From Zero to Millionaire: My Step-by-Step Guide to Building Wealth

One of the questions I get asked a lot is, what business would you start today if you were starting from scratch? What they want to know is, I want to get started now with basically nothing, and I want to become wealthy someday. So how do I go from zero to millionaire? And this is a video about, well, how I would do it. So there's some interesting criteria here. So number one, let's make some assumptions. Uh, first of all, we don't have much money because frankly, that's the way most people are getting started. So that's assumption number one. Assumption number 2, we're gonna assume you're probably pretty early in your career. You don't have any unfair advantages, like you haven't worked for decades. You don't have any particularly like unique skills, that sort of thing. But let's say you have some stuff going for you. You're a hungry person, you wanna try and you're willing to work hard. You have a little bit of savings and you have some flexibility in terms of, well, you know, you can make it a month or two without making any money at all. Given all those criteria, here's how I would go from, well, zero to millionaire. So the process I would use is basically a 5-stage process, and this is not a get rich quick scheme. I am not going to ever sell you a get-rich-quick scheme. This is something that's going to take you decades or more. So the first thing I would start for is my goal is optionality. And optionality is just basically this idea that you have the options to do a bunch of different stuff. For example, someone that has a low net worth and has gone and bought a $100,000 car on credit, they don't have a ton of optionality, right? Because they have to make that payment every month. So what I would do in phase 1 when I'm first out of school is I would probably go get a job, right? Right? And that job would be one that I can make some money at. And the thing I would be doing a lot is saving money as much as I can. I would live in a house with roommates. I would drive a used car. I wouldn't spend it all on fancy vacations. I would be taking every single dollar I could and putting that into my bank account. Like, this is exactly what I did. And the beauty of that is I looked up 6, 8, 12 months later and I had done two things. One is I had learned a lot working for somebody else because frankly, like, when you graduate college, you don't know a ton about how the business world works. They don't teach that in college. They teach you other stuff. And number two, I was able to save 30, 40, 50% of my income every month. And so that's this phase 1. How do you build up optionality? Live beneath your means, save money, learn some stuff, and get ready for the next phase. So one interesting thing during this first phase, this is a great time to make learning your side hustle. I remember during this phase of my existence coming out of college, like, I was reading books like crazy. I had tons of free time. I would read 1 or 2 books a week just on business or things I was curious about. And it was just this idea of, okay, I'm building optionality in terms of saving money during phase 1, which can last a year or two. But then secondarily, what I'm doing is broadening those options as well because I'm learning a lot and being prepared for the next phase of getting to where we want to be in the long run. All right. So now it is time to take the leap into entrepreneurship. And this is really phase 2, which is about how do we start to generate cash flow? So our net worth might be $100,000 to $250,000 depending on how much we saved. It's maybe less, but it's enough that we now have the ability to take a risk at starting a business and starting to get out of the W-2 rat race. But that is what happens in this chapter 2. This is where we're gonna go try and start our first business. And I think a lot of people would tell you during this time you go try some of these different businesses that are very common and easily understood. You do things like laundromats, delivery services. All that kind of stuff is very common for people to go after in this phase. But I think those things all have a problem, and I think there are better businesses to go after at this early stage when your net worth isn't that high because Frankly, you need to get into businesses that don't have big capital expenditures to get going. You need to get to where you can put a little bit of cash in, a lot of sweat equity, and then you can start to build out a cash-flowing engine that doesn't require a lot of capital to get going. For example, you can make a lot of money in real estate, but at this point, going to buy rental houses, well, it's probably a mistake. And why is it a mistake? It's because you go spend all of your savings on a rental house, right? If you have $100,000 or $150,000 net worth at this point, you go put all your money into a rental house, and that thing is probably gonna turn out $5,000, $10,000, $12,000 a year, uh, after debt services for you, maybe. Um, that is fine and that's a good return on investment, but it's not gonna be something that can build you a lot of cash. And there's some businesses that do that exceptionally well. I, I recorded a video a couple weeks ago about these types of low capital entry, high success rate businesses that generate a lot of cash. But those are things that are really good, like digital agencies, right? Those require very little in terms of your type of capital to get going. The great thing about having a $150,000 net worth and then starting a digital agency, for example, that takes $20,000 cash to get cash flow positive, you're in a great place where you can go and try it again if the first effort doesn't work. So let's talk about the concept of side hustles and where they come into this. So a side hustle would be a business that you do on the side, right? You have your main W-2 job and you start to do a side hustle on the side. So in other words, doing it as a side hustle when your W-2 job is happening is a way to de-risk when you go all in in phase 2. What happens with people in W-2 jobs is the requirements of time for you keep going up and up and up and up, and it's impossible for a person to serve two masters that are as demanding as a job which expects you to work full-time and eventually a company that you own. I recommend people during this phase, if we want to get ahead, we eventually have to go all in on this business. All right, so let's move on to stage 3, and this is the stage I call becoming unemployable. And what I is cool here is we enter this phase when the business that we started in phase 2, uh, is succeeding. And now we have a business that we're gonna solidify and we're gonna grow a bit to really create a foundation for us to take some bigger shots later on to push towards wealth, right? And that's what really happens in this phase. Your net worth starts to grow from say $250,000 to $1 million or more of value in this one business that you've created, plus cash that you're starting to save up. And this is where the idea of being unemployable comes in. Once you have a bunch of cash and once you have a net worth that is a certain size that you know that no matter what, you can remain an entrepreneur forever. And here I think there's a danger that sometimes people run their business for growth rather than growth plus profits. Like at this phase, you care much more about generating cash for yourself because that sets us up for success later on than you do about creating a bigger business. So run that business for profit first over growth and then focus on that. And then with that cash, what you do is you take it and the good news is You know, you can make money just by having money these days with higher interest rates. As of this recording, I think T-bills are still pretty close to 5%. That means on $100,000 you have in the bank, you make $5,000 a year just in interest alone. So that's really good for us. Not so good for the US federal tax deficit. But anyway, you get my point. A lot of these low capex, low barrier to entry businesses like digital agencies or consultancies, they get to a certain size and they just can't grow anymore. And the typical reason for that is because the owner-operator becomes really a key point. They're a critical point in managing those client relationships, and you can only grow as well as your client relationships can scale. And you're just one person, and that's just the way this works. So a lot of people just stop there. But there's another option people can make, and that's to move on to Chapter 4, which is you start to take in this phase a lot of asymmetric bets. So like an asymmetric bet is the idea that you can bet some money and the upside can be unlimited and the downside is limited. Right. So compare that to like walking into a casino and betting on something. If you bet on a football game, right, you can win X amount of money or you can lose X amount of money minus whatever the casino takes. That's a symmetric bet. An asymmetric bet goes the other way. Those are the really the coolest type of bets to start to make in this phase because you have the ability to lose all that money. You're fine with making $100,000 or $250,000 bet and you lose that money with the idea that you do that 5, 6 times and then eventually one of those could turn into, well, a heck of a lot of money, $10, $20, $30 million. And that's where you can start to use this phase of that foundation we've done in the previous years to start to deploy that capital in a way that's potentially going to be life-changing not only for you but for generations after you. So by this point, there's a good chance you're in your 30s or 40s. You'll start to see things that people call deals, right? And it's like, hey, invest in this thing, invest in this fund, invest in this company, all that kind of stuff. And look, some of that stuff can turn out to be very asymmetric bets. The reality is there's a lot of people that are at this same phase. They excited to write, like you, $50K and $100K checks. So I see a lot of those deals too. And frankly, I just pass on most of them because the reality is they are priced such because there's so many people investing in these same things that they're rarely a good opportunity. I mean, there's some out there that are fine, but if you're just trying to find those like on a part-time basis, you're not going to do a good job of it. And so for me, what I've actually done during this phase is make these asymmetric bets by trying to create them and find angles for myself. And those angles are things that other people aren't finding. For example, there are opportunities that I see that exist because of my original businesses, right? Building things that are complementary to that. This is also where you have the opportunity to start to build other businesses that can be really good, right? So let's say, for example, that you have built a digital agency that is catered very much to a particular industry like the gasoline type businesses. This is a great opportunity for you to look at things that would be related but speak to that same customer base, like a fuel hauler, for example, or a consultancy like an IT consultancy that would help people that own gas stations, manage their cash registers and all that kind of stuff. You can see that idea of how you start to build these asymmetric bets. And the worst case for you is you just lose your original thing, which to me is pretty good, right? You average out the losses and eventually, well, you end up with something pretty big on the backside. And I think also important in this phase, your growth hasn't stopped. Hopefully you've joined a CEO peer group. You're learning how to be a board member. These are all the skill sets that you hopefully are learning by this time, either by being in the right network with other people. Highly recommend our network Scalepath for that. And you've also been reading a ton, whether it's on Twitter or watching videos shows like this, or you're like just reading books, which are still really exceptionally good. And all those things really come together to give you a foundation to where you can change your skill set to make and craft a lot of these asymmetric bets that really become the driver of massive wealth as we move on to the next phase. So let's move on to the next phase. You know, by now you're 50, 60, you have a pretty high net worth— $10, $20, $30, $50 million. You know, you've made some asymmetric bets that have paid off over this period of time. Now is the time to start to think about how you become antifragile. Now it's about switching from wealth creation as you start to enter the twilight of your life to wealth retention, right? How do you move things into things that are good storage places of wealth, right? It's stocks, bonds, and real estate are where people start to put their money into at this point. They transition out, start to sell off some of the businesses that they've built, and then they create that as a platform to basically have security and flexibility for them for the rest of your life. And so I've seen other folks that enter through this business phase into this retirement phase with massive net worths, and they start to just position that into these safe and secure things. And that's owning real estate, that's potentially having some asset in business, that's had level of diversification, that's lots of cash, those bonds, stocks, all those kind of things that enable you to have predictable cash flow, a level of safety and security, but not a lot of downside risk, right? You don't have a lot of debt, you've managed to liquidate things as much as possible, you've been continuing to be saving and living underneath your means, and you've got a situation now where you've set not only yourself up for a great retirement to do whatever the hell you want, which That's what I think retirement should be about— not doing nothing, but working on the things that only give you joy. And you've potentially set up your progeny, your kids, your grandkids to have every opportunity in life. Me personally, I don't think those people should get enough inheritance to do nothing, but I think they should give every opportunity. That's the beauty, I think, of this process. If you follow this through over a lifetime, starting with working for somebody else, building a cash-flowing business, making that cash-flowing business profitable starting to make bets in other things and diversifying, generating more cash to have upside, and then putting it all into a safe platform that you can leave a legacy for not only the rest of your life, but also for the people that you leave behind. I think it's a beautiful thing. This plan, it'll work. The downside is it's not a get-rich-quick scheme. It takes you 10, 20, 30 years to do it. But the cool thing is it's a pretty proven path. I've seen people do it over and over again. It just requires you to work. And like most things in life, when you work hard, good things happen. And this is one of those.