How to Make A Billion Dollars | Spotify Video Exclusive
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What is the misunderstanding of billion-dollar success?
I didn't understand how to make a billion dollars for a very, very long time.
How can passive income contribute to becoming a billionaire?
And the first misunderstanding is that you don't make a billion dollars to become a billionaire. You own stuff that's worth a billion dollars to become a billionaire.
What tangible goals should you set for billionaire status?
Let me walk you through how I used to think this worked.
How can thinking bigger help you provide more value?
So phase one, high school Alex was like, okay, in order to be a billionaire, I have to make a billion dollars every year, which is ridiculous. that's what i thought the second phase i was like oh silly high school alex that's not how you make a billion dollars all you have to do is take home a billion two billion dollars before taxes over your lifetime and so then third season which is where i'm at right now and you don't make it you own it so let's say you own a business that is making 10 million dollars a year top line all right now half of that is your profit if this company is worth 10 times its earnings and i'll explain why that like why a company like this might be worth 10 times its earnings but
What does it mean to get returns and understand business value?
After taxes, I take home, you know, three. Good for me. Next year, because I'm in Mosey Nation and we focus on the main asset that we have, our business, and I go from $5 million a year in profit to $6 million a year in profit. Doesn't sound like a huge win, right? It's like, hey, I added a million bucks to the bottom line. Cool, this is great.
How do billionaires think about opportunities and growth?
Well, if we have a 10X multiple, then something I own went from being worth $50 million to being worth... 60 million, now I own 100% of that thing and I just got something that appreciated by $10 million that I didn't pay tax on. Wait a second, what I got out of the business only went from three to three and a half million after taxes, right? Six at 40%, you get three and a half to take home. I only made an extra $500,000 after taxes this year. No, you made an extra $10 million after taxes because the thing that you own appreciated by $10 million.
What strategies can you use to reverse engineer your path to billionaire status?
And that's the thing that I didn't understand for a very long time. And so now let's zoom out. You want to be a billionaire. Again, it's not by me side hustling my way to a billion. Like Zuckerberg didn't have Airbnbs he was flipping on the side while he's building Facebook. What did he do to become a billionaire? He built Facebook. If you have the opportunity to spend half of your time obsessing about your passive income, rather than saying, huh, I wonder if I could take my $5 million profit business, focus all my attention on it and make it into a $6 million profit business. And then all of a sudden I just added $10 million to my net worth. And so this is how a billion dollars actually is made. You have something that makes between 80 and a hundred million dollars in EBITDA or fancy word for profit that you get a multiple on.
And usually companies of that size tend to treat it 15 times earnings. Like if you look at the S and P all right, so you'd really only need somewhere in the area of like $70 million in EBITDA to be a billionaire because you own the company. So it means that you'd have to make a little bit more than $1.3 million, $1.5 million per week in take home, which I know that that sounds crazy, but like you have to think in increments. Like imagine how much you made five years ago as an entrepreneur. How crazy small does that feel to you now? Because you've leveled up. And so as much as whatever number I just said to you might sound like a lot, five years from now, you might be in shooting distance. And so it's really just about understanding, like, how do I reverse engineer what has to happen?
And if you want to be a billionaire, it's like, okay, well, how do I make a million dollars, $1.5 million a week in profit? Well, if I'm running a 30% margin business, I got to make $6 million a week. There's 52 weeks. I got to make $300 million top line. Okay. So then you can start actually putting tangible goals to this. I want to become a billionaire. You become a billionaire by owning something worth a billion dollars. If you really want to be smart about it, you don't shoot for a billion.
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Chapters
7 chapters
1
What is the misunderstanding of billion-dollar success?
0:00–0:04
2
How can passive income contribute to becoming a billionaire?
0:04–0:12
3
What tangible goals should you set for billionaire status?
0:12–0:14
4
How can thinking bigger help you provide more value?
0:14–0:50
5
What does it mean to get returns and understand business value?
0:50–1:04
6
How do billionaires think about opportunities and growth?
1:04–1:34
7
What strategies can you use to reverse engineer your path to billionaire status?
1:34–6:17