Secrets Only Billionaires Know – The billionaire’s perspective on life is quite different from anything you’ve experienced, and it will definitely go against many of the things you believe.
As of 2023, there are 3112 billionaires in the world. And we know their Secrets. So, let’s get this started!
Don’t worry if you don’t feel like reading, you can enjoy the video below or watch it on YouTube:
1
You don’t usually get to $1 Billion and still own 100% of your business
- Jeff Bezos owns 12.7% of Amazon.
- Elon Musk owns 13% of Tesla.
- Bernard Arnault owns 46% of LVMH.
- Warren Buffett owns 16% of Berkshire Hathaway.
- Larry Elison owns 35% of Oracle.
… you get the idea.
Most millionaires are share protective. They guard their shares like hawks without realizing that they’re actually keeping themselves from accelerating upward in a shorter period of time.
Here’s the billionaire secret:
Owning 15% of a multibillion-dollar pie is far more profitable than owning 100% of your three-million-dollar business.
2
Real estate will make you a Millionaire, Private Equity makes you a Billionaire
The running joke among the ultra-wealthy is that real estate is the dumb millionaires’ game. You can become a millionaire in real estate even if you don’t have the brain power to do anything else.
Any millionaire will tell you that real estate accounts for nearly half (35-50%) of their net worth.
Ask any billionaire, and you’ll quickly realize business interests (private equity) make up over 70% of their net worth.
The most productive way to increase your worth is by owning a business. So blow it up, then use the funds to buy pieces of other businesses and do it over and over again.
3
Do not use your own money, use someone else’s to make yourself rich
You can literally earn your way to 1 million dollars.
There are plenty of jobs out there where, if you put your head down, put the years in, and stack those checks, you get to seven figures. Doctors, lawyers, and tech engineers all earn a ton of money from their salaries… But you CAN NOT get to 1 billion dollars the same way.
Your financial life unlocks vertically when you realize you can use other people’s money to make yourself rich.
Here’s the secret to how most billionaires do it:
Step 1 – They go to friends, family, banks, or angel investors with an idea, and they’re willing to do all the work to make it happen.
They need $100,000 to start the business and give off 20% of the company. This values the company at $500,000.
Their 80% share of this new business is worth $400,000, and we have barely started.
Step 2 – They get some revenue and build a team ready to scale.
Let’s say the company at this point is making 1 million dollars in recurring revenue per year.
Step 3 – They then go to some external investors and sell 20% of the business at a 10 million dollar valuation.
Meaning that they now have 2 million dollars in cash & the remaining 60% of the company is now worth 6 million dollars.
Step 4 – Use the 2 million dollars to go from 1 to 10 million dollars in yearly recurring revenue.
Step 5 – You guessed it: You go to raise funds again, this time at a 100 million dollar valuation. You sell 20% more of the business and get those 20 million dollars.
At this point, the 40% you’re left with is worth 40 million dollars.
Step 6 – You use the $20 million to develop a product for other companies and hire salespeople. This blows up your recurring revenue, and in two short years, your company is ready to go public.
Step 7 – You file for an IPO, where the company floats 10% of its shares on the public market at a 10 billion dollar valuation.
You and everyone who invested in your company along the way are now billionaires.
At each stage of this journey, you used other people’s money to scale up, hire people, develop products, and gain new sales, and with each of those moves, your valuation increased.
Before you call bullshit on what we just told you, know that this is the simplified model UiPath has used to IPO at a $35 billion valuation, and we were fortunate enough to learn from the founder along the way.
4
Everything is a buy low – sell high equation, only the scale differs
Some billionaires trade in commodities: coffee, metals, etc.
Others trade in shipping those commodities, where the cost of gas, people, and transport is lower than what others are willing to pay you to get it delivered. Others trade in risk, in debt.
Tech & media companies trade in attention and eyeballs.
Buy them low, sell them high, and use the profit to do it larger over and over again. That’s the billionaire’s secret.
Once you understand that every business is in the buy low, sell high business, the way you look at yours changes.
There are 2 important things to optimize if you want to become a billionaire
- What is your markup?
- What is your scale, meaning the number of transactions you’re able to do?
Amazon as an e-commerce store has tiny margins but a lot of transactions.
Tesla has incredible margins and a decent number of transactions.
A business grows when 1 of 3 situations occurs:
- You charge more and maintain the same number of transactions. (artists use this model)
- You keep the price steady but increase the number of customers. (when fast-food chains open new locations)
- You charge more while increasing the number of transactions. (luxury brands have used this strategy, which actually made Bernard Arnault the wealthiest man in the world)
The secret most billionaires know is that once you move into a different bracket of scale, you have incredible negotiating power on how low you can buy.
Only billionaires know that:
The profit is made at the point of purchase! Not the point of sale.
5
Art is a preferred store of value that can easily be moved around
When you’re that rich, most of your money is locked up in stocks, other businesses, or hard-to-move assets.
You don’t want to keep it in cash, because at that scale cash is losing 5-10% of its value year over year due to inflation.
So where do billionaires turn to? Art!
Yep, they buy art in bulk, lease it off to museums around the world, or seal it off in shipping containers and use it as a bargaining chip.
The billionaire secret: It’s a lot easier to move 500 million in art than 500 million in gold or silver.
Most people don’t realize that blue chip art is one of the most profitable investments out there. Fine art is often referred to as the “Billionaire Asset” for a reason.
Actually, blue chip art not only performs incredibly well in high-inflation environments but consistently outperformed the S&P 500.
According to a recent groundbreaking study from UBS, 62% of ultra-high-net-worth investors surveyed allocate a shocking 30% or more of their investment portfolios to art and collectibles.
We know what you’re thinking—damn these ultra-rich individuals getting an opportunity to invest in ways the average people can’t, because who has the money to buy a 5 to 50-million-dollar painting?
This market used to be hard to get into.
But Masterworks is the platform that lets you invest in multi-million dollar paintings without breaking the bank.
Instead of buying an entire painting, you can invest in shares of it and once the painting sells, the profits are split among the shareowners.
Masterworks has already filed over 200 paintings with the SEC, ranging from $500,000 to $20 million dollars.
And when it comes to reselling the paintings for a return to their investors, Masterworks paid out over $25 million last year.
They even sold three multi-million-dollar paintings just in the last 90 days, returning profits of 10, 13, and 35% directly to investors like you.
Now, art investing isn’t meant to be your entire strategy – its hold period makes it illiquid. But now you have the same information, and access, as the ultra-wealthy.
We’re even giving you special passes to skip Masterworks’ waitlist; just go to Alux.com/art.
6
Stocks won’t get you to a billion, and neither will luck
Stocks work well when you have large time horizons and a ton of money to start with.
Back in the 1980s and 1990s, there was a financial advice trend that said if you simply invested $5 every day in the stock market starting when you were 20 and continued until you were 65, you would be a millionaire.
We know the math checks out, but the market is also evolving, and so are costs.
These financial models tell a fancy tale that’s all surface and we think they do more harm than good, here’s what we mean by that.
Warren Buffett paid $31,500 for his house back in 1958, adjusted for inflation and market value, that same house would cost around $877,000 in today’s dollars.
60 years later, the house costs 28.3 times more. It’s the same house. It’s not like it grew more bedrooms.
Take a moment to process this, the house, just by doing nothing, has almost matched the performance of professional investors. If you keep saving the $5 per day, by the time you get to your million-dollar retirement, a million will barely buy you anything.
It’s the same with luck.
You might luck your way into becoming a millionaire, but going from that to a billion, it’s a whole different ball game.
7
Every new Billionaire turns other millionaires into billionaires
Remember the “use other people’s money” example?
Every newly minted billionaire brings with him those who believe in their vision enough to open their wallets early on.
Peter Thiel was the first outside investor to back Facebook. He invested $500,000 in exchange for 10.2% of the company.
When Facebook IPOd, he sold 2 thirds of his shares for 628 million dollars.
Friend of the channel Garry Than, the current CEO of Y-Combinator, was the first investor in Coinbase in 2013. That initial investment of only $300,000 ended up being worth $2.4 billion.
These kinds of stories can be found anywhere in Silicon Valley.
The billionaire secret: Make your money first, then invest it in promising businesses. One of them might be the next Airbnb.
8
Less than 5% of their worth is liquid
Ordinary people think the rich are hoarding resources.
When they say billionaires, they picture Scrooge McDuck jumping into a vault filled with gold coins.
In reality, almost all of them are paper billionaires, meaning shares they own in companies are worth in excess of 1 billion dollars, on paper the assets are worth as much.
Usually, billionaires keep less than 5% of their worth in liquid assets. If they do need money, they do not sell their assets.
Instead, they go to banks, show them the paper that says they’re worth X amount, and use that as collateral for low-interest loans. The bank extends them a line of credit, and they proceed to acquire additional income-generating assets.
When Elon Musk bought Twitter, he didn’t actually sell his shares in Tesla or SpaceX in order to come up with the money. The bank gave him the funds to buy it.
Here’s something most billionaires know:
You do not pay tax on debt!
As a result, they would all prefer to borrow the money and use their assets as collateral.
9
Real money is made in a crisis
Billionaires look at the world differently than most people.
- Poor people look at life in terms of days.
- The middle class in terms of months.
- The upper class in terms of quarters.
- The rich in terms of years.
- The super rich in terms of decades.
People made fun of Warren Buffett’s Berkshire Hathaway for underperforming for the past 10 years and critiqued his large cash position for losing its value due to inflation.
However, Warren and Munger weren’t just sitting on cash. They were waiting. What’s more, they were ok with losing 1-3% per year because, when this recession hit, they were able to purchase companies at 50–75% discounts.
Here’s the secret: For billionaires, recessions are the Black Friday event of the decade.
Everything you really want is on sale.
That’s one of their secrets, it’s not day-to-day that you focus on; instead, you make 2-3 plays per decade that are strategic for growth
10
They all had and still have experts minimizing risk and increasing returns
There’s no such thing as a self-made billionaire, at least not in the way people think about them.
In order for you to have the time and mental space to focus on exponential growth, you need to know that almost everything else is taken care of.
You find great accounting firms to mitigate all financial risks. You find great legal firms to mitigate all liabilities. Great managers and CEOs steadily take companies to the next level.
Along the way, you must rely on and trust the expertise of others to advance.
All these billionaires surround themselves with experts who can point out exactly the inflection points and how to position yourself for them. These people are called executive coaches, and every big CEO has a couple of them as counsel.
At this level, they cost anywhere from a few hundred thousand dollars per year to a couple of millions. All billionaires employ their services and it’s no secret.
Their job is to keep the CEO focused and provide clarity of thought, very much like a coach trains and prepares a professional athlete for a big game.
Think about just how incredible it would be to have one of these world-class super coaches available to you. Moreover, how quickly your life would improve and how quickly you would crush your goals
Now you can.
We pay these coaches on your behalf and you get to learn from them in the Alux App for a fraction of the cost.
That way you have access to, not one, but multiple industry experts that are focused on the practical side of growth.
We recently did a survey among our users and over 60% of respondents say that they have already crushed their main goal after 1 year of using the app with another 30% saying they’re closing in fast.
Everyone who uses the app has found it a game-changer and we couldn’t be prouder to be the ones behind it.
Honestly, the Alux app will probably create more millionaires than any financial book out there. Go to alux.com/app right now and see what it does for you!
11
Very few billionaires are Direct-to-consumer, most of the money is in Enterprise deals
You probably don’t realize this, but Amazon’s direct-to-consumer business isn’t actually profitable.
A couple of days ago, we made a video on why Amazon is actually losing money on this front.
Instead, Amazon’s cloud infrastructure business, AWS, is printing cash. 35% year-over-year growth Over 80 billion dollars per year in revenue.
Almost the entirety of the internet is now hosted on Amazon’s servers.
A company is more willing to pay you $100 per employee who uses your service on a monthly basis.
As a future billionaire, here’s an interesting secret you might not know
Gmail is free for the average consumer, but as a business, we pay $10 per month for each business email we have with Google. Since we have over 20 @alux.com emails for this business alone.
Every year, we end up paying Google thousands of dollars in recurring revenue for something as simple as email.
And we’re a small size company.
Google is now bringing in 6.3 billion dollars quarterly from its cloud services. That’s a $25 billion-a-year business.
As long as you do business, know that it takes the same amount of effort to convince a person to buy as it takes to convince a business. As a result, here’s the billionaire secret:
It’s still 1 sale. But the difference in income is substantial.
Most of you could actually earn 10-50 times more than you do, but you’re deploying effort on the wrong thing.
12
Most billionaires don’t start from the bottom
Yep, we’re going there.
It takes a tremendous amount of work to achieve any form of financial success.
These billionaires have earned their way to the top. But more often than not, the context was a little bit more favorable to them than you think and this is no secret.
Most of them had wealthy parents, access to a high level of education, infrastructure, and a safety net if they failed, so they could gamble it all a few times.
Elon’s dad was a multi-millionaire real-estate developer who married a model. Jeff Bezos’ parents gave him $250,000 to start the company. Bill Gates’ mother comes from serious money
And the list goes on.
Going from zero to a quarter million dollars takes years for most people. Equally important, not having to worry about where your next meal comes from is also what gives you an edge.
What all of them have achieved is incredible, so the takeaway here should be:
If you’re in a position to have access to education, you have a device to read this article, and you have access to Twitter and LinkedIn where you can reach almost any professional in the world, please know that you’re not starting out at the bottom.
The bottom is the 2 billion people who don’t have a phone or internet access. But if you’re looking for a controversial point, well… here it is:
13
Most industry tycoons get wealthy by exporting slave labor where you can’t see it – and the world doesn’t really care
The phone or laptop you’re watching this on, the electric cars, scooters, drones, and all electronic appliances like your fridge, smart TV, etc. all use cobalt.
Here’s a recent picture of what is supposed to be an INDUSTRIAL COBALT mine in the Congo. The key word is INDUSTRIAL.
According to official documents from all the major tech players, not a single human being is supposed to be digging in these cobalt mines.
The average adult gets paid less than $2 per day for bringing cobalt out of the ground. They actually prefer to use children, because they are smaller and cheaper for this kind of work.
And none of this is new information. Here’s a video of children in a cobalt mine from 6 years ago.
As a developed society we enjoy the comforts technology brings us, because we are sheltered from the reality of what it actually takes for it to be produced, assembled, and shipped to you.
And this is not just the tech industry.
The International Labor Organization estimates that approximately 170 million children are used for production although they are not old enough to work sustainably. There’s a recipe for creating such cheap fashion and the billionaires behind them want it kept secret.
In the fashion industry, the children are literally working the fields picking cotton and transferring pollen, for little to no pay.
But hey, as long as you get it for cheap right?!
14
Almost all billionaires are sociopathically obsessed with money and success
Here’s the truth: you really need to “want it” to be able to get to that kind of wealth, as it will require you to sacrifice almost everything else in your life.
You don’t have a family life and you don’t get to spend time with the kids. Finally, hyper-competitiveness and travel become your lifestyle.
Sleeping well at night becomes a permanent problem and the amount of stress you’re dealing with is nothing others will ever experience. The secret about these billionaires is:
Their brain is wired differently.
They look at life differently and see life as building blocks.
Life will grant you one wish, but you have to figure out what it is and be absolutely obsessed with it non-stop for decades.
Not sure most people are able to do it.
15
Decision making & Persuasion are the only 2 Billionaire-Tier skills
The job of a Senior Executive is to make a small number of high-value decisions that have major upsides. Furthermore, you are rewarded based on what % of times you are right about your decisions.
Warren Buffett is regarded by many as the greatest investor in the world because of his ability to consistently make high-level decisions that generate a lot of money for investors.
The higher you climb, the more at stake there is with every decision you make.
If you’re in the earlier days, PERSUASION, translated as sales & clear communication, is probably the most valuable skill there is.
You will need to get people to trust you enough to join you in creating a product. Furthermore, you will need to persuade customers to give you money for your product, and you will need to persuade investors to back your company.
Even if you do not know how to build something, with the right level of skill, you will be able to convince someone else to build it for you in exchange for a piece of the reward. This is a billionaire secret you need to internalize.
As you progress, there’s always someone new you need to convince to do something. If there’s one thing you take away from this entire piece, it’s this:
Systematically improve your decision-making process.
You do this by taking your mind to the gym consistently as a result of learning mental models. In addition, learn to speak clearly and convince others to follow you on your mission.
We feel the word SELLING doesn’t really do it justice for what exactly you need to do.
These two are the only billionaire-tier skills to master, which is why the Alux app focuses on them so much.
As a thank, you for reading this Sunday’s motivational piece until the end, here’s your bonus:
Bonus
Here’s what the average billionaire investor’s portfolio looks like
Thanks to our friends at Visual Capitalist for the visual
The most interesting thing you’ll notice is just how quickly the retirement fund becomes irrelevant as you climb in net worth and how that large position is replaced by a trust fund.
The wealthiest 10% of Americans own a record 89% of all U.S. stocks. As a consequence, the bottom 90% of Americans barely have any investible assets at all.
Finally, here’s what you need to remember:
You survive by earning!
You get rich by owning!
If you don’t want to end up like 90% of Americans, start buying things that increase in value over time.
And if this isn’t a wake-up call to start taking this seriously, we don’t know what is.
In conclusion, it’s going to be an exciting year, and we feel like a lot might change for you!
These are the secrets only billionaires know. And now you know them too. Let’s see what you’ve learned from them!
