https://www.youtube.com/watch?v=LMlbWtUFa4E

1 00:00:00.000 --\> 00:01:00.000 i didn't understand how to make a
billion dollars for a very very long time and the first misunderstanding
is that you don't make a billion dollars to become a billionaire you own
stuff that's worth the billion dollars to become a billionaire let me
walk you through how i used to think this worked so phase one high
school alex was like okay in order to be a billionaire i have to make a
billion dollars every year which is ridiculous but that's what i thought
the second phase i was like oh silly high school alex that's not how you
make a billion dollars all you have to do is take home a billion two
billion dollars before taxes over your lifetime and so then third season
which is where i'm at right now and you don't make it you own it so
let's say you own a business that is making 10 million dollars a year
top line all right now half of that is your profit if this company is
worth 10 times its earnings and i'll explain why that like why a company
like this might be worth 10 times its earnings after taxes i take home
you know three good for me next year because i'm in mosination and we
focus on the main asset that we have our business and i go from five
million dollars a year in profit to six million dollars here in profit
doesn't sound

2 00:01:00.000 --\> 00:02:00.000 like a huge win right it's like hey
added a million bucks bottom line cool this is great well if we have a
10x multiple then something i own went from being worth 50 million to
being worth 60 million now i own 100 of that thing and i just got
something that appreciated by 10 million dollars that i didn't pay tax
on wait a second what i got out of the business only went from three to
three and a half million after taxes right six at forty percent you get
three and a half to take home i only made an extra 500 000 after taxes
this year now you made an extra 10 million dollars after taxes because
the thing that you own appreciated by 10 million and that's the thing
that i didn't understand for a very long time and so now let's zoom out
you want to be a billionaire again it's not by me side hustling my way
to a billion like zuckerberg didn't have airbnbs he was flipping on the
side while he's building facebook what did you do to become a
billionaire he built facebook if you have the opportunity to spend half
of your time obsessing about your passive income rather than saying huh
i wonder if i could take my five million dollar

3 00:02:00.000 --\> 00:03:00.000 profit business focus all my attention
on it and make it into a six million dollar profit business then all of
a sudden i just added 10 million to my net worth and so this is how a
billion dollars actually is made you have something that makes between
80 and 100 million dollars in ebitda or fancy word for profit that you
get a multiple on and usually companies of that size tend to trade 15
times earnings like if you look at the s p all right so you'd really
only need somewhere in there for like 70 million dollars in ebitda to be
a billionaire because you own the company so it means that you'd have to
make a little bit more than 1.3 million dollars 1.5 million dollars per
week and take home which i know that that sounds crazy but like you have
to think in increments like imagine how much you made five years ago as
an entrepreneur how crazy small does that feel to you now because you've
leveled up and so as much as whatever number i just said to you might
sound like a lot five years from now you might be in shooting distance
and so it's really just about understanding like how do i reverse
engineer what has to happen and if you want to be a billionaire it's
like okay well how do i make a million dollars 1.5 million dollars a
week in profit well if i'm running a 30 march in business i got to make
6 million a week there's 52 weeks i gotta make 300 million top line

4 00:03:00.000 --\> 00:04:00.000 okay so then you can start actually
putting tangible goals to this i want to become a billionaire you become
a billionaire by owning something worth a billion dollars if you really
want to be smart about it you don't shoot for a billion here's why you
want to shoot for 10 billion or 50 billion and i know this is gonna
sound crazy but realistically i would never imagine trying to pursue an
opportunity that was capped at 100 million a year you would have to
think about opportunities that one were not limited by your time two
could serve a very big marketplace three had very high gross margin and
four you'd think probably on a very very long time horizon and then all
of a sudden you're thinking like a billionaire the goals we have matter
matter more because of how we measure them and the increments in which
we use to build them more than what the actual goal itself is and so
when someone tells me they have a goal to make six figures what happens
is they're gonna think that six figures is the cap and they're gonna
break it down in a tiny itty bitty units and they're gonna basically say
a hundred percent of my effort equals one hundred thousand dollars and
they're gonna measure in tiny units and then they're gonna do 100 effort
and they're gonna be like ah i was at 94 this year but if you're
thinking about making 10 million dollars

5 00:04:00.000 --\> 00:05:00.000 then you can you'll think in like okay
for me to make 10 million dollars i got to sell let's say a 10 000 thing
and i got to sell a thousand of them okay that means three ten thousand
dollar things a day and if i close one out of three calls that means i
have to take nine calls a day okay well how much do i have to spend to
get a call for this thing all of a sudden you start thinking in a much
bigger increment and if you're like i don't know what i could sell for
ten thousand dollars well then you gotta figure out something that makes
someone else a hundred thousand dollars and you can sell something
that's worth 10. the reason you're not making enough money is because
you don't know how to provide enough value the reason that like a lot of
the wealth in the world sits with financiers is because they know how to
take someone passively and they can say hey man just give me a billion
dollars and i'll just make you 10 a year on it and they know how to make
15 a year and they make that extra five on a billion and they take home
50 million a year and they're like works for me if you can approach the
problem that way you'll start thinking more along the lines of the
people that i think you're trying to emulate you don't make it you own
it you get paid for what you do you get returns on what you own that 50
million dollar business that we were talking about before 10

6 00:05:00.000 --\> 00:06:00.000 million 5 million profit 10x why would
someone pay 10x or something you're like i wouldn't pay 50 million
dollars for business that's making five let me tell you why you would so
if that business went from five to six and then went twenty percent
again because that was a twenty percent growth it went to seven point
two and then twenty percent again would be eight point six and twenty
percent again would be what uh ten point two you know and keep going if
you added all those things up you'd be at 40-ish million in earnings
over the next five years remember we bought it for 50 but wait now we
still own the thing and it's making 12 and a half million in profit wait
if we just apply 10x and realistically at this point it'd probably be
closer to 12x but let's just still apply 10x for this now we have 125
million thing that we paid 50 for that already paid us 40 back and this
is where it gets even juicier to buy that 50 million thing i didn't
write a check for 50. i wrote a check for 15 and i took a loan for 35.
huh and so then at the end of this whole thing i put my 15 million down
i pay back my loan for the 35 so i only have 10 million left over that i
got i got to pay back and now i

7 00:06:00.000 --\> 00:07:00.000 get 100 of that 125 million minus my
original 10 because i covered five of it from from the cash flow oh i
just made 120 million dollars that's why people do it the smart money if
you want to sell to institutional investors they think that way and so
you have to think that way about the assets that you own and the assets
that you're building that is like ultimately how you can make huge leaps
in wealth
