A lot of entrepreneurs message me and say, “Pat, one day I’m going to build a billion dollar company.” I send a message back that says, “How?” And they respond, “That’s why I need your help, so I can build a billion dollar company.” You see, saying that statement is exciting. It’s very similar to how we get excited and inspired when we watch a video, movie or documentary and say, “I’m going to be the next _________________.” Then comes the how-to logic later. So in this video I’m going to give you 12 steps to keep in mind as you work towards your goal to build a billion dollar company. After the excitement of declaring that you’re going to build a billion dollar company, the how-to and logic come later. At this stage, many entrepreneurs get stuck and give up. It’s important to feel the emotion. But it’s like when you fall in love with a girl and end up having sex, and then later have a baby and then say, “How do I raise this kid?” Well, that’s the real work. And it’s the exact same principle. You say, “I’m going to build a billion dollar company” and then you ask, “How am I going to build this company?” So that’s one thing to keep in mind. And there’s nothing wrong with that. We need more inspiration and motivation. But today I’m going to give you a little bit of logic to be thinking about.
Before You Build a Billion Dollar Company
First of all, before you build a billion dollar company, you have to build a million dollar business. And how do you get to a million dollar business? How do you get to a $10 million business? How many companies are there that are really doing this and how do they think? I can tell you for myself, I started my company from scratch, with 100% from my savings. I didn’t get a loan from anybody, or raise capital. Nothing. I put 100% of my savings – every single penny – into it. And we went from that to where we are today, where we’re getting offers of $100 million for the company. So I went from zero to $100 million in seven years.
How Many Billion Dollar Companies Are There?
I want you to see how many billion dollar companies are out there.
- There are 30 million companies that are registered in America.
- 96% of them gross less than a million dollars a year.
- Only 4% do more than a million dollars per year. That’s 1.2 million companies do a million dollar a year or more in revenue.
- .4% which is 120,000 companies do more than 10 million. So out of 30 million, only 120,000 do over 10 million dollars a year in revenue.
Let me explain to you what that means. Out of all the people in America, to make six figures, you’re in the 20th percentile. Twenty percent of American households make a six figure income. And those that are in the top 1% make a little shy of $400,000 a year of income. We’re talking about .4% of companies do $10 million or more per year.
- Then .0006, that’s 18,000 companies, do more than 50 million. This is prime. If you’re here, you’re good. If you get over $10 million dollars a year, you have respect from your peers.
- Then, .00009%, – 2500 companies – do more than $500 million of revenue per year.
- And then you have the ultimate Fortune 500 companies. That’s .00002%, that do more than $5 billion a year.
The Top 10 Fortune 500 Companies
Right now here are the top 10 Fortune 500 companies:
#7: CVS Health
#6: United Healthcare Group
#4: Berkshire Hathaway
Wal-Mart is number one in America, with 2.2 million employees in the world, and 1.6 million employees in America. So what is the biggest difference between the guys that make more than a million dollars a year, and the guys that make less than a million dollars a year? The majority haven’t even gotten to a million dollar business. And what’s the difference between the guys that make more than ten million and those that make more than one million?
That’s what we’re going to get into in the following points, on how to build a billion dollar company.
#1 – Have a Clear Vision
A couple of weeks ago I had a group of entrepreneurs that flew in from all over the world. We went for hours dissecting businesses. And the first question that I asked all the entrepreneurs was to tell me their clear vision for their business. Because in reality, most of the 96-percenters that earn less than a million dollars a year don’t have any idea what they’re doing. They don’t even know why they started a business. It’s generally just pure excitement and enthusiasm. Or they hate their boss, their job, and don’t ever want to work for anybody else. So they start a business. That’s pretty much how it starts, right? But if you want to get to the higher level and build a company that will one day be valued at a billion dollars, you need to be very clear about what you want. You need to be able to answer the question, “What is your long-term vision?” And, “What are we doing five years from now? Ten years from now?” What and who do you want to be? Is it clear to you? Do you know exactly where you’re going? Do you know exactly what you want to do? I did a video last week called The Biggest Mistake Marketers Make. And in the video I explained how everybody wants everybody to be their customers. They want to appeal to every single person. If you haven’t watched the video yet, be sure to watch it. But the ones that do very well have a clear vision. They are very clear on who’s their customer, and stay in that lane the entire time. So the first thing I will tell you if you want to build a billion dollar company is you have to have a vision.
Listen in here to hear what I mean by be aggressively patient, and how that’s necessary if you want to build a billion dollar company.
#3: Adapt and Adjust
On this list of steps to take to build a billion dollar company, I wanted to put product. But I didn’t. Here’s why. There are a lot of billion dollar companies that create products that we use regularly, but they don’t have the best products. How did they do it? By adapting and adjusting. It’s seeing what the market demands today and seeing what’s needed five years from now. It’s looking at everything that’s moving and having the eye to see what you need to do to adapt and adjust. This is needed if you’re going to build a billion dollar, or even a 100 million dollar company.
Listen in here for what it means to stick to your philosophy and why you have to do that if you want to build a billion dollar company.
Do you know what’s crazy? I went on YouTube about a year ago or a year-and-a-half ago, and I typed in the word, “leader.” And then Mario and I did it again just recently. It’s insane. Go on YouTube and type in the word “leader” or “leadership.” No one even cares about or wants to study leadership online. When we publish videos about leadership, and put leader or leadership in the title, people don’t click, because the title’s not attractive. People feel like they already know what it is to be a leader. Just recently I took 60 people to Oheka Castle. It’s a $150 million property. We rented out the entire place. One of the nights while we were there, I said, “Look, there are a lot of people that do a very good job speaking from stage. But you don’t build big companies because of how great you speak from stage. You build big companies because of how great you are behind closed doors. That’s how you build a big company.”
An Example of True Leadership
It’s when you say things like, “John, come in my office. Let’s talk. What’s your problem? What’s going on? Is something bothering you? You’re not the same. What is going on? Did I do something? We need to talk about it. What’s up? I don’t like your behavior, man. This is effecting other people, and I heard you’re talking negatively about somebody. Are you okay? I don’t remember you being like this.” That’s leadership. And if you think that just being on the cover of a magazine and being cool, being a celebrity is what building a billion dollar company is all about, you’ve completely confused the concept of building a big, established company. Because it has nothing to do with you. It all has to do with the team you’re building. And if you don’t know how to lead a team, you’re not going to recruit the right talent. You’re not going to keep the right talent. You’re not going to drive the right talent. And you’re not going to know how to push the people, deal with competition, overcome enemies, negotiations, and lawsuits. This is all leadership.
I’m going to do an entire video on positioning to explain positioning a little bit more, because that’s a whole episode by itself. And I talked a little bit about marketing in the last episode. I said that the biggest mistake that marketers make is with who you want to be and how you want to position yourself. The question is, how are you going to market yourself? You know, Apple was very big on how they marketed themselves. “Think Different.” That’s who they are. They aren’t trying to be like everyone else. They said, “We’re different.” And eventually, we bought it. And now they’re the third biggest company in America because we bought the fact that Apple is simply different. They market different. They launch different. And we bought it because it’s marketing and positioning.
Discipline includes personal life discipline, financial discipline, how you handle your money and discipline when it comes to buying bigger items for yourself. I remember the first thing I told my wife when we started the company, I said, “For five years we’re not buying a house. I don’t want to even talk about buying a house for the next five years.” We had the money, but I decided to invest 100% in the business. That took discipline. It wasn’t easy, because we could afford to buy a house. Discipline is also coming in and working after a big victory. After something great happens, you want to say, “Oh, man, I am King Kong.” But you have to be disciplined and every day come to work. I can’t tell you how many people say, “Well, you know, I don’t come to work. I work from home.” Really? If you want to be a four-hour workweek, and that’s your MO, it’s all good. I don’t know who you want to be. I’m talking to people that want to build some companies. I’m not the guy for the four hour workweek audience. When I say entrepreneur, I mean somebody that starts a business with employees and there’s a product involved that we’re selling. The product is not a book or a video on YouTube for me to make money with. No, there’s a real, legitimate business that we’re running.
You have to be opportunistic. What is opportunistic? Look at industries that have problems. Don’t be like everybody else. You know, I got involved in an industry that nobody wanted to touch. I’d ask my friends what they were doing, and they were all doing cool, sexy things like starting a startup for online dating, or making a cool app. And what was I doing? Selling life insurance. And all of a sudden, everybody disappeared. You see, but I love it. It drives people crazy, doesn’t it? Like even right now some of you are asking, “Pat, what do you sell?” I chose to be part of the life insurance industry. Here’s why. The industry needed help. Nobody was wanting to revolutionize this industry that’s been doing business as usual for the last 40 or 50 years. And we have disrupted the industry. And we’re okay with that. We were opportunistic. We saw an opportunity, and we said, we’re going to make a difference in this industry. It’s benefited a lot of people. You’ve got to figure out a way to be opportunistic.
Listen in here for the important role luck plays in building a billion dollar company.
#10: Long-Term Thinking
You can’t just think about right now. If you want to build a billion dollar company or a 100 million dollar company, you have to think long term. You can’t just say, “I’m going to be a millionaire in six months. I’m not saying it’s impossible. It does happen. There are exceptions. Michael Jordan jumps 49 inches. I can do calves and quads for the rest of my life and I’ll be lucky if I can jump 24 inches. I’m not jumping 49 inches. But the point I’m trying to make to you is this. If you think long-term, and you’re constantly improving and adjusting, you are eventually going to have a shot at the big times, if you do your part.
#11: Lots of Battle Scars
You’ll have a lot of battle scars that you have to handle. Now here’s the difference between battle scars. Some will heal, some are healing, and some may never heal. You have to know about battle scars. When you go into the ring, and you decided to go at it with some fighters that are also pros, you’ll have somebody who’s going to punch you. You get a scar, and that one heals. Then you get hit again, and boom, that one takes a couple of weeks to heal. And then sometimes you get hit and never completely heal. In the world of business, you’re going to have to slay a lot of dragons. In the world of business, even if you’re a middle weight, you’re going to have to face some with heavy weight battles. You may have to go up against guys twice your size, and you have to be able to hang with them. That’s the big boy and the big girl club. It’s not the friendly ward. The negotiating rooms are not nice and friendly, asking how you and the family are doing. No, it’s about how much money is this going to make us. You have to be able to hang in those rooms.
#12: Not About the Money
And last but not least is one that’s confusing for most people. It cannot be about the money. Crazy, huh? It cannot be about the money. If it’s about the money, you’ll stop at some point. Then what? Then there’s emptiness. It has to be about improving something, about a vision, changing something, or correcting an injustice. It has to be about finding a way to fill a need.
Two Book Recommendations
I have two books that I want you to read. The first one is by Andy Grove, Only the Paranoid Survive. I’ve recommended this book in a couple of videos in the past. It’s an older book, and some of the concepts and stories are older. But you have to read it. The higher you go, the more paranoid you have to be. Because when you have success, sometimes you’re so confident and you believe in yourself and then all of a sudden you’re Mike Tyson facing Buster Douglas. And oh my gosh, you just got knocked out. Here’s why. Because at this level, everyone’s a pro for a reason. You’re facing professionals, and you need to be ready for it. The other one is called Competitive Strategy by Michael Porter. He’s a Harvard professor, and has good content.