I realize most people don’t have aspirations to become a billionaire. Most people just want to get out of debt and maybe live a middle class lifestyle. The more ambitious of you want to become millionaires. Trust me, being a millionaire is over-rated. Millionaires may have been an exclusive segment of the population 50 years ago, but it’s not so exclusive anymore. According to this CNBC article, there are 10.8mn households that have a net worth of $1 million or more, or 10% of total households. Being a millionaire used to be like having platinum status, and now it’s more like gold. Maybe even silver.
Only very few people have ambitions to become a billionaire. According to this Forbes article, there were 1,810 billionaires in the US in 2016, or about 0.0006% of the population. I used to have aspirations of becoming a billionaire. I’m sure some you do too. That is, until I met some of them. And then I realized I don’t have what it takes to become a billionaire, and neither do you.
Hedge Fund Billionaires
Working at a hedge fund, I’m fortunate to have access to many people richer than myself. Maybe unfortunate, since it highlights how unsuccessful I am, relatively speaking. As well as I’ve done, living in NYC did a phenomenal job of making me feel poor. I remember trudging home on the subway while some guy had his Bentley and driver waiting for him out front. Or grabbing McDonalds when others went to Per Se.
I can’t remember who I heard this quote from a while ago, so I apologize for not providing attribution. It was, “A bank is designed to make a lot of people millionaires. A hedge fund is designed to make one person a billionaire.”
1. It’s All Consuming
There are the new tech billionaires that have gained phenomenal wealth in only a few years. But for many billionaires, it has taken most of their lives to get to billionaire status. And none of those years have been easy. It’s a looooong grind. The people I’ve met have worked non-stop to get to where they are. They didn’t take vacations. They were the first ones in the office and the last ones out. And they were in the office on weekends by themselves.
They’ll take vacations now because they have people around them to pick up the slack, but they didn’t have a lot of help in the beginning. When you first start out, you have to do everything yourself.
I like the idea of being a billionaire, but I like spending time with my family more. I’m not willing to sacrifice the best years of my life to achieve wealth that I have no possible way of spending (my wife could probably do it though).
2. It’s not a Straight Path to Becoming a Billionaire
You don’t just become a billionaire overnight. Remember, you have to get to $1 million first. Then to $10 million. Then $50 million, $100 million and $500 million, finally getting to $1,000,000,000. But that doesn’t happen in a straight line.
You may get to $50 million quickly. Then it could drop down to $25 million. Take Donald Trump for example. You may not agree with his politics and there’s debate about his net worth, but it’s evident that his net worth has fluctuated substantially over the years.
Most of you have a magic number in your head where you can retire. I’m guessing that number is well below $1 billion. To become a billionaire, you need to blow through that retirement number. Instead of sipping cocktails on a beach, you need to actively decide to come in to work every day, even though you can afford not to. That’s not easy.
Imagine you build a $50 million dollar business. Everything is going well but then growth stalls. Competition is increasing. You realize that you need to spend $20 million of your own money to get the business back on track. Or you can sell the business and take a $50 million check from a private equity buyer or a competitor and retire.
I don’t know about you, but I’m signing that contract as soon as I see the check, while I’m booking the first flight out to Hawaii.
3. Others Will Depend On You for Their Livelihood
This isn’t a problem exclusive to billionaires. This is a problem for anybody that owns a business, although billionaires generally have more mouths to feed.
When you build a business, it’s not just your net worth at stake. Yes, the owner is most impacted, but there are employees who work there and depend on that paycheck to feed and clothe their families.
That’s a lot of responsibility. Responsibility that I don’t want to shoulder. I like only worrying about myself. If I decide to quit in my current job, I’ll impact a few people at my firm (if they even notice). When you own a business and sell-out, everybody gets impacted. If you sell to private equity, they’ll come and cut costs. If you sell to a competitor, they’ll look to realize synergies as well. Maybe this is why so many of these billionaires have stuck around. Because they don’t want to disappoint the people that helped build the company.
The more cynical of you may think of billionaires as ruthless business titans. But they’re normal people. They’re focused on the bottom line and do what’s necessarily to keep the business successful, but they care about others (most of them, anyways). Billionaires just have nicer clothes. And much nicer houses and cars. Oh, and definitely better vacations!