alt Hacker NewsHow to earn a billion dollars
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Why would you want to earn a billion dollars? You must have the maturity to handle the money. Hopefully you’ll mature sufficiently through the process of making that money but if the money’s fast, that might not happen. I’ve seen people get 9-figure rich overnight. Didn’t change them at all, they are still the wonderful folks they were. But I’ve also seen people drink themselves to death as it turns out a few mill in the bank does not answer the question “wtf do I do when I don’t have to do anything?”
I don't disagree with the essay, but is there any benefit to being a billionaire? Almost anything I could possibly want could be satisfied by being a humble multi-millionaire.
The answer is easy, steal the value created by thousands of your employees.
"So you can imagine how astonished I was last month when an American politician said that it was impossible to earn a billion dollars..."
Paul, playing dumb doesn't suit you.
The first definition of "earn" on merriam-webster.com is "to receive as return for effort and especially for work done or services rendered".
Your chose a straw man, "doing something bad", to argue against because it's so easy to beat.
Much harder to justify that anyone's doing $1B of effort. Being a billionaire doesn't mean you're bad. In fact, it doesn't even matter if they are all bad -- there are always going to be bad people. It means a system that allows, encourages, and protects billionaires might be a problem that needs to be fixed.
Scary idea, I know. But we all only get to go around this world once. Might as well spend our time trying to make it better rather than rationalizing why it's OK to spend all your time trying to make it worse.
I read this and see two possibilities.
1) PG honestly believes that his audience is unfamiliar with compound growth - i.e., an insult to the audience's intelligence.
Or
2) PG honestly believes that the founder of a successful startup is directly and wholly responsible for the level of magnificent growth a company achieves.
The 2nd one is some Ayn-Rand-like school of thought. That there are great people who have 1000x the work output of those around them. PG more or less alludes to this when he says stuff like
> The reason her startup was growing so fast was simply that users loved what she'd built.
Notice how the credit for the startup's growth is credited to the founder?
> The reason her startup was growing so fast was that she and her cofounder had been working their asses off to make their users happy, and as a result the users had been telling their friends
Again, crediting founders for the entirety of the company's growth. This is obviously flawed thinking in any company that has employees beyond the founder. Those employees are doing a significant amount of the work. And in any company with more than say, 5 people, they are doing the majority of the work.
PG and people who think like him believe ownership==credit. That's the whole problem.
I get the impression that a rather large number of HN commenters hereabouts have a very favorable view of https://www.theguardian.com/commentisfree/2026/jun/04/a-good... by Thomas Picketty.
I've always respect PG's articles (obviously), but him pointing to a sole founder at a high growth rate (which founder btw, what is the product) as 'proof' that no bad has been done to reach that level of growth is so incredibly naive!
His founder is not at the level we are talking about. They obviously would not represent the 'bad' that AOC was trying to make a point about. Why don't you pick your actual billionaires?
Airbnb - Ignored and exploited local housing regulations, over time the blowback has been HUGELY negative. Here the 'bad' is the commoditization of housing in peoples' homes, causing housing problems.
Coinbase - For years, they built their business on bitcoin being used on dark nets for illegal purposes. There's the bad. If they were truly good they would have done KYC from day 1. Why would they? Billionaires gotta break rules.
DoorDash/Instacart - Exploitation of cheap labor, they _consistently_ underpay workers, hire undocumented laborers for that purpose, and pit laborers and consumers against each other rather than improving the system.
These, Paul, are the actual billionaires AOC was talking about. Not your young founder making the 200th to-do app.
Really unimpressed and disappointed by the shallowness of his thinking here.
There is nothing more evil in this world than the pursuit of power and wealth.
Benefits of being a billionaire are vastly overstated. To live a happy life, you don't need to be a billionaire.
Woof. This article is pretty impressively tone deaf and seemingly missing the point (on purpose?)
This essay is unfortunate because he isn't addressing the true misunderstanding of politicians like AOC, he's not explaining the consumer surplus (why the world gained 50x more from Google than the founders), and he's not explaining that wealth is craeted not taken.
Politicians spend their lives in one of the purest zero-sum systems in existence. Of course they don't have a gut level understanding of the creation of wealth.
But consumer surplus matters most of all. Imagine the net benefit to consumers of Robotaxi and Optimus (ok, ok, assuming they work, for the doubters in the room). Entrepreneurs capture
And yet, the vast majority of startups fail. This essay about exponential growth is clearly not the whole story.
How does your startup avoid failing? By skirting local laws? Exploiting employees? Destroying the environment? Replacing jobs in a way that makes the standard of living better for the few but worse for the many? Making weapons or systems that coordinate weapons? Submitting to and therefore tacitly supporting oppressive governments?
Sure, there are examples of startups that don’t do these things. But looking at billionaire-class startups (there’s not that many of those to analyze!), there are far more of them in the other category.
We're just temporarily embarrassed billionaires.
What will become of this site once its userbase turns against its corrupt oligarch owners on the basis of it propagating evil things like Flock?
Regarding the scale of what a billion dollars even means, I've recently been thinking of an example which I think might work (but I haven’t tried it on many people yet).
There are 86,400 seconds in a day (24 hours * 60 minutes * 60 seconds = 86400). Now let’s say you spend an average of 1$ every second. That’s every second, including when you’re sleeping or on the toilet. That’s 86,400$ per day, which I hope we can all agree is a lot of money.
If you had one million dollars, to spend it all it’d take you over 11 days (1,000,000 dollars / 86,400 seconds = 11.57).
If you had one billion dollars, to spend it all it’d take you over 31 years (1,000,000,000 dollars / 86,400 seconds / 365 days = 31.71). That is an obscene amount of money.
Mr. Graham is making 2 mistakes:
a) thinking that others don't understand exponential. Any reasonably college educated grad understands it well.
b) thinking that growing 93 percent every month means the founder has put in 93% more effort than the prior month.
Their argument relies upon the ideology that just because you thought and executed an idea profitably means you should continue to "earn" from it.
In the LLM age, more and more people are questioning this, and rather want to goto: effort == earnings.
More sanctimonious billionaire apologism. Nope, all wrong. You can't earn a billion dollars, and nothing in this essay shows you can. You can get a billion dollars, and maybe you can even wind up with a billion dollars without being mostly evil (although I'm skeptical), but you can't earn it. Graham is confusing "I did some stuff and my net worth increased to a billion" with "I earned a billion".
Reading this, I realize that I don't have confidence in winning under capitalism, so I think it would be quicker to just try to break the game of capitalism altogether. But communism, in my opinion, seems like a concept that is unlikely to arrive, so please wait just a little while until I come up with a new ideology.
Man I am so tired of rich people. Can they all just go f each other on a little island and leave the rest of us alone to enjoy a normal life?
Did he... totally miss the point of AOC?
She said that no amount of "work" can "earn" billion dollars. So you earn billions through capitalism by rent, through owning companies, and having other people work for you. And ultimately, it should be obvious that societies have to cap this
> starting from 2 million && 93% growth > 9.45 months to become a billionaire (500x growth)
There is a much simpler way to become a billionaire. No Revenue (Silicon Valley): https://www.youtube.com/watch?v=BzAdXyPYKQo
> Starting a successful startup is the most common way to become a billionaire, so in effect I've spent the last 21 years training people to become billionaires
He actually thinks he trained people to become billionaires.
I like how he thinks everyone else is an idiot - look, if you make a thing bigger many times - it grow big, reaaaal biiig! Take out your calculator, look, number go biiig!
What people mean by "you can't earn a billion dollar" is that there's no work that's useful enough, alone, to be worth that much in reward. How can we live in a world where a moron can have a trillion to their name, while others work arduous physical labor all their lives and end up with nothing?
You might not believe you've done anything "bad" to become a billionaire, but the mere fact that you accumumated so much wealth necessarily means others, somewhere, had to work for it. The mere existence of billionaires is the mark of an unhealthy economy, that doesn't distribute wealth in an efficient or fair manner.
Elon Musk easily earned the billions for SpaceX. It's providing space internet to Ukraine, an innocent democracy that's under attack. The technological feats of rocket reuse and the vision of Mars don't even matter, insofar as they're just tools to attract the capital. Any other method that supports Ukraine just as well would have also been worth a billion.
Patriot interceptors cost many millions, so 100-200 are already worth a billion! Is SpaceX internet worth 200 Patriot missiles? Easily.
I think politicians restrict "earning" to "wage income", which is kind of an arbitrary line in the sand, and would also be untrue. SpaceX/Tesla would also have paid Musk billions in cash if stock wasn't allowed.
I didn't know there'd be so many anticapitalists on a forum by a VC company.
Well... but the billionaires, or billion dollar companies DO "break rules, abuse labor laws, pay people less than what they’re worth"... also manipulate markets, bribe politicians, evade taxes, sell user data etc. Even Trillionaire(s) and trillion dollar companies do that. Why do they do that then, if the only things they need are those two numbers and a product that people love ^_^?
Because there are more than 2 numbers even in pg's simplistic example. Third number: You make $10K monthly today. How? If your cost is $9.9K this doesn't mean anything right? Everyone can do that. So how you earn that $10K is more important than those other 2 numbers. You want more profit and less cost. That's when you start breaking the rules and doing bad things. You have to compete, and it's easier to win if you cheat. If there are cheaters in the game, they would win the competition, not you. And there are always cheaters in the game.
Silicon Valley's system is different than the rest of the world. They give the founders some sort of an infinite money glitch (for a limited time). They don't care about the third number. They care only about the Growth number. Because what they really care about is the Market Domination. They want to BURN money to BUY that market. In most cases, globally. That's why billions of people in the world are using Facebook's products daily. Not because Zuck had a great idea in his dorm room. Not because Poke feature was that viral. But because US needed to dominate the upcoming social media world. For profit, but more importantly for politics, for gathering information, for tracking people, for controlling (social) media and narrative, for security. So the system funded his startup, along with other similar startups in case any of them becomes the winner. And they didn't give just money, they give all the network, permission and privileges to win.
That's why Hans Zuckerberg from the Berlin startup scene hasn't become a billionaire but Mark did.
This is exactly the same playbook with the AI game today. My 70+ parents at the other side of the World use ChatGPT daily for FREE. They will never be the paying customers of OpenAI. OpenAI gives its expensive services for free, because they want absolute dominance in the global market. They can't lose that. Note that such a game plan is impossible for any company outside of Silicon Valley. Only state-controlled companies can play that game in the rest of the world. But for SV, it's not really clear who's controlling who.
The issue with billionaires is that some of them got insanely rich while being net negative from a societal perspective.
The most famous ones ended-up in prison (Sam Bankman Fried, Elizabeth Holmes, Jeffrey Epstein, Bernie Madoff) but anyone with a basic grasp of statistics and criminal behavior know that many others will escape the justice system forever.
It does not mean that all billionaires are bad, the criminals are not the majority, but there are enough criminals to justify skepticism and scrutiny.
He makes it sound simple, and in some ways, it is. You have to not only build the thing, but also find the thing that people want. It’s the latter that’s as hard if not harder than the former.
In addition, the converse is not true. Just because you’ve found something that grows fast and in large market, doesn’t mean you’ll become a billionaire. With all humility, I’ve been lucky to have done that twice, but in a large company. I’m not complaining, I’m just saying that doesn’t necessarily make you a billionaire.
He's right. You don't have to cheat to become a billionaire. Stepping on everybody else's throats is a legit part of the capitalist playbook. No cheating involved.
Please don't bury the lede here of how the author completely and epically misses the point of the statement.
It's not about the math of the thing, it's about the arguably necessary exploitation that must occur to hit those kinds of numbers.
And in fact, IMHO, you don't even need to get to "exploitation" to criticize this mentality.
Any normal human would (and if not would, SHOULD) want to stop "earning" well before they hit those ridiculous numbers. Let's say -- at about 50 million, a normal person should realize, yes, that's enough. Time to pivot to something that doesn't cause so much accumulation. This does happen, we just don't hear about it enough.
What an out of touch buffoon. AOC is right, billionaires are a policy failure, and pg is making her point.
> Since we started it in 2005 we've funded about 6500 companies.
> I've spent the last 21 years training people to become billionaires. So far about 30 of them have
Since it's a post about math, let's do it.
6500 companies with 2 founders each - 13000 founders.
30 of them became billionaires - 0.2% of them.
So being a tech founder at the most famous startup accelerator in the world give you about 0.2% chance of becoming a billionaire.
Or put another way, only 1 out of every 500 YC-combinator founded startup makes one of it's founders a billionaire.
PG seems be becoming more and more disingenuous. People using the word "earn" almost always mean "you can't get this from wages." This doesn't mean that the effect of growth isn't real - almost any business that scales even moderately, but none the less scales, and is profitable, can make its owners millionaires or better. But this does not mean that those riches were "earned." Or that the person who started the business had more glorious suffering than some rando who works 80 hours a week of part time jobs to keep a roof over their kids' heads. Rather, it is inherent to finding a scalable business and not screwing it up.
last time I waded into this discussion with my own examples, the "billionaires exploit people" maximalists kept moving the goal post indefinitely
I had asked "what about a fund manager earning the carry"
management fee and performance fee, employees not entirely necessary.
the main result was a brief back and forth to understand that role, because this class of people are completely separated from all the exceptions that break their argument, and then a brief moment of acceptance, before focusing on the prevalence of this kind of billionaire amongst all billionaires. Which I thought was funny because there are not many billionaires to begin with. 20 fund managers on the list would be a large percentage of billionaires.
Wow, Paul Graham REALLY missed the point.
How ironic. Extremely successful person tries to justify why he's better or smarter than you, and the way he does it proves that he doesn't even understand what the other person has said.
He kind of proved the point he intended to disprove.
It's not quite as bad as a lottery winner saying "anyone can earn the jackpot", but it's in that direction.
AOC wasn't even being easy to (deliberately) misunderstand, here, like Obama was when he said "you didn't build that".
Of course, like the tan suit critique, the "you didn't build that" pearl-clutchers were all arguing in bad faith.
I don't think Paul Graham is arguing in bad faith here. This post is just, for lack of a better word, "stupid".
This is a strawman argument. It is of course mathematically possible to obtain a billion dollars (although notably much harder to do in a way that is liquid, but let's gloss over that). My somewhat more charitable reading of that claim (shared by other readers here, I see) is that ‘earn’ refers to moral desert. I'm not really a desert-oriented person but let me try to steelman it a bit:
In aristocracies we traditionally assume or imply that a person can deserve a certain wealth or power simply by being born into it. Capitalism, however, sells us the dream of the meritocracy: your (financial) success in life should depend not at all on factors of chance like birth or genetics but simply how much of yourself you choose to sell to the market.
At any point in time you have control of some tangible or intangible capital, including wealth, physical health, social connections, equipment, information, trained skills, et cetera. Some of these assets are gained by luck, e.g. accident of birth; some of them are gained by trading your time; and some of them are gained by spending another asset (whose origin reduces, recursively, to some combination of luck or time). At any point you can, assuming the market is appropriately liquid, spend some of these assets to get cash.
Some of these assets have force-multiplier effects on your future output in certain domains, from which exponentials naturally arise; but the time spent on them remains linear, and so, if we want to ignore inherited factors (the opportunity to spend the time on things without immediate feedback, say, or handed-down insight about which of these investments will produce the most value in the future, or access to the required tutors) the increase in earnings these things _merit_ has to remain linear as well. There is no way to compound your time and therefore, under an assumption of meritocracy, there is also no morally acceptable way to compound earnings, which I would assume is the point the politician is attempting to make. Under this worldview, any exponential compounding that occurs must, mathematically, be a result of systematically undervaluing the time of an exponential number of other people, since each person can only spend a linear amount of time.
In practice, of course, the assumption of meritocracy is simply wrong, and arguably the concept as a whole is internally incoherent (or at least I don't believe we've yet managed to articulate it coherently: we would have to settle the nature vs nurture debate and completely sever the value of a person's spent time from the accidents of their birth, if such a thing is even meaningful). But I think that's where the claim falls down, not in failing to understand the mathematics of exponentials.
I think maybe the fundamental issue is something that he said really late in the essay:
> There are other ways to get rich than by starting startups. Some of those do require you to exploit people. But startups are the most common way to become really rich, and if you want to start a successful startup, the key is not exploitation but empathy.
> How people become rich in your society is one of the most important things to understand about it. You can't let your beliefs about this be determined by ideology, or movies, or historical examples that are centuries old. You must look at the world around you and see how it's actually done.
The "it's impossible to do morally" people are looking at how it used to be done, and how it's sometimes still done. They are right to be opposed to that. But oppose the immoral aspects of it, not doing it at all.
And those who hard-core define a billion as immoral are I think signalling something else: They want the government to take that money, from every billionaire. (If we're talking immorality, we could discuss the morality of that.) But they don't understand that there will probably be second-order consequences of doing so...
Um, did i just get mansplained compound interest by Paul f*ing Graham? I feel like this has been the subject of condescending advice since the beginning of time.
"But now you at least understand, from having done the math yourselves, that you don't have to cheat to become a billionaire. You've seen for yourselves that there are only two numbers in the calculation, the growth rate and how long it continues."
What could possibly be false in a two-parameter model of reality?
He seems to be regressing, he said this in January:
> The rational fear of those who dislike economic inequality is that the rich will convert their economic power into political power: that they’ll tilt elections, or pay bribes for pardons, or buy up the news media to promote their views.
> I used to be able to claim that tech billionaires didn't actually do this — that they just wanted to refine their gadgets. But unfortunately in the current administration we've seen all three.
Now he's claiming he's trained all these billionaires and they are a blessing to the world, not avaricious sociopaths.
Money, property, limited companies, intellectual property laws, patents, contract law, etc. etc. are things on which all successful businesses depend. These are social constructs - societal "technologies" if you like. They work because as a society we agree that they should and enforce them through the rule of law.
The assertion that it should be "impossible" to be a billionaire (or trillionaire, gazillionaire, whatever) is really an assertion that a just and moral society would design all of these things to prevent that outcome.
And I think it's pretty reasonable to say that we ought to set society up such that as someone gets wealthier we take money away from them at faster rates, so that beyond some level of wealth it is very difficult to continue to get richer.
Unfortunately, a lot of people are captured by rather libertarian ideas about government, money, property, etc. that seem to prevent many people (at least in the US, UK, et al.) from behaving in anything but the most selfish, individualistic, and antisocial of ways.
As a committed market-socialist, the extent that the HN commentariat has turned into a reflexively nihilistic anti-free-enterprise is a fairly astonishing turn. It’s like my belief system turned into the maximally idiotic version of itself.
“Externality” is thrown about as a term almost completely disconnected from any economic grounding of the term. If you make externality mean “anything I find aesthetically displeasing”, then yeah, sure, billionaires create and benefit from externalities, if your aesthetic is egalitarian comity.
But if you mean “legitimate societal goals, legislated and agreed on by a representative body” are being violated left and right by billionaires, gimme a break.
Go ahead and tax capital gains way more. Ending the estate step up in basis sounds great. Break up the “borrow” part of buy-borrow-die, while you’re at it, and treat encumbrance on capital as a taxable event, we could probably make that work, too, although the middle class might foam at the mouth if that was applied broadly.
But, man. The cynicism, confiscatory and controlling instincts on display are enough to make me upgrade Ayn Rand from “hypocritical nut” to “maybe she was on to something when the general population gets tall poppy syndrome.”
Markets work. There are externalities, but we can, and should, legislate fixes for social goals that we actually agree on. But stiflingly heavy regulation is really bad for incentivizing creation of new knowledge and wealth. You can still believe in caring about people, and building (incentive aligned) social safety nets without destroying people’s incentive, and thus, because intellectual capital formation depends heavily on network effects, people’s ability, to create many kinds of value in the world.
Actual socialists recognize that capital is incredibly useful, and incredibly valuable. Leveraging capital is incredibly beneficial to the world. Pretending that the people leveraging that capital are somehow guilty of an original sin just by leveraging capital markets, which is really what these screeds against anyone holding controlling interests in companies they were instrumental in creating, seem to be about, leads down a terrible path.
Demonizing people creating things is petty and unbecoming for a political movement.
Generally a PG defender (at least nowadays), but he is deliberately misrepresenting what she meant, and/but I think a good % of the students/attendees know that.