There are over 3000 billionaires in the world today and not a single one of them achieved that status because they were frugal or they cracked the code as a super saver. They all got there by becoming business rich.

In fact, the founders of these 10 companies achieved billionaire status in less than 4 years:

1. Binance

2. Priceline

3. Global Crossing

4. Groupon

5. Snapchat

6. Didi Chuxing

7. ebay

8. Amazon

9. Facebook

10. Pinduoduo

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Now, none of them are particularly special. But they did understand certain wealth creation fundamentals, like business returns and business value creation. So what could you do if you had the same wealth turbocharger information?

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A review of business returns

To review: the foundation of business returns lies in distributed cash or dividends, plus 3 sources of cash flow per share growth. (Cash flow growth from 1. Sales 2. Reinvested Free Cashflow, and 3. New Stock Issuance).

You estimate investor returns by adding the dividend yield to the combined cash flow growth per share sources.n And that’s just the start. The magic starts to happen when the four foundational return sources begin to exceed investor return expectations. But what might investor return expectations be?

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Estimating investor return expectations

To estimate investor return expectations, I start with the major stock indices. The S&P 500 Index includes 500 of the largest companies listed on stock exchanges in the United States. Collectively, this index represents 80% of the total market capitalization of U.S. public companies. From 1928-2024, the value of the index grew at a compound annual growth rate of 6.2%, but that excludes dividends.

Assuming you received dividends and invested them back into the index, your returns would rise to just over 10% annually.

Now, what about broader stock market performance?

The Russell 2000 was launched in 1984 and is composed of U.S. based smaller capitalization stocks representing about 7% of the total market capitalization of U.S. public companies. That index realized an annual rate of return closer to 8% between 2000-2025 assuming reinvested dividends.

As a three time public company president and CEO, based on the long term performance of the S&P 500 and Russell 2000 indices, I came to the conclusion that the long term cost of our equity was in the area of 8-10%. For sure, that’s adjusted daily. The problem is that when you build a business model, you can’t think in terms of “daily.” That’s because business models can’t be in constant flux. So you have to be thinking longer term.

For me, that meant that if we could realize returns in the area of 8-10%, chances are that our equity would be producing a nice rate of return, but our businesses would not be producing a value above what it cost to create. But, if we could do better than 8-10%, then our equity would be worth more than its creation cost. And the goal was always to do this to the best of our ability. 

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The wealth turbocharger (aka the 5th source of business returns)

Let’s look at a hypothetical scenario:

We’ll say our target total annual investor return is 9%.

There are plenty of ways to arrive at this 9% rate.

1. You could have a dividend yield of 3% + share price appreciation from your 3 cash flow growth sources of 6%

2. You could have no dividends at all, and just 9% annual per share cash flow growth rate

3. You could have other combinations of dividend yield and growth rate that add up to 9%

Now, let's say the total of your dividends and growth sources were to total 36%. That’s 4 times what a typical long-term stock investor would expect to make. In that case, you might say you have an equity valuation multiplier of 4x.

This is the fifth turbocharging source of business returns. Basically it’s cashflow multiple arbitrage which is what catapulted the richest Americans to becoming billionaires on the Forbes 400 list. The higher the equity value multiplier and the bigger the company, the greater the turbocharge. The world’s greatest personal fortunes virtually all came from having large personal stakes in companies that address large markets offering outsized cash flow per share growth potential. 

The result? Meaningful equity valuation multiplier. 

But it’s not always about this number alone and sometimes the billions can add up more slowly. 

Case in point: Walmart.

We’ll get into that case study in the future.

If you can’t wait, head to my YouTube channel, or grab your copy of The Value Equation now.

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