Author: Paul Graham

Paul Graham's latest article, "How to Earn a Billion Dollars," ostensibly responds to the political debate that "it's impossible for one person to legitimately earn a billion dollars." What's truly worth reading is his very clear explanation of the underlying logic of 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 the growth can be sustained .

If a company can consistently create products that users genuinely like and are willing to recommend to their friends, it has the potential for exponential growth. If this growth occurs in a sufficiently large market, the founder's wealth accumulation becomes a mathematical outcome, not a moral dilemma.

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

• Does it truly address strong demand?
• Do users like it enough?
• Does the growth have the ability to spread on its own? Is the market space large enough?
• How long can the growth curve last?

So this article isn't 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 a "future prime minister's club," I want to address a question that more politicians should understand: how does one become a billionaire? Even if you don't intend to go into politics, I hope this will be helpful. Those who don't become prime ministers can become billionaires instead.

My knowledge of this topic stems from an organization 21 years ago that Jessica and I founded called Y Combinator. If you haven't heard of Y Combinator, it's somewhat of a combination of an investment firm and an entrepreneurship school. Since its inception in 2005, we've invested in approximately 6,500 companies.

Starting a successful startup is the most common way to become a billionaire . So in a sense, I've been training people to become billionaires for the past 21 years. 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, "Making a billion dollars is impossible." I felt like a figure skating coach hearing someone say, "A triple axel is impossible." Of course it's possible. It's difficult, but possible.

Of course, she doesn't mean that becoming a billionaire is impossible. Obviously, it is. Nor is she talking about the difference between income and capital gains. She's not talking about accounting. What she means is that it's impossible for someone to become that rich without doing something wrong, without cheating in some way.

A few days later, I chatted with an entrepreneur I had invested in. As with every entrepreneur I meet, I started by asking about her growth rate. She said it was 93% last month. I pointed out that this meant her net worth was also growing at a rate of 93% per month. She was getting rich at an astonishing pace. Yet, she hadn't done anything wrong. The reason her startup was growing so fast was simply because users loved what she made. So she could personally experience how wrong that politician was. She wasn't exploiting anyone. Quite the opposite. The reason her startup was growing so fast was because she and her co-founders worked tirelessly to keep users happy, and as a result, users started recommending the product to their friends. This led to exponential growth.

Later that day, I talked about her case online, and someone replied that having several million dollars and growing it at a rate of 93% per month is a completely different thing from being a billionaire.

I doubt many people would agree with this statement. But it turns out that this statement is not only wrong, but also hilariously wrong.

So I'd like to ask you all for a favor. Please take out your phones and do a number. I know this might seem a bit contrived, but I promise it will be helpful. I'm going to have you do a calculation that I do most often as an investor, and this experience will give you a real understanding of the essence of startups.

If we interpret his statement in the most conservative way, assuming "millions" refers to $2 million, then her company would need to grow 500 times for her to become a billionaire. Therefore, what we need to calculate is how many months it would take for something to grow 500 times at a monthly growth rate of 93%.

Therefore, we need to calculate the logarithm of 500 to the base 1.93. The simplest way is to calculate it directly using the Google search box. Open Google search and enter log(500, 1.93) . If you enter it correctly, the answer you get is approximately 9.45.

This is the number of months it takes to go from $2 million to a billionaire with a 93% monthly growth rate. A few million dollars and a 93% growth rate aren't actually that far from a billion dollars. They're nine and a half months apart.

Now you understand why the first question I always ask entrepreneurs is about their growth rate.

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

If your income grows by 15% per month, how much will it be in five years? To calculate this number, we need to calculate 1.15 to the power of 60, because five years is 60 months. So, Google 1.15^60 . The answer should be approximately 4384. That is, in five years, your startup's revenue will be 4384 times what it is now. If you earn $10,000 per month now, in five years you will earn approximately $44 million per month, or about $526 million per year. By then, if you hold a similar percentage of the company's shares as entrepreneurs typically do, you will be a billionaire.

In the real world, growth rates tend to slow down slightly. A very successful startup might grow at over 15% per month in its first year, but less than 15% per month in its fourth year. 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. It's difficult, 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 seem impossible. That's why some politicians don't trust it. They don't understand the math of exponential growth, so when they see someone become "impossibly rich" in their eyes, they assume that person must have cheated.

But now you at least understand through your own calculations that it's possible to become a billionaire without cheating. You've seen firsthand that this calculation involves only two numbers: the growth rate and how long that growth will last. If earning a billion dollars without cheating is impossible, then 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 that rate, it depends on the market size. Obviously, if you want to grow 4000 times, there needs to be at least 4000 times the demand in the market. But that's all you need. How could you possibly expand the market size by cheating?

If all you're aiming for is to become prime minister, then you can stop listening now. We've proven that earning a billion dollars is indeed possible because it depends on just two numbers: one that startups often achieve without cheating, and another that cheating simply cannot influence.

But if you really want to become a billionaire, we should go into more detail. Especially the first number, the growth rate. To maintain steady growth every month, you have to create something so good that people will want to tell their friends. In fact, this is another reason why I always ask entrepreneurs about their growth rate right from the start. The growth rate shows whether they've made the right thing.

So, specifically, how do you create something that people like so much they'd want to tell their friends?

The problem with a market economy, and also what makes it so great, is that it's difficult to create something customers want that they don't currently have. Once a new, satisfyable need is discovered, people flock to fulfill it. So you have to discover a need that no one else knows about.

How do you do that?

By experiencing that need yourself.

You are young. Young founders should typically do what they want. You don't yet have enough experience to know what others need. But at the same time, your own needs are extremely valuable because they foreshadow future needs. You are at the age where people start using new things. What you and your friends are using now, everyone will be using in ten years. Because your intuition about other people's needs is often a bad sign, while your own needs are a particularly valuable one, you should usually listen to the second sign. You should do 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 some really cool thing about DNA that everyone else is ignoring. Maybe you and your friends love drones. The idea doesn't need to be widely appealing from the start. It really just needs to appeal to you and your friends.

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

How did you arrive at this idea?

The answer is about 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 isn't to search for them. If you consciously search for startup ideas, it makes you too conservative. You cut out the outliers. Because the best startup ideas often sound terrible at first. If you're consciously searching for startup ideas, you reject them. And that's why they remain undiscovered.

Imagine how terrible Apple, Facebook, or Airbnb sounded at first. How many people would want to own their own computers? How could a company make money by having college students spy on each other online? Who would pay to sleep on an air mattress on someone else's floor? We know now what those ideas eventually became, so rewriting history is easy. But I remember very clearly how terrible Facebook and Airbnb sounded at first. We invested in Airbnb, even though we thought the idea was awful. We invested in them simply because we liked the founders.

So, how can you find a business idea without looking for one?

Working on projects with friends.

That's how the best startups come about. They weren't even initially intended to be companies. They were just things people made because they thought they were cool. Apple, Google, and Facebook all started this way. They weren't originally designed as companies.

The reason this method works is, as I mentioned earlier, because you are foreshadowing future demand. So if you're just making random things that you think are cool, what you're creating 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 cool," no matter how absurd it sounds, has a high probability of leading to a good startup idea. Whatever you create, it can't be more absurd than a startup we invested in in 2006 called Justin.TV. Its content consisted of a guy named Justin Kan wearing a camera strapped to his head, walking around and broadcasting everything that happened to him live. But that company went quite well. In fact, you've probably heard of it, only it later changed its name to Twitch.

The key to starting a successful startup is to deeply understand a specific user group so much that you can create what they truly want. If you're young, you can and should use a trick: make things for yourself. You understand yourself. But this is just one example of a more general rule. Only with a very deep understanding of your users can you create things they love enough to tell their friends. And only then can you achieve the exponential growth needed for a startup to truly succeed.

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

How people get rich in your society is one of the most important questions to understand. You can't let ideology, movies, or historical cases from centuries ago dictate your perspective on this issue. You must observe the world around you and see clearly how things actually happen. If you want to do that yourself, you'll obviously be forced to understand how it happens. So I'm not so worried about you. I'm worried about the future prime ministers. You need to remember this speech. So I'll summarize the key ideas for you.

There are two factors that determine how big a startup can become, and consequently, how rich its founders can become: growth rate and how long that growth can be sustained . You achieve the first factor by creating something users love to the point where they're willing to tell their friends. You achieve the second by being in a large market. If you grow exponentially and enter a large market, your startup becomes valuable, and you, as a shareholder, become wealthy. You don't need to cheat to make this happen. It happens automatically as long as you consistently keep your customers happy.