Sal Buscemi: Investing Strategies the Ultra Wealthy use that YOU can use too...

Explore the world of how the ultra wealthy invest with fund manager Sal Buscemi, a renowned author and expert in various asset classes, in this episode of "The Gould Mine."  Sal's journey led him to start his own fund by age 30. His story is not just about skill and maturity but also about creating a strong track record and learning from Wall Street legends. 

Sal shares his belief in the parallels between investments of the ultra-wealthy and accessible options for everyday investors, even at smaller dollar amounts. He emphasizes the importance of preparing for the inevitable financial recessions and aligning with experienced, ethical sponsors. He offers a unique perspective on the motivations driving financial decisions, highlighting the often-overlooked role of envy.

In this episode, Sal also dives into the art of fundraising and the significance of strong partnerships in managing investments, particularly in life sciences. He underscores the importance of trust and reliability in partners, using the lens of whether you’d trust them with investors in your absence.  This episode truly is a masterclass in investment strategies and in creating successful partnerships.


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Transcript

•  What's up gold miners in today's episode. We welcome Sal Buscemi an investment adviser to the ultra wealthy. Sal runs both a private Equity Firm as well as a family office and in today's episode he shares the investing secrets of the ultra wealthy. We go deep into the tactics on how someone like yourself can Elevate their Network and start getting access to better deals. He also goes over how he makes investing decisions and how anyone can take that same. Discerning lens that the ultra wealthy use to look and inspect at their own investing decisions and their own investing strategies. Sal is a renowned author and a true investing expert across a myriad of asset classes and it really is a privilege to be able to sit down with him today. So without further. Ado everyone welcome to the show s buete. Sal yes welcome to the gold mine thank you for having me. It's a pleasure and a privilege well. You know I've uh watched you online now for a couple of months and I've been. I've been you know carefully observing and and I know that you and I uh share a similar path. We were both Premed and then very much uh on the medical path and then all of a sudden yes boom. Hard left right so what what inspired you to make that pivot and and change career trajectories. It's interesting. It was visceral. There's a couple things that was happening at the time and I'll tell you. It was the summer before my senior year and one of my father's friends gave me a book that was written in 1977 and here I am reading it in you know in the late 90s and the name of it was Confessions of a medical heretic and he just it was um. I can't remember the author but it's still available on Amazon because I bought a copy for a friend who was thinking also of going to medical school and it was at the time it seemed like that was the you know the ultimate sophistication and and what happened was to be honest with you. Danny is that during my internship I actually passed out holding a fibula in the kadav room at Beth Israel Hospital in New York City which is now since converted to condos and at that point I realized that um maybe this isn't really the you know the the the profession for me and I might have to Pivot and that of course you know back in those days. We we graduated in four years. Kids today graduate in what seven five 10 so they undergraduate right. So I crushed 24 credits my senior year first semester and then 22 you know afterwards and I got to tell you like you know it was kind of hard because I was going along with the punches and I'm thinking to myself like gosh. I don't want to wind up in a master's program or a PhD program. So um I do write about it in my book which I'm going to give a free copy to your listeners to on Audible um a little later at the end of this I'll tell them how they can do awesome um but you know it was really what came to. It was the networking and um it was. It was very fortuitous because of the fact that this doctor that I worked out for before my head hit the Cole's floor in the hospital in the Cav room I was championing him. I mean I would do anything I put him on a pedestal um. He had a beautiful wife. Joseph and Aston Martin lived in the same building where um uh glor of vender built is on the Upper East Side way over where you know Gracie Mansion is and actually I moved there shortly after college because I love that area so much and it reminded me of just you know good times over there. However um the problems were that I don't. I did not want to do this and he and I had a very Frank conversation after I spoke and he said 'l um I just want to tell you my brother. Just made partner Goldman Sachs. I told him about all the great work you've done for me. I think you have great character. I didn't even know what the hell. This was at this point and I said okay great you know I'll do that so that became a you know a different uh life lesson and really the biggest life. Lesson was that and it's mentioned in the book is that you know a doctor can put up a shingle on Park Avenue and C come in but when you're selling ideas as an investment banker you know advising on um. You know any any sort of financial transactions. He and an it's more sales and that's what a lot of people understand so um. It was interesting you know to get that standpoint and that that context from him and really sort of set the table of you know other things as it relates to um. You know later on managing money professionally for some of the world's top families so that was gold that was chapter one right uh kind of getting into the uh getting into Investment. Banking Golden Sex You Now run a family office so like what were the what what was the what were the steps in that journey. Of course so I I went through some personal issues um I lost my father when I was working at Goldman Sachs at the age of 24 and I promised to myself and he was 56 at the time and I'm like wow that's young. It was a heart attack and um so I made a promise to myself that I would um don't you know what anybody does on Wall Street. They eventually if they're worth their own salt or try to they raise an Institutional fund and so I said I'm going to start my own fund by the time I'm 30 and that's exactly what I did at the age of 29. It was fortuitously time to be honest with you Danny because what had happened was was the Advent of the great financial crisis of 20078 and we basically raised money to buy the kitchen sink from fa Sterns buying the whole loans. Not the synthetics not the stuff that you saw in the movie with um you know The Big Short um just the whole loans and this was collateralized by some rough product in Middle America to luxury homes in Las Vegas and Southern California to um even apartment buildings and it was. It was great because you know. I had the skill set to be able to do that and you know at the beginning when you're when when you're when you're getting into this. It's like you're you're being tested if that makes sense because 29 is Young. I mean it's young and look back now you know we seated some firsttime Founders who are mature beyond their years and that's exactly what we want when we done that we've had success uh with one of them actually being the youngest team to get FDA approval for their device for artificial defibulation but really what it comes down to everything is is that um it was the you know the track record I had with that and then another fund that we started I actually moved out to Las Vegas. I was following a um. You know one of the you know Legends on Wall Street Steve vuch and he had bought Indie.
•  MAAC and Irvine Irvine was the Alpha and Omega for all exess during this time that's where we got the real Housewives of Orange County because of the conspicuous consumption and everything that was during the time when these mortgage brokers and and Realtors were making a lot a lot of money um and of course that backfired when people just couldn't sit and refinance their homes. Every six months so um we me because of my background in real estate and mostly being on the distressed or value side. Not like value added side um. I raised a lot of money to insulate some investors into things into um what called um Broadline retailers sort of like a CVS if that that makes sense but you know in Middle America and I was out bit on this and I wound up having to get a lot of money back and a lot of the families that I had been investing with um. You know on these independent like syndication type of Deals. They what are you going to do now and I said well you know in New York. One of the families that supported me is a life-sized family. He's very very well known very well connected has had multiple exits and he said why don't you turn your guns on me and it was interesting because a lot of the real estate families all had way to Life Sciences through philanthropy right uh poorly managed philanthropy. Very expensive I mean you know the these are like you know people making like as much you know running. These op you know these these foundations sometimes as like you know Wall Street Bankers or CEOs right and so you know it's. It's not always an alignment of Interest with the benefactor and the you know and the philanthropy. So when we showed these investors that they could invest 100 cents of the dollar to the you know directly with with their discretion into these worldclass companies it became um it. It became you know an enlightening point to them because now they could say okay well. This is great you know I'm getting involved in something else. I'm able to build a legacy. I'm able to more importantly join Sal's community of lakem minded you know families who are doing the same thing and that's really what I think a lot of people are looking for today with the families is is the interactivity um and it's probably a very long way of answering your question but um you know it started out with with me seeding a few deals um that did really really well um and then U starting a smaller balance Venture fund and then after that um moving into hrn which is with I'm with my two partners uh both of which have very strong pedigree experience in life sciences um at 26 my partner Albert Yan was managing six billion in life sciences for the Rockefeller family and he did that for a decade my other partner bill workm at the age of 26 was head of life. Science is investing for the Texas state P tension uh Texas State Pension um program so you're dealing with very high caliber people with a very high caliber Network where we're able to get into these opportunities and you know the saying I use is. MCO or elephants can't and sometimes you know we don't lead these Investments. But you know if they're started by rock stars. We've had multiple exits and they you know they have a cap table which I consider to be the sole of the asset which is other in kind lead families. Then that's definitely something and someone who I want to work with. So um you know we've built our family office around that and it's worked out very well so far yeah that's awesome and it sounds like a very organic growth into the into that so it wasn't like oh one day. We're just all deciding to like start this family office. It sounds like there were several steps syndications first and then eventually gradually growing into that by the way for anyone who's listening at home. Right. Now that is unaware of like what a f there are many people still don't know what this is so could you give like a like a like a very brief description of what a family office is and and and the objectives of a family office yeah. So family office is a term that's been abused now just like hedge fund was during the 2000s and um it a lot of it is used by people who are Ras and what we call you know sell-side people and drag trying to sell stuff and the family office is the opposite. It's the buy side okay and it is the um you know it to me. You have to have a you know and this is just you know Wall Street parlament. You have to have a minimum of a $100 million in investable assets okay that's not including your house but investable assets and because it costs money to run and manage. These Investments and these families don't necessarily put all their money into stocks. Like Warren buset. They put them into privately held um opportunities what we call Direct Investments because it gives them some level of control discernment um and and and it's actually to them. It's much more safer because they can negotiate the terms and control the deal. We like it um because you know there's real value there and it allows us to you know get ahead of the curve and invest in things that are not public that are not going to be abused because you know the public equities Market is just to me. It's just it's very difficult to to Really Turn a dollar that day you know these days you know doing that if you if you're if you're running like some sort of a fund or something the I think it's just a little too high right now and with the Advent of some of the other opportunities that have come um. We put together a specialized structure so that our investors can invest into these opportunities at their discretion and it's great because it doesn't allow me um to have the risk of having what we call an IR clock to my head which means you know once you take on someone's money. You have to get it out there and get it working if it's just sitting in treasuries or cash equivalence. You're not doing anyone any favors and you're definitely not building trck record for yourself so we structure it more like a call fund with agreements with the families and um you know some of the things that we've been able to do was. We got into SpaceX um in August because of you know the success we had on other opportunities. But we were able to move fast with that and I think if other people had like a fund structure or other types of structures. They probably wouldn't really have been able to have moved that fast but we were able to do that because we were you know when we were putting this together. Legally structurally with Perkins Koy we wanted to make sure that this was built for Speed and discretion so someone listening at home right now that isn't ultra wealthy and you know statistically speaking. That's most people. Uh that that are listening to this call right now are listening to this podcast. We're going to really go in depth here in a little bit into into some investing strategies and everything like that so for those that are listening that that don't fall into the category of ultra wealthy can't use your services why should they listen to you. I think that there's um correlations between what we're investing into and what they can invest into at a smaller dollar. Amount. I you know and and I'm prepared to you know share those strategies. I think when it comes to multi family syndications. I've been very vocal on certain aspects of it and it really comes down to the function of your network. Right. You're only going to see opportunities as a function of your network. And if you're a dentist or you're a lawyer or you're an airline pilot. You're not seeing anything that's outside of your network. From you know a guy like me who sees the stuff all day. It's just not part of your job. So by the time you see it you know it might be good. It might it probably isn't good is least having you know quality and so that's what it is is really you know susing out your network to make sure that you're able to see these opportunities. The way they are.
•  Everybody's got a stock tip and you know it was it was interesting because during the whole pandemic a lot of people were just you know it became very transactional with people pitching Bitcoin and a lot of sast money and everything like that. But if you're a founder or you're looking to raise money or looking to Syndicate money for yourself into opportunities. I would say you know I would I would follow you know when it comes to real estate. Danny I would I would follow these three rules and this will help you a lot and I can tell you when the next great financial you know recession comes whenever it is you're going to come out looking clean and that is is that you want to pick sponsors. You don't want to do it. Yourself. You want to pick sponsors who you can raise money around who have uh the three rules that I'm about to tell you number one. I want them to have a strong trap record meaning. I want them to have been through at least two cycles. Danny um 2008 was one. This one hasn't really started yet you know there hasn't really I mean that's going to you know we'll see the pain of this within the next 12 months. But I want them going back to when I started in like the mid 90s okay because these are the guys that have the the intestinal fortitude the value system and the ethics proven to be able to get themselves out of problems. You know whether that's negotiating with lender. There's more to this business than operating a spreadsheet and I think a lot of people get that wrong number two is I want to see that they have audited financials. If their track record so good pay to have them AIT it honestly. It should be like your Super Bowl ring. You know you should be minting it for yourself if you do have that success and the fact that you're not doing that you know is going to you know some investors won't ask the hard questions but in order for you to level up guys. Me are going to ask for the hard questions but that insulates you as an investor and then third I want to see strong sponsor co-invest. A strong co-invest get in the game 5% is cute. 10% is thoughtful anything. More Danny provides conviction and that's you know some of the deals we do. The family puts in one family will put in 50% and hrn will come in with the other 50% and you know that's just a an idea of. How we structure these we're Equity investors but that's how we play the game to insulate ourselves from risk especially in real estate. It makes a lot of sense and so there's there there's actually quite a bit to unpack there. Let's go back before we go into the what you just said let's go back. A little bit you talked about the physician and the attorney that you know by the time they see the deals there. They're probably not that great of a deal right so so how does one level up their Network because obviously like there's different there's a a variety. There's like there's like tears to this right but like investing in space might not be a a practical or or even possibility for most people. But like for example real estate deals M uh how would one level up their Network to the point where they are getting access to Great. Real estate deals you got to take your network seriously in order to do that you got to invest in it and not every you know a lot of people like to do things for free especially when they're starting out but the problem is is that anything you do in life. That is a low barar entry usually attracts similar people who you know are low buried entry or you know not necessarily. The people who you might want to invest in for the first time. So I put a big emphasis on just going to Industry conferences if I'm in real estate and I'm looking to do multif family syndication. I'm going to pay to go to an event somewhere wherever it is um to go to that conference to meet the real people to qualify the way that I just told you how how we did. This um you can also find other investors there but there's a pay-to-play element here that a lot of people are very reticent to use because they're like well. I don't have that much money to do or anything like that just go out and meet people outside of your profession who are on doing these syndications who are doing these types of real estate deals. At these industry conferences. Imn is one of them I speak at a lot of those and then there's also family office conferences too. Ione. Iyf n.com is another one uh for family offices and you're really now sort of around the people who um have a lot more more experienc than you because they've been doing this for so long whereas if you're not in the profession the only thing you're hearing and I see this with doctors. All the time is you know one. Guy is a great anesthesiologist um and people respect him but then he starts getting into Bitcoin and people start following his traits you know it's not. It's not really commencer with a skill set and then you know but everybody has that need and I think you have to fight the need to get rich quick. I think the biggest thing you could do really if you were to look at you know wanting to get into this how you would add value in the most. Discerning way is to build your network and to build your network with quality people and even using LinkedIn because everybody uses LinkedIn if you're not using Linked. In you're weird you know in this business you know nobody's going to show you anything because nobody knows anything about you if they don't know anything about you even as an investor why would they trust you right. So I mean when we on board a family. There's usually a warm introduction. But then I ask a battery of questions because I want to make sure I know who I'm dealing with so you know tell people and the best way also to get into it. If you can is to write a check just write a check to a deal so you can learn because you will never pay more attention to an opportunity than when you write a check because then you're going to see how everything happens. It's going to be a learning process you know the Bible says your heart is where your treasure is right so this is where you know you get to really learn by taking a front seat. You can learn a lot more by writing a check for $50,000 than you can uh going to you know a FY business school about this business by you know learning like why the sponsor is valuing it. This way you know where's the financing coming from and just asking the questions asking to follow along that's awesome so that and I think that anyone listening right now that you should probably like go back and Rewind and play that again the the the main takeaway for me. There is is like you got you have to surround yourself with the right people that are going to put you in a situation to be able to get access to those kinds of deals which makes sense in theory right but then in act like in actuality like in the real world like how do you do that so yeah networking conferences. I mean yeah and and and honestly like I can tell you the majority of the contacts that I have made uh in the hotel world have come via either LinkedIn or conferences yeah. That's it so you just named like the two that I have personally so what you're saying is 100% true and and I would concur with everything that you just said. Let's switch gears a little bit though because I I want to come back to the to the two cycles rule is it okay so I guarantee you and myself included actually so as as I'm as as I'm saying this. It's like this is a a selfish a selfish rebuttal here too okay but I guarantee you.
•  There are some people that are uh listening to this right now who are fledgling sponsors who have not gone through two cycles so and you yourself right you started your first fund at 29 now. Obviously you had like an investment banking background. So you had maybe uh like osmosis. Some of that knowledge through your peers right at at Goldman. But what would you say to a fledgling sponsor that hasn't gone through those two cycles and and and what could they do to help accelerate that and or what would your advice be to someone that hasn't really gone through that that wants to get into that game. I'm gonna say it nobody's gon to listen but I'll tell you what it is all right when you're raising. Money is the highest order of sales in the land and if you're fledging sponsor and you're just starting out. You should probably be raising money around other people's deals who are much more experienced than you are everybody needs. Capital. The second rule of real estate that all these guys figure out way too you know you know way too late in the cycle is always be raising Capital right. The first one's course location location location. Second one has always be raising capital and if you can put together systems so that you can build a network of investors to invest into properties that you probably never be able to get into on your own. Unless you were able to scramble you know a million or two together. Then you're going to be able to start out with a track record where you'll be sleeping better. At night. The problem is is that you I've seen this happen before there's a pride of ownership and an ego that goes with this and especially with you know newer people um people with a quantitative background. They think it's all numbers and as long as you know they it models out on the spreadsheet. Then everything will be okay. No it's more than that you're dealing with all sorts of issues like Banks and investors and that and if you can go out there and really be a Salesman and really learn how to sell to be able to build sort of a uh network of investors to place that Capital your discretion into things that's the most powerful role you can have starting out makes a lot of sense and actually I don't look for deals. Everybody's Got A Deal. Nobody wants that you need to the highest value. You can provide is being able to raise capital for these uh other sponsors you know and and and truthfully. I have I found that to be the case you know like there's real like the the two things well. The the the the hardest thing it seems like is raising the capital. The second hardest thing is is finding the Great Deals like the really really good deals what I would rather. I think it's easier to raise the capital really I I think finding the Great Deals absolutely let someone else find the great deals and you attach your resume to that yeah makes sense well that actually reminds me of and I'm sure that you've read. This book pitch anything by Orin CLA oh yeah yeah and and when he and and you know having been in residential or I was in residential for eight years. Uh nine years and I read that book really early on in my sales journey in my sales career and it changed everything for me. Because really it it. It opened up my eyes to you know how to really pitch or sell something but not only that it also opened up my eyes to this like whole new world of of finance and and and raising capital and that was really the first time that I had an introduction to that and one of the things that stood out to me was you know. I had always heard the commercial guys saying because you the commercial guys love to talk and they say oh yeah you know uh. It's commercial is is all about the numbers and yada yada yada. But Orin says in the book you know. It's like hey even the savviest investors they tend to make decisions investing decisions based on the like more emotional side of the brain and not necessarily. They call he calls it the Croc brain right. The Croc brain in your experience so because you you've you've dealt with ultra high net worth individuals and in your experience like are are you are you seeing that in in real life where there's a heavy emotional component to decision-making even at that level. I yeah and I'll tell you what it is is that people are. Everybody regardless has the dopamine in their system. It's just expressed differently right and the way that a lot of people like to see this especially depending on where they are like a first gen or second gen. They tend to express their status differently all right like there in my book I talk about how the Mogul you know gets the flashy Rolls-Royce. He's the first gen you know he hasn't really matured yet um. He got the brightling watch you know with bedazzled diamonds around it. So what we do is. We put an emotional component to all of our deals okay and we do that by um providing them with opportunities that will motivate them to take action. A year ago. We invested in a company called AI Scout and we're actually doing a follow on of it right now and that is a AI company that is used principally for recruiting for now soccer and soon um American football uh cricket and a few other sports. I can't think of right now offand. However one of the things we needed to do is. We had to talk to our investors during the month of August and during the month of August. Nobody wants to pick up the F and it was kind of difficult to sort of put together the flow of how this would work and how we'd be able to get meaningful interest so at the time. Fortunately one of the investors into AI Scout is the owner of Chelsea Football Club who bought it from uh Abramovich during the time where we were making the investment and he had just closed the sale and I called the CEO and I said to him. Look I got to get these people's attention um and I have an idea to do this and I said if if you can get me for each investor a personalized Chelsea Football Club autographed by the entire team. I think we'll be able to get this thing over subscribed and he said sure. So sure out and sure enough I can tell you that and and I I mean this. Sincerely. These are very sophisticated investors I you know the minimum investment for this was $100,000. The subscriptions came in so fast it was incred and the reason is is because they just they just wanted they. They knew it was a great investment and everything but the emotional part that they're able to show this off to someone in their living room you know and they live. In example you know St George Utah is quite prestigious right. It's a conversation piece of Thanksgiving people come in and say you know it's behind glass. You know like you would see at any other like sports memorabilia shop and people ask questions how do you know and so it's perceived to them and this is the emotional on it for you. Danny being smarter more sophisticated better connected and hence more attractive than your peers. Because of this does that make sense so we we actually had we're doing this actually with a company that we've already invested into with a um co-founder who's a 2018 Nobel Prize laurate and I said uh to the families if you invest a million dollar not a donation. This is an investment a hard investment principal director investment of a million dollars. You can have lunch with you and your family with Dr James Allison down in Austin. I that idea went over very very well and you know we were able to get subscribed on that and the reason is is because people want to be able to take Instagram photos to show around the holidays. You know. This is what we did this year we did something impressive. You didn't do anything as impressive as meeting a 2018 Nobel Prize winner uh and you know wouldn't you like to know the story behind this that's a fascinating take on fundraising. So it's almost like like attaching a priz or attaching a uh some sort of like what was you know like it like when you're what's the word. I'm looking for. I'm like I'm like searching for the word. But it's not yeah yeah some something in premium yep. It's an in yeah. It's an incentive that's a really interesting take and um and and it's it's simple enough. But the prestige it adds to The Prestige of of the of the investment which is really interesting. This world. Charlie Monger says this world isn't run by greed. It's run by Envy. On that same note what um you've probably so that's that's actually a really interesting um premium story. What is the most surprising emotional trigger premium whatever that prompted an investor to invest or commit to a real estate deal or any deal. Really I think that is uh.
•  The the the Jersey is one of them that's for certain uh the other one that we do and we're joining us with a company called Thrive. Bioscience is that you always want to give a premium and we. This is a company that um its founder I become good friends with we sort of started. An informal Club between he myself and my partner and the company's name is called Thrive bioscience. So what we're doing is we have fleece vest going out to all of our investors at Thrive bioscience. This will be the CEO's 15th exit and eth unicorn if he knows what he's doing and so you know people want to wear that it's a conversation piece especially if you're an anesthesiologist in La you know you wear that into the office people going to say oh. What is this what is you invest. So now you have an understanding in a story that matches the the pedigree and why we invest in Founders that you know are not firsttime. Founders that's a really interesting take. So it sounds to me. You've got so you've got the family office but you're also do so. You've got two separate Ventures am I correct yeah that's you've got the family office and then you've got like a private Equity Fund or something my own investment platform yeah called danu partners and that's mostly real estate and hrn is not real estate. Mostly life sizes and Tech you know but I also two partners in that too as well and you know. It's because of them that we have the success that we've had in these Ventures. How do you find great partners for someone. That's looking to partner up like that what how how did you do it. You have to find someone that complements your skills. But you don't want and I think what you don't want is your friend who's a CPA to be your partner because that person is never going to take risk um and it's just going to cause a riff. It's true I I you know. I see there's certain certain. You know stereotypes persist and you know accountants. You know are bored of course. They want some action but they don't like the risk right and that's the same for management. Consultants too as well um but you got to find someone who who complements your skill set in a yin and yang type of way you know. I'm very good at the you know real estate is my you know main you know Court discipline uh. However you know that's not to say that I found two partners that have the same background as I do but they're in Venture and that works really well. But I'm very good at like the the sales you know what we call the coverage banking staying on top of this and and being on top of the investors because you need to do that. This is a more interactive than you know putting your money with Franklin Templeton for example and you have to report to people so the CEO is naturally the IR person and and that's me but as far as the diligence is concerned as far as the uh um you know. Some of the fund administrative stuff that we have to deal with I have Partners who are very good at that stuff and they understand it. But it's also like what the expectations are as it relates to that relationship and I think what you want is especially if you're finding a partner or someone who's going to. Roll up their sleeves and what I was working at Goldman. They had a saying. It says you never want to let your partner down. That's the you know sort of a definition of partnership. So you know we've all gone through things. I have one partner that's going through a traumatic divorce right now uh. But that's not to say that we don't include them in things and everything it just knows that we had to pick up the slack for a little bit um through this process and you know a lot of people would get very upset about it and you need to really bury your ego. At the end of the day you need to bury your ego. I you know be very careful when people you know talk a big game about how great they are because especially if anybody sees any sort of motorri of success that you're able to show you're going to start getting people. You know glomming on to you sort to speak saying hey you know I could I would love to work with you. But you got to ask what skill sets do.
•  They have and are those the people who you ever want invest talking to an investor when you're not around will an investor trust them as much as and if the answer is no get rid of them keep them as a drinking buddy but you don't need them as a partner. Wow that is a phenomenal lens to looked at things at it's like hey if you weren't around and they're talking to an investor would you trust them. That is uh jot that one down anyone who's a sponsor or thinking about doing it. But that's a good one. That's a really really good one. Speaking of risks how would you educate investors about risk associated. You know any sort of deal without scaring them away. I have rules that if you go outside the rules what happens right. It's like skiing right when you when you're skiing down a slope of course it's going to you know there's fresh powder here and you want to go through the ropes and if you're in Europe they don't care if you die. But in America you know you have to stay within the line. So if you go outside the lines you take higher risk I the way we've diffused risk. It is a function of the Network and the network is the function of the people who trust you. Is you need to look at each opportunity as if you're investing into the person and when you're doing diligence. It's not just so much like going through and trying to figure out the market opportunity. It's do you really trust this person with your wallet and I'll tell you the two rules we look for when we invest in anything. That's Venture related as a direct invest number one I want a Founder who has had multiple exits in the case of Tom Florest far Porche. He's had 15 egit. This will be his eighth unicorn Thrive bioscience. You know and investors get you know a lot more than a free vest right second. I want to make sure that they're led by an in-kind family office remember. A real family office with a name not a cousin who um you know has like a f you know who sold his dental practice for $5 million. That's not that's just a rich guy that's not actually. It's a middle class guy. Today. It's a whole different story but that's just a guy with some money in his pocket that doesn't necessarily mean that he understands the intricacies of a life science company or the patents involved with it using Thrive bioscience. For example um the lead investors on that are large families you would know but they're both in kind because they have either created their wealth or have supported through their family offices. Other companies as such because they know that discipline well one of which happens to be uh one of the top IP families in the country. You wouldn't know this but it's uh the Parker brother family right and they were very interested in this company's IP. So you know these are the types of people that you want. I would say that you know just putting this together and buttoning it together. For you. I would say if you're investing in something find out who the other investors are. The cap. Table is really the sole of the asset and you have a bunch of $25,000 bundles there or maybe a hundred that's not really a good investment that's people who are like investing in someone they're not investing in the idea. I mean we all invest in someone but you know it's. It's a side of like having sophisticated investors that the idea is probably not something that is not attractive to them at this point not saying it won't. But I like saying that and if you and if you can really and you know I I I was actually going to write a Linked In Post on this as well. But I had a friend who went to several startups and he was asking and he went to three of them and they failed and he said why you know how come I go to these startups. I think I'm going to get options and I'm going to get rich and I'm like well if you'd listen to me and qualifi these companies before you know taking and he is a family. I don't I said you probably would have avoided this and they said number one you all of your. Founders have been firsttime. Founders okay and you know. Founders are younger and sometimes they have huge egos because they haven't been hum. They haven't been humanized sh if that makes sense and second. Not one of these companies had lead investors. They were dependent on someone's uncle or someone being a better. Factor you know paying these people so that they could do this and that's where they ran into the cash flow issues and of course if you don't have someone who comes from the same background as you do you don't have a strong enough culture to understand this to really you know to weather it and that's where the you know the friction comes it but you should really look. At these companies. You know the same way as if you were going to work for them or invest in them. Um is that you know don't be scared away just ask who the sophisticated investors are I think Shark Tank has done this country. A disservice by just saying anyone and consumer discretionary can come out with an idea. A new pen whatever you can write with it upside down. However it. It's you know it's not necessarily going to be a million dollar deal overnight. We all know a lot of those deals fail anyway because you're dealing with firsttime. Founders who are desperate right and that's never a good thing. But you know I you know we we like to also in another role is um is we like to invest in higher barrier to entry businesses right if somebody's making a pen that can be knocked off by a kid in garage or somewhere in China. How good is that product right I mean IP and all that stuff aside I mean it's a low barar to entry industry to get into i' rather be like life sizes and AI um well qualified AI that is and um you know other other circumstances where you're you're crowding more sophisticated investors. How would your lens translate. So this is that's the lens that you're looking at businesses at which is awesome. How would you shift that into identifying potential real estate deals and and what are what are the criteria or what are the what are you looking at in the deal are you just relying on the track record of the sponsor right and you're you're you're more investing into I trust. These individuals or are you actually taking or your company your family office. Taking the deal apart you know you're underwriting it yourself yeah. We're still underwriting it yeah. I mean we still underwrite it and everything. But it's gotten to the point where I know what I'm looking for right and so I I know exactly what I want. I know exactly what it looks like and it could be like compared to anyone who's looking for a particular classic car right on on eBay right you know what you're looking for you. Know. I have a lot of friends that have Porsches. I don't I'm not a Porsche fan. I mean I'm not a car fan really but you know they know what they're looking for and they can get into like the details of it and I love industrial and Logistics.
•  That's what I like and that's what we've been successful with as a higher bar to entry so I'm not looking at multif family. I'm not looking at anything because the families that I have they're more sophisticated and they don't want. Tenants who are poorer than they are and that's why we saw. A lot of issues come out during the pandemic especially in some cities like New York where there's been red debats and people you know were having a hard time and mortgages were not being you know payments weren't being made and it sort of reversed. The context of you know sort of like the uh fabric of you know the of society where you know the tenant was in control and everything so a lot of people lost a lot of money and they don't like multif family. That's just my families that's not everybody there's a lot of people out there who like that stuff um. The second thing is is that um you know I want to work with now that I got the AA class out of the way I get that I only want to work with people who have done this for a while okay how long you've been doing this for we're working with a family in New York. In January. They've been doing this for as long as I want them to going way back to the 90s. You know actually you know since the late 80s um and they own 8.5 million square feet of industrial and Logistics. So I like that you know now I understand that okay. So that's great number two is um. I want to see that they have an audited track record. Most of these guys have y own 8.5 million square feet of anything. You're GNA have an audit okay. It just it just happens that way. So that's good do and you know that's part of the you know the process and then I like to hear that first that they have a strong co-invest. What are they putting into it. How are we participating and then at that point I'll go into the numbers and start playing with the spreadsheets because at that point it's just assumption is like do your notes and you know does your math homework match with mine. You know here's where I found some issues as it relates to you know maybe an exit cap rate or something. But it's never really more difficult than that. But you have to understand. I also look at less deals because I'm very particular in what I'm looking at right now anything else under than that would be um you know and that's just an example of what we're working on coming into um the new year. But there are also going to be some statement Class A assets that we might want to get into that might not make sense right now but you know perhaps in like a you know. A different location where you know for example office isn't as nearly hit you know as other areas of the United States. There could be an you know an attractive opportunity there um maybe with uh and I'm not saying all multifam is bad but like maybe with a statement class asset in New York City where it's Class A and you know the rents are. You know are everything is stabilized that's something we might want to get into remember. We don't want to bet on anything good happening. We already want wanted happening and Performing most of the time when we get in there and you know there there'll be times where there's special situations where you know there'll be some development deal or something that you just can't walk away from and you'll probably you load vacation for and you know we're prepared to do that too as well and that's usually set up as a um Standalone Equity facility. Well you're looking at deals right now in 2023. Obviously the debt Market is a a massive concern right now so what um what are you doing right now to hedge against what is is likely going to be a lot of blood in the streets over the next like 12 to 18 months. You just we you we've been sharpening our AE for this for the past two years actually since the pandemic because that's really when I think you know this is every the elasticity right now was going to swing the other way and for me the inflection point which has nothing to do with real estate. But before I moved to Miami I was at Art Basel following the pandemic and the amount of nft money around and and Bitcoin coin money. Around slashing around in suitcases told me this is like the end sort of like the internet you know back. During 2001 I you know the inflection points for that might have been like AOL time water so getting back to your question um as it relates to we're looking more. F there's a lot of ways we're participating on this but I think it comes down to um maybe putting together. Debt facilities private credit that's something with you know this old you know an old standby where if the banks aren't lending or whatever you know you can have a couple families Syndicate a loan to be able to provide to you know a well good. You know very good operator to be able to you know take advantage of that the debt funds are are popular right now if you know what you're doing. I wrote a book on it called making the yield a about 10 years ago and it's an industry classic actually. If people want a free copy of it. They can go to making theeld.com there's an audible copy that can download for free and one of the things with that is you know. Equity is risk debt isn't and so if the banks aren't providing debt because they are afraid. It's usually not because they don't want to. It's just that they don't they're you know they're restrained to because their current balance sheets don't allow them to do that um the families will step in and there's plenty of private credit out there to take care of a lot of good deals. There's not an issue right there and you hear of all these big funds doing it. It's not really our business. We're more Equity allocators. That's not just we won't do some sort of a death facility later on but you know if you have contacts in the industry and and again. We're not operators. We're we're just Equity you know we just we you know we're just allocators straight um. There's plenty of fighs that you can call Apollo's got one carlile's got one. I mean there's a lot of these funds out. There private credit funds that have already raised all the powder you know the the the dry powder for you. It's just a matter of networking into those places yeah. That's awesome and actually you're the third person this week and you know Deb funds obviously familiar with them. But like you're the third person this week that's mentioned that yeah um three separate conversations so that's interesting making the yield is one of your books. You also have uh your latest book which Legacy right here yes right here. So what are some insights on how you know like you talk about investing Legacy like what what are some key insights from that book. Two things number one is that we are if you're if you're dealing with families you're in a much more relational business. It's not transactional. They want to build relationships. The overall arching thesis behind this is centered around the value of your network there's a person I profile a family office we did to deal with in New York City. Before the pandemic. He averaged 220 Days on the Road around the world more than a Diplomat. However that's the price he pays for having a strong International Network and being able to have power and persuasion well s we're coming up on time here so want to be respectful of that in traditional Gold Mine fashion. I ask that you share with the audience.
•  One final gold nugget for them to walk away with people always ask me. What is a definition of a brand. I will tell you uh what I've learned is that everybody has to have an individual brand today but well brand is not a logo. It's not something you pay 40 Grand on Madison Avenue. New York for your brand is your promise and if you're able to convey that to your investors when you're networking you will start a very prosperous career in real estate love it. I did it without shoking thank you so much for your time and for the listeners at home that want to find you they can go to investing legacy.com and download a free audible code of me narrating my own book without coughs of course um and you can do that it's available uh for your listeners. Dany they can go to investing legacy.com and the other book I talked about too was called making theeld.com too as well um. But I do appreciate this and they can get in contact with me that way. If they do go to investing legacy.com. They will be onboarded on T our multif family office so they can see sort of behind the scenes the deals we do how we present them to investors so we sort of open the kimono a bit to those people and you'll actually see what we're looking at and why we make the decisions. We do we believe in having a very interactive family office structure with our investors because interactivity to us is the new CR. That's amazing uh and all of that will be in the description below. So if you didn't write that down you can catch uh those two books and and Sal's contact uh down below s thank you so much for your time thank you my friend. Danny have a great one thank you my friend. All right man take care.