The Tweet storm is very abstract. It's deliberately meant to be broadly applicable to all kinds of different domains and disciplines and time periods and places but sometimes it's hard to work without concrete example. So let's go concrete for a minute. Look at the real estate business. You could start at the bottom. Let's say you're a day laborer. You come in you fix people's houses, you know, someone orders you around tells you break that piece of rock sand that piece of wood put that thing over there. There's all these menial jobs that go on a construction site. If you're working one of those jobs, unless you're a skilled trade likes a carpenter electrician. You don't really have specific knowledge and even Carpenter electrician is not that specific because other people can be trained how to do it so you can be replaced. So you get paid your 15 20 25 50 if you're really lucky $75 an hour, but that's about it. You don't have any leverage other than from the tools that you're using. So if you're driving a bulldozer that's better than doing it with your hand. So day laborer in India makes a lot less because they have no to leverage you don't have much.
Already your faceless Cog in the construction crew and the owner of the house or the buyer. The house doesn't know or care that you worked on it one step up from that you might have a contractor like a general contractor who someone hires to come and fix and repair and build up their house that general contractor is taking accountability the taking responsibility. So now if that's a they got paid to and fifty thousand dollars to job, so I'm using barrier prices. Okay, I'll go rest of the world prize $100,000 for the job to fix up a house and it actually cost the general contractor all said and done $70,000. Well, the contract is going to pocket that remaining 30 so they got the upside. They got the equity but they're also taking accountability and risk. So if the project runs over and there's losses and they eat the losses, but you see be just the accountability give them some form of additional potential income and then they also have labored leverage because they have a bunch of people working for them, but it probably tops out right there. You can go one level above that and you can look at a property developer. This might be someone
Who is a contractor who did a bunch of houses did a really good job then decided to go into business for themselves and they go around looking for beaten down properties that have potential they buy them. They either raise money from investors their fronted themselves, they fix the place up and then they sell it for twice what they bought it for. Maybe the only put in 20 percent more. So it's a healthy profit. So now a developer like that takes on more accountability has more risk than more specific knowledge because now you have to know which neighborhoods are worth buying in which lots are actually good and which lots are bad what makes or breaks a specific property you have to imagine the finished house that's going to be there. Even when the property itself might look really bad right now. So there's more specific knowledge. There's more accountability and risk and now you also have Capital leverage because you're also putting money into the project but conceivably you could buy, you know piece of land or a broken-down house for $200,000 and turn it into a million-dollar mansion and pocket all the difference one level beyond that might be a famous architect or a developer. We're just having your name on a
T because you've done so many great properties increases its value one level up from that you might be a person who decides well, I understand real estate and I now know enough of the Dynamics of real estate that rather than just build and flip my own properties or improve my own properties. I'm going to be a massive developer. I'm going to build entire communities another person might say I like that leverage but I don't want to manage all these people. I want to do it more through Capital. So I'm going to start a real estate investment trust and that requires specific knowledge not just about investing in real estate and building real estate, but also require specific knowledge about the financial markets of the capital markets and how real estate trusts operate one level beyond that might be somebody who says actually I want to bring the maximum leverage to bear in this market and the maximum specific knowledge. And so that person would say, well, I understand real estate and I understand everything from basic housing construction to building properties and selling them to how real estate markets move and Thrive and I also understand the
Ecology business. So I understand how to recruit developers how to write code and how to build a good product and understand how to raise money from Venture capitalists and how to return it and all of that works and obviously not a single person may know this you may put a team together to do it where each have different skill sets. But that combined entity would have specific knowledge in technology and in real estate, it would have massive accountability because that company's name would be a very high risk High reward effort attached to the whole thing and people would devote their lives to it take on significant risk, and then it would have leverage in code with lots of developers. It would have Capital with investors putting money in and the founders on Capital and it would have Labor of some of the highest quality label that you can find which is high quality engineers and designers and marketers who are working at a company and then you may end up with the Trulia or Redfin or a Zillow kind of company and then the upside could potentially be in the billions of dollars with a hundreds of millions of dollars. So as you layer in more and more kinds of knowledge the sort of can only be gained on the job and
Common knowledge and you'll are in more and more accountability and risk-taking and you'll are in more and more great people working on it and more and more capital on it and more and more code and media on it. You keep expanding the scope of the opportunity all the way from The Humble day laborer to the person, you know, who might just literally be scrambling on the ground with their hands all the way up to somebody who started a real estate tech company and then took it public.
