Why does Naval emphasize 'leverage is virtually free in the internet age'?

This is an excellent question, as this concept forms one of the cornerstones of Naval's philosophy. Let me explain it in plain terms.

Why Does Naval Emphasize That "Leverage Costs Nearly Nothing in the Internet Age"?

Hey, great question—this often puzzles people when they first encounter Naval's ideas. To understand this statement, we need to break down two things: what "leverage" means and why it was historically "expensive."

Let’s Use an Analogy: Imagine Opening a Bakery

In the past, if you wanted to grow your business and reach more customers, what kind of "leverage" would you use?

Labor Leverage (Hiring): You can bake 100 loaves daily yourself. But for 1,000 loaves? You’d need to hire nine bakers. This leverage is expensive, requiring salaries and social security payments.
Capital Leverage (Investment): To expand—a bigger shop, industrial ovens, or even a chain—demands huge capital. Either you fund it yourself or borrow from banks (with interest) or investors (giving away equity). The barriers here are immense.

In the traditional world, leverage existed but came with costs, barriers, and required permission (workers must agree to be hired; banks must approve loans).

Now, Consider Naval’s "Internet-Age Leverage"

Naval argues the internet created two unprecedented forms of high-impact, low-cost leverage:

"The newest forms of leverage are 'code' and 'media.' These are permissionless levers. No one needs to grant you approval to use them—that’s why they’re so powerful." — Naval

Let’s unpack each:

1. Code (Software / Code)

Imagine spending a month developing a brilliant to-do app instead of baking bread.

Production Cost: Mostly your time and effort.
Replication Cost: You upload it to the app store. What’s the extra cost for user #1 vs. user #1,000,000? Almost zero! Server fees slightly rise but are negligible compared to revenue.

You write code once, and it operates like a robotic army—serving millions globally 24/7 with almost no added labor per user.

This is zero-marginal-cost replication. Each new bakery loaf needs fresh dough and baking; each new app user just copies digital code.

2. Media (Media / Content)

Suppose you create a video tutorial sharing unique bread recipes on YouTube or Bilibili.

Creation Cost: Primarily time/effort—maybe a smartphone.
Distribution Cost: Cost for viewer #1 vs. viewer #1,000,000? Again, near zero!

Your knowledge, insights, and skills—via podcasts, videos, articles, tweets—can replicate infinitely, reaching anyone online. Create once, and it persistently builds your brand and influence.

In Summary: Why Is This Leverage "Nearly Free"?

Permissionless:
- No approval needed to write code or publish online. Just an internet-connected device. This demolishes traditional monopolies of capital and power.
Extreme Scalability:
- A bakery scales linearly (one worker → marginal output). Code/media scale exponentially. One viral video can gain millions of followers overnight—unimaginable for a baker.
Zero Marginal Cost:
- The core insight: serving one extra user costs virtually nothing. This disrupts traditional business models, enabling solopreneurs to serve global markets.

Thus, when Naval states that "leverage costs nearly nothing in the internet age," he reveals a profound shift:

Today, anyone can amplify their unique knowledge and skills exponentially through code and media—leveraging these powerful tools to escape the "time-for-money" trap and achieve exceptional wealth/influence. The startup cost? So low it's almost negligible.

His call to action: Stop fixating on traditional labor leverage ("jobs"). Instead, learn, create, and wield the internet’s near-free superpowers!