How to become a tech billionaire
People create startups for a variety of reasons. They might have a burning desire to solve a problem, they’ve come up with something innovative that they want to commercialise or it seems the logical step from what they were doing before. It might even be an accident of being in the right place at the right time.
Obviously you’re not going to put your heart, soul and every waking hour into a startup unless you want it to succeed. And one measure of success is money – how much is the company worth, and what is your personal reward for your blood, sweat and tears along the way.
So it is interesting to look at the latest Forbes list of the world’s richest people, which has just been published. The good news is that tech and telecoms dominate the rankings – but the bad news for entrepreneurs is that it takes a lot of time to become a billionaire.
Overall the richest man in the world is Mexican telecoms tycoon Carlos Slim Helu, worth a whopping great $73 billion. To put it in context that’s more than the gross domestic product of many countries (for example Azerbaijan’s GDP was $63bn in 2011).
Following Slim Heddu is Microsoft founder Bill Gates with $67 billion (enough for Azerbaijan and loose change) with Oracle’s Larry Ellison also making the overall top 10. But all three of these are either long established companies (Oracle, Microsoft) or seized an opportunity (mobile phones in the case of Slim Heddu), rather than tech startups.
You have to delve further down the charts to find Google co-founders Larry Page and Sergey Brin (only $23bn and $22.8bn) respectively. In fact they are followed in the tech list by current Microsoft CEO Steve Ballmer ($15.2bn), showing that you don’t need to start a company to benefit from its growth. And despite the travails of Facebook’s stock price Mark Zuckerberg is still worth $13.3bn, but at 28 is one of the youngest names on the list.
So from studying the rankings, what do you need to look at if you want to join the Forbes Tech rich list? Here are a few tips:
- Cross the chasm – none of the top 10 are particularly innovative, but the majority have achieved mass market appeal very quickly (with the exception of Oracle which has used its muscle to hoover up the B2B competition)
- Keep it at it – billionaires might have not invented things, but they’ve focused on execution and have prepared to invest for the long term to drive growth. Perhaps this long term focus explains the lack of tech UK leaders in the upper echelons of the list, In fact the highest UK representative is the Duke of Westminster. And it is difficult to get more long term thinking than a peer of the realm that owns huge swathes of central London.
- Look at emerging markets – Latin American mobile telecoms has skyrocketed over the past 20 years, propelling Slim Heddu to the top of the list and there are a large number of billionaires linked to the BRICs countries where they’ve used technology to revolutionise people’s lives
- Flotation is just the start – lots of startups (particularly in the UK) look for an exit through flotation or more often a trade sale. As the rise of the fortunes of Gates and Ellison show a stock market listing was used to increase investment in the company rather than sell up.
- Deliver something scalable. You can’t build a billion dollar organisation selling people’s time (ruling out my PR company joining the Forbes list anytime soon). You need a product or service that provides economies of scale as you grow – software or telecoms being perfect cases in point. The more copies of Windows sold the greater the profits per copy as development costs are spread more thinly.
Don’t set out to be a billionaire. Everyone wants to be rich (even if, like Bill Gates, they then use the money to fund charities and education) but I doubt anyone set out with the specific goal of becoming a billionaire. Develop your idea, be innovative, appeal to a large market and deliver on your promises and (with a bit of luck) success will come – even if it takes some time. And of course for anyone that follows my advice and hits that billion, I’ll take a very reasonable 1%……………….