Investing Legacy With Sal Buscemi

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With so much information out there, it can be so easy to get confused about what investing is. Sifting through the right ones can put any budding investor off from being in the industry altogether. And what a waste of potential wealth-building avenue that could be. Not to worry because this episode’s guest has compiled years-worth of wisdom around investing that will help your journey. Salvatore Buscemi, the CEO and Co-founder of Dandrew Partners, shares with us his latest book, Investing Legacy: How the .001% Invest. He gives us a fresh view of what legacy means and where stories matter. Plus, Sal also discusses some of the mistakes people make when raising capital and the importance of being relational rather than transactional. Join this conversation and find out more about investing and leaving a legacy.

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Investing Legacy With Sal Buscemi

In this episode, our guest is Sal Buscemi, the CEO and Cofounder of Dandrew Partners, a private family investment office. He has managed money successfully for several years through the creation of multiple portfolios on various cross-asset platforms. This includes Dandrew Partners, Encore Ventures and many more.

In 2008, Sal launched two separate successful distressed credit platforms that were backed by a $2 billion New York City-based asset manager and a $1 billion commercial real estate investment manager. He is also the author of several books on investing. Two of them are Making The Yield: Real Estate Hard Money Lending Uncovered and Investing Legacy. Sal, welcome to the show.

John, how are you? Thank you. It is a pleasure and a privilege. This will be a lot of fun because we are going to have a lot to talk about as far as pitching deals.

I always love when I do a little dig into someone’s background and when I find mutual friends. Even though we don’t live in the same cities, you are in Miami and I’m in Austin. I see that you were in LA at one time, where I used to live and were interviewed by the wonderful Rob and Aaron Haskell. Those are both very good friends of mine from my days in LA.

That is a great way to kick off this interview because you are in the business of warm introductions and building trust. Before we do a deep dive into how important that is and how you do it, I love to hear a little bit about your background, childhood, college and wherever you want to take us, which led you to where you are. Did you grow up as a young lad going, “I’m going to be involved in helping people invest their money?” How did that all happen?

It is different from that. I was following the lead of people whom I respected at the time growing up who were doctors. It turned out that during the late ‘90s, one of my father’s friends sent me a book. It was Confessions of a Medical Heretic written in 1977. This is 1992. I read it the summer before going to college. I convinced myself I didn’t want to do this anymore but you have that epiphany. I was 22 and I graduated.

I was thankful that my parents paid for my brother and my education, which worked. There was nuance there where I learned how he did that by clipping but at the time, we called zero coupon bonds. He was investing it safely so that we can go to college to do that. I didn’t want to take that for granted. At an early age, I was networking for this surgeon in New York at Beth Israel Hospital shortly after I passed out holding a fibula in the cadaver room. I was like, “This isn’t going to be something for me.”

Sure enough, because of all the hard work I had done for this one doctor, he said to me, “I agree with you. I want to support you. Call my brother. He made partner with Goldman Sachs.” After that, it became learning real quickly that it is not the grades that you get. It is the reputation and network that you have.

I wrote a book about that and continued on all the technical fun stuff, running to institutional funds, now the multifamily office and investing in life sciences earlier stage successfully, especially during a time when tech is dying on the vine. A lot of these more emerging but lower barrier-to-entry businesses like tech are dying on the vine.

We are with the best in class we can around people who have had lots of successful exits because we bet on people, not on ideas. I wrote a book on this because this has been the topic of several conversations you have not just on your esteemed show with your audiences but also on a one-on-one with investors. I will probably be telling the same story at a cocktail party at Faena, meeting some other people. I will go with it over and over.

What I did was I decided to write a book about it. I like to sell the book but we are going to talk about other things. What happened is that a lot of people have gotten confused, especially as it relates to investing. What we have seen, especially over the past several years, is that your status is defined by your wealth and what your assets are. Tell me what you own and I will tell you who you are. That is the whole genesis behind that.

Making The Yield: Real Estate Hard Money Lending Uncovered

Tell me what you own and I will tell you who you are. That is going to be a great quote for you in a tweet. We are going to get into that because it is a nice twist on, “Look at the five people you spend the most time with and I’ll tell you who you are.”

Think about it. There are all these doctors. They are all trading in the same meme stocks and cryptocurrency. None of them get ahead. They like to think they are smarter than the rest but they never evolved because that is all they know. They are hearing, “So and so made $20,000 flipping the stock.”

The other thing you said about when you were in school and interning is, “It is not the grades. It is the network you have.” I want to double-click on that, Sal, because that is an insightful comment. Many of us identify our self-worth by our grades in school, “This is where I went to school. This was my GPA.” We get out of school, college or university. We substitute grades for net worth.

I love to help people get off what I call the self-esteem rollercoaster, where they only feel good if they are winning or they feel bad if they are down. What you are doing for your clients is realizing that things go up and down. You cannot identify your self-esteem or even the performance of someone like you based on a month or quarter.

You have to be easy on yourself, especially if you are a Type-A person like I am. It is very easy to go over the top and commiserate. You have to understand self-pity is probably the lowest form of thinking you can have. You got to reframe it because it is a luxury if you think about it. I think of it as not having the luxury to be able to do that. Make course corrections and move on accordingly.

Let’s get into some of your incredible, valuable insights, especially for people who are founders. You see a lot of deals. One of your criteria and why you are successful is you like to see successful exits under the belts of founders. I have worked with people on their pitches to investors like yourself. I tell them, “If you have that, you need to bring that up upfront. Don’t make them go through slide 7 or 8 to find that out.” In journalism, it is called bearing the lead. You invest in the team more than the idea. We have heard that with the horse and the jockey on all those wonderful analogies. I would love to hear you describe some mistakes people make when raising capital, even if they had a successful exit.

I have moved to Miami and I have been involved in this VC ecosystem. I was involved through a law firm I know well to go to a conference. I got a free ticket to a $2,000 Florida Venture Conference. I was going around and all these guys came to you. It is like if you are wearing a red bat that says, “Investor out here.” I’m like a French fry. What happens when you throw a French fry on the beach? All these eagles come. Even at the urinal, it is awkward. They are like, “You are an investor.” I’m like, “You know I am. Otherwise, you are going to be standing next to me.”

There is a loss of bedside manners. If you look at crypto and go back to Jim Cramer, when people think of investing, they make it much more transactional and it needs to be relational because people are investing in you. They don’t know anything about the idea. They don’t care about the idea. I don’t mean to sound rude but a lot of people think might understand numbers with real estate and you will be surprised how many people don’t understand that. If you communicate it in a way they can understand and tell their spouse, it is an entirely different thing.

It was difficult for me to learn because when you leave the institutional world and you go to the family office world, not a lot of them are real estate or life science families. You have to be able to communicate in a way where you are holding their attention because their attention is that currency. People pay more for attention than they do a barrel of oil on a relational scale.

It is about relationships, not your idea. What I see founders making as a big mistake is they treat investors like a client.

No, like an ATM. It is transactional. It is like, “Do you have money? Let’s talk.” We were joking before you hit the record button but Miami is the land of the next gens and second generations. They are still partying hard but they don’t have any bedside matters. They go around and pitch. Just because you know someone or you are someone who has the discretion to be able to invest, it is almost like an awkward date. It’s like asking for marriage on the first date. I don’t understand how you build a relationship around that. It becomes a turnoff.

I don’t care how successful this kid’s parents were. I call him a kid, he is 37 but if you look at him, he looks like he hasn’t evolved since he was 17. At one point, I had to hold my tongue. I’m like, “Do you want me to take you seriously?” I don’t. New York style can say that. Miami style can’t say that. More or less, the feeling you get is that people are so pushy. It comes across as being desperate.

[bctt tweet=”Self-pity is the lowest form of thought. ” username=”John_Livesay”]

I wrote a little guide that is called Calling the Capital: 20 Ways to Incorporate Urgency Into Your Capital Raise. It is on Amazon but also CallingTheCapital.com. It is real stories and case studies in about 26-page booklet that talks about how we were able to do things credibly without sounding cheesy. I wrote it because all these guys had no bedside manners. I went home and was bored. I like to write so I put this together. It saved a lot of people from embarrassment and humiliation who might not have gotten into becoming an entrepreneur or a founder at first because they didn’t know how to ask someone for money without sounding needy or desperate.

I’m hearing two things. Don’t treat investors like ATMs. Build a relationship and don’t be pushy. Third, as I was alluding to, they think if I treat you like a user of my software, let’s say they have an app and start pitching you how this could make your life better, you are like, “No, my criteria for whom I invest in is very different from a customer’s criteria for whether they are going to use your product.” That is what I meant about the mistake I saw made and I’m getting confirmation from you that it is a mistake you see people make sometimes.

John, think about it. Asking someone to part with their life savings is the highest calling of sales in the land. It has been like that since biblical times. This is nothing new. It is that there has been a lot more money around since Genghis Khan. People still are, for lack of a better term, moist robots. They want to be taken care of. They are carbon-based beings. They want a relationship with someone. They blame it on social media and the lack of depth there. If you want to get into this business, you have to have a relationship with your investors. If you don’t have a relationship with your investors, find other people to build a relationship with to be your investors.

In addition to startup founders with successful exits reaching out to you, you also have to walk your talk, which you do when you are wooing families who have generational wealth, who are looking for someone to invest their wealth, that they should pick you versus another family office. Give us a little sense of what that looks like.

There is a lot more charisma that goes into it. That sounds like a bad term but I will give you an example. You got to treat people like they are all the same. I had one family that wanted to invest in a multifamily deal that was value-added, meaning that he would not get paid unless a lot of good things happened. This is how I explained it to him.

Is it the social impact you are talking about?

No, it is even better. You got to understand. A lot of investors read risk like a wine list over to the right and down. If you have the highest return, you are the smartest guy because you found the best investment. That is like doctor and dentist investing. That doesn’t work and it leads to lots of failure and losses. When we were talking to this one investor, he was fixated on the point that this one guy was going to offer him 15% but in my class industrial facility, he was only going to get a 7.5%.

He couldn’t understand why. He thought I was not that smart for even talking about it. I said to him, “This isn’t about credit-adjusted quality or MBA terms. Do you want people poorer than you paying your rent for you and your family? Should you pass on or not? The reason why wealthy people put their money in here is that they are not looking for the last dollar and chasing the highest return. They want to save it and continue it for generations with seven-year leases with people who have been bid business for 200 years like Carrier Air Conditioning and Milwaukee Tool.”

At that point, it crystallized in his head that it wasn’t about the numbers. It was more or less about credit risk. He had a crash course in credit risk. He invested and was very happy because when the pandemic happened, all his other investors got wiped out. All his other investments with that one particular company went bust too. It is all about status. We are working on a deal and it is our second deal. It is with a 2018 Nobel Prize winner, Dr. James Allison, for physiology and medicine. People want a dog pile on top of that because there are smart families in that deal. When you look at like a cap table, that is the soul of the asset.

If you have good strong families there, especially in life sciences, you are going to have a lot of success there. If it is a bunch of fragmented doctors and dentists at 2,000, the denominations would only trigger desperation for a guy looking at it. It doesn’t become appealing. What you have to look at is showing them the strong points for their safety, certainty and narrative format rather than the idea of what could happen for your board of advisors, which doesn’t do anything anyway to anyone.

Many people spend a lot of time and money giving away equity to have these prestigious names on the board. If it is a name only and they are not consulting, it is not valuable.

I’m raising any money. They are not consulting. They are sitting there and they get all these options, which is hope certificates because if it is the founder’s first deal, it is not going to go well. Why wouldn’t they do that? I don’t do that because it is not something I do but you got to look at it from the standpoint and who are the other smart people who are in there. Do they like this guy because money always has a voice?

Making The Yield: Real Estate Hard Money Lending Uncovered

You toggle back and forth. Many people, after the pandemic, are in this hybrid work. Everyone is going back to the office. I work with a lot of architects who are dealing with this new way of working. People are like, “Is commercial real estate as good of an investment as it was pre-pandemic? Do you see all the tech companies in Austin still building these highrise towers?” Is that still going to continue, do you think?

It is going to be much more on a specialized basis. Austin is coming into its own because you have Tesla. There is a lot of industry there. You don’t have that much land-ground rock. That is going to be built up. I could see areas like that that are pro-business and pro-growth being good for areas like offices like that. Texas, Florida, where I am and you are familiar with that.

In cities like New York, what is going to happen is you are starting to see the ephemeral of offices. It is hard. I don’t think it will happen all at once but people are reticent to return to the office because they are lazy by nature. Certain industries do require office space, especially in financial services because you are learning a trade like anything else and you need to be around bosses to do that.

There are a lot of businesses that said, “We don’t need to do this. It is already costing us too much money to keep our employees already.” You will see a lot of these beautiful buildings get condos into residential units. That is what I think. Everybody is worried about the office building. It is going to be replaced with housing. That is the wave of the future. From my context in New York, that seems to be the prevailing tailwind that is happening as a result of the pandemic.

You got your expertise in real estate and life sciences. A lot of companies like Honeywell that make the fans in the operating rooms or Olympus, the camera company, have a whole medical division that makes the equipment. I have spoken to their sales teams about trying to take these very technical speeds and feeds and turn them into some stories that make hospitals and doctors connect. Do you see successful founders in the healthcare space? The ability to get customers, grow and scale is what you are looking for, in addition to all the other tenacity, grit and successful exit backgrounds they have. Do you see storytelling as a skill that you are looking for?

If they are talking to doctors, the doctors are going to worry more about the data rather than the story. There is a doctor they are pitching to. I pitch to other investors. They are going to be more focused on the story and have their friends look at the data. The problem is that a lot of people, when they are entrepreneurs, try to brand themselves around data or IP and say, “This is great.”

I’ve been to so many rubber chicken lunches where I have been pitched like some doctor wants to buy IP. He is at a point in his life where he is bored with his job. He was angry at his wife. He is looking to be an entrepreneur and swing for it. He has no experience except for an ego. I have seen this. He wants us to fund the IP. I’m like, “What are you going to do with the IP?” They were like, “We got to raise money to do research.” This is at the Harvard Club in New York. I said, “This is the difference between a novice and a professional.”

I got up and walked and the guy learned an important lesson. Before you do this with your attitude, you should understand. Don’t ask people for you to do the research and development. You should have an understanding of this. Anybody can go out there. John, you can go out there and buy Medical IP if you want. Whatever you want, it is available. There are IP brokers that do it. What do you do with it? That is the whole point of it. Anybody can have it but what do you do with it afterward?

We are in the middle of closing a huge investment we made into a company called Thrive Bioscience. It will be the CEO’s 15th exit and 8th unicorn. We like that. He has prominent families leading this other than us. One of the things I like about it is he is replacing microscopes around the world. That is a powerful hook for a lot of people, especially doctors. Doctors do not like working with microscopes. It has been around for many years. They have to pull cultures out. They can’t see cells in real-time. His whole thing is, “Uber knows more about ourselves than we know about ourselves.”

We understand there is a need here. It gets into digitization and people can get their heads around that, especially doctors. We don’t have a lot of doctor investors, to be honest with you. If I did have to talk to a doctor, I would be a little heavier on the data but also do a good lead-in, which is what this is, rather than, “Let me talk to you and set up a call. Hold on.” You got to know what it is and study what it is before you talk to someone. Otherwise, you’re losing credibility. I have been known to lose Wi-Fi in stable spaces.

Let’s talk about your book Investing Legacy. Who was this written for when you were sitting down to write this? Is it for people who have generational wealth and trying to avoid mistakes in it?

There is a lot of thought that went into this because this was my third book. Books take a lot of time. It is one thing to write a book but it is an entirely different thing to sell a book. One of the things I noticed over my career is I was receiving a lot of phone calls from women my age who were receiving a lot of money through inheritance or an exit through options. They would read my investment letters, John. They would be like, “Sal, I read your letter. Congratulation, it sounds like things are going great.” I have no idea what the hell any of that means. They were like, “I like to talk to you a little bit. You mentioned something about a friend of yours in California that opened a library and their names are on the side of it. What about that?”

[bctt tweet=”People have made investing much more transactional when it needs to be much more relational because people are investing in you.” username=”John_Livesay”]

You peel back the onion a little bit. What it comes down to is affluent households and there are TV shows about this. Women have most of the discretion when it comes to investment decision-making. Whereas if you also look at it, women are also 70% of book buyers. I narrated my book because a friend named Mel Robbins told me to because it would be more catchy. I met her in the studio when I recorded it. That is when I was doing other media things. I was trying to impress her. I was telling her, “I was going to hire someone to do it like I did my other book.” She said, “No.” I spent two weeks in a studio and there is an Audible version for you as narrated by the author, which means a lot.

When I narrate my book, you have to break it down into chunks. You don’t sit down and record the whole thing in six hours.

Two hours at a time, after the gym, when I was fresh and ready to go in it. We went with a female publisher because I wanted to prove the point that this was for females. Guys go on Reddit. The guys ate in the stocks. They are much more speculative and women aren’t. This was a book for women published by a female, Andrea Albright of Beverly Hills Publishing. She runs a fantastic global firm over there. She has a lot of international clients and does a lot of publishing for them.

As a result of that, it has been easier to create relationships with people I would not have been able to create relationships with. It is a book that I wrote in my voice because I like to write but it is not anything that I ghostwrote or hired anyone to do. There is a lot of what we call silos things in there, which we learn and statement assets.

Those are terms used in the industry. It helps get people familiar to say, “Is this something I want to do? It is making me think about my life.” The hook for that is, “How do you want your kids and grandkids to think of you when you are done? When you die, do you want to be known as the crypto day trader that spends all his time in front of monitors or trading weed stocks? Do you want to be known as someone who is like, ‘Grandma and grandpa did something different and that is why we have a legacy now?’”

A lot of people have been focused on legacy because it is a form of immortality when you think about it. That is why people go to space and our families want to develop cures. They don’t need an extra zero but they need the legitimacy of saying, “Grandma and grandpa also invested in this drug or this therapy.”

That is such an undervalued premise that people think, “We want to get richer.” That is why those people keep working. It is about the legacy you leave behind. You have tapped into it. I have never heard anybody say the way you did, Sal, which is, “In some way, your legacy is what keeps you going on. It is a little form of immortality.”

Legacy and immortality are not always connected like that. That is the emotional connection that makes people make a decision to invest in something and pick you over another family office. I’m a big believer that when we connect and tug at heartstrings, people are willing to go forward and make a choice to pick us versus somebody else.

You always remember the story. You never remember the data. In a post-pandemic election world, people don’t believe facts and figures anymore.

It can all be manipulated. If people want to reach out to you, what is the best website to do that?

They can go to SalvatoreBuscemi.com. If they want to email me, they can email me at [email protected]. If they want to buy an autographed book, they go to InvestingLegacy.com/book. If you go to InvestingLegacy.com, it will take you to where you get a report on horror stories of how people lost all their money. If you want to buy the book, that will come after. You can also get that too on the SalvatoreBuscemi.com site.

Any last thought or favorite quote you have?

Investing Legacy: You always remember the story. You never remember the data.

There is a funny movie that comes to the heart. One of my friends in Chicago reminded me of it and it is corny. I’m not a big movie person but in the movie Ferris Bueller, he takes the day off. One of the things he said is, “You can never go too far.” One of my friends I was talking to in Chicago was like, “Sal, you are like Ferris. You could never go too far.” There are a lot of things that you can do. You just got to put your mind to it. Things will come. You will have some difficult times and great times but it is the effort you put in and being confident enough to do it. That is going to bring you a little more joy later on.

Long-term vision, not immediate gratification. This is my takeaway.

I agree with you there. John, thank you so much,

Thank you for sharing your story and wisdom.

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Tags: Hard Money Lending, Investing Legacy, Investors, Raising Capital, storytelling, Transactional Versus Relational

Investing Legacy With Sal Buscemi

Listen to the podcast here

Investing Legacy With Sal Buscemi

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John Livesay, The Pitch Whisperer

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