One of my pet peeves is using the word leverage simply to mean use, ignoring the whole point of the metaphor: a lever multiplies your effort.
leverage
Pronunciation: ‘le-v&-rij, ‘lE-; ‘lev-rij, ‘lEv-
Function: noun
1 : the action of a lever or the mechanical advantage gained by it
2 : POWER, EFFECTIVENESS
3 : the use of credit to enhance one’s speculative capacity
I recently read Arnold Kling’s Under the Radar, about “bootstrapping” (or “netstrapping”) a net business without venture capital, and he does not misuse leverage. In fact, he goes one step further, and only uses leverage as a noun. He uses lever as the verb form:
lever
Function: transitive verb
Inflected Form(s): le?vered; le?ver?ing /’le-v&-ri[ng], ‘lE-; ‘lev-ri[ng], ‘lEv-/
1 : to pry, raise, or move with or as if with a lever
2 : to operate (a device) in the manner of a lever
Once you see it, it makes sense — but leverage is still an accepted verb, and it’s the accepted verb for “supplying with financial leverage”:
leverage
Function: transitive verb
Inflected Form(s): -aged; -ag?ing
: to provide (as a corporation) or supplement (as money) with leverage; also : to enhance as if by supplying with financial leverage
Anyway, in his book, Kling lists a number of important traits for a netstrapper, including Ability to Stand Up to the Bear:
You are going to need revenue. In order to get enough revenue, chances are at some point you are going to have to propose to a customer a price that represents an outrageously high markup over your costs, and you will have to make the price stick. I call this “standing up to the bear.”I once read somewhere that when you meet a bear in the woods, you should not run away. The bear is too fast for you. Instead, your best chance is to stand up tall and show the bear that you are not intimidated. If you can pull it off, the bear will not bother you.
I don’t know whether standing up to the bear really works in the woods. I can’t say that I’d ever want to try it. But I’ve always wanted to use it as a metaphor.
Just as most of us instinctively run from the bear, I think that most of us are too quick to reduce our pricing to something that will just cover costs. I don’t know the psychology involved — it could be guilt, fear of rejection, or eagerness to please. In any case, economic theory notwithstanding, we seldom maximize profits.