How To Become a Billionaire: 8 Defining Traits

It is almost the epitome of the American dream: Starting with nothing and striking it rich, becoming a billionaire overnight. Of course, the odds of actually earning a billion dollars are slim, to put it politely: There are a mere 724 billionaires in the United States, out of a population of over 335 million. It is a tiny number and speaks to the sheer difficulty of earning over a billion dollars throughout a lifetime.

To be clear, at least in theory, anyone in America can become as rich as Bill Gates, Steve Jobs, Paul Allen, or Warren Buffet. However, doing so requires a scarce combination of skill, luck, and good fortune. You’ll have to earn, save, and invest in all the right places if you do not start with millions of dollars in your bank account. Making as much money as you’d like and achieving billionaire status is not just striking it rich on the stock market or hiring the right hedge fund managers.

So, want billionaire status? Here are some thoughts on how to get there.

The Right Life

More often than not, making money is a matter of being born into money. Though there are exceptions, the vast majority of individuals with a net worth of billion dollars or higher were born into this level of riches. Great wealth is rarely earned on its own – it usually comes from being born into the right circumstances.

According to studies, family life is the number one factor determining wealth. It doesn’t mean you must be born into a billion dollars or have generational wealth. Most people aren’t. Instead, it usually means that a person was born into a family that had:

• Substantial wealth
• The correct values of hard work and education
• The work ethic that enables them to work hard enough to earn money

Most people who become billionaires cite their family – and particularly their work ethic – as a large part of their financial success.

This begs a fundamental question: What sort of life were you born into? Did you have wealthy parents like Elon Musk and Bill Gates? Did you have a solid middle-class upbringing, like Warren Buffet? Both of these can set the stage correctly for you to start making money, create your own business, and turn it into billions of dollars.

Learning From Those Who Have Been There

It is impossible to even think about how to become a billionaire without first taking a look at those who have already achieved this impressive feat. As you will quickly see, there is virtually no set path, and most of the men and women who became billionaires had very different pathways to living as one of the wealthiest people in the world.

Warren Buffett

Warren Buffett became a billionaire by becoming one of the most successful investors in the world. Buffett had the financial acumen to turn his education into wealth. Buffet started numerous business partnerships and slowly expanded them, investing more and more money and pursuing a value investing approach. 

He bought stocks that he thought were undervalued, held them, and sold them for a massive profit. Eventually, Buffett took control of Berkshire Hathaway, a one-time textile company, and turned the company into a multinational holding business that has invested in some of the most successful businesses in the world. Today, quotes by Warren Buffet are used to convey critical investing lessons.

Paul Allen

Like many other billionaires on this list, Paul Allen made his money by enacting a business strategy that others simply could not. Allen became one of the world’s billionaires with his steadfast belief that the personal computer would revolutionize the world. Allen and Bill Gates founded Microsoft in that capacity, forever changing technology. He would ultimately form numerous other tech businesses, and while none approached the levels of success as Microsoft, all would make Allen rich.

James Dyson

James Dyson is a British inventor and businessman. You’ve almost certainly heard his name before: He is best known for his creation of the Dyson vacuum cleaners. These cleaners, of course, completely revolutionized how cleaning is done. A combination of innovation and business smarts resulted in Dyson building a massive cleaning company that could create vacuum cleaners that didn’t need replaceable bags. This innovation – and the marketing campaign that followed – helped to launch Dyson vacuums into the upper echelon of home goods and, in the process, made Dyson, a billionaire. Dyson also invented a range of other cleaning products, such as the washing machine, air dryer for cleaning hands, and more.

Ken Griffin

Griffin is a genius businessman who was trading stocks as early as college. He became a hedge fund manager, where he turned his business acumen into serious cash. He would fund his own business and invest the money from that business wisely, ultimately repeating significant profits for himself and his fellow investors.

Bill Gates

Everyone knows Bill Gates, the computer innovator, businessman, and philanthropic leader. Gates got his start as early as college, showing significant promise in the world of technology and computer. With Paul Allen, Gates would create Microsoft. Through his extensive involvement in the company, Gates would drive a personal computing revolution, developing various products that are modern-day staples of the computing world. For some time, he was the wealthiest person in the world.

Elon Musk

Contrary to popular belief, Elon Musk wasn’t the founder of Tesla. Instead, like many others on this list, Musk got his start in the world of technology, where he and his brother started numerous successful tech firms that were bought by larger rivals. He founded SpaceX and eventually used his significant investments to form a variety of other businesses.

Defining Traits of Billionaires

As you can see, there is no set path to becoming a billionaire. While many billionaires were born with significant advantages in life, those advantages were never a guarantee of success. Every billionaire on this list benefited from at least some of the circumstances below:

Entrepreneurship

Data on the average net worth by age indicates that the USA is the land for entrepreneurs.

The best way to increase your net worth is to start a business. 

Yes, you can work on improving your human capital and providing value to your employer. But do you know anyone who became a billionaire working a 9-5 job?

7-figure salary jobs exist, but they all require high-income skills. Increased income from W2 does not leave as much money on a post-tax basis since one can only utilize limited tax-saving strategies. Refer to the IRS publication on business expenses to understand why the tax code favors entrepreneurship.

Business Acumen

Everyone on this list had serious business acumen. No one can become a billionaire by merely playing sports, becoming a lead actor, or collecting fine art on its own. Instead, almost every billionaire has, at some point, shown enough business acumen to make a small fortune in the business world properly.

Kanye West, Paris Hilton, and Oprah have all pivoted from their core competencies to build a brand around themselves, selling associated products to their fans.

How does this translate to personal success? It means that developing business understanding can be the best way for you to develop the skills necessary to understand how the business world works and what you need to do to succeed in business. Many billionaires had an entrepreneurial mindset from when they were little children. As such, if business success is indeed a goal of yours, you need to work to develop business skills that can lead to financial success. Practically speaking:

1. Go into business.
2. Volunteer in local offices.
3. Get an internship.
4. Do something that will expose you to skills in the real world that will enable you to learn how businesses work and how you can be successful in business.

A Solid Education

They say that education is the foundation for a solid life, and with good reason, it is.

If you want to become rich, you need a solid educational background. It doesn’t necessarily mean attending the fanciest schools (though it helps!). It does mean that you need to pay attention to specific subjects that work for you and that can enable you to make more money. It also means that you need to pay attention in class and seek outside experiences that will provide you with a solid business background.

That last item, in particular, is critical. Many businessmen say that their educational background was helpful, but their real-world experiences ultimately gave them a critical edge and allowed them to be successful. Pay particular attention to clubs, internships, and volunteer opportunities. Find where the spaces maybe that will enable you to succeed in other areas and potentially develop the relationships that can allow you to become a business success.

HOWEVER. This is not to say that a college degree is required for billionaire status. Indeed, in many cases, it’s not. Bill Gates, Mark Zuckerberg, and many other famous billionaires did not ever complete their college degrees, instead choosing to drop out of college to work on their world-shattering billion-dollar idea. That’s not to say that you should drop out of college, even if you have a great idea. However, it seems that the men who dropped out of college to pursue a business degree knew that they had a brilliant idea at hand and took the risk that allowed them to pursue it.

Calculated Risks & Smart Decisions

The difference between a calculated and crazy risk is an extremely thin line. You’ll need to walk it if you want to strike it rich.

Consider these two examples: At their founding, Google founders Larry Page and Sergey Brin attempted to sell Google to Excite for $1 million. $1 million. One of the world’s wealthiest and most successful companies once tried to sell its company to a now-defunct rival for the smallest fraction of its current worth. And Excite said no! And they said no even after the price was reduced further.

Another example from the mid-2000s was when Mark Zuckerberg almost sold Facebook to Yahoo! for a billion. He said no, despite opposition from some members of his board, who later said that if Yahoo! had increased the offer, they may have forced the sale. Turning down $1 billion for any tech product may seem like absolute madness, but considering Facebook’s net worth today, it was the correct business decision by Zuckerberg.

What is the lesson here? Zuckerberg took a calculated risk and got it right. Page and Brin took a safer bet and only got it right when Excite got it wrong. Every business has critical pivot points that will make or break its success. You have to be prepared for these moments, and you have to get them right.

Trust the Team

You might think that billionaires are known for their massively large egos. Indeed, in many cases, that’s true. But in other cases, billionaires are smart enough to recognize a fundamental truth: They don’t need to be that smart. Indeed, a smart billionaire can realize that they don’t have to be a genius, and they don’t have to be the smartest person in a room. Instead, they have to be able to surround themselves with smart people.

There’s an old saying: If you are willing to sacrifice credit, anything is possible. From the perspective of making money, this means that you have to surround yourself with people who are more intelligent than you but also paid well and put in positions to succeed. Not everyone wants to be a billionaire, but most people want to work with those who are intelligent, successful, and able to make a difference in the world.

So, how does this impact your pathway to riches? Be ready to manage people the right way. Motivate them. Give them opportunities to grow personally and professionally. Allow them to serve and build loyalty to you and your company. Be prepared to admit when you are wrong, and give successful and intelligent people a chance to be successful. Some billionaires are micro-managers, but most are smart enough to realize there’s nothing but madness down that pathway. Instead, build people up, and above all else, be willing to sacrifice your ego to pursue a business mission.

Network, Network, Network

Education is important. Knowing the right people is beyond critical. Consider where the wealthiest men and women in the world would be without the proper guidance and mentors. As someone who wants to be rich one day, your job needs to be to expose yourself to as many successful people as possible.

What does this mean? Seek out these individuals. Attend business meetings, events, and speeches. See what you can learn. Leverage your network, see who knows who, and see if there aren’t people you can get to know better within the business world.

However, remember this: Networking is a two-way street and works best when it isn’t done with the explicit objective of enriching your pocket. If business networking is something you genuinely care about, your goal needs to be to not just hand out your business card to as many people as possible and hope to strike gold. Instead, it needs to meet people, make friends, build healthy relationships and go from there. This may not result in you meeting a billionaire. But it may result in you building a business network that you can help and that can help you one day.

Investing Success

For many billionaires, investing proved to be the pathway to business success. However, it’s critical to realize how they got there: Slow and steady. Most investors didn’t have that “one hot stock” that launched their personal balance sheet into the stars. The opposite: They slowly accumulated wealth and invested it properly and smartly.

Investing in stocks did not make them rich. Bezos became rich by investing in his business and holding a large percentage of the company.

What does this mean for you? If you are interested in becoming a billionaire, you should be careful with how you spend your money. Most billionaires put aside a good chunk of change for savings and didn’t spend frivolously. In many cases, they had a one-track mind regarding cash: Use it to make even more money. If this is your desired pathway, you’ll have to save as much as possible to get to where you want to be financially independent.

Luck

Talking about luck is never glamorous, but it plays a huge role in becoming a billionaire. Of course, hard work and grit are necessary, but you also need luck.

Elon Musk revealed that Tesla was “about a month” from bankruptcy during the run-up in Model 3 production from mid-2017 to mid-2019.

Closest we got was about a month. The Model 3 ramp was extreme stress & pain for a long time — from mid 2017 to mid 2019. Production & logistics hell.

— Elon Musk (@elonmusk) November 3, 2020

Within a few years of starting FedEx, the founder Fred Smith made a real gamble to keep the company afloat. He took FedEx’s last $5,000 and won $27,000 playing blackjack, which helped the company survive till the subsequent funding round.

Corporate America has several stories of near misses where luck helped companies survive.

Most Common Business Pathways for Becoming a Billionaire

While there is no “set” pathway in which someone can become a billionaire, some career pathways still have proven more popular than others.

The first, of course, is technology. However, any old technology won’t do. Most of the tech-oriented entrepreneurs on this list have been able to see things and invent things that were simply beyond the grasp of everyday people. They created products that have revolutionized the world and how we do business with each other.

In some cases, these changes are massive for innovators like Bill Gates or Steve Jobs. In other instances, billionaires came from lesser-known or lesser-impactful innovations, like Reid Hoffman, who cofounded LinkedIn. One of the many reasons why moonshot stocks involve several technology firms.

The world of finance, including investment success, is also a common pathway to billionaire status. Many of the world’s wealthiest people successfully made one investment after another. Some took a slow and steady approach, like Warren Buffett. Others took a process that involved more risk, thus resulting in more reward. In many cases, individuals with investment success ultimately become hated by others. Still, if being a billionaire is truly your passion, this is a risk you will have to take.

Investors in real estate may find themselves billionaires as well. These investors spawn a diverse array of real estate holdings, from investing in apartment buildings to self-storage units. 

But they typically can acquire a diverse array of property, then leverage that property for future success using real estate syndication by helping others invest in real estate.

In some cases, these investors are flashy. In others, they operate quietly and discretely, thus avoiding attracting negative attention. Regardless, these individuals have figured out how to make a small fortune from real estate development.

Retail proved to be a popular pathway to billionaire status as well, with many billionaires like the Walton family starting retail empires that grew slowly but surely. In many cases, these retail brands are international. 

That indeed emphasizes how complicated it can be to set up an empire worth billions of dollars, as starting internationally-popular businesses can be extremely difficult – particularly in this day and age when supply chains are so highly stressed.

However, with all of us living in the internet age, online business is the best due to the risk/reward ratio. 

1. The low cost of starting an online business and the opportunity for passive income make it an ideal diversified income source. 
2. Besides, you can avail of several tax exemptions and live in a low-cost country/state to make it even more profitable.
3. Given the digital economy, more and more of our world will be moving online. Automated tools make it easy to start a website in 10 minutes with zero computer programing skills.

Unlike physical business, it is effortless and cheap to create a website. You can start a website for a low monthly fee of $3.95/month. 

Setting up a website or blog is considered active in the initial phase because you need to produce content. But, the internet provides infinite leverage in terms of audience. The content created once can be sold repeatedly, with no extra cost.

Contrast online with a physical business where you have ongoing manufacturing costs to generate extra sales. Also, the one-time effort to create content pays off in the long run. You no longer need to create new content. Marketing the already created content will result in a passive income stream for the future.

And you do not need to be an expert. Everyone loves to learn from their peers. 

The topic does not need to be complex either. Make money from your hobby.  

My friend started a kitchen herb garden and now sells e-books on herb gardening from her website. Another friend is offering keto recipes on his website. There is no reason not to start an online business with low costs. Check out my guide on how to create a website in 10 minutes.

Nerdwallet was founded in 2009. The IPO 12 years later raised over $675 million.

Final Thoughts on How To Become a Billionaire

Remember this: It is tough to be a billionaire. Also, it can be challenging to measure the net assets that make someone a billionaire. 

Liquid net worth can have complicated and ever-fluctuating definitions, and the value of someone’s business and real estate holdings may change regularly. As a result, it can be a challenge to measure what truly makes someone a billionaire and even what qualifies as a billionaire status.

What does this mean? Achieving a billionaire status means some flexibility. Someone who may be a billionaire one day may not be the next, simply due to fluctuations in the market.

So, you want to be a billionaire. Who doesn’t? But, as you can see, the road is long and arduous, and only an infinitesimally small percentage of the world will ever earn the cash to qualify them for this elite status. 

That being said, there’s an old expression: The only way to eat an elephant is one bite at a time.

Instead of seeking the stars right away, start by getting your financial house in order. Then, examine what you can do to further your investments and better yourself. It will put you on the right pathway, and even if you come up short of billionaire status, you will be able to enrich yourself financially.