Paul Graham: How to Make a Billion Dollars

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Author: Paul Graham

Paul Graham's latest article, "How to Earn a Billion Dollars," on the surface responds to the political debate that "it's impossible for a person to legitimately earn ten billion dollars," but the truly worth paying attention to is how clearly he explains the fundamental logic behind entrepreneurial wealth.

In his framework, a billion dollars is not a mysterious number, but the result of two variables: the growth rate and how long that growth can be sustained.

If a company can continuously produce products that users genuinely like and are willing to actively recommend to friends, it has the chance to achieve exponential growth. If this growth occurs in a sufficiently large market, the founder's wealth growth becomes a mathematical outcome rather than a moral dilemma.

This article is also very enlightening for investors, because the early valuation of many great companies in the secondary market essentially depends on the same set of questions:

Does it truly solve a strong demand?

Do users like it enough?

Does the growth have self-propagating ability? Is the market size large enough?

How long can the growth curve continue?

So this article is not just about "how to become a billionaire," but also about how to identify exponential companies and why linear thinking often underestimates truly high-growth assets.

Below is the full translation.

How to Earn a Billion Dollars

June 2026

This article is based on a speech I gave at Oxford Debate Society.

Since this is clearly a "future prime minister club," I want to discuss a question more politicians should understand: how does a person become a billionaire? Even if you don't plan to go into politics, I hope this is useful to you. Those who haven't become prime ministers can aim to become billionaires.

The reason I understand this topic is because 21 years ago, Jessica and I founded an organization called Y Combinator. If you haven't heard of Y Combinator, it's a bit like a combination of an investment firm and a startup school. Since its founding in 2005, we have invested in about 6,500 companies.

Starting a successful startup is the most common way to become a billionaire. So in a sense, over the past 21 years, I have been training people to become billionaires. So far, about 30 of them have become billionaires, and more are on the way.

So you can imagine how shocked I was last month when an American politician said, "It's impossible to earn ten billion dollars." I felt like a figure skating coach hearing someone say, "A triple Axel is impossible." Of course, it might be. Very difficult, but possible.

Of course, she didn't mean that becoming a billionaire is impossible. Clearly, it is. She also wasn't talking about the difference between income and capital gains. She wasn't discussing accounting issues. Her point was that if a person hasn't done bad things or cheated in some way, it's impossible to become that wealthy.

A few days later, I was chatting with a startup founder I had invested in. As I always do when meeting entrepreneurs, I first asked her what her growth rate was. She said last month was 93%. I pointed out that this means her net worth is also growing at 93% per month. She was getting richer at an astonishing rate. But she hadn't done anything bad. The reason her startup is growing so fast is simply because users like what she makes. So she could personally see how wrong that politician was. She didn't exploit anyone. Quite the opposite. Her startup's rapid growth was because she and her co-founders worked tirelessly to make users happy, and as a result, users started recommending the product to friends. This leads to exponential growth.

Later that day, I talked about her case online, and someone replied that having a few million dollars and growing at 93% per month is completely different from becoming a billionaire.

I suspect many people would agree with that. But it turns out that this statement is not only wrong but also very enlightening.

So I want to ask for your help. Please take out your phone and do a calculation. I know this might seem a bit contrived, but I promise it will be useful. I want you to perform a calculation I do most often as an investor, and this experience will help you truly understand the essence of startups.

If we interpret her "a few million" in the most conservative way, say $2 million, then her company needs to grow 500 times to make her a billionaire. So we need to calculate how many months it takes for something to grow 500 times at a 93% monthly growth rate.

To do this, we calculate the logarithm of 500 with base 1.93. The simplest way is to search directly in Google. Open Google Search and input:

log(500, 1.93)

If you input correctly, the answer should be approximately 9.45.

This is the number of months it takes to go from $2 million to a billion dollars at a 93% monthly growth rate. The gap between a few million dollars and 93% growth rate isn't that far from a billion. It's about nine and a half months apart.

Now you understand why, when I meet entrepreneurs, my first question is always about the growth rate.

But I don't want anyone to accuse me of using unrealistic numbers, so let's consider a more conservative growth rate. Let's see what happens at 15% per month. This rate is not rare at all. I often encounter startups growing at 15% per month.

If your revenue grows by 15% per month, how much will it be after five years? To calculate this, we need to compute 1.15 raised to the 60th power, since five years is 60 months. So, input into Google:

1.15^60

The answer should be about 4,384. That is, after five years, your startup's revenue will be 4,384 times what it is now. If you currently earn $10k a month, after five years, your monthly income would be about $44 million, with an annual income of roughly $526 million. By then, if you hold shares proportionally to what startup founders usually hold, you would become a billionaire.

In reality, growth rates tend to slow down slightly. A very successful startup might have a higher growth rate in its first year than 15% per month, and lower than 15% in its fourth year. But the overall result is roughly the same. If you start a startup in your early twenties, becoming a billionaire before age thirty is definitely possible. Difficult, but possible.

I want you to do this calculation yourself because now you understand one of the reasons people start startups. Exponential growth is like magic. It produces seemingly impossible results. And because of this, some politicians distrust it. They don't understand the math of exponential growth, so when they see someone becoming "impossibly wealthy" in their eyes, they assume those people must be cheating.

But now you at least understand through personal calculation that a person can become a billionaire without cheating. You have seen firsthand that this calculation involves only two numbers: the growth rate and how long that growth lasts. If earning ten billion dollars without cheating is impossible, which of these two numbers is impossible? A 15% monthly growth rate is certainly not impossible; startups often achieve this. As for how long you can grow at this rate, it depends on the market size. Clearly, if you want to grow 4,000 times, the market must have at least 4,000 times the demand. But that's all you need. How could you cheat to expand the market size?

If you only want to become a prime minister, you can stop listening now. We've already proven that earning ten billion dollars is actually possible because it depends on only two numbers: one that startups often reach without cheating, and the other that cheating cannot influence.

But if you truly want to become a billionaire, we should go into more detail. Especially about the first number—the growth rate. To maintain steady growth each month, you must create something that people are willing to tell their friends about. In fact, that's another reason I always ask entrepreneurs about their growth rate at the start. The growth rate shows whether they are making the right thing.

So, specifically, how do you create something that people like enough to tell their friends about?

The problem with market economies—and the greatness of market economies—is that making something customers want but don't yet have is very hard. Once a new, unmet demand is discovered, people will swarm to satisfy it. So you must find a demand that others haven't yet realized.

How do you do that?

By experiencing that demand yourself.

You are young. Usually, young founders should build what they want. You don't yet have enough experience to know what others need. But at the same time, your own needs are very valuable because they can signal future demands. You are at an age when people start using new things. What you and your friends start using now, everyone will be using in ten years. Because your intuition about others' needs is often a poor signal, but your own needs are a particularly valuable signal, you should usually listen to the second one. You should build what you and your friends want.

Building what you and your friends want doesn't mean you have to make consumer products. Maybe you and your friends are molecular biologists, and there's some cool thing you can do with DNA that others have overlooked. Maybe you and your friends like drones. This idea doesn't need to have broad appeal from the start. It only needs to appeal to you and your friends.

Don't worry about the second number—the market size. Since you are signaling future demand, the market will grow. And expanding into adjacent markets is always possible. All you need is to find a foothold in an unmet demand landscape and then expand from there.

How do you get such ideas?

The answer is one of the most counterintuitive things about startups. And there are many counterintuitive things in startups. The best way to find startup ideas is not to look for startup ideas. If you consciously look for startup ideas, you'll become too conservative. You'll cut off those outliers. Because the best startup ideas often sound terrible at first. If you're actively searching for startup ideas, you'll reject them. And that's why they remain undiscovered.

Imagine how terrible Apple, Facebook, or Airbnb sounded at the start. How many people wanted to own their own computers? How could a company make money by college students secretly watching each other online? Who would pay to sleep on an inflatable mattress on someone else's floor? We now know what these ideas eventually became, so rewriting history is easy. But I remember very clearly how terrible Facebook and Airbnb sounded at the beginning. We invested in Airbnb, and at the time, we thought the idea was terrible. The reason we invested was simply because we liked the founders.

So, how do you find startup ideas without actively searching for them?

By working on projects with friends.

That's how the best startups come about. They didn't even start out intending to be companies. They were just things people made because they thought it was cool. Apple, Google, and Facebook all started that way. They weren't designed as companies from the beginning.

The reason this method works is what I mentioned earlier: you are signaling future demand. So if you just build some random thing you think is cool, what you produce is actually far from random.

This is one of those cases where your subconscious mind knows more than your conscious mind. Any project that genuinely makes you think, "This will be a cool thing," no matter how absurd it sounds, has a high probability of leading to a good startup idea. Whatever you make, no matter how crazy, can't be more absurd than a startup like Justin.TV, which we invested in in 2006. Its content was just a guy named Justin Kan, with a camera strapped to his head, walking around and live-streaming everything happening to him. But that company turned out quite well. In fact, you might have heard of it—it's now called Twitch.

The key to founding a successful startup is to deeply understand a specific group of users so well that you can create something they truly want and are willing to tell their friends about. If you're young, you can—and should—use a trick: build for yourself. You understand yourself. But this is just a more general rule. Only by deeply understanding users can you create something they love enough to tell their friends. And only then can you achieve the exponential growth that makes a startup truly successful.

Besides starting startups, there are other ways to get rich. Some of them do require exploiting others. But starting a startup is the most common way to become truly wealthy. If you want to build a successful startup, the key isn't exploitation but empathy. What do users really want? What can you do for them to make their lives significantly better? This empathy is what we look for in founders and cultivate in the founders we admit.

In your society, how people become wealthy is one of the most important questions for understanding that society. You can't let ideology, movies, or centuries-old historical cases determine your view on this. You must observe the world around you and see how things actually happen. If you want to do this yourself, you'll be forced to understand how it happens. So I’m not too worried about you. I worry about future prime ministers. You need to remember this speech. So let me summarize the key ideas for you.

The factors that determine how big a startup can become are two, and the factors that determine how wealthy its founders can become are also two: growth rate, and how long that growth can continue. You get the first factor by making something users love enough to tell their friends about. You get the second by being in a large market. If you grow exponentially and enter a big market, your startup will become valuable, and you as an equity holder will become wealthy. You don't need to cheat for all this to happen. As long as you keep customers happy, it will happen automatically.