Why should we avoid scaling solely through human effort?

Okay, let’s talk about this topic. This question actually touches the core of modern business and personal growth, especially within the ethos of Naval Ravikant, where it's a very crucial concept.

Imagine you run a wildly popular handmade baozi shop. Your baozis are absolutely amazing, and customers flock to you.

Initially, it’s just you in the shop, working yourself to the bone to make 200 baozis a day. The business is so good you decide to expand.

Method One: Scaling with Labor Alone (Linear Growth)

The most straightforward idea is: hire another master chef just like you.

You + 1 chef = Can make 400 baozis a day.
You + 9 chefs = Can make 2000 baozis a day.
You + 99 chefs = Can make 20,000 baozis a day.

Sounds fantastic, right? But problems quickly arise:

Costs Increase in Lockstep with Output: For every extra dollar you earn, you pay nearly another dollar in wages. Your profit margin likely doesn't change much. To double output, your costs (wages, rent, overhead) must also roughly double. This is a very "brute-force" way to grow.
Management Complexity Grows Exponentially: Managing 1 person is simple; managing 10 requires scheduling meetings, creating rosters, handling conflicts. Managing 100? Heavens, you need HR, managers, complex reporting structures... You're no longer a baozi chef; you're a "baozi shop administrator," overwhelmed daily.
Quality Becomes Extremely Hard to Control: Can you ensure the 99th chef you hire has skills identical to yours? Will they cut corners? What if they have a bad day and the dough doesn't rise? People are the biggest variable; the more people, the less consistent the product or service quality.
A Very Low "Ceiling": Your baozi shop is ultimately limited by physical space and human energy. Even hiring everyone in the city, you couldn't produce a billion baozis a day. Your scale is tightly shackled by the "human labor" factor.

This is the trap of scaling solely through labor: your growth is linear, but your troubles are exponential. The more successful you are, the more exhausted and ensnared you become.

Method Two: Scaling with "Leverage" (Non-Linear Growth)

Now, let's rethink this. You're still the master chef, but you're not satisfied just hiring more people.

You seek "Leverage". Leverage means using minimal input to generate massive output.

Tools and Automation (Code is the Best Tool):
- You stop being content with manual kneading and invest in an automatic dough-mixing machine and a baozi-making machine. This machine might be as efficient as 10 chefs, but it doesn’t get tired, doesn’t take vacations, is ready 24/7, and ensures perfect dough consistency every time.
- You develop a small app where customers can order, pay, and schedule pickup online. This app can serve tens of thousands of customers simultaneously, requiring just one backend operator. It replaces countless phone-answering and cashiering assistants.
"Products" and "Media" (IP is the Best Product):
- You realize the real value isn't your hands, but your baozi recipe and brand.
- So, you write the recipe into a beautiful cookbook, "Secrets of the Baozi King," priced at $50. The marginal cost of printing 10,000 copies vs. 100,000 is tiny—you put in the creative effort just once.
- You record a series of baozi-making tutorial videos and sell them online. This course can be bought by 100 people or 1 million people, yet you only recorded it once.
- Your "Baozi King" brand takes off, and you start franchising. Others open shops using your brand and standardized processes, and you collect licensing fees.

See the difference?

In the second method, your input (buying a machine, developing software, writing a book, recording a course) and your final output (serving countless customers, selling countless products) are not linearly related. Your revenue can grow 100-fold, yet your workload might only increase 2-fold, or not at all.

Conclusion

So why avoid scaling solely through labor?

Simply put, it's to break free from the linear fate of "one unit of effort for one unit of reward."

Labor is the lowest-leverage scaling method. It traps you in the cycle of "the busier you are, the poorer you get; the more successful, the more exhausted."
Tools, code, media, and capital are high-leverage scaling methods. They enable your wisdom, creativity, or product to be replicated thousands or millions of times, with minimal additional labor from you.

This doesn't mean people are unnecessary. On the contrary, people are vital. But their value should lie in what cannot be easily replicated or automated: innovation, decision-making, building relationships, and creating the "leverage" itself that can be amplified.

The ultimate goal is this: to liberate yourself and your team from repetitive "labor," and become the "brain" that drives the "leverage."