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
to tell you about something it would be good if more politicians
understood: I’m going to tell you how people become billionaires.
I hope this will be useful to you even if you don’t plan to go into
politics. Those of you who don’t become prime minister can become
billionaires instead.

The reason I know about this topic is that 21 years ago Jessica and
I started something called Y Combinator. If you haven’t heard of Y
Combinator, it’s a cross between an investment firm and a school
for startup founders. Since we started it in 2005 we’ve funded about
6500 companies.

Starting a successful startup is the most
common way to become a
billionaire, so in effect I’ve spent the last 21 years training
people to become billionaires. So far about 30 of them have, but
there are many more in the pipeline.

So you can imagine how astonished I was last month when an American
politician said that it was impossible to earn a billion dollars.
I felt like a skating coach hearing someone say that it’s impossible
to do a triple axel. Of course it’s possible. It’s hard, but it’s
possible.

She wasn’t saying, of course, that it’s impossible to become a
billionaire. Obviously that’s possible. Nor was she talking about
the distinction between income and capital gains. She wasn’t making
a point about accounting. What she meant was that it’s impossible
to get that rich without doing something bad — without cheating
in some way.

A couple days later I was talking to the founder of a startup I’d
funded. I began by asking, as I usually do when I meet a founder,
what her growth rate was. 93% last month, she said. I pointed out
that this meant her net worth was also growing at 93% a month. She
was getting richer at a stupendously rapid rate. And yet she hadn’t
been doing anything bad. The reason her startup was growing so fast
was simply that users loved what she’d built. So she could feel
from her own experience how wrong that politician was. She wasn’t
exploiting anyone. Exactly the opposite in fact. The reason her
startup was growing so fast was that she and her cofounder had been
working their asses off to make their users happy, and as a result
the users had been telling their friends. And that gets you exponential
growth.

Later that day I was talking about her case online, and someone
replied that having a few million and growing at 93% a month was
radically different from being a billionaire.

I suspect many people would agree with this statement. But it turns
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
to take out your phones and calculate a number. I know this may
seem contrived, but I promise it will be useful for you. I’m going
to have you do the most common kind of calculation I do as an
investor, and the experience will bring home to you what startups
are all about.

If we interpret his statement in the most conservative way and
assume that a few means 2, her company has to grow 500x for her to
become a billionaire. So we are going to calculate how many months
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
way to do that is to go to Google search, which lets you do
calculations right in the search box. So go to Google search and
type log(500, 1.93). If you typed that right, the answer you get
is about 9.45.

That is how many months of 93% growth it takes to become a billionaire,
starting from 2 million. A couple million and 93% growth are not,
in fact, radically different from a billion. They’re nine and a
half months apart.

Now you see why, when I meet a founder, the first thing I ask about
is their growth rate.

But I don’t want anyone to accuse me of using unrealistic numbers,
so let’s take a more conservative growth rate. Let’s see what happens
at 15% a month. That’s not rare at all. I constantly encounter
startups growing at 15% a month.

If your revenues grow at 15% a month, how much more will you be
making 5 years from now? To calculate that, we need to find 1.15
to the 60th power (since 5 years is 60 months). So go to Google
again and this time type 1.15^60. The answer should be about 4384.
Meaning in 5 years your startup will be making 4384 times as much.
If you’re currently making ten thousand a month, in five years
you’ll be making about 44 million a month, or 526 million a year.
And at that point, if you own as much of the company as founders
typically do, you will be a billionaire.

In the real world, growth rates tend to slow down a bit. A very
successful startup will probably be growing faster than 15% a month
in year 1 and slower than 15% a month in year 4. But you end up in
about the same place. If you start a startup in your early twenties,
it’s definitely possible to be a billionare by the time you’re
thirty. Hard, but possible.

I wanted you to feel this by doing the calculation yourselves,
because now you understand one of the reasons people start startups.
Exponential growth is like magic. It generates outcomes that seem
impossible. And that’s why some politicians distrust it. They don’t
understand the math of exponential growth, so when they see people
becoming what seems to them impossibly rich, they assume they must
have cheated.

But now you at least understand, from having done the math yourselves,
that you don’t have to cheat to become a billionaire. You’ve seen
for yourselves that there are only two numbers in the calculation,
the growth rate and how long it continues. If it’s impossible to
make a billion dollars without cheating, which of those two numbers
is impossible? It’s certainly not impossible to grow at 15% a month
without cheating. Startups do that all the time. And how long you
can continue to grow at that rate depends on the size of the market.
Obviously for you to grow 4000x, there has to be at least 4000x
more demand. But that’s all you need. And how could you possibly
cheat to increase the market size?

If you’re only planning to become prime minister, you can stop
paying attention now. We’ve proved that it is in fact possible to
earn a billion dollars, because it only depends on two numbers, one
of which startups routinely hit without cheating, and another that
cheating couldn’t possibly affect.

But if you actually want to become a billionaire, we should go into
more detail. Especially about that first number, the growth rate.
To grow at a consistent rate every month, you have to make something
so good that people tell their friends about it. And in fact that’s
the other reason I always begin by asking founders their growth
rate. It shows whether they’ve built the right thing.

So how, exactly, do you make something people like so much that
they tell their friends about it? The problem with market economies,
and also the great thing about market economies, is that it’s hard
to make something customers want that they don’t already have. As
soon as a new, satisfiable need is discovered, people rush to satisfy
it. So you’re going to have to discover a need that no one else
knows about yet.

How do you do that? By feeling the need yourself.

You’re young, and usually young founders should make something that
they themselves want. You don’t have enough experience yet to know
what other people need. But at the same time your own needs are
uniquely valuable, because your needs predict future demand. You’re
the age when people start using new things. Whatever you and your
friends start using now, everyone is going to be using in ten years.
Since your intuitions about other people’s needs are usually a crap
signal, and your own needs are an especially valuable one, you
should usually listen to the second signal; you should make something
you and your friends want.

Making something you and your friends want doesn’t mean you have
to build a consumer product. Maybe you and your friends are molecular
biologists, and there’s something cool that could be done now to
DNA that everyone else has overlooked. Maybe you and your friends
are into drones. The idea doesn’t have to have a wide appeal. It
literally just has to appeal to you and your friends.

Don’t worry about the second number, the market size. Since you
predict future demand, the market will grow. And it’s always possible
to expand into adjacent markets. All you need is a beachhead in the
territory of unsatisfied need that you can expand from.

How do you get an idea like that? The answer is one of the most
counterintuitive things about startups — which is saying something,
because there are a lot of counterintuitive things about startups.
But the way to get the very best startup ideas is not to look for
startup ideas. If you’re consciously looking for startup ideas, it
will make you too conservative. You’ll lop off the outliers. Because
the very best startup ideas tend to sound so lame, at first, that
you’d reject them if you were consciously looking for startup ideas.
That’s what has prevented them from being discovered.

Imagine what a bad idea Apple or Facebook or Airbnb seemed at first.
How many people are going to want their own computers? How is a
company going to make money from undergrads stalking one another
online? Who’s going to pay to sleep on an airbed on someone’s floor?
We know how these ideas turned out, so it’s easy to rewrite history,
but I remember very well how bad Facebook and Airbnb sounded at
first. We funded Airbnb, and we thought the idea was bad. The
reason we funded them was just that we liked the
founders.

So how do you find startup ideas without looking for them? By working
on projects with your friends. That’s where the very best startups
come from. Initially they’re not even meant to be companies. They’re
just something people built because they thought it would be cool.
That’s how Apple and Google and Facebook all started. None of them
were meant to be companies at first.

The reason this works is what I told you earlier: you predict future
demand. So if you just build random stuff you think would be cool,
the things you build will actually be far from random.

This is one of those cases where your unconscious mind knows more
than your conscious mind does. Anything that genuinely seems to you
like it would be a cool thing to build has a high probability of
leading to a good startup idea, no matter how preposterous it sounds.
Whatever you build couldn’t possibly sound more preposterous than
a startup we funded in 2006 called Justin.TV. It consisted of one
guy, Justin Kan, walking around with a camera on the side of his
head, live streaming everything that happened to him. But this
company ended up doing quite well. In fact you’ve probably heard
of it, but under its new name, Twitch.

The key to starting a successful startup is to understand some group
of users so well that you can make exactly what they want. If you’re
young you can, and should, use the hack of making something for
yourself. You understand yourself. But this is just an instance of
the more general rule. Only by understanding users very deeply can
you make something they love so much that they tell their friends
about it, and only that can get you the exponential growth you need
to make a startup really successful.

There are other ways to get rich than by starting startups. Some
of those do require you to exploit people. But startups are the
most common way to become really rich, and if you want to start a
successful startup, the key is not exploitation but empathy. What
do users really want? What could you do for them that would make
their lives dramatically better? That kind of empathy is what we
look for in founders, and what we cultivate in the ones we accept.

How people become rich in your society is one of the most important
things to understand about it. You can’t let your beliefs about
this be determined by ideology, or movies, or historical examples that are
centuries old. You must look at the world around you and see how
it’s actually done. If you want to do it yourself, obviously you’ll
be forced to understand how it’s done. So I don’t worry too much
about you. The ones I worry about are the future prime ministers.
You need to remember this talk. So for you I’m going to summarize
the key ideas.

There are two numbers that determine how big a startup gets, and
thus how rich its founders become: the growth rate and how long it
continues. You get the first by making something users like so much
they tell their friends. You get the second by being in a big market.
If you grow exponentially into a big market, your startup will
become valuable, and you, as a shareholder, will become rich. You
not only don’t have to cheat to make this happen, it will happen
automatically if you just keep making customers happy.

Thanks to Trevor Blackwell, Jared Friedman,
Jessica Livingston, and
Garry Tan for reading drafts of this, and to Arwa Elrayess and the
Oxford Union for hosting me.