The Kyle Phoenix Blog: Kyle Phoenix Answers: How do billionaires buy things?

It depends on what you’re trying to buy.

Most people misunderstand being a billionaire. At some point you were worth a few million and that’s when most of your systems got set up. You still get a shuffling off of a few million from being on boards, being an employee of your own company so you may still handle the same $10 million in liquid cash for 50 years, it’s just replenished yearly from a single or multiple sources.

Being a billionaire means that you have to manage the other billion dollars beyond that $10 million.

So you have an accountant, generally a personal one who is paid about $100,000 a year because they keep track of your personal bills and get them paid.

You have one or a handful of personal assistants that handle different areas—-one is for scheduling your personal calendar of events, one is for professional events, a third for business events, a fourth for international events and a fifth for family issues and personal friends——they would all pool into the same office, Outlook account or there’s a Lead Assistant who manages them all.

Then you have a management team—-Business Manager, Real Estate Manager, Personal Banking Manager—-the three of them handle their designated issues. There might be a President of your company who reports to you. There’s often a Logistics Manager, especially if you travel a lot. This position can be combined into your Lead Assistant or sometimes it’s a separate personal who also manages your Security and Travel team (think: Oprah), you would need someone who just handles travel, contacting airports, managing the plane, it’s staff and security. If you have multiple businesses, that’s multiple Presidents so there might be one overall Portfolio Business Manager who sums it all up monthly and there’s a full meeting every six months.

Then there’s Estate Manager, perhaps a House Manager/Head Butler/Head Maid.

So your purchases are handled by size, complexity, time and to which account it belongs.

Oprah has nothing in her name. She has companies that she owns that buy her everything as an employee. Why film TV shows at her house—-because a company bought the estate. The estate itself becomes a business write off. All associated costs to her well being are built into a contract with the company she owns—-clothing, food, travel expenses, so
she says:

I love that sweater, I want 5!

Lead Asst. has for simplicity’s sake 5 credit cards or Oprah has them which they assign to Clothing Budget.

I love that car!

Another card with a higher limit.

I love that house!

A money market account owned by a holding company.

I love that yacht!

Another assignation to a different holding company account.

At a certain limit she probably has to get the bigger accounts involved. So maybe she might have a Black American Express card—-from her company with no limit—-but she wouldn’t go over a million with it. Or she might prefer a checkbook (my mother had various checkbooks—-normal checking checking account, money market and checks that specifically went against annuities).

But everyone and everything is on a budget by a certain point—-maybe a few years into gaining money so you have an account with Westside Market, a supermarket here in Manhattan so they’ll send a monthly bill to the Personal Accountant. You have accounts at Saks, Nordstroms, Bergdorf Goodman’s, Tiffany’s, Armani, etc. places you’ve gone to regularly. Your Security detail or Personal Asst. who is with you also has a card with the Personal Account’s name and contact information if you’re famous——because handling money or demanding it is gauche.

Or you have this single Black Amex and your account at the end of the month figures out what was what.

Generally you only have the 1 card because of simplicity sake, it sticks right with your cell phone and you’re good. This above is what it looks like when it arrives—-at your office——literally a black hard on in a financial box! Because it’s one of the few simple objects that has a truly unlimited spending limit (okay, they make a courtesy call at any charge between $1–2 million….but still)

For anything over say a million, Security has those cards so you pick out some furniture at a high end store and give them the business card to contact your Business Manager or Accountant and they generally have a bank check delivered by hand when the invoice is confirmed within 24 hours because delivery instructions also have to be confirmed. So the Personal Assistant might handle the logistics of getting money, store and delivery together. (I’ve even done this when I worked as a personal assistant.)

Though it might seem cumbersome to have a second person involved besides the store/retailer in your transactions, it’s a security protocol so that it is confirmed that you made the purchase and the retailer exists. You might also want some distance—-”Judy, go back to Tiffany’s and get me the purple thongs in a size XL.” You might not want to walk in and pick those up. It’s better to have Judy go in and swipe with the corporate card.

Do you have cash on hand?

Yes, generally in the home safe because in case of an emergency—-there are suddenly fires in Montecito and you have to get your valuables out of the house. There’s a truck rental company but they’re pushing another house to the side to come to yours because you’re like I’ve got $75,000 cash if you’re here in an hour. Or you go to restaurants regularly and it’s easier to tip twice—-once on your card and once in cash because you know that the credit card tip goes to the house but you want your favorite waiters to get something in hand. (I used to do this at a restaurant that two coworkers and I would go to. We’d yip on the credit card—-that’s split through the bar, maybe the host, the chef, the manager—-lots of people helped. But then we’d slip Brian our waiter, he was an actor $50 in cash, mainly because he’d doctored bill after the 4th round of drinks.)

You might also have cash on hand for bonuses, gifts, emergencies, going out without wanting to leave a complete trace, or to places like nightclubs or food trucks or just places where cash might be needed and you don’t want to flash a multi-million dollar unlimited Black American Express card.

Those first couple of years are all about getting your team and systems in order so that you might replace team members but your system holds for yourself, your family, your business. I had to keep track of, distribute and adjust 300–400 paychecks for a company in a 40 block radius with 1000 employees who had all kinds of varying salaries—-hourly, yearly, yearly and hourly, part time, full time, withholding and then children-students started getting stipend checks—-I was literally the mayor of Harlem for two years—-but I was the Lead Liaison for the first 2 years while we were working the kinks out of employee,m buying, vendors, supplies—-by now I’m sure it’s tight as a drum. Your lead assistant would handle making sure all of your private staff got paid, vacation days, scheduled, etc..

This is one of the reasons why unless you know what you’re looking for you can’t see this seamless team in place because when I was a corporate assistant or business liaison (the difference between as a liaison I was the crux point between two separate large businesses, one spawning the other), I designed a system that worked to the companies/individuals desired level of invisibility. Pretty much at a budget over $1 million for a business or person a year . By the time a business or person’s net worth would graduate to $100 million or to $1 billion it would just be increasing in size in some places and lack of redundancy in others. Also people don’t realize that when you buy well, it tends to be of better quality so you’re not running out of things and your team replaces quite a few things before you even notice an issues—-sheets might be bought in quantity of three or ten and used through a large home for a year or two. My mother had linen for individual bedrooms which were carpeted and wall papered grey, green and a fuchsia pink so replenished based on guests for the year.

Wealth involves lots of anticipatory logistical work on your staff;’s part but after a few years you’re predictable in the sense that it’s like the path is cleaned, cleared and scented fifty feet in front of you because your team knows your preferences backwards and forwards.

As weird as it sounds, the person themselves might confuse or mess things up more than their team will because your team is so practiced at solving your problems. The team is generally thrown off when you do something weird or unusual or spontaneous. Ironically the more money you have the more you can be surrounded by controlling people (think: Michael Jackson) who have the maintenance of the system at heart and not the wishes of the individual that the system surrounds.

Of course this is a wide system, some people have or need less depending upon their desires but it falls into the concept of a “Family Office” that acts as a hub of management or a business/office where the team is centralized at domestically for residences and international travel/living.

How To Be A Billionaire: Proven Strategies from the Titans of Wealth is an excellent book that goes into deeper detail about this topic.