The road to becoming a millionaire is becoming fairly well documented and traveled. After all, a million isn’t what it used to be and if you work hard, save and invest over a lifetime, your chances of crossing that millionaire threshold are actually pretty decent.
In 2010 Merrill Lynch and Cap Gemini reported (in the World Wealth Report) that there were 3.1 million
millionaires in the US alone. Asia had another 3.1 million and Europe had 3 million more of them! On top of that CNN Money is saying that by 2020 the number of US millionaires will double.
If everyone has a shot at becoming a millionaire, what is next? Billionaire status of course. According to Forbes Richest people on Earth list, there are only 1210 billionaires world wide. Alternately you could strive for multi-millionaire status – once you get to Category II wealth status (See What Category Wealth Are You for information on the categories) you pretty much have it made for several generations.
What are the differences between a millionaire and a billionaire? Here is what I found – based on
interviews with mega millionaires and billionaires by Forbes and The Business Insiders take on Robert Jorden’s book “How They Did It”.
They are not afraid of failure.
Millionaires tolerate risk. Billionaires actively seek it. They taunt failure by taking big risk
bites. The rest of us just try to avoid risk.
Although I don’t know if he was rich or not, Thomas Edison (who invented the light bulb) is quoted as saying
“I have not failed. I’ve just found 10,000 ways that won’t work.”
They learn from their mistakes.
Millionaires learn from small mistakes. Billionaires turn their mistakes into money. The rest of us drop
the matter and try something else.
They think differently.
Millionaires own their company. Billionaires create industries. They recognize value of simple ideas. They look between the cracks to discover what is there. The rest of us get caught up in conformity.
Billionaires see the world through the lens of finding solutions to problems that might not even yet exist. They have a great attitude – a passion for what they do and pursue it single mindedly for long periods of time. They are confident in their goals.
They are great problem solvers.
Millionaires solve problems for their customers. Billionaires solve problems for humanity. They have enormous curiosity and a desire to fix problems everyone else complains about, or cover holes no one else even sees. Billionaires power through impossible obstacles that would stop most people.
They create wealth instead of collecting it.
Millionaires collect wealth by earning, saving and investing. Billionaires take the world in new directions, start new industries and new companies. The rest of us live from paycheck to paycheck and can’t envision a different way of doing things.
They don’t go it alone.
Millionaires like to make their own decisions and be their own boss – sometimes forgoing help from others. Billionaires rely on a core group of people to help them through the endeavor. They know it takes years and a village to reach big success.
Billionaire Data Clusters.
Forbes studied (unscientifically) some of 657 of the billionaires on their list and found some assorted factoids that may or may not be significant in the making of a billionaire.
Here is the short list.
- Parents of billionaires had a high aptitude for math.
- Parents of billionaires clustered in professions related to engineer, accountant and small business owner.
- More billionaires were born in the fall than in other seasons.
- They believe that failure early on is a necessary component (but not a sufficient one) to later success.
- Membership in the Yale Skull and Crossbones club was held by several of the billionaires.
- Many billionaires from the financial sector worked at Goldman Sachs.
Could You Explain How to Become a Billionaire?
I like to think that I could explain to someone just starting out – how they could get to be a millionaire, but I don’t know the path to becoming a billionaire.
So what do you think? What differentiates a billionaire or multi-millionaire from the merely millionaires? Is there a path tofollow to billionairedom?
This post was written by Marie.
Marie has written 38 articles on this blog. Marie at Family Money Values wants to help families understand the potential consequences of wealth. She encourages visitors to take the long view and pull all family generations together to nourish the family legacy and wealth.
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One can become a self-made multimillionaire with a good income, consistent investing of a decent part of that salary, a long enough time horizon, and controlled expenses. However, usually self-made billionaires are in entirely different spheres and own all sorts of systems of making money. Often, their wealth is the result of extraordinarily successful businesses that they own and extremely smart investments.
Agreed, but how can one build that ‘extraordinarily successful business’ and find those ‘extremely smart investments? What is a specific path to becoming a billionaire (or is there even one)?
I think you’re asking the wrong question. Many people know how to build successful businesses, but very few are willing to do what it takes to become a billionaire. In some cases, it means sacrificing having a family, missing vacations, splitting or protecting equity, possibly even putting out a product when it is good enough rather than when it is excellent, hiding details about your life that could be professional, devoting oneself to mentorship, partnering with venture capitalist, or finding your own dolphins, committing oneself to innovation, and rethinking how problems are solved, continually reinvest, and solve them somewhat better. I could go on, but the issue is not how do you get there for most people who study businesses, but it is getting the right idea(s) implemented with the right team around plus being willing the excel and sacrifice in many of the areas I just mentioned. At least, that’s what is listed in most of the books by billionaires or those worth North of
$100 million.
substitute “damaging” for “professional”
I don’t believe there’s one path either.
I’d be interested in knowing what books by billionaires you’ve read – always in the market for a good read.
This fact “Parents of billionaires had a high aptitude for math” is a great one. This is why I wrote about what parents can do to build strong foundation in Math skills for their kids.
“More billionaires were born in the fall than in other seasons.” This is probably a coincidence. I just don’t think being born in certain season have to do anything with their success.
It is interesting. I guess I’m out of luck as my aptitudes are in other areas!
From what you said, the difference is in magnitude. All billionaires started with a lot less and grew into that level. At one time they were just millionaires. Do millionaires who do not become billionaires feel like failures? I doubt it! After a certain point it is just a score!
Well, I know I don’t feel like a failure – do you?
What separates billionaires from millionaires and multimillionaires is time. There are very few self made billionaires. If a good head start (a few million) and 30-50 years you can turn that into a billion.
Ah yes, a good head start – maybe it would take a few family generations to get to that level….
Well, now. I am in with a chance – my parents had maths aptitude and I was born in the Autumn. Pity these are not suffcient conditions. I think that self made billionaires have really grand vision about changing the world (Bill Gates,luck in being within a window of opportunity and the single minded courage to pursue their dream. But then, I may be wrong – I have not met a billionaire yet.
Let me know when you do meet a billionaire – I’ll interview them!!
I don’t think I know any billionaires, but it is an interesting question to ponder.
Once you’re a millionaire, I think it’s all about taking risks in investing in early stage start-ups that have a potential for a nice exit.
So being a venture capitalist will get me there?
If I could generalize in another direction, and since we’re comparing the two, I’d say that millionaires are more attuned to free-market ideals, while billionaires are more likely to turn to governments to restrict competition through legislation. Otherwise, I’m sure the same personal motivations apply.
That’s an interesting observation – I am not sure I see the connection – can you give an example?
I was thinking of millionaires in terms of the small businessperson that scraped and borrowed and gotten to where they are by hard work and personal responsibility.
Billionaires (and barring the usual suspects such as the philantrophically-minded Bill Gates) are more likely to be leaders of industry. As such, they engage in what’s termed as political entrepreneurship, lobbying state and federal governments to pass legislation which imposes regulations and restrictions on their industry sector. Regulations which larger companies have the resources to abide by, but which more often than not harm smaller businesses with the burden of compliance.
My Grandma had (11) kids, her 1st born son married a teacher and they, (her husband had a good job) would quiz their kids with cards.
When I was young w/my lil sister–she’d beat me at all the card games and monopoly, but reading, writing and drawing came natural for me. I sometimes reverse #s mostly 4 & 7. I’m trying to make it at writing and I was born in July. My 1st real good Poem was Free Association. And it was written Fall 94 in Oregon, 10 years later it’d come true.
But just because math may take me longer I did get a B in accounting. I liked reading your reply. I think when we find something we love to do, for anyway is writing.) I could be rich too.
Great discussion! I think that the steps to billionaire would be a lot bigger than millionaire, or possibly even multimillionaire. In order to gain the next level there would certainly be a high level of risk, which in my mind would probably be harder to commit too as you have more and more to lose each time.
On the flip side, I doubt that billionaires and multimillionaires spend too much time thinking about failure.
Shaun,
From what I read, the billionaires do think about what failed, but the way they think about it is different – in that they try to find a way to turn that failure into a success by twisting it around into a slightly different product, solution or service.
Interesting trends for billionaires. I think becoming a billionaire requires a certain degree of luck, whereas a person can usually will themselves to become a millionaire fairly consistently (I won’t say easily). You must have a certain base level of intelligence, but beyond that you definitely need the right circumstances as well.
Another good thing to remember is that Billionaires many times do not just look at the economy but are willing to combine poltics + eocnomics + culture + other aspects to create, sculpt, and control markets. The billionaires that run and beneift from Goldman Sacs don’t are not happy to deal with what the market throws at them. No, they are willing [and able] to use politics to preserve their advantage over other market particpants [ie look at how they lobbied for the creation of TARP and changed their corporate structure to receive the benefits].
This is why I hate politics. They aren’t neutral and it’s all about who you know and how much money you have.
Billionaires are confident people who know they can have financial freedom by focusing on it and taking deliberate action. They are visionary thinkers. Billionaires see opportunity where the average person only sees obstacles. They take calculated risk after doing research and planning. Billionaires approach potential business opportunities and ask ” How much will I make?”, while the average person ask “How much will this cost me?”
Well said. Since the average Joe can have a greater risk they often look at the negatives unlike a billionaire who has less risk and can see the positives. Very good point. Maybe if I stay optimistic enough and seize opportunity I too one day can be a billionaire.
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