How to Earn a Billion Dollars -->
June 2026
(This is based on a talk I gave at the Oxford Union.)
Since this is apparently the future prime ministers' club, I'm going<br>to tell you about something it would be good if more politicians<br>understood: I'm going to tell you how people become billionaires.<br>I hope this will be useful to you even if you don't plan to go into<br>politics. Those of you who don't become prime minister can become<br>billionaires instead.
The reason I know about this topic is that 21 years ago Jessica and<br>I started something called Y Combinator. If you haven't heard of Y<br>Combinator, it's a cross between an investment firm and a school<br>for startup founders. Since we started it in 2005 we've funded about<br>6500 companies.
Starting a successful startup is the most<br>common way to become a<br>billionaire, so in effect I've spent the last 21 years training<br>people to become billionaires. So far about 30 of them have, but<br>there are many more in the pipeline.
So you can imagine how astonished I was last month when an American<br>politician said that it was impossible to earn a billion dollars.<br>I felt like a skating coach hearing someone say that it's impossible<br>to do a triple axel. Of course it's possible. It's hard, but it's<br>possible.
She wasn't saying, of course, that it's impossible to become a<br>billionaire. Obviously that's possible. Nor was she talking about<br>the distinction between income and capital gains. She wasn't making<br>a point about accounting. What she meant was that it's impossible<br>to get that rich without doing something bad — without cheating<br>in some way.
A couple days later I was talking to the founder of a startup I'd<br>funded. I began by asking, as I usually do when I meet a founder,<br>what her growth rate was. 93% last month, she said. I pointed out<br>that this meant her net worth was also growing at 93% a month. She<br>was getting richer at a stupendously rapid rate. And yet she hadn't<br>been doing anything bad. The reason her startup was growing so fast<br>was simply that users loved what she'd built. So she could feel<br>from her own experience how wrong that politician was. She wasn't<br>exploiting anyone. Exactly the opposite in fact. The reason her<br>startup was growing so fast was that she and her cofounder had been<br>working their asses off to make their users happy, and as a result<br>the users had been telling their friends. And that gets you exponential<br>growth.
Later that day I was talking about her case online, and someone<br>replied that having a few million and growing at 93% a month was<br>radically different from being a billionaire.
I suspect many people would agree with this statement. But it turns<br>out not merely to be false, but false in a very illuminating way.
So I would like you all to do me a favor please. I would like you<br>to take out your phones and calculate a number. I know this may<br>seem contrived, but I promise it will be useful for you. I'm going<br>to have you do the most common kind of calculation I do as an<br>investor, and the experience will bring home to you what startups<br>are all about.
If we interpret his statement in the most conservative way and<br>assume that a few means 2, her company has to grow 500x for her to<br>become a billionaire. So we are going to calculate how many months<br>of 93% growth it takes for something to grow 500x.
To do this we want to calculate the log base 1.93 of 500. The easiest<br>way to do that is to go to Google search, which lets you do<br>calculations right in the search box. So go to Google search and<br>type log(500, 1.93). If you typed that right, the answer you get<br>is about 9.45.
That is how many months of 93% growth it takes to become a billionaire,<br>starting from 2 million. A couple million and 93% growth are not,<br>in fact, radically different from a billion. They're nine and a<br>half months apart.
Now you see why, when I meet a founder, the first thing I ask about<br>is their growth rate.
But I don't want anyone to accuse me of using unrealistic numbers,<br>so let's take a more conservative growth rate. Let's see what happens<br>at 15% a month. That's not rare at all. I constantly encounter<br>startups growing at 15% a month.
If your revenues grow at 15% a month, how much more will you be<br>making 5 years from now? To calculate that, we need to find 1.15<br>to the 60th power (since 5 years is 60 months). So go to Google<br>again and this time type 1.15^60. The answer should be about 4384.<br>Meaning in 5 years your startup will be making 4384 times as much.<br>If you're currently making ten thousand a month, in five years<br>you'll be making about 44 million a month, or 526 million a year.<br>And at that point, if you own as much of the company as founders<br>typically do, you will be a billionaire.
In the real world, growth rates tend to slow down a bit. A very<br>successful startup will probably be growing faster than 15% a month<br>in year 1 and slower than 15% a month in year 4. But you end up in<br>about the same place. If you start a startup in your early twenties,<br>it's definitely possible to be a...