them to do the work and they do it. And that’s great.

Nathan: [00:27:33]
It’s interesting to think about. Like people doing that with audiences. And there’s plenty of examples that we’ve come to, like, you know, a Twitter account, like Ram capital or, or, you know, there’s, there’s plenty of them.

And I don’t think it really holds you back. Like, in some ways, I wonder if it’s speed things like speeds up audience growth or, or leverage in some of those ways. So, okay. Ways it’s harder, right? I can’t be like, Hey Eric, Hey, you know, David who like texted a bunch of friends and be like,

Eric: [00:28:05]
Yeah.

Nathan: [00:28:06]
Wrote this post, will you promote it? That kind of thing.

Eric: [00:28:08]
For, for people who are yeah. Starting from zero without those friends and connections, it’s probably, that was probably a wash. but it’s definitely a challenge if you already have them. I think it’s a little harder to trust somebody. Like, it takes me a little bit longer to build a mental model of an anonymous.

Person. but you can mean advantages. You can build a brand that’s much more extreme than a real world person is willing to be.

Nathan: [00:28:37]
Right,

Eric: [00:28:38]
I don’t know, there’s always been like a joke accounts that are just

Nathan: [00:28:42]
Right.

Eric: [00:28:43]
Things. th that tend to grow really quickly,

Nathan: [00:28:46]
What was the, like, in the, start of space? Fake Grimlock.

Eric: [00:28:50]
Yeah, that’s what I was thinking. That that’s the name I was trying to come up with. Yeah. The like caps lock, dinosaur monster guy. I mean, startup startup called Jackson was a really famous one. yeah. And it’s like those accounts build credibility, like huge credibility. and I think, I don’t know, I don’t have a good example off the top of my head of somebody who’s like turned that into a really big business, but like, I think there’s plenty of people doing, doing great through anonymous accounts.

Nathan: [00:29:16]
Yeah. It’s interesting. Once it probably is harder to get traction in some ways, but then what you’re talking about of being able to take strong stances, you know, the internet, both rewards and punishes. Strong stances. Like if you’re out here going, like, you know, leverage is, is, is nice. Like if you can get it, I don’t, know.

You don’t, you’re like all soft about it. No, one’s going to pay any attention. But if you’re like, Hey, this is a thing you have to understand. Here’s why it matters. And all of that

Eric: [00:29:40]
Yeah.

Nathan: [00:29:41]
But they’ll really pay attention. They’ll read the posts, they’ll share it.

Eric: [00:29:44]
So that’s a thing I’m like, that’s a card I’m pretty unwilling to play because I’m like a normal person who wants to actually represent myself as a normal person online. And like, it is pretty. I think it’s kind of trivially easy to win the like outrage retweet game. And there’s people who just like tweet hot takes in deliberately clumsy ways to like, get the reach of people, like quote tweeting and like dunking on them.

But like all the time they’re getting more followers and people show up to defend them. And I’m just like unwilling to do that, even though it clearly obviously like works for gaining a bunch of followers. but like if you were to set off at a, as an anonymous account to do that, like easy, right.

Nothing to lose. That’s your brand from the beginning.

Nathan: [00:30:27]
Okay. So we were, before we went off the anonymous direction, we, we were talking about, like other types of leverage that, you know, isn’t relying on, on that audience or reputation.

Eric: [00:30:38]
Product is leveraged and a very common like starting place. Right? So anything you can record, you know, at the end of the course, I kind of try to codify these like 10 laws of leverage. That’s like these little triggers to like remind you and like turn this into instinctive behaviors.

And one of them is don’t repeat yourself, record yourself. So when you hear yourself telling the same story over and over again, you should be writing it down. You should be recording it as a video you should do as a Podcast, you should, whatever. And I think it’s easy to underestimate the power of like creating something that can serve hundreds or thousands of people in parallel and into the future.

And like, you know, people will make a YouTube video and it only gets like a hundred views and they’re kinda like bummed about it. I was like, Like do the math on that, like ROI, like that is a miracle. Like if a hundred people listen to this podcast probably way more are going to, but if a hundred people listen to this podcast from one hour of our time, like, That’s a crazy miracle that couldn’t possibly have happened a hundred people in a room and I’d be like sweating, but like 5,000 people are going to listen to this.

And that’s absolutely wild. so think like product leverage at almost any scale is like a miracle that we see every day that we’ve just forgotten is a miracle. and. When you are prolific with that, even if you don’t like you get good at it fast, and that leverage has its own kind of compounding, in, in, in a way being prolific is like its own form of credibility.

Like you make a thousand podcasts, like you’re probably not going to suck by your thousands Podcast, no matter how slowly you improve, you just can’t not get better.

Nathan: [00:32:23]
What makes Seth Godin has this thing that he says, like, I will come on anyone’s Podcast. You just have to have recorded at least a hundred episodes. You know, and partially cause he’s going to, like, I want you, I want to make sure that you’re consistent with it. I don’t wanna be your third guest on your fifth guest.

You know, like most Podcast die after, you know, probably three episodes. and so he’s like saying, I want to help you, you know, I like encourage that, but like here’s the bar that you have to get to. And hopefully you won’t be a terrible interviewer by the time you get to a hundred episodes, you know?

Eric: [00:32:54]
Yeah.

Nathan: [00:32:54]
Credibility and, and all of that, that comes with being prolific.

Eric: [00:32:58]
Yeah, that’s a great rule. And then you’re not evaluating it, then you’re not thinking about it, then there’s going to be, there’s certain to be like some sort of guaranteed minimum audience, probably by the time they get to a hundred episodes. yeah, that’s, that’s really smart.

Nathan: [00:33:10]
Something else, on productizing level or product as a leverage side of things that maybe it made me think of is we have a internal Podcast for that ConvertKit team. that is each team member being interviewed about their life story. by another team member. And so you’re like outgoing on your run.

And you’re thinking about like Charlie, who’s our creative director and you’re like listening to her life story. And so there’s a bunch of, she records that once, for an hour, you know, and then now the 67 other people on the team, and then everyone who joins from today. Forward, like listens to that. And then now when I sit down or anyone sits down and talks to Charlie, then it’s just like, Oh, tell me about growing up in Brunei.

And like this whole thing, like, we can shortcut so much for that because

Eric: [00:34:01]
Yeah.

Nathan: [00:34:01]
story and she’s listened to mine. And like, we

Eric: [00:34:05]
That’s as a brilliant application, as a brilliant, there’s so many, like so many. Onboarding’s have the like, Oh, like go get coffee with the whole team. And so like that just breaks so fast. As soon as you have like an onboarding class of five as like what, I’ve five coffees this week. Like I’m going to spend 10 hours, like

Nathan: [00:34:22]
Yeah.

Eric: [00:34:23]
hanging out with new members of the team every week.

But that’s brilliant. And then you can just kind of wait until you’re like, Oh, I have my first meeting with Charlie next week. like I better. Go get some contacts and they hear what it’s like. Yeah. Listen to her episode, hear what it’s like to meet her here, like where she’s coming from, what she does here, what her goal is. That’s super, really, I love that.

Nathan: [00:34:43]
You said there’s 10 rules, or like the key things that you reminding people of? What are a few others of this.

Eric: [00:34:49]
Oh, okay. so one I have, that’s like the one I probably have to tell myself the most often, is, is do the things only you can do. I find myself like do the work only you can do is a really good way to remind yourself, like, what’s my highest invest use, how much stuff am I doing that? Like, Either doesn’t need to be done.

Someone else can do for me, or could be automated, could be, you know, delegated, whatever. that one is, I catch myself doing that a lot. and then sometimes I’m like, no, I’m kind of enjoying this. Like, I’m good. Like, I’m fine with that. but usually the stuff that only you can do, is the highest impact, like.

Longest term outcome stuff. It’s usually like talking to customers, giving, like creating a new sort of standard operating procedure, like figuring out, you know, some sort of high leverage like cops situation, which is speaking of, I have listened to maybe two or three separate interviews about your profit sharing system.

And I absolutely adore it. I think it’s brilliant. I love kind of collecting the stories of like Nucor steel and Glen.

Nathan: [00:36:02]
yeah.

Eric: [00:36:03]
I feel like you are. In that lineage in a amazing way.

Nathan: [00:36:06]
Well, thanks. We’ll, we’ll give it some time to see how it all plays out, but those are also the kinds of stories that I, that I like to collect. I’m curious in the, in like the collection of stories, side of things, like what are some of the stories, like favorite examples of stories of leverage, you know, or in different types of leverage, applied that are your go-to.

Eric: [00:36:26]
I think, I really like this like example of, real estate agents. So I worked with real estate agents a lot over the last few years, and I kind of like Naval uses them as an example in the book of just being a high leverage job because your inputs and your outputs are disconnected. Most realtors are not actually it’s.

Using that like, they’re not actually adding leverage, but the ability is there for any of them to add it. if they, if they choose it’s really independent contracting sales job, right. and most sales jobs have, this is just, everybody can relate to realtor. So one, one lesson I have in the course takes like realtors, four different realtors that are operating from like the first one is just like a very normal, basic, you know, Linear sort of time and money relationships.

She does like 10 clients a year. It makes 50,000 a year. Okay. Normal, normal day job. The like best realtor in a typical office makes like. $400,000 a year. and it’s usually because they have like a full-time personal assistant or to the transaction coordinator. They’re usually spending money on advertising.

They’re usually spending money on, tools like upgraded tools and systems. and they have like enough of a, more speaking of like opt in people leverage. They have past clients who are driving word of mouth for them. so like that is a really. That is a high leverage thing that people don’t think of as leverage, because it’s not labor is not even really audience.

It’s just like happy customer base. and then you get into the order of magnitude above that, and you’ve got the realtor. Who’s like the number one realtor in the city. And they’ve got a team of 50 agents below them that are all doing the stuff that the best agents in the office are doing. They’re all paying for personal assistants, they’re all paying for marketing.

And that person is like coaching and managing and recruiting all of those agents and building a team, a whole team of them in a culture that. Helps those agents become better and earns a percentage of all of their earnings. and this guy, I was wondering how far this went. And so I looked up, who’s the number one real estate agent in the country.

And it’s this guy in Texas named Ben Cabalero caviar, I think is his name. And he started out as just like a normal realtor and he kind of found his way into this, like a niche of new home builders. And so he’s got now. this team, like, I don’t know a team dozens under him. And like half of them kind of work on these partnerships with new home builders who are companies that build like dozens to hundreds, to maybe thousands of homes per year.

And they have to figure out how to sell them involved. And so they just don’t give him like here’s a thousand listings, like go sell all these houses. And then he’s got a software team that is building a platform to actually like manage the inventory of all these houses and all of their listings and all their sales.

And then like, So he, he’s basically like a founder of a software company with a BD team and like designers and marketers and engineers, but he’s still functionally a realtor. And he earns commissions as a realtor on thousands of homes a year. And my napkin math is that this guy makes like a hundred million dollars a year.

That could be like 50 million high or low, but like it’s crazy either way. And is the ultimate illustration of like, if you add system, if you systematically add leverage. Is of these four types. You can go from a very normal job, to an absolutely insane kind of like founder situation and the mindset and the instinct to like add leverage where you can and in a safe kind of, sustainable way.

That’s manageable. Like. Is a huge, huge difference. You have to find your way into a place where you don’t have that ceiling and you can reinvest in that leverage and like you get the benefits of that. and there’s a lot of traps or places where that’s not as true. but if you can find that place and you can develop that mindset and like get into it as a habit and then go for, you know, 10 or 20 years, you can get to some crazy, crazy places.

Nathan: [00:40:32]
Yeah, it’s not that leverage plus compounding, but the two of them together, pretty powerful. You have another tweet, You talked about blockbuster. he’s a Netflix didn’t kill blockbuster being over leveraged, killed blockbuster. I’m curious some of the, like the downsides of leverage or people misuse it or, yeah, don’t understand what they’re flying with it.

Eric: [00:40:55]
Yeah, yeah. Leverage. I mean the lever goes both ways, right? Like leverage pushback. and that’s actually like, so leverage law eight and nine levers. A lot of our aid is live by the lever.by the lever. Like if this is the game you choose to play, like understand that it can hurt you. and levers a lot.

Number nine is like leave room for things to go wrong. which is just kind of the like normal. Peterson way that all the investing nerds would say margin for margin of error. but there’s a difference between being over leveraged and being super leveraged. So like you can have really, really long levers, right?

Like Warren buffet has a really long letters. he’s got billions of dollars. He’s got multiple many companies. He’s got, you know, 250,000 employees. but if those levers push back on him, they’re not dangerous amounts of large and he can. Absorb that pushback, kind of with equanimity, because it’s not just because this long does it mean the travel is high and doesn’t mean there’s like a huge force pushing on the other side.

And so there are people who, you know, if you make $50 an hour and you hire an assistant for $40 an hour, And try to outsource your whole job and then like, there’s no room for things to go wrong. And if there’s pushback on that other side of that lever, you know, your revenue changes, your costs, change.

Something happens like all of a sudden you’re in deep shit because that lever is pushed back too hard on you. You don’t have the like capacity to absorb that blow. and now all of a sudden this is like launch you into space and, and you’re done.

Nathan: [00:42:31]
Gross margin matters. When you’re

Eric: [00:42:33]
Yeah.

Nathan: [00:42:34]
how, like, to what degree you can use leverage

Eric: [00:42:37]
And, and as you layer things on top, right? Like if you’re making a hundred dollars an hour and $10 an hour system makes a ton of sense, but if you hire five of them like that stacks. And so all of a sudden, so like you’ve got to run the math and, and be cognizant of all the other levers, things like product leverage.

Like we talked about the risk of being. Public person. And so like, that’s less quantitative, but it’s still intangible and it’s still a form of risk. but you can layer a lot of those on top of each other before you have like financial risk associated with that. but that’s not true, you know, when you’re, when you’re playing like leverage trading games and like, you know, I’ve, I’ve seen plenty of people lose way more money than they thought was possible because they were using leverage that they did not understand.

And when those good. Multiplied out, things can move really quickly. and leverage, leverage just gets you more of what you’re already getting. It doesn’t change your outcome. So like, if things are going poorly and you add a bunch of money to it and make things happen poorly, faster, and more often than like you have not done yourself, any favors, except that maybe we make it more clear.

What were you were already getting? so yeah, it’s a very, I, you know, I say to anybody, who’s thinking about the course, like this is not for people who do not know. What they’re doing, or do not, are confident in the direction that they’re heading and are confident, like investing money to get more of the results that are already getting.

Nathan: [00:44:05]
yep.

Eric: [00:44:06]
Is for like, getting more of what you’re already getting.

Nathan: [00:44:08]
Yeah, that makes a lot of sense. somebody else that I want to turn to talk to a bit is the, the book, the Almanac of involve Africa, which is, has replaced, well first rework, and then anything you want as my most gifted books. so thanks for, thanks for writing that. it’s just one of those things where I’m like talking to someone, whether it’s a sibling or a friend or someone else I’m like.

This will change your world. Know like it is the most condensed way I can get them to think in a completely different way. So thank you for doing all of the work to, to put that together. I’m curious how that started. like, what, what inspired that project and then how did you start working on it?

Eric: [00:44:51]
Yeah. I mean that, the inspiration came really from a podcast that navel did with Shane Parrish. on the knowledge project, it was an awesome interview. I listened to it two or three times. and I was a little, like I’d been following them all for 10 years, right? Like, since 2009, maybe when he like, started writing on venture hacks, there’s really still an awesome blog.

I’ve been following him and learning all these, you know, what are used, mostly talking about startups and investing for a long time. And this interview with Shane Parrish was the first time he kind of talked about like some of his, some of his like principles for how to build wealth and some of his principles that he had been like kind of teaching himself about the philosophies and practice and habits of happiness and building happiness, and that you are totally in control of your own happiness.

And I thought this was such a good Podcast. And I love podcasts. I listen to them a lot, but I’m also very aware that like, most people don’t listen to podcasts and even if they do the discovery is not great of whole episodes or even within them. And I just thought it was such a tragedy that most of the stuff that of all is shared on Twitter and in Podcast is just in such a like difficult to access kind of subcultural like ephemeral format.

And I spent. I mean, I’m, I’m, I’ve been curating and assembling and editing and writing for a long time. And, it was kind of between projects. I was like, all right, I’m going to go like, Just throw this idea out there. and I was like, you know, I saw the tweet is so dumb and I just thought up a Twitter poll is like, if I wrote the book of knowledge and like compiled a few of his important transcripts, like, do you want that?

And like treated it and went to bed. And I woke up to find that Naval had retweeted it and like, you know, 5,000 people were like, Oh my God, yes, please do this. And Naval was like, I’m not gonna provide you all the materials, like rock on. And I, I don’t have any reasonably that he knew who I was. I had no connection or, kind of prior access or anything like that.

And, I mean, he gave me an export of his whole Twitter history and everything else was public record. I just started doing transcripts of the podcasts and interviews and books and, just kind of like threw it all on the table. It was like, all right, let me like start kind of. Learning to condense this and makes sense of it.

And I mean, it was well over a million words of source material that I just kind of like started organizing and distilling and lumping into ideas and categories. And, I just, I mean, I was excited to like swim around and all these ideas and like absorb them and learn them. And. spend time like reading and rereading and just do this giant, like weird conceptual jigsaw puzzle and make it easy for people to read and get these ideas in their own head and put it into a format that would last for, you know, hopefully decades and be relevant for people for a long time.

Nathan: [00:47:30]
I didn’t realize how early in the project didn’t have all got involved or like, you know,

Eric: [00:47:35]
Yeah.

Nathan: [00:47:36]
gave his blessing. That’s pretty cool,

Eric: [00:47:37]
Yeah. I mean, he’s got, I have no idea. He was probably like, yeah, sure. Go for it. Like there’s no chance you’re actually gonna finish it. I I’ve, I have no idea. but he’s, he’s pretty like, you know, and then we, we kind of came to terms he’s like, make sure there’s a, you know, free version available for everybody and, make sure that it’s clear that like I’m not selling it.

And not earning money from it. because it would be critical to some of the material that’s in the book and all like done and done, like. Let’s go and it took me three years to finish it and publish it, but it’s, we got out there and I’m really, I’m proud of it. And I think it’s a really, I like, I really enjoy hearing that people got a lot out of it.

I wish I’d had it at 18. but the next best thing is, you know, making sure that the next next generation can have it and are better educated than we were. so

Nathan: [00:48:27]
right?

Eric: [00:48:28]
we all end up better off in the future, you know?

Nathan: [00:48:29]
Yeah. What are some of those other cool things that have come from it? You know, maybe unexpected you go from, I’m gonna throw out this random tweet and go to bed and then fast forward a few years and you’re like, okay. This, you know, this thing happened And, it’s because of what ultimately started with a tweet after it podcast episode.

Eric: [00:48:45]
Yeah. I mean, it’s, it’s a thousand little things, you know? just like getting DMS for people that are like, you know, I gave this to my 18 year old brother and like, it totally changed his life. people who are like actually made me drop out of law school and like go become a software engineer because I didn’t.

I didn’t understand why technology was going to be so key. And, it’s just, it’s really interesting to hear, you know, it’s a bunch of individual stories, I think, you know, it’s been cool to like kind of come on podcasts and talk to people and meet them. And, I’m really excited about, this format.

Like I think there’s so much valuable stuff that’s created in a femoral digital mediums, and I think books just will always have a place. And, and that kind of transformation and that, that practice of curating things into like something really timeless and taking somebody’s whole body of work. And.

Turning that into, like this has always been my favorite genre of book, right? Like I love Peter Beth Mullins books, and I love Porcelli’s Almanac and the letters of Warren buffet and, like principles. I think, like it’s not, everybody’s going to sit down and write their own book and dedicate years to doing it.

But I think the ability to kind of like condense someone’s best advice and worldview and things into, into a book that someone can read in a few hours and like really get the experience of a lifetime. Is really cool and valuable, and I hope we see more of those. I certainly intend to keep, keep doing them.

Nathan: [00:50:21]
Yeah. Yeah, that’s great. is there something that you’re working on

Eric: [00:50:24]
not, not that I can talk about yet, but,

Nathan: [00:50:26]
yeah,

Eric: [00:50:27]
Yeah, I got it. I got a new spreadsheet. I’m working on it.

Nathan: [00:50:31]
I know they’re new million words of source material out there.

Eric: [00:50:33]
Yes. Yes. I know there are New million ways.

Nathan: [00:50:35]
That’s not intimidating at all.

Any numbers that you can share from like the book launch or something like that? I’m always curious how, like the scale of something like this, especially when it has the free version. And so even in the number of people who read it or anything like that?

Eric: [00:50:51]
Yeah. I mean, we have like the site, the page views on the site are, are like, I think, well into the millions now. or somewhere in the mid six figures for, I think like digital downloads, that’s harder to track, but it’s like,

Nathan: [00:51:09]
Yeah.

Eric: [00:51:10]
Yeah. It’s a lot.

Nathan: [00:51:11]
And then I assume a substantial number of people going like, no, I don’t want the digital version. Like, I’ll take the, you know,

Eric: [00:51:17]
Yeah.

Nathan: [00:51:18]
like, I think I’ve bought eight or 10 copies of the book.

Eric: [00:51:23]
Yeah. Impossible. The answer is like what the effect the net effect has been like, does the free version drive more sales? Like, I’ve definitely have heard stories of people. Like I read the free version and it was a few chapters in and the like, then I went and bought the physical version or finished the free version.

I loved it. And so like, I wanted it as a trophy, a physical version, or they read it and then they gift it or like, whatever. so yeah, it’s, it’s impossible to know, I think, but like, you know, my goal for this was just like, Please. I hope it gets back to cash that I put into like making it professional and like well-designed and well-published and, it has done that and more.

Nathan: [00:52:02]
Right.

Eric: [00:52:03]
You know, Naval seems happy with it as a like representation of, of him.

Nathan: [00:52:10]
Have there been like, did it result in more conversations in interaction with evolve over time or has he been pretty much like thumbs up from a distance?

Eric: [00:52:19]
Like, you know, we, we actually never spoke live about this. Like we did it all through email. I kind of kept them updated and he was kinda like, cool, let’s go ahead and like, as comprehensive, as that’s a lot, like yeah. yeah, so, no, I appreciate, I mean he was, his support has been like.

Super super valuable. And I’m actually not sure that I would have felt good about doing it because like, there’s this huge risk of kind of like putting words in his mouth. and in opening him up to misinterpretation by just like recontextualizing all of this stuff, which is kind of like what I’m doing by definition.

So it’s, it took a lot of faith I think. and I, I appreciate the kind of trust he put in me there to do it. and yeah, I’m glad to see it’s, you know, if I can, I can be positive, like a piece of people finding their way to him and understanding that better. Like that’s, that’s awesome.

Nathan: [00:53:20]
Yeah, that’s great. And I’m excited for more of that format, because like you said, there’s a lot of people who have this like wealth of knowledge and, and Content, but it’s not like packaged nicely that I can either read myself or like give to my brother or anything like that.

Eric: [00:53:35]
I can’t wait to do the Almanac of Nathan Berry.

Nathan: [00:53:37]
Yeah. hopefully I’ll be one of those people that like writes it all down myself rather than me, you know, but I’d be down, Yeah, well, I’m, I’m curious, like as we, as we wrap up, where should, well, first, what are you working on most right now?

And then where should people go to, to follow you?

Eric: [00:53:55]
Yeah. My main project right now is a course on leverage. So, this is, this is all very top of mind for me. The biggest question I get from the books, people who read the leverage chapter and are kind of like, that’s awesome. I totally get the importance of this idea but, I don’t know how to apply it to my life.

So I kind of have been really distilling frameworks and ideas and collecting stories and like putting them all in this course, that will launch soon. And it’s kind of like quietly in beta, letting people in as we get confident that like we got, the right kind of level of fidelity and things here.

So, that’s, that’s a huge focus for me right now. I’m really excited to be like building my first course and like getting to kind of put my hat in this ring of education. And I think, I really am enjoying experimenting with like, I want to provide the flexibility and availability and like kind of perfectly available, of, of asynchronous, like evergreen course with a layer of kind of very light accountability and social connections, and community that comes with it.

So I’m trying to pull the very best of like a high-end very expensive cohort-based course and, like, permanently available kind of course and like merge them into one here. So it’s a little bit of experiment in medium and like getting to explore this topic that I really like. so that’s really cool.

That’s on my website: ejorgenson.com, And, I spend like way too much time on Twitter. So, if anybody wants to come hang out with me, like I’m easy to find.

Nathan: [00:55:29]
Sounds good. Well, thanks for coming on. We’ll both had our separate ways. We’ve got stuff going on this evening, but, it was good to catch up and I’m excited to see the course come to life.

Eric: [00:55:38]
Yeah. Great to talk to you. I can’t wait to, to flip the mix and, have you on my podcasts and, get to dive into more of the story. I think, I think you’re going to be a perfect, like exemplar case study of intuition of leverage and building that ladder. And I can’t wait to dig into it.

Nathan: [00:55:54]
I love it. All right. We’ll chat soon.

Eric: [00:55:56]
All right.