There's this quote from Archimedes where he said, "Give me a lever long enough and a place to stand, and I will move the world."
Most of our conversations about leverage focus on the lever. Things that allow one person's effort or judgment to reach much further than it otherwise could. But there are two parts to that quote: there's the lever, and then there's the place to stand. And I think we massively underestimate the second one.
Where are you standing? What are the conditions around you? What game are you playing? What's that game reward? Who are you surrounded by? All of these questions deal with where you're standing. And once you start exploring this, you realize how much the environment around a person can function as a form of leverage itself.
I call this Environmental Leverage, and often people don't factor it in.
This idea of Environmental Leverage is pretty simple. All it is is: the exact same quality, in the exact same person, can be worth almost nothing in one environment and be incredibly powerful in another. Because power, or ability, or strengths are often much more dependent on the environment than we usually admit.
So if I were to ask you, who would win the fight, a shark or a tiger? I'm assuming your first question would be, "Well, where are they fighting?" Because in the ocean the sharks are going to dominate, but on land it's helpless. The animals had the exact same traits, but in certain environments their greatest traits became irrelevant or mediocre.
And it's so often true with people. Someone might look lazy or mediocre in one environment, and then if you actually switch them into another environment, all of a sudden their abilities get maximized. Now, the person didn't change whatsoever, but the environment changes what the person is capable of doing with the skills they already have.
We can think of a trait that often gets classified as a positive. So think of patience. We talk about patience like a virtue. Warren Buffett often gets associated with extreme patience. But patience is only useful when the game rewards patience. So if you take Buffett and you put him inside of a fund structure where the investors can redeem their money whenever they get scared, or if you give him quarterly performance pressures, or if you compare him to the S&P every three months, what happens? How valuable is patience now?
He can be the most patient person in the world internally, but if his capital structure forces him to behave impatiently, then that environment has neutralized the trait. But then when you take his trait of patience and you put it in a structure like Berkshire with long-duration capital, insurance float, no one demanding their money back instantly and all of a sudden it becomes much more valuable.
And so I see this dynamic happen often, where we spend so much time thinking about: How do I get better? How do I become more disciplined? How do I think clearer? How do I get more productive? And those are, and can be, useful questions. But we rarely ever explore the second part of Archimedes' quote: where we're standing. Start asking yourself: what conditions would make the best parts of me become more valuable? That is a very different question.
We might see someone who is intense, or aggressive, or obsessed, and that's often viewed as a negative. But if you put them in the right environment, that gets rewarded. Aggression can make someone in one environment absolutely indispensable and create an incredible company, become an amazing investor. But it can also destroy them in another. It could be the worst thing possible for your marriage. So that dynamic, that your Achilles heel in one game can actually be part of your competitive advantage in another, is really interesting.
Growing up I loved watching the lacrosse player B.J. Prager who was known as a crease attackman: he would literally stand next to the goal, and his teammates would jam the ball on the inside to him so he could shoot very quickly and score. And B.J. Prager scored a crazy number of goals. He actually scored the overtime game-winning goal in the 2001 national championship game against Syracuse, a game I was at.
And I'm saying all of this because B.J. Prager went down as one of the greatest crease attackmen of all time. But what's interesting is, there are a ton of teams and coaches who don't even use a crease attackman. So can you imagine if B.J., during his career, didn't go to Princeton? Say he went to a team that wasn't using a crease attackman; he probably wouldn't even play. So on one team, in one environment, he goes down as one of the best of all time; in another environment, he's not even playing. The environment often determines the value of the underlying trait.
And if that's true, then one of the most important decisions you're ever going to make is choosing where to put yourself: where to stand. Or, as I like to say: what game are you going to play? Are you choosing a game? Are you putting yourself into a game where the things that are naturally strong in you actually matter, actually are valued?
This connects with the idea I've talked about before: Nature-Game Fit. Are you playing a game that fits your nature? The right game, when you play it, doesn't constantly require you to suppress your instincts in order to succeed. It actually rewards you for becoming more of yourself. The shark becomes an apex predator because he's being himself in his natural habitat. Buffett gets rewarded because he's being Buffett in an ideal structure.
So a major error I see people make is, they try to copy the traits of the successful people, but what they don't remember is that certain traits won't work in different terrain. So I could have spent my entire youth trying to become B.J. Prager and play crease attack. But if a team doesn't use a crease attackman, how valuable is it?
Earlier in life, you're usually just trying to discover the right environment. That's the move: you're looking for it. But there should be a progression.
When you're young, you usually just accept the environments. You go to school, you take a job, you join a company, you accept whatever meeting schedule or environment or incentive structure that you get put in. You're basically dropped into a habitat someone else has designed. But as you develop more agency in your life, you start choosing environments. You become more selective with the company you join or the role you're going to take. You choose the people in your life. You choose where you live. You even choose what kind of customers you're going to work with.
But I think the highest level is when you start constructing the environment itself.
So you begin with more thoughtful questions. If you're a capital allocator, you think about: what kind of capital structure allows me to operate at my best? What kind of business model fits how I think? What are the people that actually bring out my best judgment, and can I surround myself with them more frequently? You can think about your clients: how many clients can I work with before the quality of my thinking drops? That's one of the questions I think through a lot. What kind of calendar can I construct that lets me do my best work? What should I never actually put on my calendar? An interesting one to think about is pressure: what kind of pressure sharpens me? What kind of pressure actually makes me work?
So you start thinking about engaging with more thoughtful questions. You start thinking, "What do I need to build around myself?" Buffett did this in a great way. Craftspeople often do this in a great way. And I think founders who really understand themselves, eventually do this as well. And I think great organizations do this for their people.
Environmental leverage, in my opinion, is one of the most powerful forces you're probably not thinking about. And I also want you to think about how environmental leverage can work against you. Leverage magnifies things. So if the environment is bad, it's going to magnify the wrong things. If you take a poorly run organization and you give them more capital, they're just creating a larger, more disorganized, mediocre organization. You had thirty confused employees; all of a sudden you have one hundred confused employees. That has not helped your situation.
And that's one of the things I think gets missed. People talk about leverage, but more leverage does not necessarily automatically mean better.
So I want you thinking about that: thinking about the environment you're in, the one you've selected into, and, if you have high agency, the one you're creating. So ask: does the environment I have created bring out the best abilities in me and my people? And if not, what can I change to get closer to making that a reality?
Most of our conversations about leverage focus on the lever. Things that allow one person's effort or judgment to reach much further than it otherwise could. But there are two parts to that quote: there's the lever, and then there's the place to stand. And I think we massively underestimate the second one.
Where are you standing? What are the conditions around you? What game are you playing? What's that game reward? Who are you surrounded by? All of these questions deal with where you're standing. And once you start exploring this, you realize how much the environment around a person can function as a form of leverage itself.
I call this Environmental Leverage, and often people don't factor it in.
This idea of Environmental Leverage is pretty simple. All it is is: the exact same quality, in the exact same person, can be worth almost nothing in one environment and be incredibly powerful in another. Because power, or ability, or strengths are often much more dependent on the environment than we usually admit.
So if I were to ask you, who would win the fight, a shark or a tiger? I'm assuming your first question would be, "Well, where are they fighting?" Because in the ocean the sharks are going to dominate, but on land it's helpless. The animals had the exact same traits, but in certain environments their greatest traits became irrelevant or mediocre.
And it's so often true with people. Someone might look lazy or mediocre in one environment, and then if you actually switch them into another environment, all of a sudden their abilities get maximized. Now, the person didn't change whatsoever, but the environment changes what the person is capable of doing with the skills they already have.
We can think of a trait that often gets classified as a positive. So think of patience. We talk about patience like a virtue. Warren Buffett often gets associated with extreme patience. But patience is only useful when the game rewards patience. So if you take Buffett and you put him inside of a fund structure where the investors can redeem their money whenever they get scared, or if you give him quarterly performance pressures, or if you compare him to the S&P every three months, what happens? How valuable is patience now?
He can be the most patient person in the world internally, but if his capital structure forces him to behave impatiently, then that environment has neutralized the trait. But then when you take his trait of patience and you put it in a structure like Berkshire with long-duration capital, insurance float, no one demanding their money back instantly and all of a sudden it becomes much more valuable.
And so I see this dynamic happen often, where we spend so much time thinking about: How do I get better? How do I become more disciplined? How do I think clearer? How do I get more productive? And those are, and can be, useful questions. But we rarely ever explore the second part of Archimedes' quote: where we're standing. Start asking yourself: what conditions would make the best parts of me become more valuable? That is a very different question.
We might see someone who is intense, or aggressive, or obsessed, and that's often viewed as a negative. But if you put them in the right environment, that gets rewarded. Aggression can make someone in one environment absolutely indispensable and create an incredible company, become an amazing investor. But it can also destroy them in another. It could be the worst thing possible for your marriage. So that dynamic, that your Achilles heel in one game can actually be part of your competitive advantage in another, is really interesting.
Growing up I loved watching the lacrosse player B.J. Prager who was known as a crease attackman: he would literally stand next to the goal, and his teammates would jam the ball on the inside to him so he could shoot very quickly and score. And B.J. Prager scored a crazy number of goals. He actually scored the overtime game-winning goal in the 2001 national championship game against Syracuse, a game I was at.
And I'm saying all of this because B.J. Prager went down as one of the greatest crease attackmen of all time. But what's interesting is, there are a ton of teams and coaches who don't even use a crease attackman. So can you imagine if B.J., during his career, didn't go to Princeton? Say he went to a team that wasn't using a crease attackman; he probably wouldn't even play. So on one team, in one environment, he goes down as one of the best of all time; in another environment, he's not even playing. The environment often determines the value of the underlying trait.
And if that's true, then one of the most important decisions you're ever going to make is choosing where to put yourself: where to stand. Or, as I like to say: what game are you going to play? Are you choosing a game? Are you putting yourself into a game where the things that are naturally strong in you actually matter, actually are valued?
This connects with the idea I've talked about before: Nature-Game Fit. Are you playing a game that fits your nature? The right game, when you play it, doesn't constantly require you to suppress your instincts in order to succeed. It actually rewards you for becoming more of yourself. The shark becomes an apex predator because he's being himself in his natural habitat. Buffett gets rewarded because he's being Buffett in an ideal structure.
So a major error I see people make is, they try to copy the traits of the successful people, but what they don't remember is that certain traits won't work in different terrain. So I could have spent my entire youth trying to become B.J. Prager and play crease attack. But if a team doesn't use a crease attackman, how valuable is it?
Earlier in life, you're usually just trying to discover the right environment. That's the move: you're looking for it. But there should be a progression.
When you're young, you usually just accept the environments. You go to school, you take a job, you join a company, you accept whatever meeting schedule or environment or incentive structure that you get put in. You're basically dropped into a habitat someone else has designed. But as you develop more agency in your life, you start choosing environments. You become more selective with the company you join or the role you're going to take. You choose the people in your life. You choose where you live. You even choose what kind of customers you're going to work with.
But I think the highest level is when you start constructing the environment itself.
So you begin with more thoughtful questions. If you're a capital allocator, you think about: what kind of capital structure allows me to operate at my best? What kind of business model fits how I think? What are the people that actually bring out my best judgment, and can I surround myself with them more frequently? You can think about your clients: how many clients can I work with before the quality of my thinking drops? That's one of the questions I think through a lot. What kind of calendar can I construct that lets me do my best work? What should I never actually put on my calendar? An interesting one to think about is pressure: what kind of pressure sharpens me? What kind of pressure actually makes me work?
So you start thinking about engaging with more thoughtful questions. You start thinking, "What do I need to build around myself?" Buffett did this in a great way. Craftspeople often do this in a great way. And I think founders who really understand themselves, eventually do this as well. And I think great organizations do this for their people.
Environmental leverage, in my opinion, is one of the most powerful forces you're probably not thinking about. And I also want you to think about how environmental leverage can work against you. Leverage magnifies things. So if the environment is bad, it's going to magnify the wrong things. If you take a poorly run organization and you give them more capital, they're just creating a larger, more disorganized, mediocre organization. You had thirty confused employees; all of a sudden you have one hundred confused employees. That has not helped your situation.
And that's one of the things I think gets missed. People talk about leverage, but more leverage does not necessarily automatically mean better.
So I want you thinking about that: thinking about the environment you're in, the one you've selected into, and, if you have high agency, the one you're creating. So ask: does the environment I have created bring out the best abilities in me and my people? And if not, what can I change to get closer to making that a reality?