Paul Graham: How to Make a Billion Dollars

Author: Paul Graham

Paul Graham's latest article "How to Earn a Billion Dollars" appears to respond to the political debate that "it is impossible for a person to earn a billion dollars," but the real takeaway is how clearly he explains the underlying logic of entrepreneurial wealth.

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

If a company can consistently produce products that users truly like and are willing to recommend to friends, it has the opportunity for exponential growth. If this growth occurs in a sufficiently large market, the founder's wealth growth will become a mathematical result rather than a moral puzzle.

This article is also enlightening for investors. Because the early pricing of many great companies in the secondary market essentially depends on the same set of questions:

• Does it really solve a strong demand?

• Do users like it enough?

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

• How long can the growth curve be sustained?

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 the Oxford Union.

Since this is clearly the "Future Prime Ministers Club," I want to discuss a question that more politicians should understand: how people become billionaires. Even if you don't plan to enter politics, I hope this is useful for you. Those who do not become prime ministers can instead become billionaires.

I understand this topic 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 school for entrepreneurs. 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, for the past 21 years, I have been training people to become billionaires. So far, about 30 of them have become billionaires, with more on the way.

So you can imagine how shocked I was last month when a U.S. politician said, "It is 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. Difficult, but possible.

Of course, she didn't mean that becoming a billionaire is impossible. Clearly, it is possible. She wasn't talking about the difference between income and capital gains. She wasn't discussing accounting issues. What she meant was that a person cannot become that wealthy without doing something wrong or cheating in some way.

A few days later, I was chatting with an entrepreneur I had invested in. As I do every time I meet an entrepreneur, I asked her what her growth rate was. She said it was 93% last month. I pointed out that this means her net worth is also growing at a rate of 93% per month. She is becoming wealthy at an astonishing speed. However, she hasn't done anything wrong. The reason her startup is growing so fast is simply that users like what she has created. So she can feel from her own experience just how wrong that politician was. She hasn't exploited anyone. On the contrary, her startup is growing so quickly because she and her co-founder have been working hard to make users happy, and as a result, users started recommending the product to friends. This led to exponential growth.

Later that day, I mentioned 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 statement. But it turns out that this statement is not only wrong but also very enlightening in its wrongness.

So I want to ask you to do me a favor. Please take out your phones and calculate a number. I know this seems a bit contrived, but I promise it will be useful for you. I want you to do a calculation that I, as an investor, do most often, and this experience will help you truly understand the nature of startups.

If we conservatively interpret her words, assuming "a few million" refers to $2 million, then her company needs to grow 500 times to make her a billionaire. So what we need to calculate is how many months it takes for something to grow 500 times at a monthly growth rate of 93%.

To do this, we need to calculate the logarithm of 500 to the base of 1.93. The simplest way is to go to Google and directly calculate it. Open Google search and type log(500, 1.93). If you enter it correctly, the answer should be about 9.45.

This is the number of months required to go from $2 million to becoming a billionaire at a monthly growth rate of 93%. The difference between a few million dollars and a 93% growth rate is, in fact, not that far from a billion dollars. They are separated by nine and a half months.

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

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

If your revenue grows by 15% per month, how much will it become in five years? To calculate this number, we need to compute 1.15 raised to the power of 60, since five years is 60 months. So go to Google and type 1.15^60. The answer should be about 4384. That is, in five years, your startup's revenue will become about 4384 times what it is now. If you currently have a monthly revenue of $10,000, in five years, your monthly revenue will be about $44 million, with an annual revenue of about $526 million. By that time, if your ownership stake is similar to what entrepreneurs typically hold, you will become a billionaire.

In the real world, growth rates often slow down a bit. A very successful startup may have a growth rate higher than 15% per month in the first year and lower than 15% in the fourth year. But the end result is roughly the same. If you start a startup in your early twenties, becoming a billionaire before you turn thirty is absolutely 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 results that seem impossible. Because of this, some politicians distrust it. They do not understand the mathematics of exponential growth, so when they see someone becoming what they perceive as "impossibly wealthy," they assume those people must have cheated.

But now you have at least understood through personal calculation that a person does not need to cheat to become a billionaire. You have seen for yourself that there are only two numbers in this calculation: the growth rate and how long that growth lasts. If it is impossible to earn a billion dollars without cheating, then which of these two numbers is impossible? A monthly growth rate of 15% is certainly not impossible; startups often achieve that. As for how long you can grow at that rate, it depends on the market size. Clearly, if you need to grow 4000 times, there must be at least 4000 times the demand in the market. But that is all you need. How could you possibly cheat to expand the market size?

If you only intend to become a prime minister, you can stop listening now. We have proven that earning a billion dollars is indeed possible because it only depends on two numbers: one of which is often achieved by startups without cheating, and the other is something that cheating cannot affect at all.

But if you really want to become a billionaire, we should discuss it in more detail. Especially the first number, which is the growth rate. To maintain steady growth every month, you must create something so good that people are willing to tell their friends about it. In fact, this is also another reason why I always ask entrepreneurs about their growth rate at the beginning. The growth rate indicates whether they have created the right product.

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

The problem with market economies, and the great thing about them, is that it is hard to create something that customers want but do not currently have. Once a new, unmet demand is discovered, people will rush to satisfy it. So you must discover a need that others do not yet know about.

How do you do that?

By feeling that need yourself.

You are young. Typically, young founders should create what they want. You do not 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 demand. You are at the age when people start using new things. What you and your friends start using now will be used by everyone in ten years. Since your intuition about others' needs is usually a poor signal, while your own needs are a particularly valuable signal, you should generally listen to the latter. You should create what you and your friends want.

Creating what you and your friends want does not mean you have to make consumer products. Perhaps you and your friends are molecular biologists, and there is some cool thing about DNA that can be done, but others have overlooked it. Maybe you and your friends like drones. The idea does not need to have broad appeal from the start. It just needs to appeal to you and your friends.

Do not worry about the second number, which is the market size. Since you are signaling future demand, the market will grow. And it is always possible to expand into adjacent markets. All you need to do is find a foothold in the landscape of unmet needs 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 get great startup ideas is not to look for startup ideas. If you consciously search for startup ideas, it will make you overly conservative. You will cut out the outliers. Because the best startup ideas often sound terrible at first. If you are consciously looking for startup ideas, you will reject them. That is precisely why they have remained undiscovered.

Imagine how terrible Apple, Facebook, or Airbnb sounded at first. How many people wanted to own their own computers? How could a company make money by having college students peek at each other online? Who would pay to sleep on an air mattress on someone else's floor? We now know what these ideas eventually turned into, so it is easy to rewrite history. But I clearly remember how terrible Facebook and Airbnb sounded at first. We invested in Airbnb, and at the time, we thought the idea was terrible. The reason we invested in them was simply that we liked the founders.

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

Work on projects with friends.

The best startups come from this. They often did not even start out to become companies. They were just things people made because they thought they were cool. Apple, Google, and Facebook all started this way. They were not designed as companies from the outset.

The reason this method works is what I mentioned earlier: you signal future demand. So if you just create something random that you think is cool, what you create is actually far from random.

This is one of those situations where your unconscious mind knows more than your conscious mind. Any project that truly makes you think, "This is going to be a cool thing," no matter how ridiculous it sounds, has a high probability of leading to a good startup idea. What you create, no matter how ridiculous, cannot be more ridiculous than a startup we invested in back in 2006 called Justin.TV. Its content was a guy named Justin Kan walking around with a camera strapped to his head, live-streaming everything that happened to him. But that company ended up doing quite well. In fact, you have probably heard of it; it later changed its name to Twitch.

The key to starting a successful startup is to deeply understand a group of users so that you can create something they truly want. If you are young, you can and should use a trick: create something for yourself. You understand yourself. But this is just an instance of a more general rule. Only by deeply understanding users can you create something they like enough to tell their friends about. And only then can you achieve the exponential growth needed for a startup to truly succeed.

Besides starting a startup, there are other ways to become wealthy. Some of them do require you to exploit others. But starting a startup is the most common way to become truly wealthy. 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 significantly improves their lives? This empathy is what we look for in founders and what we 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 cannot let ideology, movies, or historical cases from centuries ago determine your view on this issue. You must observe the world around you and see how things actually happen. If you want to do this personally, you will obviously be forced to understand how it happens. So I am not too worried about you. I am worried about those future prime ministers. You need to remember this speech. So let me summarize the key ideas for you.

There are two factors that determine how large a startup can become, and consequently, two factors that determine how wealthy its founders can become: the growth rate and how long that growth can be sustained. You achieve the first factor by creating something that users like enough to tell their friends about. You achieve the second factor by being in a large market. If you grow exponentially and enter a large market, your startup will become valuable, and you as a shareholder will become wealthy. You do not need to cheat to make all this happen. As long as you keep making customers happy, it will happen automatically.