In a talk at the Oxford Union, Paul Graham, or PG for short, offered a formula that sounds absurd at first:
Start with 2 million dollars in assets, grow 93% every month, keep that up for 9.45 months, and it becomes 1 billion dollars.
It sounds ridiculous, but PG was not bluffing. Since he founded Y Combinator in 2005, it has incubated about 6,500 companies and produced roughly 30 billionaires. The 93% monthly growth rate was a number he got from a founder he had invested in during a conversation one month before the talk.
He admitted that this is extremely hard. But the hard part is not the final result of ?1 billion dollars.? It lies in two counterintuitive variables: the growth rate, and how long that growth rate can continue.
Many of us are used to linear calculation. Earn 100 this month, earn 100 next month, and after 100 months you have 10,000. Often, our basic sense of a ?large number? comes from imagining how long we would have to go without eating or spending to reach it.
But in the world of exponents, growth is not a matter of stacking bricks. After each round of growth, the new base participates in the next round. At first it looks slow, even insignificant, but if the growth rate is high enough and lasts long enough, the later result becomes deeply counterintuitive.
It is like the old fable: put 1 grain of wheat on the first square of a chessboard, 2 on the second, 4 on the third, and before reaching the 64th square the whole kingdom is bankrupt.
PG?s formula has no mysterious magic in it. It is just the most ordinary compound-interest formula. But placed inside the story of ?becoming a billionaire,? this simple, almost brutal formula suddenly gains a strange power of transmission.
In the talk, PG also used a less exaggerated number. Even without 93% monthly growth, if a startup grows at a more common 15% per month, after five years it becomes 4,384 times its current size. In other words, if a company now makes 10,000 a month, five years later it makes 43.84 million a month, with annual revenue above 500 million.
This is the counterintuitive nature of exponential growth: we always think a ?big result? comes from one huge leap, when in fact it may simply be the natural result of a stable growth rate lasting long enough.
Think of the motivational lines we have all heard: ?Choice matters more than effort.?
?When the wind is right, even pigs can fly.?
The way these lines are often said makes them sound like watered-down science fiction. But if we put them back into PG?s formula, they are not so mystical.
The hidden meaning of ?choice matters more than effort? is that working hard on an exponential-growth path is more effective than blindly working hard on a path with no compounding.
If a direction does not have enough time to grow, even a very high growth rate is only short-term fluctuation. A hot trend, a round of subsidies, a brief traffic dividend will eventually be nothing more than a mirage.
Conversely, if a direction has enough time to grow, then even if the early growth rate is not dramatic, as long as it can keep rolling, it can produce exponential multiplication.
So the real logic behind ?when the wind is right, even pigs can fly? is not that the wind suddenly gives pigs wings. It is that an ordinary individual has been placed onto an upward growth curve. When demand is expanding, infrastructure is maturing, user awareness is forming, and capital and talent are flowing in, even doing nothing can still mean being pushed upward.
The same effort is amplified by the environment, and the same mistakes are more easily hidden by growth.
So how do we get a meaningful growth rate, and enough time for that growth to continue?
PG?s answer is not interesting at all.
He says growth rate comes from making something users truly want, something they like enough to tell other people about. Growth time comes from market size. As long as the market behind it is large enough, growth has room to keep rolling. Even if the starting niche is small, you can begin from a beachhead of unmet demand and gradually expand into adjacent markets.
Correct nonsense.
Make something users want, and enter a large enough market. This is almost the most correct and most boring sentence in all startup advice. PG suggests that founders should work with friends, because the best way to get startup ideas is not to search for startup ideas, but to play around with strange little things together with friends.
For example, Facebook started as a social circle inside Harvard. Airbnb started by renting out a living room to designers who could not find hotels during a design conference. Twitch started with a founder strapping a camera to his head and livestreaming his day.
These were not ?great startup ideas.? They were specific, odd, even slightly crazy little needs. They emerged from messing around with friends, but behind them were broader abstract scenarios: social spaces for self-expression, flexible short-term accommodation, and curiosity about other people?s lives.
So he said something that is true, but also almost as if he said nothing.
Starting a company is not the only way to get rich, but it is the most common path to great wealth.
The problem is that most people are not founders, and most people will not actually incubate the next Airbnb or Twitch. So does this formula still mean anything for ordinary people?
I think it does.
At the very least, it helps us understand how painfully straightforward it is to save 100 a month for 100 months. In reality, there are many ways to reach goals in far less time than the old 100-month path required. Yet mainstream value narratives love praising endurance, diligence, and stability, while ignoring the methods that can actually create nonlinear outcomes.
As for more concrete principles or methods, I am afraid I cannot help much. After all, I am only a failed person who studies correct nonsense.