KGCI: Real Estate on Air - Investing Legacy - How the .001% Invest with Salvatore M. Buscemi

Episode Date: June 3, 2024

What's up, everyone? It's Holly Kitchens here with another awesome episode that Unleashed Your Inner Legends. And I am so excited about today's class because you guys are about to be mind-blown as much as I was when I not only was introduced to him, but then also consuming his content was just even like a next level. So everyone welcome Salvatore Bushimi.

Hi, how are you, Holly? Good to see you again. Oh my gosh, I'm so excited. And Sal, Sal, you are incredible. Your mindset. everything. And as listeners had heard into the intro of your, all of the accolades that you have and all your credentials, they are definitely in for a treat to say the least. So I'm super excited to have you on because you have so much going on. But first, I want to talk about the most exciting thing

you've got going on right now, which is your book launch that you just had. Let's talk about that. Yeah. The book is written for, you know, it's interesting. It's a book on finance. And today there's a of noise in the industry. There's Bitcoin, there's stocks, there's all these financial news stations. So they're just giving you bite-sized pieces of information, but it's really not anything anyone can really build a legacy on top of. So what I've done is over the past 20 years, managing money for very wealthy families and now what we call ourselves allocators, I put together a handbook for what we call the next gen or the people who are your kids, right, who will be inheriting this because there's been a massive amount of wealth polly that's been created

over the past 20 years. Think about it. Amazon never existed 27 years ago. Maybe Holly didn't either, but now it has like a trillion dollar market cap, right? So things have changed and there's a massive amount of vicious wealth that will be brought under new ownership in real time. And there's no real handbook. So this book really doesn't have any math in it. It just shows behind the scenes about what your peers are doing and the differences between an established operating family like Rockefeller, who is gracious enough to, you know, be quoted in the book as a he invested in a company that we invested into as well, but also some of the more emerging families who have just come into it, the person who just came into. When I talk

about families, I'm talking about people that have a least $100 million net worth. That's $100 million. That's not leverage with toys or anything like that. That's commercial real estate, sports franchises, fine art, things like that that really are real legacy assets. And people discover that not everything looks the same and that people who are on the other end of the statistical curve, if you will, as far as wealth, look at the world much differently than their middle class counterparts do. 100%. Everyone tuning in, for those who are watching this on the video format, you can see the book

or website. You guys can go in, Investinglegacy.com. I'm fortunate enough to have the privilege of coming through the book already. And what, you know, it's interesting. We kind of chat about this a little bit before we hit record is I am a creative. I'm not a financial person. And this stuff is always interesting to me because I guess it's one of those things. Like I'm fascinated because I don't understand it completely when it comes to that.

And just it's interrupting the way you even start the book out. And I'll just read this little insert. It says this is not a book on portfolio allocation. Unlike my other books, which are academic handbooks on credit, private equity, institutional fundraising and fund management. investing legacy is a salacious book on the concerns, passions, and prejudices of the world's wealthiest family. In these pages, I'll reveal the deep and hardcore biases of the influential families on the planet. Like that opening statement, I was like, bam, I was already bought it to it.

I was like, this is going to be some good stuff. So, and what I love about it is, you know, you always hear about when people come into money, maybe it's lottery, maybe it's an inheritance, maybe a lawsuit or so on and so forth. But they come into this money and we all know these people who do that. And almost as quickly as they come into it, they come out of it and they're almost even triple in debt after that. And it's so sad to see this or you hear about, you know, generational wealth ends after, you know, there comes a point in time when a kid comes in and maybe messes it up or makes a bad investment and the entire family legacy is down the drain.

So I'm super excited to chat with you more about the one. or as you call them decimals. Is that correct? Correct. Yes. Yeah. That's the internal, that's the inside baseball term, the decimals. I love it. So also, too, an interesting point in the book that I want to talk to you about was you were talking about defining middle class. And I found this was very interesting. It's a very interesting perspective. And you say today having less than 10 million in assets is middle class. So let's kind of expand on why that is your philosophy and why you believe in that? I think there's a lot of, you know, as I said before, there's been a tremendous amount of wealth creation, but there's a tremendous amount of debt creation.

And so people today are more so dopamine focused than they've ever been. If you look at Instagram, you look at Facebook, people would rather take their inheritance and buy a Rolls-Royce with it rather than do something like me, you know, do anything else that would maybe give them any sort of legacy, right? Because really what it comes down to, and one of the families told me is, you got to thing about it. What do you want your kids to think or say about you after you pass? Right. And so right now what we're dealing with is people who are basically emotionally charged because they don't know who to take advice from. And sometimes it's from people who haven't been successful in anything.

Sometimes it's in the case of our business, it's asymmetric advice from sell side investment professionals. You know, that could be brokers of any kind looking to sell, you know, a piece of real estate or an investment, but you have asymmetric interests. And that's really what the decimals we're looking for today is to make sure that they have an alignment of interest with other investments and not being sold things that are just boilerplate liquid, mostly liquid products, crypto products, things like that, which are today become more speculative than they were back when they were, you know, a different class of asset back in the 60s and 70s. Yeah. So would you say that the decimals are investing in crypto or what how would you see

the direction of that cryptocurrency versus stocks? I think when you look at cryptocurrency today, you see like the advent of like, you know, the younger, the millennial, the bros, they're trading it for wealth creation because they're just speculating. That's what they're doing. The millennial brethren or the next gen, what they're doing is that they're integrating the blockchain technology into their own businesses so that they can build a legacy and integrating all sorts of other things such as ESG, building things, building things that

are sustainable, building a legacy making and impact. That's the difference. So when you think of cryptocurrency today, you think about people getting rich quick fear of missing out. Whereas when you think of cryptocurrency as far as the decimals are concerned of the next generation, they're principally concerned with using those technologies to further their own businesses and also make those discernible impact. They're much more longer term focus. They have an impact statement. I know one family that's very famous. If it doesn't affect their 50 year plan, they don't want to invest in it. That's an incredible statement to make because, you know, when you think about crypto,

people are just thinking like, oh, I'm just going to invest in it. But really, it's integrating it into your business. It's having it as different. Like you said, it's the long term. It's not necessarily just purchasing it and investing in it. I love that. That's an incredible insight. And hearing about like right now, we're in an interesting time.

You know, we're post-COVID. People are starting to travel again. Events are back. And, you know, a lot of people are in the mindset of focus on collecting experiences and not things. But at one point in time, you have to have the mindset of, okay, yeah, that's right. But what about generational wealth? What about your kids? Even if you don't have kids right now, what about your future?

Because at some point in time, there's going to be something left for somebody or something, right? Maybe it's a charity, so on and so forth. So what would you say is that mindset that helps people get there? because it's easy to say, oh, it's free, you know, it's free time, let's just have fun versus, okay, so let's get to business and actually build legacy. I think it's a function of where you are in your life and who's influencing you. If you're young in your life and you're, you know, you're on Instagram, your Instagram traveler and everything, you're not looking to build a legacy. They're not. If you, you know, but when people do, when it comes down to hyphen, I'm sorry, when it comes down to do business with people,

usually what the decimals do is they look for someone to hyphen with and that could either be in like an impact initiative or that could be in something like maybe you know maybe like a joint venture for example you know any sort of partnership and you hear about wealthy families doing this all the time and when you start to have the long term thinking like hey I don't want to live for tomorrow anymore once you know once things have gotten moving for me I have a kid I have money now I'm not scraping by I'm not in survival mode I actually have some wealth now I can start thinking about okay how do I just and really what it comes down to is ego how do I how do I how do I differentiate myself from my peers right if I just inherited 10 million dollars for example the question is I don't want to go into crypto because that looks like what all the poor boy you know what guys are doing and they don't want to be involved in speculating like how do I put a stake in the ground so I can show everybody on Instagram that I am more sophisticated more connected um attracted a better looking woman you know rather than just showing off like another Porsche or some some sort of bogus type of shiny trinket and really that's evolving in the two ways

number one it's through your investments right i talk about this in the book but later on in the book too it's it's the it's no longer about being liked it's about the influence it's about having a tighter network but more personal more interactive and i think that's the new currency today especially with the wealthy families is that people are looking for that for that interactivity and you're going to come back to what I think is society investing. And if you look at like, you know, how the investment banks, Goldman Sachs, Lehman Brothers, how they were all built, they were basically partnerships or societies where people trusted each other.

You know, they were all very wealthy merchants. You know, they started after the Civil War and, you know, moved up to New York and the rest of its history. And I think you're going to start to see that migration right now because I think there's tremendous pressure to be conspicuous with investments. And I don't think the mainstream, you know, financial press, which mostly sells liquid items to make a fee is really is really entering the call to that you know to the needs for this because really what is what these next gens are looking for is a drop down on the wrong of ladder

of the ladder so that they can get the experience to execute and do deals themselves too as well and we talk about that in the book too 100% and you guys have got to absolutely go out and get south book it is an incredible um just an a great guide or playbook if you will to really understand And like I said earlier, it's actually an easy read. And I am not one of those people, but it's such an easy read. It's very fascinating your way and your perspective of putting things into where it changed your mindset of like you said, thinking not like, oh, I want to live just for today, but I want to live for legacy. I want to start putting those solid foundations into making sure that I have financial security, not just for myself, but for generations to come. Yeah, I mean think about it.

And I don't mean to interrupt you, but we're very very. precarious point right now in America. And I think it's becoming like the Brazilification of America where you have like there's going to be much more disparate binary you know segregation of wealth. We have poor poor people over here you have the wealthier people over here and this is going to be a much different view of the world but you're correct. Yeah 100%. So where would you say the next place that the decimals are that's in at? Right now you're starting to see them move into things where the emerging families, the new decimals, are following the established

families, like the older families into doing things that to them is what they consider to be the ultimate sport of privilege. And that's a lot of life sciences investing, healthcare investing. Right now that's huge. A lot of people have the belief I do too as well that we're coming out of the pandemic and we're going to probably have the roaring 20s as far as healthcare and life science is concerned because anything like sciences has just gone to the moon almost. And that's going to continue with progress and it'll probably have been flow. But the other thing people are moving towards too is more so emerging sports franchises, believe it or not, because there's a tremendous amount of influence that comes with it,

right? Think about it. If you know someone who owns a sports team, that enhances your status, right? So it's like, hey, I know the owner of this sports team, you know? So that's, you know, people like that notoriety. So there's going to be a rise of that because that's more of like what's considered a statement asset. Traditionally, when people think of statement assets, they don't really know what it means or they think of fine art. That too is a considerative statement asset.

But I think you're going to start to see more of a drive where people are going to start moving more towards quality, less towards the speculation. And that's going to be defining them who they are. And that's going to be how they receive their dopamine hits by saying, I'm more sophisticated than you. I'm smarter than you. I made better life decisions in life. here I am an owner of this Class A building or fine art or, you know, life sciences. And that's really what these people are looking towards. And that's part of how people evolve and how families evolve too as well.

I love it. You surprised me, I mean, it makes sense, but you did surprise me saying sporting events because you're spot on with that, though, because it is definitely a status symbol saying you own this or you're a part owner of that team. People definitely look at you a lot differently whenever you say things like that. Yeah. Oh, sure. And there's a whole chapter there with one of the, and it's funny, Holly, I really enjoyed it because I went back to the old school of original sports families in Chicago with the accent, full on, you know, the experience.

And we were sitting at Gibson's Italia for a couple, you know, over a weekend. And of course, he's drinking wine and the accent's getting thicker. But it talks about the real stories about why these sports franchises are probably the best investments, because they have such fierce brand protection. You can't wear an NBA or NFL hat without, you know, you can't make it. at home and give it to your kids at school to wear, right? I mean, you're going to get, Roger Goodell will come down and find you and take your house away from you. So that's what keeps the value of all these franchises going. But it's also good too because there are some people who have actually turned it into a portfolio where it's like well managed like anything else.

So it would be real estate or stocks. And there's examples of that too as well in the book. But there's a lot of names in there who talk about it from firsthand experience and corroborate. You know, this is really what it is. It's a society. It's like a, you know, a YPC on steroids, you know, it's like, it's what it is, sports ownership. There's no other society like it. I love it. It's always, yeah, it's definitely a fascinating. Sorry about that.

You're absolutely great. It's a fascinating, it's a fascinating status symbol for sure and why people go after it. But it's definitely you're spot on. It's, hey, I made better life choices. I love that line that you just said earlier. So when it comes to, absolutely it does. So when it comes to, you know, mistakes that you see people make. I know you've talked about like the three generations.

You know, you have the first person who makes the money, the second person who keeps it. And then by the third time, there's a lot of times people go broke after that. And you specified in the book that it's because they don't evolve. What are some tips or some strategies you can share with people that can help them, you know, when it comes to developing that and creating a solid foundation so that it doesn't stop after the third generation? Yeah, I think it's, right now it comes down to education and experiential education, not so much sending your son to Harvard so you can get a job at Goldman Sachs or something like that, but it's more so learning alongside the family, the family business, understanding that and having what we call a succession or governance planning in place. Too many times people don't, they have access to a lot of money, but they don't know how to execute because they don't have the permission from other family members to do so. So sometimes they have to clean up their house.

And that requires sometimes tension and friction. And people don't want to do that. And that's why sometimes legacies get stymied or stunted because somebody didn't get along with somebody else and they don't want to have the awkward conversation of, do they sell this Class A office building for a billion dollars or not? So, and, you know, most people who are watching this might not have to worry about that large of a deal.

But there's a lot of companies today and there's a lot more than you would expect where there's a wealth transfer happening, whether it's $15 million, $10 million. It seems like every week, the IPO markets, you know, are very hot right now, so you're starting to see a lot more people just emerge into the decimal class, probably at a faster rate, not only in America, but also in China too. I love it. So good.

So awesome. You know, I was meaning to ask you, when we were talking about crypto, what's your thoughts on NFTs? I think it's going to come into its own, but I think right now it's always a retail, poorer investor that pays the fees as far as the research and development to see if it's something that's really tangible or not. And you know, I know that there's name brand celebrities who are buying it, but they have the discretionary cash flow to spend $100,000 on an NFP of a house and fire or something like that, then, you know, maybe someone else. So, you know, you got to look

at the people who are buying this. They probably have a lot more liquid. They have, you know, they have operating businesses that throw off a lot of cash. Kim Kardashian, right? I mean, she throws up, she's a family office. She's a family office. She's a her companies are off a lot of cash. So it's going to be interesting to see if the buyers of the NSTs get any value out of it or if it's just the sellers of the NFTs. But it's always going to be at the pain, the financial pain for the retail investor to prove it out with the research and development of them trading it before the institution

stepped in. And we saw that with crypto with Elon Musk and now some other institutions are coming in as well. 100%. And you're spot on because that's what, you know, I was thinking to you hear about people buying them, but you don't hear necessarily a lot of people reselling them and getting much of a profit from the resale. Yeah, yeah. It's like a trading card.

It's like a digital baseball card. Exactly. I know John Legerer, who's former CEO of T-Mobile, he had purchased one and I believe it was close to a million dollars. And he's probably thinking like, what did I just do? Like, how am I going to, again, it's somebody who has the money that they could, they go out and they can spend on that versus somebody who is looking to make that mark from. And you know about it too.

Yeah. Right? You know that he bought it. Yeah. Right? So that elevates his status. So you know that he spent a million or whatever it was on something that is ridiculous. So he gets his dope and mean hit too as well.

100%. I love it. Awesome. I love it, Sal. So before we wrap things up, is there anything else you'd love to share with listeners when it comes to the 1% and investing in legacy? I'm sorry, the 0.01%. Yeah, it's okay, let's make a big difference here. Yes.

The 1% is your neighbor who is over levered in their McMansion with a Tesla that they lease. Okay, that's not who we're talking about here. We're talking about the 0.001%. Yes. And that is a statistical anomaly, which talks about people who generally have more than $100 million in net worth. So we're talking about an entirely different identity with an entirely different type of, of the mentality behind it too as well. I talk about that in the book, but I think, you know,

everybody thinks that, you know, there's a lot of memes out there, or they talk about Warren Buffett and be like him and drive an oldsmobile and eat cheeseburgers. There's different profiles. There's five different avatars for what we call the next gen's or the legacies. And it's going to be interesting.

And, you know, when you read the book, I invite you to like pick out ones, and I'm sure you have four friends that sit maybe each one of those. Like, you know, Holly, you would probably be more of like the, what would you be? I wouldn't say the documentarian, but you'd be more like, I think, the curator, right? I think you would, you know, I think when you read the book, you will fit that profile pretty, pretty clearly.

Whereas other people don't fit that profile, you know, but they are decimals too, and they don't look like Donald Trump or Warren Buffett or any of the people that you see on Instagram or on the financial media. 100%. Well, thank you so much for taking the time to sit down with that. Everyone, you guys all listening in, you have to go out and buy his book because it definitely is a great mindset shift. And it really puts things in perspective. That's an easy way to consume.

It's not one of those like, oh my gosh, another financial book type of ones. No math. No math. No, I never said honest, everyone. But I absolutely love it because you're focused not on just like right now, but you're focusing on the next generation. And I think that's right now because not a lot of people are doing it. Two people are too much are consumed with either what's happening today. but what happened yesterday.

And not a lot of people are really concerned about the next gen. And I absolutely love everything you're doing, Sal. And again, I appreciate your time for being here on the podcast. Thank you so much. I appreciate it, Holly. Thank you for your time. Thank you so much. It's been a pleasure and a privilege.

Thank you.