Author: Paul Graham

Paul Graham's latest article, "How to Earn a Billion Dollars," appears to respond to the political debate that "a person cannot legitimately earn a billion dollars," but the real highlight is how clearly he explains the underlying logic of entrepreneurial wealth.

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

If a company can consistently create products that users truly like and are willing to recommend to their friends, it has the opportunity for exponential growth. If this growth happens 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 valuations of many great companies in the secondary market essentially depend on the same set of questions:

• Does it really solve a strong demand?

• Do users like it enough?

• Is the growth self-propagating? 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," but rather 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 Debate Society.

Since this is obviously a "future prime minister club," I want to discuss a topic more political figures should understand: how people become billionaires. Even if you don't intend 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 our 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 political figure in the U.S. said, "Earning 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 hard, but it’s possible.

Of course, she did not mean that becoming a billionaire is impossible. It is evidently possible. She was not talking about the difference between income and capital gains. She was not discussing accounting issues. What she meant was that it’s impossible for a person to become that rich 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 first asked what her growth rate was. She said it was 93% last month. I pointed out that this means her net worth was also growing at 93% per month. She was getting rich at an astonishing pace. However, she hadn’t done anything wrong. The reason her startup was growing so fast was simply that users liked what she made. So she could feel from her own experience how absurdly wrong that political figure was. She wasn’t exploiting anyone. In fact, the opposite was true. The reason her startup was growing so rapidly was that she and her co-founder were working tirelessly to make users happy, resulting in users starting to recommend 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 was completely different from becoming a billionaire.

I doubt many people would agree with that statement. But it turns out that this statement is not only incorrect but also very misleading.

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

If we conservatively interpret what she said, assuming "a few million" refers to 2 million dollars, then her company would need to grow 500 times to make her a billionaire. So 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%.

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’s search box and calculate directly. Open Google Search and type log(500, 1.93). If you type it in correctly, the answer should be approximately 9.45.

This is the number of months needed to go from 2 million dollars to becoming a billionaire at a monthly growth rate of 93%. The difference between a few million dollars and a 93% growth rate is actually not that far from a billion dollars. They are just 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 blame me for using unrealistic numbers, so let’s switch to a more conservative growth rate. Let’s see what happens with a monthly growth rate of 15%. This rate is not at all uncommon. I often encounter startups with a monthly growth rate of 15%.

If your revenue grows by 15% per month, how much will it be in five years? To calculate this number, we need to calculate 1.15 raised to the power of 60 because five years comprise 60 months. So again go to Google and input 1.15^60. The answer should be around 4384. That is, in five years, your startup revenue will be about 4384 times what it is now. If your current monthly revenue is 10,000 dollars, in five years your monthly revenue will be about 44 million dollars, with an annual income of approximately 526 million dollars. By that time, if you hold a similar percentage of the company as entrepreneurs typically do, you will become a billionaire.

In the real world, growth rates often slow slightly. A very successful startup may have a growth rate higher than 15% in its first year and lower than 15% in its fourth year. But the end result is roughly the same. If you start a startup in your early twenties, becoming a billionaire before thirty is definitely possible. It’s hard, but it’s 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. It is because of this that some politicians distrust it. They do not understand the mathematics of exponential growth, so when they see someone become what they consider "impossibly wealthy," they assume these people must have cheated.

But now you at least understand through personal calculation that a person doesn't need to cheat to become a billionaire. You have seen firsthand that this calculation contains only two numbers: the growth rate and how long that growth lasts. If earning a billion dollars without cheating is impossible, then which of these two numbers is impossible? A monthly growth rate of 15% is certainly not impossible; startups frequently achieve that. As for how long you can sustain that growth, it depends on the market size. Clearly, if you are 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 demonstrated that earning a billion dollars is indeed possible, as it depends solely on two numbers: one of which startups often achieve without cheating, while the other is not something cheating can impact at all.

But if you really want to become a billionaire, we should delve a bit deeper, especially into the first number, the growth rate. To maintain consistent growth each month, you must create something that is good enough for people to want to tell their friends about. In fact, this is also another reason why I always ask entrepreneurs about their growth rate at the outset. The growth rate shows whether they have created the right thing.

So how do you create something that people like enough to share with their friends?

The problem with market economies—and their greatness—is that it is hard to create something that customers want but do not currently have. Once a new, unmet need is discovered, people rush to fulfill it. So you must uncover a demand that others do not yet know about.

How do you do that?

By feeling that demand yourself.

You are young. Usually, young founders should create things they want. You do not yet have enough experience to know what others need. But at the same time, your needs are particularly valuable because your needs will foreshadow future demands. 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. Because your intuition about other people's needs is generally a poor signal, while your own needs are a particularly valuable signal, you should usually listen to the latter. You should create things that you and your friends want.

Making what you and your friends want doesn’t mean you have to create consumer products. Perhaps you and your friends are molecular biologists and there’s some cool thing related to DNA you could work on that others are overlooking. Maybe you and your friends like drones. The idea doesn’t need to have broad appeal from the start. It just needs to appeal to you and your friends.

Don’t worry about the second number, which is market size. Since you signal future demand, the market will grow. Additionally, it’s always possible to expand into adjacent markets. All you need to do is find a foothold in the map of unmet demand and then expand from there.

How do you come up with 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 dismiss the outliers. Because the best startup ideas often sound terrible in the beginning. If you are consciously looking for startup ideas, you will reject them. This is precisely why they have remained undiscovered.

Imagine how terrible the ideas for Apple, Facebook, or Airbnb sounded in the beginning. How many people wanted personal computers? How could a company make money off college students spying on each other online? Who would pay to sleep on an air mattress on someone else's floor? We know now what these ideas eventually became, so it's 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 because we liked the founders.

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

By doing projects with your friends.

The best startups come this way. They did not even begin with the intention of becoming companies. They were simply things people made because they thought they were cool. Apple, Google, and Facebook all started this way. They were not initially designed to be companies.

The reason this method works is what I mentioned earlier: you signal future demand. So if you just make some random things you think are cool, what you create is far from random.

This is one of those situations where your subconscious mind knows more than your conscious mind. Any project that genuinely 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 great startup idea. What you create, no matter how absurd, cannot possibly be more absurd 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 on his head, live-streaming everything happening to him. But that company turned out quite well. In fact, you’ve probably heard of it; it later changed its name to Twitch.

The key to starting a successful startup is to deeply understand a particular group of users to the point where you can create what they truly want. If you are young, you can and should use a trick: make things 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 love so much they want to tell their friends about it. Only then can you achieve the exponential growth necessary for a startup to truly succeed.

Besides starting a startup, there are other ways to get rich. Some of them indeed 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 truly want? What can you do for them that will significantly improve their lives? This empathy is what we look for in founders and what we cultivate in the founders we admit.

One of the most crucial questions in understanding your society is how people get rich. You cannot let ideology, movies, or historical cases from centuries ago dictate your view on this issue. You must observe the world around you and see how things actually happen. If you want to achieve this firsthand, you will clearly be forced to understand how it happens. So I’m not too worried about you. I am concerned about those future prime ministers. You need to remember this talk. So let me summarize the key ideas for you.

There are two factors that determine how big a startup can get, and thereby how wealthy its founders can become: the growth rate and how long that growth can be sustained. You obtain the first factor by producing something users like so much they want to tell their friends about it. You gain the second factor by being in a big market. If you grow exponentially and enter a large market, your startup will become valuable, and you as a shareholder will become wealthy. You don’t need to cheat for any of this to happen. As long as you keep making customers happy, it will happen automatically.