Alex Hormozi: How to Make A Billion Dollars

The video is about how to become a billionaire by owning something worth a billion dollars, and the importance of thinking in larger increments and providing enough value to achieve financial success.

This video by Alex Hormozi was published on Aug 20, 2022.
Video length: 06:23.

In this video, Alex Hormozi explains how to become a billionaire by owning something worth a billion dollars, rather than making a billion dollars every year.

He breaks down the process of building a business that makes between 80 and 100 million dollars in profit, which can be worth 10 times its earnings. Hormozi emphasizes the importance of thinking in larger increments and providing enough value to become wealthy.

He also suggests aiming for a goal of 10 or 50 billion dollars, rather than capping oneself at 100 million.

• To become a billionaire, you need to own something worth a billion dollars, not necessarily make a billion dollars every year.
• You need to make around 1.3 million dollars per week and take home to be a billionaire.
• It's better to pursue opportunities that are not limited by time, can serve a big marketplace, have high gross margin, and can be thought of on a long time horizon.
• You get paid for what you do and get returns on what you own.
• Having a business that appreciates in value can make you a lot of money.

How to Make A Billion Dollars - YouTube

Misunderstanding How to Make a Billion Dollars

• First misunderstanding is that you don't make a billion dollars to become a billionaire, you own something worth a billion dollars.
• High school Alex thought he had to make a billion dollars every year to become a billionaire.
• Later, he realized that he just had to take home a billion or two billion dollars before taxes over his lifetime.
• Now he understands that you don't make it, you own it.
• Having a business that makes 10 million dollars a year can make you a billionaire if it's worth 10 times its earnings.

How to Make a Billion Dollars

• You become a billionaire by owning something worth a billion dollars.
• You need to have something that makes between 80 and 100 million dollars in EBITDA (profit).
• Companies of that size tend to trade 15 times earnings.
• You need to make a little bit more than 1.3 million dollars per week and take home to be a billionaire.
• You have to think in increments and reverse engineer what has to happen.

Why You Should Shoot for 10 Billion or 50 Billion

• You want to shoot for 10 billion or 50 billion because you don't want to pursue an opportunity that is capped at 100 million a year.
• You need to think about opportunities that are not limited by your time, can serve a very big marketplace, have very high gross margin, and you can think on a very long time horizon.
• The goals you have matter more because of how you measure them and the increments in which you use to build them.
• If you're thinking about making 10 million dollars, you'll think in bigger increments and tangible goals.
• The reason you're not making enough money is that you don't know how to provide enough value.

How to Make A Billion Dollars - YouTube

You Don't Make It, You Own It

• You get paid for what you do and get returns on what you own.
• Financiers know how to take someone passively and make them 10% a year on their billion dollars.
• If you can approach the problem that way, you'll start thinking more along the lines of the people you're trying to emulate.
• You don't make it, you own it.
• Having a 50 million dollar business that appreciates by 10 million dollars can make you a lot of money.

How to Make A Billion Dollars

• Think in larger increments and provide enough value to achieve financial success.
• Invest in a business that is making a profit of 5 million dollars.
• Grow the business by 20% each year, which will result in earnings of 40 million dollars over the next five years.
• Apply a 10x multiple to the business, which will result in a value of 125 million dollars.
• Use leverage to buy the business, putting down only 15 million dollars and taking a loan for 35 million dollars.
• After paying back the loan, the profit from selling the business will be 120 million dollars.

Watch the video on YouTube:
How to Make A Billion Dollars - YouTube