Making money is weird. If you ask a billionaire like Mark Cuban or a venture capitalist at Sequoia, they’ll tell you that the physics of wealth change once you cross a certain threshold. But most people talk about the first million. That’s the classic milestone. Honestly, though? In today’s economy, a million dollars is a retirement fund, not a "machine." The real shift—the point where the gravity of poverty or "middle-class-ness" finally loses its grip—is much higher. Usually, the first 20 million is always the hardest part of the journey because you're fighting against a system designed to keep you small.
Think about it. When you have zero dollars, you are trading time for money. That is a linear equation. You work one hour; you get twenty bucks. To get to that first 20 million, you have to break the link between your presence and your profit. That is a brutal, exhausting transition that kills most businesses before they even get off the ground.
The Brutal Physics of the First 20 Million
Why 20 million? Why not five? It's about the "Critical Mass of Capital."
Charlie Munger, the late partner of Warren Buffett, famously said the first $100,000 is a "total bitch." He was right for his time. But inflation and the scaling costs of modern technology have moved the goalposts. When you are aiming for that 20-million-dollar mark, you are usually in the "messy middle." You’re too big to be a nimble one-person show, but you’re often too small to have the massive institutional advantages of a Fortune 500 company.
You’re paying for office space, or massive AWS bills, or a team of twenty people who all expect health insurance. At this stage, your overhead is a monster that eats your sleep. You’re likely reinvesting every single penny back into the company. You might be "worth" 10 million on paper, but your bank account has less cash in it than it did when you were a freelancer. This is the valley of death. This is why the first 20 million is always the hardest; you are essentially a professional firefighter, and the fire is your own ambition.
The Friction of Being "New"
Nobody gives you the benefit of the doubt when you’re small.
Banks don't want to lend to you. Top-tier talent doesn't want to work for you because you might go bust in six months. You have no "brand equity." You have to prove yourself every single day. This creates a massive amount of friction.
Compare that to someone who already has 100 million. They get "deal flow" just for existing. People bring them opportunities. Banks beg to lend them money at 2% interest. When you are scraping for your first 20 million, you are paying the "poverty tax" of business—high interest, high turnover, and high stress.
Psychological Barriers and the "Skill Gap"
It’s not just about the money in the bank. It’s about who you have to become.
To go from zero to one million, you need to be a doer. You need to be the person who can grind out the work. But to go from one million to 20 million, you have to stop doing. You have to start leading. This is a psychological pivot that most founders fail. They can’t let go. They micromanage their way into a plateau.
Learning to Lose Money to Make Money
It sounds counterintuitive, but reaching that 20-million-dollar valuation or liquid net worth requires a stomach for loss. You have to hire people who are smarter than you and pay them more than you take home.
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I remember talking to a founder in the SaaS space. He was stuck at 2 million in annual recurring revenue (ARR) for three years. He was terrified of the first 20 million is always the hardest reality because it meant he had to stop being the lead developer. He had to trust a stranger with his "baby." Once he hired a real VP of Sales and a CTO, his growth tripled. But that first year of paying those salaries? He lived on ramen again.
The Institutional Advantage (Or Lack Thereof)
Let's look at the numbers. According to data from the Small Business Administration (SBA), about 20% of small businesses fail in their first year, and 50% fail by year five. But if you look at the "scale-up" phase—companies trying to move from 1 million to 50 million—the failure rate is surprisingly high because of "premature scaling."
When you’re chasing that first 20 million, you’re often competing against incumbents who have:
- Established supply chains.
- Political connections.
- Deep legal moats.
- The ability to outspend you on customer acquisition for years just to put you out of business.
You are the underdog. Everything is uphill.
Why the Second 20 Million Feels Like a Breeze
Once you hit that 20-million-dollar mark, something magical happens. It’s called "Compound Interest," but not just the kind you see in a savings account. It’s compounding of everything.
- Network Compounding: You now know people who know people. Your phone calls get returned.
- Trust Compounding: You have a track record. Investors see you as a "safe bet."
- Capital Compounding: If you have 20 million dollars invested at a conservative 7% return, you’re making 1.4 million dollars a year just for waking up.
That is the tipping point.
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When you have nothing, you have to push the boulder up the mountain. It’s heavy. It’s slow. Your feet slip. But 20 million is the peak. Once you’re over that ridge, the boulder starts rolling down the other side. You aren't pushing anymore; you’re just trying to steer. That’s why the first 20 million is always the hardest—it’s the only part of the journey where you’re fighting gravity.
The Role of "Luck" vs. "System"
We love to talk about hard work. Hard work is a prerequisite, sure. But systems are what get you to 20 million.
Early on, you survive on "heroics." You stay up until 4 AM to fix a bug. You personally drive a package to a customer. That doesn't scale. To hit the big numbers, you need a system that works while you sleep. Most people never build the system because they are too addicted to being the hero.
Real World Examples: The 20 Million Threshold
Look at the story of Spanx founder Sara Blakely. She started with $5,000 and a pair of scissors. For years, she was doing everything—selling, marketing, even stocking shelves herself. The grind to those early millions was legendary. She was turned down by every manufacturer in North Carolina.
But once the brand hit a certain scale—once it became a household name—the growth didn't just stay linear. It exploded. Why? Because the "hardness" was in the foundation. Once the foundation was set, the structure could go as high as she wanted.
The Mid-Market Trap
There is a specific danger zone between 5 million and 15 million. Experts often call this "The No Man's Land" of business. You're too big to be "niche" but too small to have "economies of scale."
- Labor Costs: You need middle management, which is expensive and doesn't directly produce "widgets."
- Complexity: The communication overhead increases exponentially. With two people, there’s one connection. With ten people, there are 45 connections.
- Compliance: You suddenly fall under new tax laws, labor regulations, and reporting requirements.
Navigating this complexity is why the first 20 million is always the hardest. It's a test of operational excellence, not just a good idea.
How to Actually Get Through the Hardest Part
If you're currently in the trenches, it feels like it will never end. It will. But only if you change your strategy.
You cannot "out-hustle" the 20-million-dollar mark. You have to "out-think" it.
Focus on High-Leverage Activities
Are you still checking the company Twitter account? Stop. Are you still interviewing entry-level interns? Stop.
You need to focus on the three things that actually move the needle:
- Strategy and Vision.
- Hiring "A" Players.
- Ensuring there is enough cash in the bank to keep the lights on.
Anything else is a distraction that keeps you stuck in the "hard" phase.
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The Power of "No"
When you’re starting out, you say "yes" to everything. You take every client. You chase every lead.
To get to 20 million, you have to start saying "no." No to bad clients. No to "distraction" projects. No to "coffee chats" that don't lead anywhere. Success is a result of focus, and focus is a result of elimination.
Actionable Steps to Scale Past the Hard Part
If you want to break through that 20-million-dollar ceiling, you need a plan that isn't just "work harder."
- Audit Your Time: Spend one week tracking every 15-minute block. How much of your time is spent on $20/hour tasks? How much on $10,000/hour tasks (like strategy or high-level sales)? Shift the ratio.
- Build Your "Second-in-Command": You cannot scale alone. Find an Operations person who loves the details you hate.
- Watch Your Unit Economics: If it costs you $10 to make $11, you will never reach 20 million without a massive infusion of outside cash. Fix your margins before you fix your marketing.
- Invest in Infrastructure Early: Don't wait until things break to buy the better software or hire the better lawyer. Technical debt and legal debt are the silent killers of the 20-million-dollar dream.
- Mental Fortitude: Understand that this is supposed to be hard. If it were easy, everyone would have a 20-million-dollar exit. The difficulty is the barrier to entry that keeps your competition away.
The journey is long. It's often lonely. But once you realize that the first 20 million is always the hardest, you can stop wondering why it feels like such a slog. It’s a slog because you’re building the engine. Once the engine is built, you get to drive. Until then, keep pushing.
Focus on building a business that doesn't need you. That is the only way to reach the point where the money starts making itself. Optimize for systems over sweat, and eventually, the physics of wealth will start working in your favor instead of against you.