Billionaires get there by owning a slice of something huge, using other people’s money, buying low at scale and mastering two skills: decision making and persuasion. The script opens by noting that there were 3,112 billionaires in the world as of 2023, and that their perspective on life runs against many things you believe. It lists 15 secrets, plus a bonus.
Some points are practical and some are uncomfortable. The video argues all of them, and the figures here are as it states them.
Watch the full video here, or skip to the breakdown below.
The 15 secrets at a glance
- You rarely reach $1 billion while owning 100% of your business
- Real estate makes you a millionaire, private equity makes you a billionaire
- Do not use your own money, use someone else’s
- Everything is a buy low, sell high equation; only the scale differs
- Art is a preferred store of value that is easy to move
- Stocks will not get you to a billion, and neither will luck
- Every new billionaire turns other millionaires into billionaires
- Less than 5% of their worth is liquid
- The real money is made in a crisis
- They all had and still have experts minimizing risk and increasing returns
- Few billionaires are direct to consumer; most money is in enterprise deals
- Most billionaires do not start from the bottom
- Many industries rely on labor conditions the public does not see
- Almost all are obsessed with money and success
- Decision making and persuasion are the only two billionaire-tier skills
1. You rarely reach $1 billion while owning 100% of your business
The narrator lists the stakes: Jeff Bezos owns 12.7% of Amazon, Elon Musk 13% of Tesla, Bernard Arnault 46% of LVMH, Warren Buffett 16% of Berkshire Hathaway and Larry Ellison 35% of Oracle.
Most millionaires guard their shares like hawks, which keeps them from climbing faster. Owning 15% of a multi-billion dollar pie is far more lucrative than owning 100% of a $3 million business.
2. Real estate makes you a millionaire, private equity makes you a billionaire
The running joke among the ultra-wealthy is that real estate is the dumb millionaire’s game. You can get there with it even without the brainpower for anything else. Ask a millionaire and 35 to 50% of their net worth is typically in real estate.
Ask a billionaire and business interests make up over 70%. The most productive way to raise your worth is to own a business, build it up, then use the proceeds to buy pieces of other businesses, again and again.
3. Do not use your own money, use someone else’s
You can earn your way to $1 million as a doctor, lawyer or tech engineer, but you cannot earn your way to $1 billion on a salary. Your financial life opens up vertically when you realize you can use other people’s money.
Here is the simplified model. Raise $100,000 from friends, family, banks or angels for 20% of the company, valuing it at $500,000. Build revenue to $1 million a year, then sell 20% at a $10 million valuation, taking $2 million cash. Use it to reach $10 million in revenue, raise again at $100 million for $20 million, build a product for other companies, and float 10% in an IPO at a $10 billion valuation.
At every stage, other people’s money paid for scaling, hiring and product, and each move lifted the valuation. Alux says UiPath used this model to IPO at a $35 billion valuation, and that the team learned it from the founder.
4. Everything is a buy low, sell high equation; only the scale differs
Some billionaires trade commodities such as coffee and metals. Others trade shipping, where the cost of fuel, people and transport is lower than what customers will pay. Others trade in risk and debt, and tech and media companies trade in attention.
Two things matter: your mark-up and your scale, meaning the number of transactions. Amazon has tiny margins and huge volume, while Tesla has big margins and decent volume. A business grows when you charge more at the same volume (artists), charge the same to more customers (fast-food chains opening locations) or charge more while selling more (luxury brands, which the script credits for making Arnault the richest man in the world).
At a large enough scale you gain negotiating power on how low you can buy.
The profit is made at the point of purchase, not the point of sale.
5. Art is a preferred store of value that is easy to move
At that level most money is tied up in stocks, businesses and assets that are hard to move. Cash loses 5 to 10% a year to inflation, so wealthy people turn to art. They buy in bulk, lease it to museums around the world or seal it in shipping containers as a bargaining chip.
Moving $500 million in art is easier than moving $500 million in gold or silver. The script calls blue-chip art the billionaire asset and says it has traditionally outperformed the S&P 500, doing especially well when inflation is high. It adds that art is illiquid and should not be your whole strategy.
6. Stocks will not get you to a billion, and neither will luck
Stocks work with a long time horizon and a lot of starting money. The old advice said investing $5 a day from age 20 to 65 makes you a millionaire. The narrator says the math checks out, but markets and costs evolve, and such models tell a fancy tale that does more harm than good.
Its example: Warren Buffett paid $31,500 for his house in 1958, and adjusted for inflation and market value it costs about $877,000 today, 28.3 times more. The house just sat there and nearly matched professional investors. A million at retirement may barely buy anything. Luck can make you a millionaire, but going from there to a billion is a different game.
7. Every new billionaire turns other millionaires into billionaires
Each new billionaire brings along the people who believed enough in the vision to open their wallets early. Peter Thiel was the first outside investor in Facebook, putting in $500,000 for 10.2%. At the IPO he sold two thirds of his shares for $628 million.
It also cites Garry Tan, CEO of Y Combinator and a friend of the channel, who was the first investor in Coinbase in 2013 with $300,000, a stake that grew to $2.4 billion. Make your money first, then back promising businesses. One might be the next Airbnb.
8. Less than 5% of their worth is liquid
People picture Scrooge McDuck diving into a vault of gold coins. In reality almost all billionaires are paper billionaires, holding shares worth over $1 billion on paper. They usually keep less than 5% of their worth liquid.
When they need money they do not sell assets. They show banks the paper and use it as collateral for low-interest loans, then buy more income-generating assets. Alux says Elon Musk did not sell Tesla or SpaceX shares to buy Twitter, because a bank supplied the funds. The point stated: you do not pay tax on debt, so they would rather borrow.
9. The real money is made in a crisis
Billionaires see the world on a different time scale. Poor people think in days, the middle class in months, the upper class in quarters, the rich in years and the super rich in decades.
The script notes that Berkshire Hathaway was mocked for underperforming for ten years and for holding cash that inflation was eating. Buffett and Munger were willing to lose 1 to 3% a year, and when the recession hit they bought companies at 50 to 70% discounts. For billionaires, recessions are the Black Friday of the decade. They make two or three strategic plays per decade, not daily moves.
10. They all had and still have experts minimizing risk and increasing returns
There is no self-made billionaire in the way people imagine. To focus on exponential growth you need almost everything else handled: accounting firms to cut financial risk, legal firms to cut liabilities, and strong managers and CEOs to take companies to the next level.
They also use executive coaches who help them spot inflection points and position for them. At this level coaches cost from a few hundred thousand dollars a year to a couple of million. Their job is to keep the CEO focused and clear-headed, like a coach preparing an athlete for a big game.
11. Few billionaires are direct to consumer; most money is in enterprise deals
The narrator says Amazon’s direct-to-consumer business is not really profitable. Its cloud arm, AWS, is the cash machine, growing 35% year over year with over $80 billion in annual revenue.
Businesses happily pay per employee per month. The Alux team pays about $10 a month per business email address for more than 20 addresses, which adds up to thousands of dollars a year to a tech giant for something as basic as email. The video says that giant’s cloud services bring in $6.3 billion a quarter, a $25 billion a year business. Convincing a business takes the same effort as convincing a person, but the income is much higher, and many people could earn 10 to 50 times more by aiming their effort at the right customer.
12. Most billionaires do not start from the bottom
It takes a tremendous amount of work to reach the top, but the context was often more favorable than people think. Many had wealthy parents, strong education, infrastructure and a safety net that let them risk everything a couple of times.
Alux says Elon Musk’s father was a multi-millionaire real estate developer, Jeff Bezos’s parents gave him $250,000 to start his company, and Bill Gates’s mother came from serious money. Not worrying about your next meal is an edge. Still, if you have education, a device and access to professionals through social platforms, you are not at the bottom. The bottom is the 2 billion people without a phone or internet.
13. Many industries rely on labor conditions the public does not see
This is the script’s controversial point. It argues that many industry tycoons get wealthy through labor practices out of sight, and that the world does not much care. Its example is cobalt mining in the Congo, material used in phones, laptops, electric cars, scooters and appliances. It says adults are paid less than $2 a day and that children are preferred because they are smaller and cheaper.
It adds that the International Labor Organization estimates about 170 million children are used in production, and points to fast fashion, where children work the cotton fields for little or no pay. The script’s view is that cheap goods come at a hidden cost. These are the video’s claims and are presented as its argument.
14. Almost all are obsessed with money and success
To reach that wealth you have to want it enough to sacrifice nearly everything else. No family life, no time with the kids, constant competition and travel, years of poor sleep and stress that others never experience.
According to the script, their brains are wired differently and they see life as building blocks. Life grants one wish, you have to work out what it is, and then be obsessed with it non-stop for decades. It doubts many people can do that.
15. Decision making and persuasion are the only two billionaire-tier skills
A senior executive makes a few high-value decisions with major upside and is rewarded by the share that turn out right. Warren Buffett is regarded as the greatest investor because he consistently makes high-level decisions that earn investors a lot of money. The higher you climb, the more each decision carries.
Early on, persuasion, meaning sales and clear communication, is probably the most valuable skill. You must win over people to join, customers to pay and investors to back you. With enough skill you can convince someone else to build it for a piece of the reward. The script’s advice: improve your decision process by training your mind with mental models, and learn to speak clearly and convince others.
Bonus: you survive by earning, you get rich by owning.
Own things that rise in value
The bonus point turns on a portfolio picture. According to the script, the retirement fund becomes irrelevant as net worth climbs, replaced by a large trust fund position. It states that the wealthiest 10% of Americans own a record 89% of all US stocks, while the bottom 90% barely have investable assets.
Its summary is simple: you survive by earning and you get rich by owning. If you do not want to end up like the 90%, start buying things that increase in value over time.
FAQ
What do billionaires know that most people do not?
According to the script, they use other people’s money, own a slice of large businesses instead of all of a small one, buy low at scale and focus on two skills: decision making and persuasion.
Why do billionaires own less than 100% of their companies?
Because owning a smaller share of a huge business is worth more than all of a small one. According to the script, Bezos owns 12.7% of Amazon and Musk 13% of Tesla.
How do billionaires get cash without selling assets?
They borrow against their holdings. According to the script, they keep under 5% of their worth liquid and use shares as collateral for low-interest loans, since debt is not taxed.
Why do billionaires like recessions?
They see them as a sale. According to the script, Buffett and Munger held cash and bought companies at 50 to 70% discounts when the recession came.
Is real estate the way to become a billionaire?
According to the script, real estate makes millionaires, while billionaires hold over 70% of their net worth in business interests such as private equity.
What skills do billionaires rely on most?
It names decision making and persuasion as the only two billionaire-tier skills, and advises learning mental models and clear communication.
Keep reading
- 15 Things Poor People Don’t Know About Making Money
- 15 Secrets Only Billionaires Know
- 15 Money Secrets from the World’s Wealthiest People
