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I didn't understand how to make a billion dollars for a very, very long time.

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And the first misunderstanding is that you don't make a billion dollars to become a billionaire.

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You own stuff that's worth a billion dollars to become a billionaire.

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Let me walk you through how I used to think this worked.

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So phase one, high school Alex was like, okay, in order to be a billionaire,

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I have to make a billion dollars every year, which is ridiculous.

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But that's what I thought.

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The second phase I was like, oh, silly high school Alex,

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that's not how you make a billion dollars.

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All you have to do is take home a billion, two billion dollars before taxes,

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over your lifetime.

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And so then third season, which is where I'm at right now,

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and you don't make it, you own it.

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So let's say you own a business that is making 10 million dollars of your top line.

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All right, now half of that is your profit.

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If this company is worth 10 times its earnings,

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and I'll explain why the, why a company like this might be worth 10 times its earnings,

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now after taxes I take home, you know, three.

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Good for me.

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Next year, because I'm in Mosination and we focus on the main asset that we have

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our business, and I go from five million dollars to your profit to six million dollars

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to your profit.

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Doesn't sound like a huge win, right?

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It's like, hey, I added a million bucks to bottom line.

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Cool, this is great.

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Well, if we have a 10x multiple,

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then something I own went from being worth 50 million to being worth

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60 million.

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Now I own 100% of that thing,

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and I just got something that appreciated by 10 million dollars that I didn't pay tax on.

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Wait a second.

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What I got out of the business only went from three to three and a half million.

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After taxes, right, six at 40%, you get three and a half to take home.

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I only made an extra $500,000 after taxes this year.

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Now, you made an extra $10 million after taxes because the thing that you own

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appreciated by 10 million dollars.

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And that's the thing that I didn't understand for a very long time.

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And so now let's zoom out.

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You want to be a billionaire.

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Again, it's not by me side hustling my way to a billion.

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Like Zuckerberg didn't have Airbnb's

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he was flipping on the side while he was building Facebook.

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What did you do to become a billionaire?

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He built Facebook.

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If you have the opportunity to spend half of your time obsessing about your passive income,

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rather than saying, huh, I wonder if I could take my $5 million profit business,

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focus all my attention on it and make it into a $6 million profit business.

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And then all of a sudden, I just added $10 million to my net worth.

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And so this is how a billion dollars actually is made.

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You have something that makes between $80 and $100 million in EBITDA

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or fancy word for profit that you get a multiple on.

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And usually companies of that size tend to treat it 15 times earnings.

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Like if you look at the S&P,

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all right, so you'd really only need somewhere in there of like $70 million in EBITDA

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to be a billionaire because you own the company.

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So it means that you'd have to make a little bit more than $1.3 million,

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$1.5 million per week and take home.

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Which I know that that sounds crazy, but like you have to think in increments.

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Like imagine how much you made five years ago as an entrepreneur.

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How crazy small does that feel to you now?

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Because you've leveled up.

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And so as much as whatever number I just said to you might sound like a lot,

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five years from now, you might be in shooting distance.

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And so it's really just about understanding like,

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how do I reverse engineer what has to happen?

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And if you want to be a billionaire, it's like,

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okay, well, how do I make a million dollars,

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$1.5 million a week in profit?

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Well, if I'm running a 30% march in business,

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I got to make $6 million a week.

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There's 52 weeks.

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I got to make $300 million top line.

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Okay. So then you can start actually putting tangible goals to this.

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I want to become a billionaire.

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You become a billionaire by owning something worth a billion dollars.

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If you really want to be smart about it,

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you don't shoot for a billion.

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Here's why.

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You want to shoot for 10 billion or 50 billion.

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And I know this is going to sound crazy.

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But realistically, I would never imagine trying to pursue an opportunity

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that was capped at $100 million a year.

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You would have to think about opportunities that one

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were not limited by your time.

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Two could serve a very big marketplace.

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Three had very high-grace margin.

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And four, you'd think probably on a very, very long time horizon.

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And then all of a sudden, you're thinking like a billionaire.

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The goals we have matter,

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matter more because of how we measure them

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and the increments in which we used to build them

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more than what the actual goal itself is.

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And so when someone tells me they have a goal to make six figures,

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what happens is they're going to think that six figures is the calf.

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And they're going to break it down in a tiny,

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80-bitty units.

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And they're going to basically say 100% of my effort equals $100,000.

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And they're going to measure in tiny units.

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And then they're going to do what 100% effort

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and they're going to be like,

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I was in 94 this year.

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But if you're thinking about making $10 million,

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then you can.

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You'll think in like, okay, for me to make $10 million,

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I got to sell, let's say, a $10,000 thing.

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And I got to sell 1,000 of them.

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Okay, that means $3,000 things today.

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And if I close one out of three calls,

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that means I have to take nine calls a day.

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Okay, well, how much do I have to spend to get a call for this thing?

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All of a sudden,

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you start thinking in a much bigger increment.

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And you feel like, why don't know what I could sell for $10,000?

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Well, then you got to figure out something

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that makes someone else $100,000.

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And you can sell something that's worth 10.

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The reason you're not making enough money

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is because you don't know how to provide enough value.

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The reason that like a lot of the wealth in the world

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sits with financiers is because they know how to take someone

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passively.

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And they can say, hey, man, just give me a billion dollars.

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And I'll just make you 10% a year on it.

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And they know how to make 15% a year.

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And they make that extra five on a billion.

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And they take home 50 million a year.

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And they're like, works for me.

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If you can approach the problem that way,

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you'll start thinking more along the lines of the people

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that I think you're trying to emulate.

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You don't make it, you own it.

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You get paid for what you do,

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you get returns on what you own.

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That $50 million business that we were talking about before,

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$10,000, $5,000 profit, $10,000.

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Why would someone pay $10,000 or something?

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You're like, I wouldn't pay $50,000 for business that's making five.

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Let me tell you why you would.

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So if that business went from five to six

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and then went 20% again,

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because that was a 20% growth, it went to 7.2.

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And then 20% again would be 8.6.

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And 20% again would be, what a 10.2.

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You can keep going.

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If you added all those things up,

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you'd be at 40-ish million in earnings over the next five years.

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And remember, we bought it for 50.

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But wait, we now we still own this thing.

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And it's making 12.5 million in profit.

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Wait, if we just apply 10x and realistically at this point,

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it'd probably be closer to 12x.

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But let's just still apply 10x for this.

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Now we have $125 million thing.

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That we paid 54.

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That already paid us 40 back.

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And this is where it gets even juicier.

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To buy that $50 million thing, I didn't write it.

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Check for 50.

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I wrote a check for 15.

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And I took a loan for 35.

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Huh.

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And so then at the end of this whole thing,

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I put my 15 million down.

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I pay back my loan for the 35.

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It's only have $10 million left over

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that I got to pay back.

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And now I get 100% of that $125 million.

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Minus my original 10,

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because I covered five of it from the cash flow.

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Oh, I actually made $120 million.

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That's why people do it.

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The smart money, if you want to sell to institutional investors,

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they think that way.

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And so you have to think that way about the assets

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that you own and the assets that you're building.