Career Leverage is like having a catapult to launch you forward, while everyone else is marching steadily forward (or for some, pulled backward). [Work in Progress: Part 04]
Great article clearly defines the thought process to make conscious decisions about whichever path you choose, but at least you will be doing so understanding the pro's and con's of both. Would have been very helpful for me 30 years ago, I suppose in an indirect way I split the baby in half maintaining a low leverage good paying job by aggressively managing my company savings plan and eventually 401K. This gave me the opportunity with each successful move in an out of company stock to function high risk / high reward while maintaining a steady cashflow. It worked out well while allowing me excellent work/life balance.
P.S. you might like my 'The Other Side of Enough' series, looking at those with financial independence. A few of them made it the slow-and-steady way via a low leverage job, e.g.
I've been binge-reading your articles for the past couple of hours, and this one is so clear about how one should approach their career! I'll be graduating soon and have been considering a performance-based job, but I've been hesitating. In my position, the downside seems barely existent, and it would be beneficial to try something that requires me to actively pursue it, rather than seeking a passive role. Thank you very much for this!
I've personally always liked more performance-based roles, as they're more motivating to me. But yeah, you have to take some downside (which usually isn't as big as people think, especially when you're starting out in your career).
As someone who has been in all of these leverage classes at some point, high leverage is a great choice early in a career when exploring a novel concept when you have little to lose if wrong, or mid/later career when you fundamentally understand a domain to exploit the pockets of opportunity that exist (TSMC). Great risk lies in the middle.
This is an excellent point. 100% agree with that early/later opportunity.
Early - I will encourage my kids to consider high leverage opportunities early in their career. COL is low, risk tolerance is high, experimentation is rewarded, and if something were to work out, then they'll experience the extreme value of compounding (as I am now).
Later - mid-career professionals underestimate how their established expertise/reputation can translate into higher leverage opportunities. And typically, they don't need to take on as much risk as those earlier in their careers. Hopefully they have a little saved up to create some cushion. And a little bit of risk can go a long way here. Unfortunately, too often people have become extraordinarily risk adverse + living without financial margin, so they can't take these steps.
Ok so this article is fundamentally flawed on many levels. I will expand on one of them:
The insinuation here is that low leverage jobs = bad, because there is no way for you to increase $/input. First this is false. You can incrementally increase $, and you can very quickly decrease input because you get better at the job.
Second, you are getting a LOT of stability out of these “low leverage” jobs (typing out low leverage itself makes Me cringe at myself). Sure you can be a “business owner” but that comes with so much risk and most fail. Like cmon dude you clearly haven’t started any business of your own.
Lastly, it’s time to stop demonizing people for working corporate jobs. It everyone has the personality to be an owner nor does everyone want to. You yourself NEED low leverage ppl so that when you do start a business you have someone to fucking hire.
Thanks for the comment, and even the attempt to takedown my essay. However, I covered what you critiqued in the piece:
1. I didn't say Low Leverage can't increase $/input, I said there is a "ceiling" that is "limited to predetermined guardrails." Then later, I outline 11 different ways to increase leverage, even in lower leverage jobs.
2. On risk, I said the exact thing you're saying I didn't say: "Low Leverage careers are stable and certain." "High Leverage careers are high risk. Your basic employability may be at risk on a day-to-day basis."
3. I'm not demonizing, I'm trying to outline how it is. Specifically: "I do not mean that having high leverage equals “good,” as in morally. There are many important, high value careers that are unfortunately low leverage in our system today." Plus, when hiring, I look for High Leverage type people.
Good. But the problem is you and people like you write these essays and people think that doing their normal job that they’re somehow losing out on life.
It’s okay dude, you can defend your article all you want but the insinuation stays the same. Bottom line is that you don’t do anyone a service by telling them to “become an owner” because not everyone can. And your ideas on how to have more leverage in a low leverage job are valid, but kind of pitiful.
Lastly don’t take this as a jab to your article. I know your first comment started off something like “trying to take down my article” and I’m not. If anything I’m providing a different perspective and it’s very valid. I’m not saying I disagree with what you wrote, I’m kind of just adding on and also saying I see a lot of this type of stuff lately and people take it the wrong way because they read this and think “damn I should quit my job in a loser in a low leverage job”
Also, to become an owner, the smart path is to work a low leverage job first, or even parallely. You just miss so much nuance, or the audience will miss nuance or not read critically and come to faulty conclusions.
We’re all just pals just discussing stuff. I’d say the same thing if we had a beer together. Check out my stuff and feel free to roast it too :)
The highest leverage definitely means the highest risk.
That's why I think there are options for increasing leverage over the course of one's career (looks like you have, as an example) and I'm not sure, say, founding a VC-backed business is necessary or even a smart decision for 99% of people.
Great article clearly defines the thought process to make conscious decisions about whichever path you choose, but at least you will be doing so understanding the pro's and con's of both. Would have been very helpful for me 30 years ago, I suppose in an indirect way I split the baby in half maintaining a low leverage good paying job by aggressively managing my company savings plan and eventually 401K. This gave me the opportunity with each successful move in an out of company stock to function high risk / high reward while maintaining a steady cashflow. It worked out well while allowing me excellent work/life balance.
P.S. you might like my 'The Other Side of Enough' series, looking at those with financial independence. A few of them made it the slow-and-steady way via a low leverage job, e.g.
MadFientist: https://newsletter.thewayofwork.com/p/put-off-life
Doctor: https://newsletter.thewayofwork.com/p/breaking-free
Lawyer: https://newsletter.thewayofwork.com/p/another-level
Consultant: https://newsletter.thewayofwork.com/p/waiting-decades
That's definitely one way to turn a low leverage opportunity into a high one.
The mistake would have been low leverage job + maxing out your spending, so you have nothing left, and only a low leverage job.
I've been binge-reading your articles for the past couple of hours, and this one is so clear about how one should approach their career! I'll be graduating soon and have been considering a performance-based job, but I've been hesitating. In my position, the downside seems barely existent, and it would be beneficial to try something that requires me to actively pursue it, rather than seeking a passive role. Thank you very much for this!
Sixth - thanks for your generous comment.
I've personally always liked more performance-based roles, as they're more motivating to me. But yeah, you have to take some downside (which usually isn't as big as people think, especially when you're starting out in your career).
However it goes, I wish you luck!
As someone who has been in all of these leverage classes at some point, high leverage is a great choice early in a career when exploring a novel concept when you have little to lose if wrong, or mid/later career when you fundamentally understand a domain to exploit the pockets of opportunity that exist (TSMC). Great risk lies in the middle.
This is an excellent point. 100% agree with that early/later opportunity.
Early - I will encourage my kids to consider high leverage opportunities early in their career. COL is low, risk tolerance is high, experimentation is rewarded, and if something were to work out, then they'll experience the extreme value of compounding (as I am now).
Later - mid-career professionals underestimate how their established expertise/reputation can translate into higher leverage opportunities. And typically, they don't need to take on as much risk as those earlier in their careers. Hopefully they have a little saved up to create some cushion. And a little bit of risk can go a long way here. Unfortunately, too often people have become extraordinarily risk adverse + living without financial margin, so they can't take these steps.
This was excellent!
Thanks for the support, Edward!
Ok so this article is fundamentally flawed on many levels. I will expand on one of them:
The insinuation here is that low leverage jobs = bad, because there is no way for you to increase $/input. First this is false. You can incrementally increase $, and you can very quickly decrease input because you get better at the job.
Second, you are getting a LOT of stability out of these “low leverage” jobs (typing out low leverage itself makes Me cringe at myself). Sure you can be a “business owner” but that comes with so much risk and most fail. Like cmon dude you clearly haven’t started any business of your own.
Lastly, it’s time to stop demonizing people for working corporate jobs. It everyone has the personality to be an owner nor does everyone want to. You yourself NEED low leverage ppl so that when you do start a business you have someone to fucking hire.
Thanks for the comment, and even the attempt to takedown my essay. However, I covered what you critiqued in the piece:
1. I didn't say Low Leverage can't increase $/input, I said there is a "ceiling" that is "limited to predetermined guardrails." Then later, I outline 11 different ways to increase leverage, even in lower leverage jobs.
2. On risk, I said the exact thing you're saying I didn't say: "Low Leverage careers are stable and certain." "High Leverage careers are high risk. Your basic employability may be at risk on a day-to-day basis."
3. I'm not demonizing, I'm trying to outline how it is. Specifically: "I do not mean that having high leverage equals “good,” as in morally. There are many important, high value careers that are unfortunately low leverage in our system today." Plus, when hiring, I look for High Leverage type people.
Like cmon dude you clearly didn't read my essay!
Good. But the problem is you and people like you write these essays and people think that doing their normal job that they’re somehow losing out on life.
I have no idea what you’re talking about.
It’s okay dude, you can defend your article all you want but the insinuation stays the same. Bottom line is that you don’t do anyone a service by telling them to “become an owner” because not everyone can. And your ideas on how to have more leverage in a low leverage job are valid, but kind of pitiful.
Lastly don’t take this as a jab to your article. I know your first comment started off something like “trying to take down my article” and I’m not. If anything I’m providing a different perspective and it’s very valid. I’m not saying I disagree with what you wrote, I’m kind of just adding on and also saying I see a lot of this type of stuff lately and people take it the wrong way because they read this and think “damn I should quit my job in a loser in a low leverage job”
Also, to become an owner, the smart path is to work a low leverage job first, or even parallely. You just miss so much nuance, or the audience will miss nuance or not read critically and come to faulty conclusions.
We’re all just pals just discussing stuff. I’d say the same thing if we had a beer together. Check out my stuff and feel free to roast it too :)
The highest leverage definitely means the highest risk.
That's why I think there are options for increasing leverage over the course of one's career (looks like you have, as an example) and I'm not sure, say, founding a VC-backed business is necessary or even a smart decision for 99% of people.