How to become a millionaire in 3 years?

This was originally a comment made in response to a hacker news thread titled:  Ask HN: How to become a millionaire in 3 years? 

The comment has over 200 upvotes, which means people found it useful. I decided to add more thoughts, refine existing ones, and put it in a permanent place. This is just my own humble advice and I hope it’s useful for entrepreneurs.

I move forward the only direction
Cant be scared to fail in Search of perfection

-Jay-Z, On To The Next One

I’m going to go and replace 3 years with a “short time frame”.

Market opportunity

A million dollars is not a lot in the grand scheme of things, but it certainly is a lot if the market opportunity is not large enough. Even if you put Bill Gates and Steve Jobs as founders in a new venture with a total market size of 10 million, there is no way they could become too wealthy without completely changing the business (ie- failing).

Inequality of information

Find a place where you know something that many undervalue. Having this inequality of information can give you your first piece of leverage.

Leverage skills you know

You can go into new fields such as say Finance, but make sure you’re leveraging something you already know such as technology and/or product. Someone wanted to start a documentary with me. I said that would be fun, but it would be my first documentary regardless of what happened. There was a glass ceiling due to that. If I do something leveraging a skill I know, I’m already ahead of the game.

Look in obscure places

We’re often fascinated with the shiny things in the internet industry. Many overlook the obscure and unsexy. Don’t make that mistake. If your goal has primarily monetary motivations, look at the unsexy.  One example would be email newsletters, which I’ve profiled before.

Surround yourself with smart people

Smart people who are successful usually got there by doing the same and have an innate desire to help those do the same. It’s the ecosystem that’s currently happening with the PayPal mafia and can be traced all the way back to Fairchild semiconductor.

Charge for something

Building a consumer property dependent upon advertising has easily made many millionaires, but it isn’t the surest path. It takes a lot of time and scale, which due to cash flow issues will require large outside investment probably before you are a millionaire. Build something that you can charge for.  That’s how business has worked for thousands of years prior to the 1990s.  Make something, charge for it, repeat it.  DHH explains this really well at Startup School 08.

Information Products Are Valuable

E-Books, screencasts, And anything that can teach others to be good at something is a very lucrative business.  Look at guys like Peepcode… they’re killing it.  There are also things like Parrot Secrets, which make $400k a year.
Bonus points if the information helps a person make money (directly or indirectly) or improves their self image.  Fyi, this doesn’t mean sell snake oil ebooks.  That may get you a somewhere in the 5 figures, but word will spread that your shit smells.

Your primary metric shouldn’t be dollars

If you’re going after a big enough market and charging a reasonable amount, you can hit a million dollars. Focus on growth, customer acquisition costs, lifetime value of the customer, and churn.

 

Get as many distribution channels as possible

 There is some weird sense that if you build something they will just come. That a few “like”+retweet buttons and emails to editor@techcrunch.com will make your traffic explode + grow consistently. It won’t. Get as many distribution channels as possible. Each one by itself may not be large, but if you have many it starts to add up. It also diversifies your risk. If you’re a 100% SEO play, you’re playing a dangerous dangerous game. You’re fully dependent upon someone else’s rules. If Google bans you, you will be done. You could easily replace the SEO example with: App store, FaceBook, etc.

Go with your gut and do not care about fameballing

Go with what your gut says, regardless of how it might look to the rest of the world. Too often we (I) get lost in caring about what people think. It usually leads to a wrong decision. Don’t worry about becoming internet famous or appearing on teh maj0r blogz. Fame is fleeting in the traditional sense. Become famous with your customers. They’re the ones that truly matter. What they think matters and they will ultimately put their money where their mouth is.

Be an unrelenting machine

Brick walls are there to show you how bad you want something. Commit to your goals and do not waver from them a one bit regardless of what else is there. I took this approach to losing weight and fitness. I have not missed a single 5k run in over a year. It did not matter if I had not slept for two days, traveling across the country, or whatever else. If your goals is to become a millionaire, you need to be an unrelenting machine that does not let emotions make you give up / stop. You either get it done with 100% commitment or you don’t. Be a machine.

If it’s a mass market “trend” that’s all over the news, it’s too late

This means the barriers to entry are usually too high at this point to have the greatest possible chance of success. Sure you could still make a lot of money in something like the app store or the Facebook platform, but the chances are significantly less than they were in the summer of 08 or spring of 2007. You can always revisit past trends though.  Peter Cooper and I clarified some of the semantics about what is a trend over here.