Author: Paul Graham
Paul Graham's latest article, "How to Earn a Billion Dollars," superficially responds to the political debate that "it's impossible for a person to legitimately earn a billion dollars." The truly valuable part is how clearly he articulates the underlying logic of entrepreneurial wealth creation.
In his framework, a billion dollars is not a mysterious number; it's the result of two variables: growth rate and how long that growth can be sustained.
If a company can continuously create products that users genuinely love and are willing to actively recommend to friends, it has the potential for exponential growth. If this growth happens in a sufficiently large market, the founder's wealth increase becomes a mathematical outcome, not a moral puzzle.
This article is also very enlightening for investors. Because the early-stage valuation 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 growth have self-propagation capability? Is the market space large enough?
How long can the growth curve last?
So this article is not just about "how to become a billionaire"; it's also about how to identify exponential companies and why linear thinking often undervalues truly high-growth assets.
Below is the full translation.
How to Earn a Billion Dollars
June 2026
This essay is based on a talk I gave at the Oxford Union.
Since this is obviously the "Future Prime Ministers Club," I thought I'd talk about something more politicians ought to understand: how people become billionaires. Even if you're not planning to go into politics, I hope this will be useful for you. Those of you who don't become prime minister can instead become billionaires.
I happen to know something about this, because twenty-one years ago, Jessica and I started an institution called Y Combinator. In case you haven't heard of it, Y Combinator is a cross between an investment firm and a school for startup founders. Since we started it in 2005, we've funded about 6500 startups.
Starting a successful startup is the most common way to become a billionaire. So in a sense I've spent the last 21 years training people to become billionaires. So far about 30 of them have, and there are a lot more on the way.
So you can imagine how surprised I was last month when an American politician said that "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. It's hard, but possible.
Of course, what she meant wasn't that it's impossible to become a billionaire. Obviously it's possible. And she wasn't talking about the difference between income and capital gains. She wasn't talking about an accounting question. What she meant was that you couldn't get that rich without doing something bad, without cheating somehow.
A few days later, I was talking to a founder I'd invested in. As I always do when I meet founders, I started by asking her what her growth rate was. She said it was 93% last month. I pointed out that this meant her net worth was also growing at 93% a month. She was getting rich at a remarkable rate. And yet she wasn't doing anything bad. The reason her startup was growing so fast was simply that users liked what she was making. So from her own personal experience she could tell how mistaken that politician was. She wasn't exploiting anyone. The opposite, in fact. The reason her startup was growing so fast was that she and her cofounder were working desperately hard to make users happy, and as a result users were starting to recommend their product to friends. And that brought exponential growth.
Later that day, when I mentioned her case online, someone replied that having a few million dollars and growing at 93% a month is totally different from becoming a billionaire.
I suspect a lot of people would have agreed with that. But it turns out that statement is not only false, but illuminatingly false.
So I'm going to ask you to do me a favor. Please get out your phone and calculate a number for me. I realize this is going to feel a bit contrived, but I promise it will be useful to you. I'm going to make you do the sort of calculation I do most often as an investor, and the experience will give you a real understanding of the nature of startups.
If we interpret his words as conservatively as possible and assume that "a few million" is $2 million, then her company has to grow by 500 times to make her a billionaire. So what we're going to calculate is how many months it would take for something to grow by 500 times at a rate of 93% a month.
To do this, we need the log base 1.93 of 500. The easiest way to do this is to use the Google search box. Open a Google search and type log(500, 1.93). If you do it right, the answer you get should be about 9.45.
That's the number of months it would take to go from $2 million to a billion dollars at a monthly growth rate of 93%. A few million dollars and a 93% growth rate are, in fact, not far from a billion dollars. They're nine and a half months apart.
Now you see why the first question I ask founders is always about growth rate.
But I don't want anyone accusing me of using unrealistic numbers, so let's see what happens with a more conservative growth rate. Look at 15% a month. That's not at all unusual. I often meet startups growing at 15% a month.
If your revenue grows at 15% a month, what does it become after 5 years? To calculate that, we need to raise 1.15 to the power 60, because there are 60 months in 5 years. So again in Google type 1.15^60. The answer should be about 4384. So after 5 years your startup's revenue would be about 4384 times what it is now. If you're making $10,000 a month now, in 5 years you'd be making about $44 million a month, or about $526 million a year. At that point, if you owned as much of the company as founders usually do, you'd be a billionaire.
In the real world growth rates tend to taper off a bit. A very successful startup might have a growth rate above 15% a month in year one and below 15% in year four. But the end result is roughly the same. If you start a startup in your early twenties, it's definitely possible to become a billionaire by the time you're thirty. Hard, but possible.
I wanted you to do this calculation yourselves because now you understand one of the reasons people start startups. Exponential growth is like magic. It produces results that look impossible. And that, in turn, is what makes some politicians distrust it. They don't understand the math of exponential growth, so when they see someone become what seems to them impossibly rich, they assume they must have cheated somehow.
But now you at least understand from having done the calculation yourselves that you don't need to cheat to become a billionaire. You've seen with your own eyes that there are only two numbers in the calculation: the growth rate, and how long it can be sustained. If it's impossible to make a billion dollars without cheating, then which of these two numbers is impossible? A 15% monthly growth rate certainly isn't impossible; startups do it often. And how long you can grow at that rate depends on the size of the market. Obviously, if you're going to grow by a factor of 4000, there have to be at least 4000 times as many potential customers. But that's all you need. And how would you even cheat to increase the size of the market?
If you're only planning to become prime minister, you can stop listening now. We've proved that it is in fact possible to make a billion dollars, because it only depends on two numbers, one of which startups often hit without cheating, and the other of which cheating can't possibly affect.
But if you actually want to become a billionaire, we should go into a bit more detail. Especially about the first number, the growth rate. To get steady growth every month, you have to make something so good that people tell their friends about it. In fact, that's another reason I always ask founders about their growth rate first. Their 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 it?
The problem with market economies, and also what's great about them, 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 have to discover a need that other people don't know about yet.
How do you do that?
By feeling the need yourself.
You're young. Usually young founders should work on things they want themselves. 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 your needs are a leading indicator of 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 poor guide, and your own needs are an especially valuable guide, you should usually listen to the second guide. You should work on things you and your friends want.
Working on what you and your friends want doesn't mean you have to work on consumer products. Maybe you and your friends are molecular biologists, and there's some cool thing to do with DNA that everyone else has overlooked. Maybe you and your friends are into drones. The idea doesn't have to have broad appeal initially. It really just has to appeal to you and your friends.
Don't worry about the second number, the size of the market. Since you're a leading indicator of 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, and you can expand from there.
How do you get such ideas?
The answer is one of the most counterintuitive things about startups. And there are already a lot of counterintuitive things about startups. The way to get the best startup ideas is not to look for startup ideas. If you consciously look for startup ideas, it makes you too conservative. You prune away the outliers. Because the best startup ideas often seem terrible initially. If you're consciously looking for startup ideas, you reject them. And that's precisely why they've been undiscovered.
Think how terrible Apple, Facebook, or Airbnb must have sounded initially. Who would want their own computer? How could a company make money from college kids looking at each other online? Who would pay to sleep on an air mattress on someone else's floor? It's easy now that we know what these ideas turned into to rewrite history. But I remember very clearly how bad Facebook and Airbnb sounded initially. We invested in Airbnb, and we thought the idea was terrible. We funded them because we liked the founders.
So how do you get startup ideas without looking for startup ideas?
Work on projects with your friends.
That's how the best startups come about. They don't even start off as companies. They're just things people make because they think they're cool. That's how Apple, Google, and Facebook all started. None of them was designed to be a company initially.
This works for the reason I said earlier: you're a leading indicator of future demand. So if you just make random things you think are cool, the things you make are in fact far from random.
This is one of those cases where your unconscious mind knows more than your conscious mind. Any project that genuinely makes you think "this would be cool to have," however preposterous it sounds, has a high probability of leading to a good startup idea. Nothing you make could sound more preposterous than a startup we funded in 2006 called Justin.TV. All it was was a guy named Justin Kan walking around with a camera on his head, broadcasting everything that happened to him. But that company turned out fairly well. In fact, you may have heard of it, but under a different name: Twitch.
The key to starting a successful startup is to understand some group of users so well that you can make something they really want. If you're young, you can, and should, use a trick: make things for yourself. You understand yourself. But that's just an instance of a more general rule. Only by understanding users very deeply can you make something they like enough to tell their friends about. And only then can you get the exponential growth that makes a startup truly successful.
There are ways to get rich other than starting a startup. Some of them do require you to exploit people. But startups are the most common way to become genuinely wealthy. 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 will make their lives significantly better? This empathy is something we look for in founders, and something we cultivate in the founders we admit.
How people get rich in your society is one of the most important questions to understand about it. You can't let ideology, movies, or historical examples from centuries ago determine what you think about it. You have to look at the world around you and see how it actually works. If you want to do it yourself, you'll obviously be forced to understand how it works. So I'm not worried about you. I'm worried about the future prime ministers. You need to remember this talk. So let me sum it up for you.
Two things determine how big a startup gets, and therefore how rich its founders get: growth rate, and how long it can keep growing. You get the first by making something users like enough to tell their friends about. You get the second by being in a large market. If you grow exponentially and are in a large market, your startup will become valuable, and you as a shareholder will become rich. You don't need to cheat to make this happen. It will happen automatically if you keep making customers happy.
