How to Make $100M
One-third of 1% (i.e. 0.033%) of American households are worth more than $100M
While the average US citizen retires at 63 with $141,542 in savings…
20.27 million US households are worth more than $1 million
The top 1% starts at $11 million
34,500 US households have $100 million
How did they get to $100M?
27% of American Households with over $100M inherited it. But they rarely keep inherited wealth beyond their grandkids. A 20-year study of 3,200 families conducted by wealth consultancy, The Williams Group, found that 70% of families lose their fortune by the second generation, while 90% lose it by the third generation.
25,000 US households with over $100M are self made.
Some common themes of self-made $100M-aires:
Many (recovering) lawyers are now famous investors (hedge, venture, PE)
Investment banking is a feeder into HF, PE, and to a lesser extent VC
Coding and math skills are key differentiators in getting hired
For 15 years, I have mentored high-performing (3.7 GPA, motivated, hard working) students at my Alma Mater, UCSD.
These students didn’t start with millions or have connected families. Some were immigrants. Some went to community college. Some were the first in their family to graduate college.
Before the age of 30, my mentees have wealth in the millions, are in Forbes 30 under 30, and some manage billions. They are on their way to $100M.
What did they do right?
They started early in the right careers. A “right” career isn’t one your parents approve of (ie doctor, lawyer), instead, a career is the “right” career to take you to $100M if it’s close to the money machine and has embedded leverage.
You can do it too.
To the outside world, it will look like you’re always lucky, being at the right place, right time, and with the right people. But you’ll know differently. Like my mentees, you have a plan.
How can YOU make $100 million?
1. Start Early
Set a big enough goal and take big risks for big returns early, like Elon Musk, Bill Gates, Mark Zuckerberg.
Not a brilliant coder with a world-changing idea? Ride the wave with these founders in VC, like Bill Gurley, John Doerr, and Tim Draper.
2. Get Ownership
Don’t make the mistake I did, always making millions for others. Start there.
Then use your great track record to run and own your own company, fund, or financial firm.
3. Keep Moving Forward
Never take the gas off. Mental breaks mean you are refreshed for the next push. But when you stop pushing and get complacent, your bank account will quickly move in reverse.
Compounding and growing wealth takes commitment year in and year out. Stay the course.
1. Start Early.
You have to start early because time is your friend. If you look at the chart below:
Starting with $1M only gets you to $100M if you grow it at 15% every year for 33 years.
If you think growing your wealth at 8% per year is more sustainable, you need to start with $8M and grow it for 33 years.
If you are starting later, you either need to start with more or grow it faster.
You can calculate your potential paths to $100M with this custom calculator
There are several alternatives:
Compound at a higher rate than 8%: Bill Gates kept his money in his first startup, Microsoft. His shares were worth $350M at IPO when Gates was 30, and he let most of them compound at annual return of 25%, making him worth $114 Billion by age 66.
Have two wealth creation events in the same high leverage career: Elon Musk’s first fortune was built with the sale of Paypal to eBay (Musk was paid $175.8 million at age 27). But he became the wealthiest man on earth by investing most of it in another startup, Tesla.
Have two wealth creation events, moving between high leverage careers: Marc Andreeson made his first (tens of) millions at age 29 when he sold his startup Netscape to AOL. He then made his billions as an investor, through a personal seed investment in Facebook, and then as head of his own venture capital firm, Andreeson Horowitz (founded 2009). According to Forbes, he crossed $1 billion in wealth in 2017.
Make your first million(s) by age 30
Those who tell you that you can make $100M by compounding your savings at 8% are lying.
Very wealthy people had a big win early. Warren Buffett, who repeatedly recommends index investing, took big bets and had a huge win in Geico and others. Earlier in his career, Buffett was famous for saying you should have a small basket of a few great names and watch that basket closely.
To make your first million(s), you need to be in a leveraged career.
Leverage is simply a one-to-many relationship. As a CEO, you can manage 10 people or 10,000. As an entertainer, you can sing for 10 people or 10,000. You spend the same time but can make 1000X as much money.
As you become more popular/powerful, you make more per person you influence, AND get paid by more people!
That’s leverage.
What careers? How do you break in? When is it too late?
The 5 fastest paths (aside from being a talented entertainer or criminal) to $100M are:
Private Equity
Hedge Fund
Startup Founder
Venture Capital
Board Director
Private Equity only hires the top performers at bulge bracket investment banks (Goldman, Morgan Stanley, etc), who only hire from Ivy League schools, so unless you are getting straight A’s in high school and have this plan in mind, it’s likely too late for this path. Private equity also requires a lot of capital, so the early years you may make a few million, but not $100 million until you found a firm. Like hedge funds, every year it is harder to compete with the largest firms, so harder to start up a new firm as a way to build your wealth.
Hedge Funds made their founders millions and billions, but the industry has been shrinking as most hedge funds don’t outperform index funds over long time frames. However, if you have talent and specific knowledge in a complex space (like Web3), you can make your $100M in this hedge funds. Current example is crypto hedge funds (complex for institutions to navigate, so they will pay great investors 20% of profits).
The next 3 (related) careers give you the highest opportunity for big wealth and thus have the most self-made $100 millionaires and beyond.
Startup founders of successful companies are among the richest in the world. Elon Musk. Bill Gates. Larry Ellison. Sarah Blakely. All billionaires. They were right early. But other startup founders who have made $100M started later. Martha Stewart started her company at age 50, became a billionaire with the IPO, and is now worth $400 million. The internet and subscription services available mean it has never been cheaper to start a tech company.
Venture Capital funds these startups and participates in the returns. Founders and early partners of successful VC firms can make hundreds of millions to billions. Examples are Bill Gurley (Benchmark), Marc Andreeson, and more. Successful startup founders often become venture partners as a way to formalize investing in the ecosystem they are part of. VC is a way to compound your wealth at a higher rate than 8%.
Board Directors can make millions in stock options for joining a board. Like startups and VC, it depends if you are an in-demand director in a fast growing industry. VC firms often require a board seat for their large investment, so working at a VC will get you experience on boards. Successful founders are in demand for board directors because they have experience scaling a startup. Being a board director is a great learning, networking, and wealth-building tool.
Finding Leverage: All 5 careers use OPM - Other People’s Money - to make you wealthy. You invest other people’s money and build your own wealth with a percentage of the profits.
Your Career Flywheel: Startup founders and venture capitalists are often on boards, ramping their wealth in parallel and increasing their chances that one of their equity positions will hit big. And founders who do hit big themselves start investing in other founders and many times become serial angel investors or venture capitalists. Being on boards introduces you to other power players, as in venture capitalists and CEOs, and increases your chances of being asked to run your next unicorn or be a board member in another hot company.
How do you break in?
The first step to getting into this flywheel of money is breaking in:
If you are in high school, get great grades and go to Ivy League
If you are already in college and not in Ivy League, you should cross off Private Equity, and then get great grades and network with alumni aiming for Investment Banking (IB) and Mangement Consulting roles.
If you got into IB or management consulting, use this as a stepping stone to meet the right people at companies in the 5 careers you want to move to next.
Beyond the “entry fee” of long hours, your probability increases if you are starting young, choose a leveraged industry, and know the possible paths earlier in your life.
When is it too late?
If you are later in life, then the highest chance for making a big win is in the startup world, but that is also the world with a 90% failure rate that might not fit with your personality or family situation. The probability of success increases if you are a serial entrepreneur and around age 45, so if that’s you, it might not be too late.
Getting from your first million(s) to $100 million is a matter of compounding your returns at a high enough rate without losing money (aka drawdowns). Not easy, but the math is simple.
You have to work hard (and smart) to have a shot at millions and ultimately $100 million.
Part of working smart is moving from big earnings to ownership.
2. Get Ownership
Don’t make the mistake I did, always making millions for others. Start there, then use your great track record to run and own your own company, fund, or financial firm.
My Billion Dollar Trade of a Lifetime
In June 2000, I said to my friend
I bet my career this morning.
I’d been at Palantir Capital for 8 months. I’d been quiet, recommending small trades.
All of a sudden, that June morning, I recommended whipsawing 30% of the entire fund, from long to short.
The owner of Palantir hired me to call the semi cycle. Even though I had already gotten multiple cycles right in the past, no one believed I could do it this time. This was the mother of all cycles. A Tsunami of oversupply careening towards markets.
If you’re early, you lose hundreds of millions. Late, you lose hundreds of millions. We had a head-fake in April 2000.
Then came the big moment.
I usually look for 1-2 metrics to hit out of 5. In a 48 hour period in June 2000, all 5 hit. I told my boss:
“Everything in semis is going down 80% from here. We should sell and short them.”
In that moment, I held my breath. I had just bet my entire career on one trade.
He acted boldly, selling $1 Billion in semis and shorting $1 Billion, for a $2 billion swing in under 2 weeks.
All the while, Markets were going up 2% per day.
My partners called me to say I was crazy and would ruin Palantir.
4 days after we repositioned short, the #1 semi analyst downgraded the sector.
He received multiple death threats and hired 2 bodyguards.
Over the next 2 years, semis went down 80%. We made a 5X return on that trade while our competitors bled.
And my hedge fund boss made over $100M personally on that trade.
The year before, I’d made my previous boss $24M by running the #1 fund in the world at his firm.
Anyone can make big money. My hedge fund boss used to say: might as well be us!
But it wasn’t “us”, it was him. I knew how to make him $100M.
That’s why after you break into one of these 5 careers, you need to take ownership.
First, break into a great firm and build a track record there.
Then run your own fund for them.
From there, you can either be paid handsomely in partnership shares, which is the way Bill Gurley became a billionaire as a partner at Benchmark (VC), or you can start your own firm.
Either way, you need to have an ownership or equity stake to increase your chances of getting to $100M (and beyond).
3. Keep Moving Forward
Compounding and growing wealth take commitment year in and year out. Stay the course.
After working nearly a decade of 80-100 hour weeks, when Palantir shut down, I slept for 3 months.
It’s fine to take breaks.
But what I did next was not fine.
Part of my issue was I thought I had hit my goals because my goals were too small (work at a top hedge fund), and I cover this issue of sizing your goals big enough to be personal moonshots in Why You Should Go For $100M. Moonshot Your Career and in Dream Big - $100M Big.
Once I hit my goals, I languished.
I got more jobs doing the same thing: being an analyst. Being paid for my time.
After running the #1 fund in the world and then making the #1 hedge fund a 5X return on a billion dollar short, I could have started my own fund or moved to Silicon Valley (it was 2003) and joined an internet startup like Google and Facebook in the early days AND while valuations were rock bottom.
Either move could have taken me to $100M.
But I was learning and making mistakes as I went along.
If you want a $100M Career, don’t make my mistakes:
I repeatedly proved I could make that first chunk, but took the gas off.
I didn’t move into ownership early enough and with enough confidence
I didn’t have a big enough goal to start with, so I thought I was “done”
If you want to learn more about having $100M Career, grab a slot in my exclusive free webinar by preordering the book!