Leverage: Consulting, Products, Equity

Leverage: Consulting, Products, Equity is the chapter with the thinnest evidence base in this book, and saying so first is the only honest way to write it. The economics of consulting, products and ownership are documented mostly by people selling the idea of them. What follows is one sourced risk figure, a structural comparison, and my judgement labelled as judgement.

Key takeaways

• Leverage means output that keeps arriving after you stop working. There are three shapes available: sell hours at a higher price, sell something built once, or hold a claim on a business, and each removes a different ceiling.
• Consulting does not escape the hours ceiling, it raises the price per hour and adds sales, contracting and collection to the work. The ceiling moves, and it remains a ceiling.
• A product is the only shape where output genuinely continues without you, and its cost is a long period of building with no revenue, followed by permanent distribution and support obligations.
• Ownership is a claim on a future that may not arrive. CB Insights, reviewing 431 VC-backed shutdowns since 2023, found 70% ran out of capital and 43% had poor product-market fit.
• Cash-flow risk, not upside, is what decides whether a shape is survivable for you. The correct question is how many months of zero income the arrangement can require, and the answer is personal rather than general.

Read this after Chapters 9 and 11, because choosing an employer and doing public work are the two inputs that make these shapes reachable, and before Chapter 13, which puts a review cadence on the whole book. This chapter deliberately contains no compensation figures, no rates and no revenue numbers, because I have none I can source.

Two engineers leave the same job in the same month.

One doubles their effective hourly rate as an independent consultant and is fully booked within a quarter. Eighteen months later they are earning more than before and working the same number of hours, plus evenings on invoices and proposals.

The other spends eighteen months building something, earns almost nothing for fourteen of them, and then has a thing that produces some revenue while they sleep. Whether that was the better decision depends entirely on facts neither of them could know in advance. The details here are composited from ordinary career shapes rather than two real people, and the shape is exact.

Leverage is output that arrives after the work stops

The word has been degraded by usage, so define it mechanically.

Leverage exists when the relationship between hours worked and value received stops being proportional. Employment is proportional: stop working and the income stops, with the lag of a notice period. Consulting is proportional with a better constant. A product is non-proportional, because a thing built in March can be sold in November without March happening again. Ownership is non-proportional in a different way, because value accrues to a claim rather than to activity.

Notice what leverage is not. It is not passive, since every shape here requires maintenance. It is not a way to work less. Not for years, anyway.

The honest framing is that leverage changes what you are exposed to. You trade the certainty of a salary for a different distribution of outcomes, and the trade is only sensible if you can survive the bad end of that distribution.

Hours have a ceiling made of arithmetic

Start with the shape everyone begins in, because the ceiling is not a metaphor.

There are a fixed number of working hours in a year, and skill raises the value of each one without changing the count. So every route out of employment that keeps hours as the unit hits the same wall. It arrives sooner than people expect, because capacity for genuinely difficult work is not eight hours a day. It is closer to four.

The subtler ceiling is that your income becomes a function of your continued presence. Illness, a family situation, or a year when you cannot concentrate is not a reduction in income. It is the removal of it.

That vulnerability is the actual argument for leverage, and it is a better argument than ambition. In my experience people who pursue leverage for upside quit when it is hard, and people who pursue it because they have seen what happens when income depends entirely on their presence do not.

Consulting raises the price and keeps the ceiling

Consulting is the most common first move and the most commonly misunderstood.

What consulting does well is raise the value of an hour, because you are selling judgement applied to a specific expensive problem rather than capacity. It also shortens the feedback loop on your own skill, since you see many systems instead of one, and Chapter 3's breadth compounds quickly.

What it does not do is remove the hours ceiling. It also adds three jobs that are not engineering: finding work, contracting for it, and being paid for it. Those consume a real share of the week, they are unpaid, and they are the part most engineers are worst at.

There is a specific trap I would warn about. Consulting rewards being excellent at a narrow, well-understood problem, because that is easiest to sell, and the same narrowness makes you fragile when demand for that problem moves. The consultants I would bet on are the ones who keep a second area in development while the first one pays.

A product pays after you stop, and can pay nothing

A product is the only shape where the non-proportionality is real, and the cost sits in a place people do not look.

The building is not the hard part, and this is more true now than it was, since generation made the first version of most things cheap. The hard parts are distribution, meaning somebody has to find out the thing exists, and support, meaning every customer is a permanent obligation until you shut it down. Neither of those gets cheaper with better tooling, and both scale with success rather than with effort.

The other cost is time without revenue. A product that eventually works usually produces almost nothing for a long stretch first, and that stretch is where most attempts end. It ends not because the product was wrong but because the person ran out of money or patience.

My judgement, and it is judgement: the engineers who make this work are the ones who started while employed, kept the burn low enough to be boring, and had a specific group of people they already understood. I would not bet on a product built for a market the builder has never worked in.

Ownership is a claim on a future that may not arrive

Equity is the shape most engineers are offered and the one they are least equipped to price.

Here the one sourced figure in this chapter does real work. CB Insights, reviewing 431 VC-backed shutdowns since 2023, found that 70% ran out of capital and 43% had poor product-market fit. Read that as the base rate against which any equity grant should be valued. The modal outcome for a venture-funded company is not a moderate return. It is running out of money. That is the number to hold.

What that implies is specific. Equity is not compensation. It is a claim with a long expiry and terms you probably have not read. Two facts matter most about it and are rarely discussed at offer time: what fraction of the company it represents on a fully diluted basis, and what has to be true for it to be worth anything.

I wanted better evidence for this section than I have. The data I went looking for, on how often people actually exercise vested options and how that has changed, sits behind a server that refuses automated readers, so it is not in this book. Chapter 2's rule applies to me as well as to everybody else.

Three shapes, three costs

Put them side by side at the same scale, which is the comparison the sales pitches never make.

The column that decides this for most people is the third, not the second. Optionality is the real currency: the shapes differ in how easily you can stop, and stopping is the thing you will eventually want to do.

Cash-flow risk is the one people underprice

If you take one thing from this chapter, take the question rather than the conclusion.

The question is: how many consecutive months of near-zero income does this arrangement require me to be able to absorb, and can I absorb them. Not the expected value, not the upside, and not what happened to somebody whose blog post you read. Just the number of months.

That question is personal rather than general, which is why prescriptive advice here is worthless. An engineer with no dependants and low fixed costs can absorb eighteen months. An engineer supporting a family with a mortgage cannot absorb three. Belief does not change that arithmetic.

What I have seen is that most failures in this territory are cash-flow failures rather than judgement failures. The idea was fine. The runway was personal, and nobody had calculated it.

What I hold, and what I will not tell you

I hold three of these shapes, and being specific about the boundary is more useful than being inspiring.

I am the chief technology officer of ViitorCloud Technologies, which is employment, a role recorded on third-party profiles including Inc42. I founded LaraCopilot, which is a product. And I do public and community work of the kind Chapter 11 describes, which is not leverage by itself and is what makes the other two reachable.

What I will not give you is a number attached to any of it. No revenue, no customer count, no rate, no valuation, no outcome. Partly that is a rule here against publishing figures nobody can source. Partly it is that a number from one person's situation is the least transferable thing I could offer you.

What I will say as judgement is this. Holding more than one shape at once is the arrangement I would choose again, not because it maximises anything, but because the failure of any one of them is survivable. That is a preference about variance, and you may reasonably have a different one.

The objection: all of this needs capital nobody has

This is the strongest objection and it is largely correct.

Every shape above assumes savings, or a partner's income, or a market where consulting demand exists, or the ability to work evenings that many people do not have. Advice that ignores that is written for a narrow audience and pretends to be universal. So the honest statement is that leverage is easier to acquire when you already have slack, which is uncomfortable and true.

What remains available at low capital is narrower and still real. The employed version of leverage is building things inside a company that keep working without you, which is Chapter 10, and it transfers as evidence even though the ownership does not. Public work is nearly free in money and expensive in time. Consulting on the side of employment tests demand before you depend on it.

The sequencing that follows is unexciting and I would recommend it anyway. Build the evidence while employed, test the demand at small scale, and change your income structure only when the test has already worked. In my experience the people who do it in that order are the ones still doing it in five years.

Chapter summary

Leverage means output that keeps arriving after you stop working, so employment and consulting are proportional shapes while a product and ownership are not. The honest framing is that leverage changes what you are exposed to rather than reducing the work. Hours have an arithmetic ceiling, made worse because capacity for genuinely hard work is nearer four hours a day than eight, and the deeper vulnerability is that income becomes a function of your continued presence. Consulting raises the price of an hour and shortens the feedback loop on your own skill. It keeps the ceiling, adds finding work, contracting and collection as unpaid jobs, and traps people who become excellent at one narrow problem whose demand can move. A product is the only shape where non-proportionality is real, and its costs are distribution and permanent support, neither of which gets cheaper with better tooling. Then there is the long stretch with almost no revenue, where most attempts end. Ownership is a claim on a future that may not arrive, and CB Insights' review of 431 VC-backed shutdowns since 2023, finding 70% ran out of capital and 43% had poor product-market fit, is the base rate any grant should be valued against. The deciding question is cash-flow risk, meaning how many consecutive months of near-zero income the arrangement requires you to absorb. And the low-capital version is narrower: build evidence while employed, test demand at small scale, and change your income structure only after the test worked.

One question is left, and it is the one that recurs rather than resolving. Chapter 13 is Staying Employable for the Next Decade, which is a reassessment method with named inputs and refresh intervals, built so that the trigger for changing direction is evidence rather than the next confident headline.