Eric Siu breaks down a path to a billion dollars: own 10% of a company with $300M annual revenue, worth roughly $3B at typical valuation multiples. That gives you $300M. Invest it in bonds at 5% annual return and you hit $1B in about 25 years.
Here's a real-life practical example of how to make $1 billion. So this is someone I know, and number one, he has a company that he worked really hard to help get to $300 million a year in annual recurring revenue. Now let's say his share is 10% in the business, and right now valuations of companies are depressed, so the valuation of his business might be $700 or $800 million because you put a multiple on the business, right, when you're trying to sell the business. So let's say the multiple is like 2, 3x or something like that right now. Well, when the markets get healthier, you can argue that the multiples might go So then you do $300 multiplied by 10 would be $3 billion. And then, well, you multiply by 10% again, then his take would be $300 million. At that point, you can then compound the money, put all that money into bonds if you wanna be really safe and get a 5% return each year. And then over 25 years, that money will become a billion dollars.
