Author: Paul Graham
In his latest article, "How to Earn a Billion Dollars," Paul Graham, while superficially responding to the political argument that "it's impossible to earn a billion dollars legitimately," provides a clear exposition of the underlying logic of entrepreneurial wealth creation.
In his framework, a billion dollars is not a mysterious figure but the result of two variables: the growth rate and how long that growth can be sustained.
If a company can consistently create products that users genuinely love and are willing to recommend to friends, it has the potential for exponential growth. If this growth occurs in a sufficiently large market, the founder's wealth increase becomes a mathematical outcome rather than a moral puzzle.
This article is also highly enlightening for investors. Because the early-stage pricing of many great companies in the secondary market essentially depends on the same set of questions:
Does it truly address a strong need?
Do users like it enough?
Does the growth have viral potential? Is the market space large enough?
How long can the growth curve be sustained?
Therefore, this article is not just about "how to become a billionaire," but also about how to identify exponential companies and why linear thinking often undervalues truly high-growth assets.
The full translation follows.
How to Earn a Billion Dollars
June 2026
This is based on a talk I gave at the Oxford Union.
Since this is obviously a "Future Prime Ministers' Club," I want to talk about something more politicians should understand: how people become billionaires. Even if you aren't planning to go into politics, I hope you'll find this useful. Those who don't become Prime Minister can become billionaires instead.
I know about this because 21 years ago, Jessica and I started a thing called Y Combinator. If you haven't heard of Y Combinator, it's a combination of an investment firm and a school for startup founders. Since we started in 2005, we've funded about 6500 companies.
Starting a successful startup is the most common way to become a billionaire. So in a way, for the last 21 years, I've been training people to become billionaires. So far, about 30 of them have become billionaires, and many more are on their way.
So you can imagine how shocked I was last month when an American politician said "it's impossible to earn a billion dollars." I felt like a figure skating coach hearing someone say "a triple axel is impossible." Of course it's possible. Hard, but possible.
Of course, she didn't mean it's impossible to *be* a billionaire. Obviously it's possible. She also wasn't talking about the difference between income and capital gains. This wasn't about accounting. She meant that no one could get that rich without having done something bad, without somehow cheating.
A few days later, I was talking to a founder we'd funded. As I always do with founders, I started by asking her what her growth rate was. She said last month it was 93%. I pointed out that meant her net worth was also increasing at a rate of 93% per month. She was getting rich at an astonishing rate. And she wasn't doing anything bad. Her startup was growing that fast simply because users liked what she'd made. So from her own experience she could feel how wrong the politician was. She wasn't exploiting anyone. On the contrary. Her startup was growing so fast because she and her cofounder had been working insanely hard to make users happy, and as a result users had started telling their friends. That yields exponential growth.
Later that day, I mentioned her case online, and someone replied that having a few million dollars and growing at 93% a month is a very different thing from being a billionaire.
I suspect a lot of people would agree with that statement. But it turns out not only to be wrong, but to be instructively wrong.
So I want you to do me a favor. Get out your phone and do a calculation. I know this is going to seem stagey, but I promise it will be useful. I'm going to have you do the sort of calculation I do most often as an investor, and the experience will give you a visceral understanding of the nature of startups.
If we take his statement in its most literal sense and assume "a few million" means $2 million, then her company needs to grow 500x for her to become a billionaire. So what we need to calculate is how many months it takes something to grow 500x at a rate of 93% per month.
To do that we need to calculate the base 1.93 logarithm of 500. The easiest way is to go to Google search and calculate it directly. Open Google search and type log(500, 1.93). If you type that correctly, the answer should be about 9.45.
That's the number of months it would take to go from $2 million to a billion at 93% monthly growth. A few million dollars and a 93% growth rate are not, in fact, very far from a billion dollars. They are nine and a half months apart.
Now you see why when I meet founders, the first question I always ask is what their growth rate is.
But I don't want anyone to accuse me of using unrealistic numbers, so let's try a more conservative growth rate. See what happens at 15% per month. This is not at all rare. I often see startups growing at 15% per month.
If your revenue grows at 15% per month, what is it after 5 years? To compute that, we need to calculate 1.15 to the 60th power, because 5 years is 60 months. So again, go to Google and type 1.15^60. The answer should be about 4384. Which means that after 5 years, your startup's revenue would be 4384 times what it is now. If you're now doing $10k a month, after 5 years you'd be doing about $44 million per month, or about $526 million per year. By then, if you own the fraction of the company that founders typically own, you'd be a billionaire.
In the real world, growth rates tend to taper off a bit. A very successful startup might grow faster than 15% per month in year 1, and slower than 15% per month in year 4. But the outcome is roughly the same. If you start a startup in your early 20s, it's definitely possible to be a billionaire by your early 30s. Hard, but possible.
I wanted you to do the calculation yourselves because now you understand one of the reasons people start startups. Exponential growth is like magic. It produces results that seem impossible. And because of that, some politicians distrust it. They don't understand the math of exponential growth, so when they see someone getting what seems to them "impossibly rich," they assume the person must have cheated.
But you at least now understand from having done the calculation yourself that you don't have to cheat to become a billionaire. You've seen for yourself that there are only two numbers in the calculation: the growth rate, and how long it lasts. If it's impossible to become a billionaire without cheating, then which of these two numbers is supposed to be impossible? A growth rate of 15% per month certainly isn't impossible; startups achieve that all the time. How long you can grow at that rate depends on the size of the market. Obviously if you're going to grow 4000x, there have to be at least 4000x as many potential customers. But that's all you need. How could you even cheat to increase the size of a market?
If all you're going to be is Prime Minister, you can stop listening now. We've proved that it's in fact possible to earn a billion dollars, because it depends only on two numbers, one of which startups often achieve without cheating, and the other of which cheating couldn't possibly affect.
But if you really do want to be a billionaire, we should get into more detail. Especially about the first number, the growth rate. To grow at a consistent rate month after month, you have to make something that people like enough to tell their friends about. And in fact, this is another reason I always ask founders first about their growth rate. The growth rate shows whether they've made the right thing.
So concretely, how do you make something that people like enough to tell their friends about?
The problem with market economies, and the great thing about them, is that it's hard to make something customers want but don't already have. Once a new, satisfiable need is discovered, people swarm to satisfy it. So you have to discover a need that other people don't know about yet.
How do you do that?
By feeling the need yourself.
You are young. Usually young founders should make what 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 especially valuable because they are future needs. You're at the age when people start using new things. The things you and your friends start using now, everyone will be using in ten years. Since your intuitions about other people's needs are usually a bad signal, and your own needs are an especially valuable signal, you should usually listen to the second signal. You should make what you and your friends want.
Making 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 something cool to do with DNA that everyone else is overlooking. Maybe you and your friends are into drones. The idea does not have to be widely appealing at first. It really just has to appeal to you and your friends.
Don't worry about the second number, the market size. Since you're presaging future needs, 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 needs, and you can expand from there.
How do you get ideas like this?
The answer is one of the most counterintuitive things about startups. And there are already many counterintuitive things about startups. The way to get the best startup ideas is not to look for startup ideas. If you try to look for startup ideas consciously, it makes you too conservative. You prune away the outliers. Because the best startup ideas often sound terrible at first. If you're looking for startup ideas consciously, you'll reject them. And that's why they've been undiscovered.
Think how bad Apple or Facebook or Airbnb sounded at first. Who wants their own computer? How could a company make money by letting college students peek at each other online? Who would pay to sleep on an air mattress on someone else's floor? It's easy now to rewrite history because we know what those ideas became. But I remember very clearly how bad Facebook and Airbnb sounded at first. We funded Airbnb, and we thought the idea was terrible. We funded them only because we liked the founders.
So how do you find startup ideas without looking for them?
Work on projects with friends.
That's how the best startups happen. They didn't even start out as companies. They were just things people built because they seemed cool. Apple, Google, and Facebook all started that way. None of them was designed initially to be a company.
This works for the reason I said earlier: you presage future needs. So if you just work on random things that seem cool to you, what you produce is actually far from random.
It's one of those cases where your unconscious mind knows more than your conscious one. Any project that genuinely makes you think "that would be cool," no matter how preposterous it sounds, has a high probability of leading to a good startup idea. The thing you make cannot be more preposterous than a startup we funded in 2006 called Justin.TV. Its content was a guy named Justin Kan with a camera strapped to his head walking around and broadcasting everything that happened to him. That startup turned out pretty well. In fact, you've probably heard of it, though it later changed its name: Twitch.
The key to starting a successful startup is to understand a group of users so well that you can make what they really want. If you're young, you can, and should, use a trick: make 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 like enough to tell their friends about. And only that yields the exponential growth a startup needs to be really successful.
There are other ways to get rich besides starting startups. And some of them do require you to exploit people. But startups are the most common way to become truly rich. And if you want to start a successful startup, the key is not exploitation but empathy. What do users really want? What can you do for them that makes their lives significantly better? That empathy is the thing we look for in founders, and the thing we cultivate in the founders we admit.
How people get rich in your society is one of the most important questions in understanding it. You can't let ideology, or movies, or historical cases from centuries ago, decide what you think about it. You have to look at the world around you and see clearly how it actually happens. If you want to do it yourself, you'll obviously be forced to understand how it happens. So I'm less worried about you. I'm worried about the future Prime Ministers. You need to remember this talk. So I'll summarize the key ideas for you.
There are two things that determine how big a startup can become, and thus how rich its founders become: the growth rate, and how long it can grow. You get the first by making something users like enough to tell their friends about. You get the second by being in a big market. If you grow exponentially and you're in a big market, your startup becomes valuable and you as a shareholder become rich. You don't have to cheat to make this happen. It happens automatically as long as you keep making customers happy.
