How to be a Billionaire
All total, there are 372 billionaires in the US worth about 1.3 trillion all together. That’s the same as 13,146,371 median (those exactly in the middle) net worth families. If you have trouble visualizing $1 billion, take a look at the image below. It’s $1 billion stacked in $100 bills. Each cube is worth $100 million.
courtesy of www.methodshop.com.
Again this year, Bill Gates and Warren Buffett topped the Forbes list of US billionaires. We applaud them, not just because they’re Olympian earners, but also for the enormous good they do through the Bill and Melinda Gates foundation. Combined, they’re worth about $100 billion. Forbes classifies them as “self made” billionaires, as they did not inherit. But we offer an alternate classification, “ earner made”.
Warren Buffett (left) and Bill Gates (right) playing bridge. photo by: Ethan Bloch
What you earn makes consumption of Windows, Coca Cola, Google Ads, or iPhones, by those who depend on you, possible. Billionaires don’t become billionaires based on salary, they earn based on the trickle up of the consumption you enable, combined with ownership of a large percentage of a company’s stock. You turn their genius into wealth.
Why is the Forbe’s billionaires list their most popular piece year in and year out? For some, it’s an occasion to ooooh and aaaah. For others, an occasion to rant against the rich. But, how does it inform or affect the lives of a typical earner, like you? If you’re a golfer, you might study Tiger Woods. For chess, Gary Kasparov. For snow boarding, Shaun White. For earning, why not study billionaires? We thought we’d take a closer look at the self/earner made Forbes data for you to see if there was anything there that could help you become a billionaire.
Option 1. Be in the right place at the right time.
|Otherwise known as, inheriting your wealth. If you can pick your parents well, this is the easiest way to go. But, be forewarned, most billionaires are self/earner made, and those who are have an average net worth of about $3.5 billion, vs. $3 billion for those who inherit.|
Option 2. Be in the right place at the right time with the right action.
In response to the Great Recession, many have called for more education to help prepare earners for new jobs. The Forbes US billionaire data adds color to this generic recommendation. It turns out that amongst billionaires, we notice a freakonomical result. Those with the least formal education, drop outs, have the highest average net worth. Those with the most formal education, PhDs, LLDs and MDs the lowest average net worth. But, there is not quite an inverse relationship between formal education and net worth. Those whose highest degree is either an MBA or MS are greatest in number, and have the second highest average net worth, after drop outs.
Take Away: We think this suggests that billionaires value scarce and timely consumer and market knowledge over academic knowledge, and take action to get it. But, if you’re going to get a degree, get a Masters, preferably an MBA.
For those who complete a formal education, the right places appear to be, by far, Harvard U., followed by Stanford U., Columbia U., MIT, U. of Chicago, U of Penn., NYU, U. of Texas, UC Berkeley and USC. Billionaires graduating from these 10 schools created about 39% of all billionaire wealth.
Apart from what they learn at these institutions, we think one undervalued benefit of graduating from them is the trust these university names engender in potential backers, clients or employers, relative to, say, Wasamata U. This seems to be underscored by their first names too.
The most prominent first names among them are John(17), David(13), Steven(13), George(8), James(7) and Charles(7), primarily biblical names, or names of great historical figures, that people are more inclined to trust. In general, billionaires don’t have unusual first names. Of course, there is the exception, the one and only Oprah. She’s the only US self/earner made woman billionaire, and the only non-Asian minority billionaire. We believe she succeeds in large measure because she’s been able to build trust through her television persona. Otherwise, the self/earner made US billionaire list is more than 97% white male.
Take Away: Your ability to earn rises with how much others trust you. If you don’t have a pedigree from one of the schools listed above, a common biblical or historical first name, or look like a billionaire, you’ll have to take action to cultivate more trust. If you’ll be naming a baby soon, it’s something to consider.
The average age of a self/earner made US billionaire is 66. But the average age varies by industry. It goes from youngest to highest as follows, internet/software (52), investments/finance (64), electronics/semiconductors (65), oil/energy (65), retail/apparel (67), manufacturing (68), media/entertainment (68), and real estate (73).
Together, these 8 industries comprise 64% of self/earner made US billionaire wealth. Setting aside the outlier industries, internet/software and real estate, where average ages are significantly higher or or lower, we see that their birth dates cluster around the end of WWII. They were lucky enough to be born into the greatest economic expansion the US has ever seen. Timing matters.
Take Away: Look to earn and own stock within industries and countries that have the potential for strong growth over the long term. Health, Genomics, Green industries, Space, Internet, China, India and Brazil are all worth considering.
Option 3. Be in the right place at the right time with a nudge.
If you live in Alaska, the Dakotas, Iowa, New Mexico, Louisiana, Mississippi, South Carolina, West Virginia, Delaware, or Maine there are no billionaires living in your state. If you live in any of the others, you have at least 1 billionaire residing in your state.
Let’s say you’re already 66, or are a woman, or didn’t graduate from a premiere school, or your first name is Osama, or you don’t have a head for business, then what? Well, click on the adjacent billionaire map. Find your state. Click on the white billionaire icon. See the list of billionaires living in your town. If you happen to run into them at an airport, restaurant, spa or wherever, very politely nudge them to open their earning to the earners that put them where they are using Open Pay, or the service of their choice. This means reserving a % of their earning for distribution to earners in the bottom 99% based on their influence on them. This won’t make you a billionaire, but it will help make trickle down a reality.
Billionaires are like everyone else, they may know the right thing to do intellectually, but to get them to actually do it, takes nudging.
Chances are your local billionaire already has a favored philanthropy. Point out that opening his pay will very likely help him to achieve his philanthropic goals faster. Using the Gates Foundation, as an example, epidemiological research shows that 40% of the problem areas on which they’re focused are, themselves, exacerbated by gross inequality, itself. The adjacent table shows the match up.
|Gates Foundation Problem Focus||Problems Worsened by Inequality|
|nutrition, pneumonia, HIV/AIDS||physical health|
|early learning, high schools||education|
|financial services for poor||social mobility|
|family planning||teenage births|
|maternal, newborn and child health||child welll being|
Let your local billionaire know that the middle class is hurting, and they have a responsibility not just to the poor, but also to the middle, who put them where they are. To paraphrase Warren Buffett, “If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to act on behalf of the other 99 percent.”