The Sassoon Dynasty: From Baghdad to Bombay - How Refugees Built Asia's Real Estate Empire

They called him the Rothschild of the East. But while the Rothschilds moved paper, David Sassoon built infrastructure.

In 1829, he fled Baghdad with nothing but two saddlebags of gold. By 1860, his family controlled the largest trading house in Asia. By 1940, they owned half of Shanghai.

This isn't just another rags-to-riches story. It's a masterclass in turning displacement into dynasty.

In this episode, we explore:

• How a stateless refugee became the unofficial bank of Bombay
• Why owning warehouses beats owning goods (the original REIT model)
• The concept of "cultural arbitrage" and why immigrants have a superpower
• How the Sassoons timed every market perfectly across 130 years
• Why infrastructure always wins, regardless of who's in power

From the opium trade to Shanghai jazz clubs, from Bombay swampland to prime real estate - the Sassoons proved that disruption creates opportunity, displacement creates advantage, and infrastructure creates dynasties.

Whether you're a real estate investor, a student of history, or someone interested in how fortunes are really built, this episode reveals timeless principles that work in any era.

Think Well. Act Wisely. Build Something Timeless.

Subscribe to the Timeless Investor Newsletter for our long-form content.

Follow the Timeless Investor Show if you want to hear more of our podcast content.

Get your own copy of Timeless Wealth: Real Estate Through the Ages.

If you want to learn about new investment opportunities through Lombard Equities Group (accredited investors only), please reach out here.

Think Well. Act Wisely. Build Something Timeless.

Transcript

SPEAKER_00: 0:00

They called him the Rothschild of the East, but that's not quite right. David Sassoon didn't just move money. He moved opium, cotton, and eventually entire cities. While the Rothschilds were financing European wars, Sassoon was building the infrastructure of Asian trade, warehouses in Bombay, ports in Shanghai, mills in Manchester. The Sassoons didn't build their empire on innovation or technology. We'll be right back. We often dive into many different stories. You know, we have a series running now called The Cons or The Villains, if you will. We have a series on great crashes throughout history. Last week, we covered the Kipper and Whipper crisis, which was very well received by the audience. So thank you, everybody. We also cover the builders, people who have built incredible empires throughout history and what can we learn from them. Cover economic history, the history of of Finance, and we interview real-life people today, the real OGs, if you will, people who have been through multiple cycles and have something to teach us. And today, we are diving into how a Baghdad merchant family became Asia's real estate dynasty, and what their playbook teaches us about how the best opportunities often come from the worst circumstances. Let me paint you a picture of Baghdad in 1792. This is not the Baghdad you know from headlines. Saddam Hussein's home, the scene of, you know, bombs and fighting and killing. This, at the time, was the jewel of the Ottoman Empire. And the Ottoman Empire, for those of you who don't know, was one of the major world empires at the time that spanned the entire Middle East. Coming out of Turkey, modern-day Turkey, out of Istanbul, historic Constantinople, The Ottoman Empire controlled all of the Middle East. This was a city where Jewish merchants have thrived for 2,500 years since the Babylonian exile. Think about that long history. They ran the trade routes between Europe and Asia. They financed the caravans. They were the trusted intermediaries in a world that ran on trust. And if there's one thing we can say that is a common thread throughout any of the Timeless Investor episodes, shows, articles, it is that economies trade Everything runs at the speed of trust. David Sassoon was born into this. His father was the chief treasurer to the Baghdad governor. The Sassoons were not just wealthy. They were connected. They understood power. They understood how to be useful to whoever held it. But here's the problem with a base of power connections and everything that is built on connections and power. Power changes hands. So in 1829, a new governor arrived. arrives. His name is Dawood Pasha, and Dawood Pasha does not like successful Jewish merchants. He really doesn't like Jewish merchants who know where all the money is hidden. So David Sassoon sees the writing on the wall. One night, he packs two saddlebags with gold coins, takes his family, and he flees. First to Persia, then to the Persian Gulf, and finally to Bombay. He is 37 years old. He has lost everything except what he can carry. And he's about to build one of the greatest commercial empires in Asian history. Think about that for a moment. 37. I mean, we view that as like entering midlife. I'm at 38, about to turn 39. So, you know, I like to say that's still young age. But, you know, I think many of us suffer angst in our 20s. Like, oh, we haven't done anything. We haven't done anything. And I'm going to repeat the great story. Julius Caesar, in his mid-20s, weeping at the feet of the statue of Alexander the Great. Because by the time he's done that, By 25 or whatever, 25, 26, Alexander the Great had conquered the entire known world. And so Caesar thought to himself, what am I ever going to be? Here I am, I'm a 27-year-old loser who hasn't achieved what Alexander the Great achieved. Interestingly enough, I think it's arguable who's more famous now, Alexander the Great or Julius Caesar. By the way, David Sassoon, not famous. Nobody in the West probably even knows who this gentleman is. And that is why we love these stories. They're incredible. But keep in mind, he's 37 he has lost everything except, crucially, two saddlebags with gold coins, which is pretty nice. I mean, it's better than nothing, right? But I mean, he came from a lot and had nothing. So let me paint you another picture now. Bombay in 1832 was not the Mumbai of today. It was a malaria-infested backwater. The British had just taken control. They needed everything. Infrastructure, trade networks, local knowledge. And here comes David Sassoon. He speaks Arabic Hebrew, Persian, and Turkish. He understands Asian trade better than any European could possibly understand it. And crucially, he's stateless. He needs British protection as much as they need his expertise. So this is the first lesson. Some of the best partnerships happen when both sides desperately need each other. But I want to get into like the actual start of how he did this. So Sassoon doesn't open a grand trading house. He rents a single room in the be 10,000 rupees in gold. Like I said, he didn't come with nothing, right? Decent money, but not empire building money. So what is his first move? He doesn't try to compete with established traders. Instead, he identifies a gap. The British East India Company needs someone to handle the quote unquote country trade, the small scale, high touch commerce between Indian ports that British merchants considered beneath them and something they don't want to deal with. So pearls from the Persian Gulf, dates from Basra, horses from Arabia, small shipments, high margins, and most importantly, it required trust relationships that took decades to build. Sassoon had those relationships and the British didn't. So within six months, he is the go-to intermediary for Gulf India trade. But here's what I think is a really clever move on his part. He doesn't just broker the deals, he starts extending credit. A Gujarati cotton farmer who needs funds before harvest, Sassoon lends it 12% monthly. Monthly? Wild. A British date merchant needs to buy cargo space. Sassoon finances it. A British officer wants to send money home. Sassoon handles the exchange. He is becoming the informal bank of Bombay's trading community. But his breakthrough really comes in 1839. The first opium war starts. The British need to move massive amounts of opium from India to China to finance their tea imports. But they have a problem. China The Chinese merchants do not trust British traders. Too many broken contracts, too much colonial arrogance. Sassoon sees the opportunity. He is not British. He's a Baghdadi Jew. He's not colonial. He's a fellow Asian merchant. The Chinese dealers in Canton trust him in a way that they just won't trust a British face. So he makes the British an offer. Let me handle your China trade. I'll guarantee delivery. I'll manage the risk. In exchange, I want exclusive privileges at Bombay Port and Protection. from my ships. The British take the deal. Within one year, Sassoon goes from small-time Gulf trader to running one of the largest China trading operations in Asia. But, Critical point. He does not blow his profits on luxury. Every rupee goes back into the business. He brings over his sons from Baghdad, Abdullah, Elias, Solomon, Rubin. Each one gets trained in a different aspect. Abdullah learns British law. Elias studies cotton markets. Solomon goes to Hong Kong to understand Chinese commerce. By 1850, he's got eight sons, and they're running eight offices across Asia. It's not a business anymore. It's a network, and networks are exponentially more valuable in businesses. Sassoon insists that every family member spend two years working in the Bombay warehouse, not in the offices, in the warehouse, loading cotton bales, checking opium quality, understanding the physical reality of trade. Why does he do this? Because he learned something in Baghdad. When you're too far from the actual business, you make fatal mistakes. His sons might become British Knights and Chinese Taipans, but they always know what a cotton bale should way. Now think about that. I want to say a little added point here. Many of the wealthiest families that I have encountered that run large family businesses take a very similar approach. Their children do not get to just ride in on a beautiful white stallion and take over the business. They got to learn the business from the ground up. I had a good friend at Goldman who came from a major banking family that had a business they'd owned for like 700 years. He didn't get to ride in like the prince and just run the whole thing. He had to go prove himself elsewhere. Fisher Investments, where I spent a good portion of my early working career, Ken Fisher had family members working in the business. They started at the bottom, I can tell you. Now, did they get some help? I don't know, probably, but they didn't get to just write into a senior executive role. They had to learn the business from the ground up. This is a tried and true strategy. I also know guys who run businesses where their sons have gotten to write in immediately and become the head honcho, and it doesn't always work very well because they have a lot of arrogance. They're like, oh, I'm the kingpin, I'm the prince. This is important. So the numbers tell the story here really well. In 1832, Sassoon had one room and 10,000 rupees. By 1840, his warehouse at Bombay Port had 100,000 rupees in annual revenue. In 1845, there were five ships under the Sassoon flag, one million rupees in revenue. By 1850, offices in eight cities, 10 million rupees in revenue. And by 1860, he was the largest trading house in Asia with 50 million rupees in revenue. Not a bad start from 1832 with 10,000 rupees. 10,000, and in 28 years, 28 years, 50 million rupees in revenue. That is awesome. But here's what the numbers don't show. By 1850, the Sassoons are not not just moving goods. They are setting prices. So when David Sassoon sets the cotton price in Bombay, that's the price in Manchester. When he says opium quality is declining, London listens. He is not just in the market. He is the market. The British want Indian cotton to feed Manchester mills. Sassoon knows every cotton farmer in Gujarat. The British want to sell opium to China. Sassoon has cousins in Canton. The British need someone to trust in a world where contracts mean very little to nothing. Sassoon's word is his bond. So by 1850, David Session and Company has offices in Bombay, Calcutta, Shanghai, Hong Kong, and eventually London. But, and this is critical, it's all family. Every office is run by a son or nephew. Every transaction stays within the network. Now, I'm a real estate investor. Many of my listeners are real estate investors. We have a focus on real estate, the history of real estate, the glorious patterns and traditions of the past in real estate. So this is where things start to get really interesting if you are a real estate investor. The Sassoons, at this point, are wealthy. They could have just stayed pure traders. Buy low, sell high, clip the spread. That's what most merchant families of this era did. But then, I would beg to argue, we would not remember their name. David understood something different. Whoever controls the infrastructure controls the trade. Just like the Hanseatic League that we covered prior to this. Just like them. So they started buying. Not the goods, but the buildings where goods were stored. Not the cottons The mills were caught and was processed, not the ships, the docks where ships had to unload. By 1860, the Sassoons owned the largest warehouse complex in Bombay, three of five major mills in the city, prime waterfront real estate in Shanghai, and the first synagogues in Bombay and Hong Kong, which I will add doubled as community centers and informal trading floors. They basically built the REIT model in this market, owned the infrastructure, lease it back to operators, collect rent forever. But here's the thing that I, you know, these stories are always fascinating. And here's the thing that's important. They bought all of this when nobody else wanted it. The Bombay waterfront in 1840 was swampland. The Shanghai International Settlement in 1850, a speculative disaster waiting to happen. But the Sassoon saw what others didn't. Population growth is really important. Trade routes are permanent and infrastructure always win. And there's an additional concept I want to introduce here that's critical cultural arbitrage. The British couldn't do business in China. They didn't speak the language, understand the culture, or have the relationships. The Chinese couldn't access British markets. Same problem in reverse. The Sassoons were the bridge. They were Iraqi Jews who spoke English, lived like British gentlemen, but maintained Asian networks. They could walk into a Manchester bank or a Canton trading house with equal credibility. This is the immigrant superpower. You're not trapped in one culture's way of thinking. David's son, Albert Sassoon, later Sir Albert, was knighted by Queen Victoria and married into the Rothschild family. His brother Elias stayed in Bombay and became more Indian than the Indians. Another brother, Solomon, went to Shanghai and became a Chinese real estate magnate. Same family, three continents, total cultural fluency. What are the modern parallels? Look at Indian tech families in Silicon Valley or Chinese property developers in Vancouver, Nigerian entrepreneurs in London. Same playbook, different century, bridging the gap between cultures, cultural arbitrage. I don't know if it's going to stick, guys, but I like it. Now, we need to talk about the major elephant in this room. The Sassoons made enormous profits from opium. From 1830 to 1900, they were one of the largest opium traders between India and China. At one point, they controlled 70% of the trade. This is not a small footnote. It was central to their wealth. Now, I'm not here to judge 19th century business by 21st century ethics, but I think there's an important lesson here about concentration risk and reputation. When China finally banned opium imports in 1907, the Sassoons had already diversified. Real estate, textiles, banking, they saw the end coming and they positioned accordingly. But the reputation damage was permanent. In China today, the Sassoon name is still associated with the century of humiliation. So the lesson here is your biggest profit center can become your biggest liability. What makes you rich today might make you toxic tomorrow. Always be diversifying. Always be building alternative income streams. The Sassoons did so. They successfully took their wealth generated from what I would argue is a fairly immoral trade in hindsight, right? Probably at the time as well, frankly, but in hindsight, definitely immoral. And they used it to diversify and build something else. So by the In the 1920s, the Sassoons had largely exited trading and become pure real estate players. Victor Sassoon, David's great-grandson, embodied this transformation. He sold the family's Indian textile mills in 1931, right before the global depression destroyed commodity prices. He took that capital and he poured it into Shanghai real estate. The Cafe Hotel, Hamilton House, the Metropolitan Hotel, the Embankment Building. By 1940, Victor Sassoon owned half the international settlement. But here is what I love. He didn't just own the buildings. He owned experiences. The Cafe Hotel wasn't just lodging. It was the place where jazz happened in Asia, where Noel Coward wrote plays, where Charlie Chaplin stayed. Victor understood something that we talk about all the time on this show. Real estate isn't just about beautiful buildings, big, beautiful buildings. It's more than that. It's about human behavior. Control where people gather. control where they store their goods, and you control the commerce. When the communists took Shanghai in 1949, Victor had already moved his capital to the Bahamas. When they seized his buildings, he'd already extracted decades of cash flow. Never fall in love with your assets. Fall in love with your cash flow. By the way, something that stands out to me in this story, it's absolutely wild. These guys managed to time the market well every single time. They got in early in Bombay. They got in early in Shanghai. They They escaped before the communists took over. Something's going on. So the Sassoon Empire lasted from 1832 to roughly 1960, 130 years. That's five generations of wealth. How many American fortunes have lasted that long? Here's what they did right. First, they treated real estate as the ultimate store of value. Not stocks, not bonds, not even gold. Buildings and growing cities. Second, they understood portfolio theory before portfolio theory even existed as a concept. They never had more than 30% in any one city, never more than 50% in any one asset class. They always had geographic diversification, which allowed them to survive the communist revolution. Third, they maintained family control while bringing in professional management. Their buildings were run by experts. The capital decisions stayed within the family. Fourth, they knew when to leave. They had a good sense of market timing. They got out of Baghdad before persecution, out of India before independence, out of China before communism. They didn't try to time it perfectly to just make sure they were early, not late. So what does this story mean for us today? Look at the Li Ka-shing family, refugees from mainland China who built Hong Kong's largest property empire using almost the exact same playbook. Look at the Canadian pension funds buying American infrastructure, cultural arbitrage at institutional scale. Look at yourself if you're an investor trying to find opportunity in chaos. The Sassoon model still works. Find displacement. There's always displacement somewhere. Bridge cultures. Every market has an insider-outsider divide. Buy infrastructure, not products, not services, infrastructure. Hold forever, but be ready to run and take it with you if you have to. Here is my controversial opinion. The Sassoons were better capital allocators than the Rothschilds. The Rothschilds were financiers. They moved paper. When governments defaulted or currencies collapsed, they lost fortunes. The Sassoons owned physical assets. When governments changed, the buildings remained. When currencies collapsed, the warehouses still collected rent. The Rothschilds are more famous because they financed wars. The Sassoons lasted longer because they owned ports. Fame is narrative. Wealth is cash flow. Now, David Sassoon died in 1864 in Pune, India. I think I pronounced that right. He never saw England. He never returned to Baghdad. He never set foot in America. But he understood something timeless. Disruption creates opportunity. Displacement creates advantage. And infrastructure can create dynasties. He started with two saddlebags of gold coins and his great-great-grandchildren are still collecting rent today. This is not a story about luck or timing or even intelligence. It's a story about seeing clearly when everyone else is blinded by the chaos and terror of the present moment. The British saw colonies to I'm Ari Van Gemeren. Remember, think in centuries, not quarters. I hope you guys enjoyed this show. And remember, build for generations not for exits, and always, always aim to own the infrastructure. This has been the Timeless Investor Show. Think well, act wisely, build something timeless. Thank you. I look forward to seeing you guys again next week.