Podcast Summary
Misconception of Becoming a Billionaire: To become a billionaire, focus on acquiring and growing assets, not just making money annually.
Becoming a billionaire doesn't mean making a billion dollars in revenue or profits every year. Instead, it's about owning assets worth a billion dollars. The speaker shares his past misunderstanding of this concept, having once thought that making a billion dollars annually was the key to becoming a billionaire. He then realized that accumulating a net worth of a billion dollars through savings and investments is the actual path. The speaker encourages listeners to think beyond their current financial situation and consider the long-term strategy of acquiring and growing wealth through owning valuable assets. He also emphasizes the importance of understanding the difference between revenue, profit, and net worth. In essence, the journey to building wealth and potentially becoming a billionaire involves more than just making money; it requires a strategic approach to saving, investing, and acquiring assets.
Focus on appreciating assets for wealth growth: Building wealth requires more than just increasing income or savings. Owning assets that appreciate in value contributes significantly to wealth growth.
Building wealth goes beyond just increasing income or savings. It's about owning assets that appreciate in value. The speaker's example illustrates this concept through a business that generates $5,000,000 in profit annually. If the business is worth 10 times its earnings, it's valued at $50,000,000. The owner takes home $3,000,000 after taxes. When the business profits increase to $6,000,000, the asset value also rises to $60,000,000. The owner's personal wealth grows by $10,000,000, even though their take-home pay only increases by $500,000. This lesson emphasizes the importance of focusing on appreciating assets to build wealth, rather than solely relying on increasing income or savings.
Focus on growing a profitable business to become a billionaire: To become a billionaire, focus on growing a large, profitable business with high EBITDA, aiming for around $1.5 million in weekly profits
Becoming a billionaire involves focusing on growing a profitable business to a certain size, rather than obsessing over passive income. To reach this goal, you need to make significant profits each week and own a company with a high EBITDA (earnings before interest, taxes, depreciation, and amortization). For instance, a company with $70 million in EBITDA, which typically trades at 15 times earnings, would make you a billionaire. To get there, you need to make around $1.5 million per week in profit. By setting tangible goals and focusing on growing a large, profitable business, you can work towards becoming a billionaire. Remember, the journey might seem daunting now, but it could be achievable in just a few years. If you're interested in learning more about growing a successful business, check out my book, "$100,000,000 Offers," available on Amazon.
Expand your thinking by setting ambitious goals: Setting ambitious goals and measuring progress in larger units can help expand our thinking and unlock greater potential, leading to opportunities with significant returns.
The way we measure and think about our goals can significantly impact our mindset and progress towards achieving them. The speaker argues that if we set our sights too low, we may limit ourselves and focus on small, insignificant units, rather than thinking about opportunities that could potentially yield much larger returns. For example, instead of aiming for a $100,000 business, we should consider aiming for a $10,000,000 business, which would require us to think in bigger increments and consider opportunities that are not limited by time, serve a large marketplace, have high gross margins, and have a long-term vision. By revers engineering the goal of becoming a billionaire, we can start thinking like one. Therefore, it's essential to set ambitious goals and measure them in larger units to expand our thinking and unlock greater potential.
Growing assets and generating returns: Focus on growing assets and generating returns for substantial wealth, rather than just earning income. Apply long-term thinking and value assets based on future earnings potential.
Creating wealth involves not only generating income but also owning and growing assets. The example given illustrates how a $50 million business can be turned into a $125 million asset by applying the principle of earning returns on what you own and leveraging loans. Financiers are able to accumulate significant wealth by providing value in this way and making smart investments. To reach the level of wealth emulated by these financiers, one needs to focus on growing assets and generating returns, rather than just earning income. This can be achieved by thinking long-term and applying the principle of valuing assets based on their future earnings potential. This is the mindset that leads to building substantial wealth.
Setting larger financial goals leads to greater wealth growth: Setting ambitious goals for larger amounts of wealth can lead to surpassing expectations and achieving even greater wealth
Setting ambitious financial goals and thinking about the assets you own and are building in terms of larger increments can lead to significant wealth growth. Misconceptions about wealth often revolve around just owning a large amount of money, but in reality, becoming the person who owns the thing, whether it's a business or an investment, is key. By setting goals for larger amounts, like $10 billion or $50 billion, instead of just $1 billion, you'll find that you'll put in the same amount of effort but surpass your goal, leading to even greater wealth. So, keep striving for the next level and remember, a small increment of effort can lead to a huge leap in wealth.
