WS1897 Building Relationships With High-Net-Worth Families | Highlights Salvatore Buscemi

Welcome back to another highlight episode ,today we had the pleasure of reconnecting with Sal Buscemi, a seasoned investor and managing director at Dandrew Partners LLC. Sal shared a wealth of knowledge about the current state of investing, particularly in the real estate and life sciences sectors.

Sal has recently moved to Miami, a strategic decision to be closer to the cosmopolitan network and the families he's known since his time at Goldman Sachs. He discussed the impact of the Bitcoin craze on Miami's transformation into a tech hub and shared insights into his multifamily office, HRN, which stands for Harlem River Navy.

HRN was formulated during the pandemic and has shifted its focus from real estate to life sciences and technology investments. Sal emphasized the importance of investing in ventures with high barriers to entry and founders with multiple exits under their belts. He also highlighted the significance of having other smart money investors alongside in deals.

Discussing the current challenges in raising capital, Sal pointed out that rising interest rates have disrupted previously stable markets like commercial real estate. He also mentioned the geopolitical risks and the upcoming contentious elections as factors contributing to investor hesitancy.

When it comes to engaging with ultra-high-net-worth families, Sal stressed the importance of building long-term relationships and being of service to potential investors. He shared anecdotes of how impactful investments in life sciences have provided both financial returns and a sense of contributing to society.


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Transcript

Whitney Sewell: This is your daily real estate syndication show. I'm your host, Whitney Sewell. Today, we've packed a number of shows together to give you some highlights. I know you're going to enjoy the show. Thank you for being with us today. Sal, welcome back to the show. It's been a little bit since you've been on, and man, it's been a couple of years ago or maybe three years ago since we were at a conference you were doing, I think, and you and I had met before that. Yes. Glad to connect with you. I'm looking forward to getting an update, man, what's been happening with you over the last year for our listeners as well. A lot's been happening just in, I mean, any business that works with investors, there's a lot happening, right? Or just so many things unexpected or whatnot, obviously over the last year or unexpected to some maybe, maybe expected to others, but, but looking forward to diving in and why don't you give the listeners a little update about what's the latest with you and what's your focus right now and let's jump in. Yeah.

Salvatore Buscemi: Yeah, so you're going to be shocked to hear this, but I, I had moved to Miami and you can tell by the formula one where that one gets when you go to these conferences and everything. But it's, it's been interesting. I've moved town here for the past year and I made the cognizant decision to move to Miami because that's where a lot, it's, it's a very cosmopolitan area. It's a network. A lot of the families I've known since leaving Goldman Sachs are not too far away in Palm beach. They're just. a train called the bright line away. So that's, that helps a lot. But the networking down here has really been a recipient. I think of like what's happened with the Bitcoin mania and sort of like the forward movement towards moving Miami to be a tech hub spot. I don't think that's necessarily going to happen. But we can get into that. I don't think that really correlates to what we're discussing here today, but it allows me to be more interactive with the investors more so than I am already with our multifamily office that I have with two other partners called HRN. HRN stands for Harlem River Navy and It was formulated during the pandemic because it's not real estate. Now I know you're a real estate guy. I know, but everything I'm talking about here applies. And some people are like, well, what do you mean? I'm like, well, hold on. We do have a great class A development we have in Vegas that we liked. And at one point we didn't know what was going to happen during the pandemic, but it became one of those necessity businesses because everybody needs carrier air and everybody wants Milwaukee tool. You need to have that type of infrastructure in there. So it worked out really well. And that was the last real estate deal we did. And the reason for that is because I have two partners who have helped me build this. And what we found out with the real estate families, especially the richer ones, over $100 million that are worth their salt, is that they all have a gateway, Whitney, into life sciences, and that's through philanthropy. Now, that philanthropy is very expensive. People don't know where the dollar is going. People really don't know where the last dollar is. If it's in a lab supporting a cause you might like or don't like, but it's completely different perhaps or delineated from what, you know, the intent. So when families figured out that they can make the same direct private direct investments as they did in our real estate deals into these. life sciences and technology companies, we really had a tremendous amount of success. And we follow two rules and the rules are very simple for success. And some people try to overanalyze it and make themselves look smart and everything. And the way we run it, whenever we go into a venture deal, where there's a lot of risk. We want it to be number one high barrier to entry, of course, so that's why we like life sciences. But my two partners have a very strong pedigree in that. What I'm looking for are founders that have had multiple exits under their belt, Whitney. I'm not looking for a first-time founder who's never come out of a lab, who doesn't know how to interact with people, who doesn't really know how to market it, because that doesn't give any sort of certainty of execution that there's going to be any sort of commercialization or marketability. That's just a broad stroke. The other broad stroke is I like to see other smart money next to me or in with me. And for some of the deals, all of the deals that we've done, there's a lead family office in there who's in kind, right? It's not like it's a real estate guy going into life sciences. These are life science family offices that are fostering runaway nuns from like the pharmaceutical convent who start their own therapies and sell it back later. And that's worked very well because it is a people business no matter how you look at it. But the one thing that people do not like to be pitched or hear about is biology and chemistry. I was a biology and chemistry major in college. My father had a PhD in organic chemistry. I was sort of, it's into me. I, the reason why, you know, that change is actually the subject of the book. I don't know if I gave it to you or not, but I'll send you an autographed copy if you send me. No, I'm not saying investing legacy. Yeah. You've seen the other two, but that one I wrote right after the pandemic, because there are a lot of very wealthy families that to me, it's over a hundred million investable assets. that were asking questions and they had inherited a lot of money or they made a lot of money, but they did not really trust the mainstream advice. So the questions would say, well, what are all the wealthy people doing? How are they investing? Real estate, venture, not all into venture, but there's a cadence there. And These guys pop and they have like a hundred million dollar exit. We're having two exits at the end of the year. Guess where I'm going to put those proceeds? About 80% of it's going to go into real estate equity and the rest goes into the, the other stuff. So that's sort of like the operating handbook for a lot of these families. They use the venture and then use that to get into class A statement assets. So one of the things that we like doing is that we were actually, we got into AI and we've gotten into. I told you SpaceX because of our reputation with the families and us doing what we say we're going to do. And if anybody really wants to know our structure, our legal structure and how we put it together, you can, I guess, send me an email if that's all right. Sal at HRN dot LLC. And I'll send you like a little video snippet of it. But you know, we are discretionary for our families. I do have a fund. It's doing pretty well on the venture side. But we don't like using fund structures because we don't, fund managers like myself do not like to have a, Ed Whitney, you would know this, an IR clock to your head. The moment you take money from someone, you have to start giving them a return. And so we make it very direct and we, we put together a phenomenal franchise, but we're sort of like a system that I put together since I moved down here. And one of the things I learned and I'll finish with this real quick is that People really want to get into private equity and the pockets of family offices, but it's not transactional, it's relational. And a lot of people don't have the bedside manners who come from the Gary V School of Hustle and they come over and before you know it, they, and I see it all the time, they have their iPad underneath their arm. They sit there. Hi Whitney. How are you? Small talk is too small and then all of a sudden he starts going into his slide and that's not how it works anymore. And so I did put together a little booklet that's available on Amazon called Calling the Capital. You can actually get it for free too. I think it's callingthecapital.com, but there's 20 ways for people to raise capital, adding urgency without sounding desperate. And I think that's important. And we do that with deal toys and all sorts of things that we'll get into.

Whitney Sewell: Love that. I, I appreciate your focus on the ultra high net worth as well. I think it's a very different, it's a different focus, right? Than say the typical $50,000 investor. Right. And, and it's a different business model, I think, and not everybody can just hop right into that. And even right now, a lot of people that are listening, they love to raise money from high net worth families that are worth a hundred million or more. And you hit the nail on the head there too, about it being relational. And maybe bring that back a little bit, or as far as a little more elementary to say, how did you start relationships with families like this? Where did you find families like this? How does that begin?

Salvatore Buscemi: Yeah. So I moved to Miami for a reason, all right? And that is because this is sort of the most cosmopolitan place between Israeli Latin American, the LATAMs and Europeans who come down here. And I've known these guys early in my career when I worked at Goldman Sachs. And I wrote about it in my book, the whole story investing legacy, because everybody wants to know what that story looks like. And so those are relationships that I just fostered. And one of the things that I learned when I was at Goldman, there were two things. Number one is whatever you do, no matter what you think you are, you're always a salesman. And whether you're in mergers or this or even back office support, you are a salesperson. You're, if you're interacting with someone else, you're helping build the brand. And on our 30, on our reviews, we would actually have things on salesmanship. And the other thing too is that you're looking for a long-term relationship with these people. And in order to build that relationship, you need to really spend time with them. So the second thing I learned is nobody is going to part with their hard-earned savings without giving you their time first, right? It's different if I'm selling you a $5 book, it's not a big deal. The $50,000 guy, he's going to be a little more meaningful. He's probably, you got to think about that too, is that these people are in two different tax brackets. So the people I deal with, they have so much cash, they have to put it somewhere, right? I mean, that's really what it is. Whereas a lot of the middle-class investors, their cost of capital is much higher because they pay higher taxes on it. So they're a lot more, um, guarded, if you will, about where to put it. And sometimes there's analysis paralysis and that gets into all sorts of behaviors that I'd love to divulge with you on. But you know, the, the, that's meaningful to them, but the families you have to understand is there's two different types of people today. There's the middle class, which is being ephemeralized really, unless you're like you're a one percenter and you live on bi-coast, chances are you're making over $120,000 a year combined. But, you know, we're dealing with families here who have had an exit or they have operating companies, Whitney, that need to be able to put cash out. And a great example of this, and they're not one of our member families, but I profile it on LinkedIn is the Zara designer founders, Zara fashions. Everybody knows what that is. It's become a household name. Armancio Ortega is the CEO and he's 80 years old and he has spent over the past year, 1.3 billion in statement class quality assets. Class A, right? Not B to C conversion. I mean, C to B conversion, not B to A. Just paying top dollar cash. Why? Because different capital has different needs. And that's what we cater to here when I wrote that little handbook, calling the capital.

Whitney Sewell: Yeah. And so for the listeners saying, like I said, I would love to build those relationships with somebody like that. Yeah.

Salvatore Buscemi: Go to conferences. No, go to conferences. Participate on Zooms. I, because the more you put yourself out there and this is the way I, somebody always wants to make a referral to someone. And today I met with a member of the Adidas family office and we just met for coffee. I will always stop what I'm doing to meet with someone of consequence. And I think the highest and best use of your time to get to that point. is to just be talking to investors all the time. If you have nothing going on and you wanna go to bed at night feeling as though that you did something worthwhile, talk to at least three investors, new investors, old investors. It's the highest and best use of your time, but it's also those relationships are gonna be like, you know what? I know this wacky guy named Sal, he's in Miami, he's from New York. You might wanna meet him. And that's how it goes. And I'll tell you a story I'm not allowed to share, It's a great story, but I'm not going to mention the name. I'll mention it to you in a text message later. All right. Because this is, there's NDA work here. So I moved to Miami and I went and literally had a suitcase and I, all I had was like two suits and I'm in New York at my partner Bill Workmister's MetInvest conference. And there's this goofy guy there and he and I hit it off and I didn't know who he was and he was sitting there and he was asking me about the portfolio that we had and I was telling him like the relationships and tied to the CEOs and he wanted to know what else we were investing into. And we started pivoting into some of the deals that I really liked. And the reason why is the same reason I told you. One of the companies is called Thrive Bioscience. Thrive Bioscience is started by a friend of mine. We started an informal book club. Him, myself, and my CFO, Albert Ewan, who's a CSA. And I told him, I'm like, look, this is the CEO's 15th exit and it'll be his eighth unicorn. And he's like, I want to know more about this. And then he went in and a month later, well, it wasn't a month. It was supposed to be the end of the year. It wasn't. But you know, we had a million dollar ticket from a very prominent investor that allowed us to go, because we said what we said we were going to do, pivoted us right to an allocation in SpaceX and also working with the CEO's other family office investors back in his last five or eight companies that he's done in Palm Beach. So it's really like you being of service to people. I think too many people are like, what's in it for me? If you really want to build a relationship, treat them like you're courting them for marriage because it is a long-term partnership and people can smell if they like you or not. A lot of people, if you're just starting out, you really need to network. If you're living in middle America, you can be on Zoom today. I know a guy, I did a whole Zoom thing, and you'll love this, but it's crazy, but it's something I might do towards the end of the year, because things slow down and I get bored. This guy opened up his schedule during the pandemic. His name is Andrew Sacks. I met him here on LinkedIn, and he met with so many investors and people who could help him just by opening up and being very, helpful on LinkedIn. He was of service to other people. And the best way to do that is to provide contacts because contacts are an extension of your reputation, right? And I can tell you one of my rules is if I don't restruct the person giving me the referral, I'm not going to take the referral because it always runs sideways. It's never what you think it is, or maybe I just put it out there, but it's a rule that works. It's a New Yorker in me. They call it the vibes or whatever. And that is what I would do. And I practice what I preach. I'm always on the phone with my, I have two partners, which are great as far as like doing the deal, the diligence and the sourcing for the tech and the life sciences, because that's what they do. When real estate comes around in January, we start going back into warehouse and logistics.

Whitney Sewell: So why is it so hard to raise money right now?

Salvatore Buscemi: Because. Interest rates have really thrown a monkey wrench into a lot of the things that were proven to have been sacrosanct. And that has been… commercial real estate. And I think what people are starting to experience today is that they got involved in a certain opportunities they shouldn't have. And it looked pretty interesting because rates were at zero. When you have rates at zero for too long of a time, it invites unwanted participants in the market. And then you start seeing all sorts of noise. For example, crypto, NFTs, that would never have happened without zero interest rates. So there's been some sort of like a It, it, that catered, when you think about it, that catered to a lot of people who made a lot of money very quickly. Same could be said probably with some multi-family off, multi-family properties. I think right now people are just kind of sitting in there and they're waiting to see what happens as it relates to a commercial real estate, more trades to happen. Right now it's more of like a Mexican standoff. Nobody's selling. Nobody's, everybody wants top dollar, even though it's a suitable, like pref is more expensive. It makes no sense to me. Um, and then also Silicon Valley bank sort of became sort of an issue too, with a lot of people who are invested in the tech. So people are a little gun shy because of the effect that rates have had since being raised 550 basis points, you know, just in the past year alone. And that's really sort of like something that is pretty consequential because people don't know what's going on. And they also, we're also going into a Probably one of the more contentious elections that we've ever seen. And you have two former presidents for the first time going after it on stage. people are worried about Ukraine. I think there has been a awakening, if you will, with Elon, and this is just my conjecture, buying Twitter that people are starting to see and peel back the layers of the onion that certain things that were promised to them really weren't what they appeared to be. And they're just in wait and see mode. However, that's mostly like the upper middle class because they lose their job or whatever, they're out. The last thing they need is discretionary real estate. So they think, so they'll continue to apply it into things that hold. I also think that people, there are some people who are sitting on the sidelines waiting for the best deals to come. And oftentimes you don't know when that happens, but I can tell you we're probably far removed from that right now. Just based on my experience going into my third cycle, I think that we'll see probably in the next 18 months and going into the election will probably be one of the Probably the lowest points we'll see in the commercial real estate market. And depending on what happens with that election, that could be, that could, you know, go into anything else at that point. There's a lot of geopolitical risks that's happened for the first time. And that's really become sort of an issue today.

Whitney Sewell: Yeah. What are your, your expectations just for the real estate market or investing market? I will say, I know you're, you're not extremely focused on real estate this moment, it seems, but, but just the economy, what do you expect and how is that affecting what you all are doing personally?

Salvatore Buscemi: I think there's some people who are the doomsdayers, and I don't think that the United States is going to lose its US dollar reserve status. If that happens, all hell will break loose. I think Jerome Powell is not an Ivy Tower Dwindler, he's a banker, he's a deal maker. One of my CEOs actually worked with him at Carlisle. So he's going to slick, he doesn't care who gets hurt because he's a deal guy. Somebody's going to win, somebody's going to lose. And if you look at real interest rates the way they are right now, you're around 2%, which is not really that high enough. I think you're going to see interest rates go higher. And what that'll do is that that'll make the US dollar, I think, much stronger going forward. That's my conjecture. There are certain things that I don't like that's happening right now. There's probably a lot more going on as it relates to what's going on with the war overseas. But the single point I think of contention or failure that this world could use, that could kill America, as if Iran or some adversary were shut off the streets of Hormuz, Then you could have oil shooting sky skyrocketing because you have about 26% of the world's oil there. It's contained. It's there's some contagion there with Warren Buffett's weapons of mass destruction with derivatives and that could wind up hurting America. I will tell you that I'll end the thesis saying that cheap oil is good for a middle class and no country has ever had a successful middle class without cheap oil. And this country was not built the $10 a barrel oil. Hmm. Did I go too deep on that or did I?

Whitney Sewell: That's good. A lot of things to think about. Speak to that maybe in conversations, how a hundred million dollar net worth family would be thinking about those things versus the $2 million, $10 million net worth.

Salvatore Buscemi: I mean, the best thing about that, that's an interesting question. Okay. So a $10 million guy is not really mature yet. They're going through their. 10 million is not really enough to move it. 10 million just makes you greedy enough to keep going. And that's where you see a lot of the entry level sales for Ferraris, Rolls Royces, and all of this stuff. People get to the first 10. But it isn't until after you hit the $100 million mark that Everything changes. And at that point, it's not about saving or making an extra zero, although some people might be, it's about what kind of an impact am I going to make? I made all this money. What am I going to do with it? And that is why you're starting to see people make impactful initiatives into like science companies, not saying all families do this or anything, but the other ones who are not doing that, what they're doing is they're going in the highest quality real estate they can find with the best of sponsors they can find because to them, that certainty of execution that they want. They don't need to get rich quick. They don't need to go into a C-class multifamily in Reno for rehab. They're not looking for that. They're looking to buy the class A apartment building in New York with the best renters in there who can afford any sort of inflationary shocks as it relates to cost of living. They are looking for certainty. They're not looking, and I hate to say this, but They're not looking to have tenants in real estate who are poorer than they are, if that makes sense. They're looking to have, whether it's corporate tenants like we have in industrial or Maybe a class A multi-family in a tier one city like Miami, New York, where there's a lot of movement and like Brickell where I live. That's something that you're starting to see families do that. That's what their concern is right now. The concern becomes different. Everything sort of has a parabolic wave, but you also have to remember too, that the U.S. is still a safe place for rich people around the world to invest. And that's what you're starting to see is people still concentrating their bets in the United States to the point where we're actually seeing some states actually close off to foreign investors.

Whitney Sewell: Interesting. You mentioned in yesterday's segment, I think briefly as well, I meant to follow back up, but then you mentioned it again now that high net worth families, definitely a different place, right? A hundred million versus 10 million or less, but they're looking for impact. And how do you engage in that conversation to show that there's impact or that they're going to care about? We just had a.

Salvatore Buscemi: We just had a compliment just in February. We just received a note that one of our investments in one of my funds called AVIVE Solutions, Inc. was the youngest team at the age of 27 to receive PED approvals from the FDA, which means that you can basically take a Coke can device and put it in your purse, put it in your car, or donate multiple of them to athletic centers and schools because if anybody lays on the ground, Unfortunately, that's become the norm rather than the exception as it relates to cardiac arrest. You can revive them with the power from your cell phone. And that's become very, very, very impactful. Because when you think about it, and I don't know what it is, they're not selling yet. They're already commercializing and building it. Again, if you go to Avai.edu, Um, dot com or Google it, you'll, you'll see what I'm talking about. But the impact that they have is the bragging rights to say that they probably have impacted maybe 10,000 lives already in the past six months because of how many times this thing has been used to save a life. And that, and, and with the therapeutic, with the therapies and some of the more aggressive things and cancer, and as it relates to drug discovery and the company that I was telling you about Thrive Bioscience. They're very happy knowing that they're making a mark on society, that they'll be able to tell their friends. And it's like anyone else, your friends behind your back. I know the guy that invested in a vibe or invested, owns part of the Steelers or the Skyscraper or something. And that's really to them how their status is as a function of their intellect and their character. Right. A lot of people, I mean, every time I post something on Facebook or Instagram about this company, there's always, I always get a call from one of the guys saying, Hey, did you post that we're getting more sales? It looks like it's linked to this. I'm not trying to, there's no affiliate income or anything off that, believe me. I just want them to see that, see that grow. But the, that there'll be an outsized return at the end. Don't worry about that. My, and you'll probably have a company like Philips buy it, but for the meantime, people just get enamored with understanding on a constant basis that I communicate with them on my emails that, Hey, this is what happened. This is a great thing that's happened. This is, keep it in mind. And those emails get forwarded. And that really draws a lot of attention. And when you're talking to investors today, interactivity is so important. But you got to call them, talk to them. If you're not friends with them, you don't want to be friends with them, don't engage with them. These are people who you're going to be married to and it's, but you have to make sure you're understanding that you're not selling shellfish to someone who might be allergic to it. There are people who are not going to be interested in this. They're more interested in the sexier things like SpaceX or AI scout or something. It's just a function of that person's character and their drives and needs and motivation. So we have, as I said before, with H&M, it started because there was a lot of real estate investors that became life science investors because they understood that there was an impact that they could make more directly rather than having to go through philanthropies and expensive… with high expense ratios, and maybe you don't know where that last dollar is going, but once we showed our investors that almost 100 cents on the dollar goes towards companies like Avive or Thrive or any of these technology companies, now all of a sudden become more motivated because for them, they can see the impact tangentially, not just as a function of the profit, but as something much more altruistic.

Whitney Sewell: It's their deal toy, just like you were talking about at the end of the last segment, right? Yeah. It's bragging rights. Yeah.

Salvatore Buscemi: It's over coffee. I mean, when everybody's bragging about something, oh, well, we invested in this therapy and that's going to cure who knows what's what's going to happen with that. And that's really what people want are the bragging rights. Everybody's a social animal. They're all looking for approval from other people. We just sell legitimacy.

Whitney Sewell: Sal, thank you so much. We're grateful for being able to do two segments with you and you've added a ton of value to the listeners and I over this time. Tell them again, though, how they can get in touch with you and learn more about your books as well. Sure.

Salvatore Buscemi: They can go to salvatorebushemi.com forward slash books. There's a newsletter there. So you go to salvatorebushemi.com. And if you want a free copy of Calling the Capital, go to callingthecapital.com. And if you wanna be onboarded onto our multi-family office, you can send me an email to shall at hrn.llc.

Whitney Sewell: Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the Real Estate Syndication Show and how they can also build wealth in real estate. You can also go to lifebridgecapital.com and start investing today.