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- Were you pushed out of Goldman? - I wouldn't say pushed out, but I think there may have been somebody there who said, "Hey, you should find something else to do." And I think it was something along. - That sounds like pushed out for them. - Yeah, well, I'm trying to soften it up a little, but basically it was, hey man, you may be the worst analyst that Goldman Sachs has ever hired. And I said, really? The worst. - Fernando De Leon turned a small real estate firm into a multi-billion dollar holding company, Leon Capital Group. Yet, the way he relates to money has less to do with what he's accumulated and more to do with where he started.
Let's go back to the beginning, all the way back to the beginning. - Well, I lived in Mexico. I was an American citizen. I was born in the United States, so I would go to school as a young kid, as a 6-year-old kid, daily to school in the United States. From about first grade to eighth grade, I went also to school in Mexico in the evenings. So I was sort of going back and forth between these two cultures every single day. So it was probably the most formative thing that happened to me as a human being.
- And you were the only one of your siblings who was an American citizen, is that right? - Yeah, I am the lucky Golden ticket. I had this advantage that I could speak English and Spanish. So at an early age I started working when I was about 12 years old as a translator. - Do you remember wanting to make money at that point? - Oh, absolutely. It was all about money, I mean, the primary objective was to generate economic resources for my family.
My mom, many years later, described it to my kids as sort of coming home with a lot of like, you know, dollar bills and putting it on the bed. - Wow. - And supporting the family. So yeah, it was a very meaningful thing. And so I had to do it and I wanted to do it. - And you had to do it because your father had passed away? - Yeah, so my dad passed away when I was 12. And so right after that I said, hey, I'm not gonna sit around and mope.
I'm going to help my family get out of this and support my mom. She, you know, she deserved it. She needed people to stand up and support her because there were six of us. I started taking equity in projects that developers built. When I was their translator, I started getting paid in equity instead of in cash. - I gotta back up. So how did you even know what equity meant at age 12? - Well, maybe I didn't know the term equity, but I knew ownership and I knew that person would own a building and that I was just, I was better off saying, hey, I'll help you solve this,
but I wanna be a small partner in this endeavor. So if I could take 1% or 2%, than that I knew was more permanent than dollars today. I had this idea in my mind that in the United States there was meritocracy and obviously I was right. So, you know, the university admissions process was really important. I had been studying, probably since I was like 13 for the SATs. - You crushed it, right? - Well, I, yeah. I mean, I worked hard at it.
I was studying, you know, five years before I took it. So when I got that admissions notice, I mean, I showed it to everybody. It was a watershed moment for the family, for us to, you know, to sort of send somebody to an institution like that. And then everything else played out because of it, I think. - And you landed at Goldman shortly after graduation? - I saw the supply chain of money, of capital. I saw it at an institutional level.
I saw the way American savers go through the investment process. - You weren't there for very long. - I wasn't. - Were you pushed out of Goldman? - I wouldn't say pushed out, but I think there was, you know, there was a, there may have been somebody there who said, hey, you should find something else to do. And I think it was something along. - That sounds like pushed out for him though. - Yeah, well, I'm trying to soften it up a little, but basically it was, "Hey man, you may be the worst analyst that Goldman Sachs has ever hired." And I said, "Really?
The worst?" And he said, "Look, someday you'll come back as a client of this firm, but today you really gotta go find something else to do." And it was great advice. I mean, it was like for five seconds it was like, you know, hurtful. But then it turned out to be the best thing that ever happened because it was true. Like I belonged out there in the wild building something. I moved back to Texas and then, you know, I have probably 80 to a hundred thousand dollars of savings from my bonuses at Goldman. And I have this money. And then I have a little bit of savings
from back when I was growing up. And I have a couple interests in some buildings. And then I start basically optioning land. So I found pieces of land that I could change the zoning on. You know, there was a piece of property. I had a contract to buy it for a million dollars. I didn't have a million dollars, but I knew that if I could change the designation from being able to build 20 houses on that land to 40 houses on that land, then it would go from a million dollars to $2 million. So once I changed the zoning, the land value became much more valuable. And I assigned my contracts to other home builders and large corporations, and I could arbitrage the difference.
And early days, I had like a string of bad deals and I almost like I had made enough mistakes or I was almost like done. And I got home and I told Patricia, who, my now wife, "I'm probably not good at this and I think I'm just gonna go get a job. I think I gotta, you know, hang up my gloves." And she said, "Look, you can't do that because if you do that, you're gonna drive me crazy. You cannot work for anybody. You've gotta go out there, get back up one more time, just try it again. I know you're gonna do well.
You just gotta believe in yourself, but I just don't want you hanging around here 'cause you're gonna be a pain in my butt." - Was there a deal that proved to be a turning point for you while you were kind of early in real estate investing? - Well, there was a point where I had about 25 properties and around 2007, no, late 2006, I started seeing, you know, some cracks in, it was all residential. And we were seeing, for instance, we saw a subdivision where we were selling two homes per month. And then all of a sudden, one weekend we sold like 50. And I said, whoa, what's going on?
So I looked at the files of who was buying homes and the home buyers were not qualified to buy homes. They were called Ninja Loans back then, no income, no job. And so there was a large home builder who came and offered to buy all of my positions. And because I had that information at the street level, I said, okay, I did a transaction. I sold everything that was in my real estate portfolio in 2007, and I took that capital and then I waited a little bit, and then around September, 2008, all hell broke loose. And it was probably the best time to invest, that I know of, in the last a hundred years or so.
- 2008, of course, was the great financial crisis, a time when so many Americans were losing their homes, right? And losing their jobs. - 2008 was cataclysmic. I mean, you know, you saw Merrill Lynch was acquired, Countrywide went down, IndyMac, Washington Mutual, endless numbers of financial institutions. Lehman Brothers obviously was the domino that fell first, which meant that if you didn't have anything but time and energy to go fix problems, you could really take advantage of the opportunity, and that's what I did.
- How much did you make from those sales? - Not as much as I wanted. - Was it hundreds of thousands, millions? - No, it was several million dollars. But I think more than that, most importantly, there were partners in those deals with me and they said, "Oh, Fernando, you know, you called it right. What do you think's gonna happen?" And then I would say, "Well, I think this is gonna flush itself out." And they said, "Okay, whatever you have, let's go, let's do this." So I had earned the trust of people around me, and then everybody agreed with me that now from 2008 to 2012, we should go all in.
- How much did you spend going all in? - We probably invested from 2008 to 2012, several hundred million dollars. - Help me understand this. So 2007, you sell for a few million dollars. So how do we get to a hundred million dollars? - Well, because we kept going all in and these deals, you know, we were buying a loan from a life insurance company and they had it on their books and $10 million. And we bought it for one. And we solved countless problems at that property. We had to foreclose, we had to get the building. It was an apartment building, we had to fix it. It had all the problems in the world. And then when things recovered, it was no longer worth one, it was worth 15 or 20.
- Can a financial crisis make or break someone's career? - Oh yeah, for sure. More than make a career, what it does is it gives you sort of a muscle memory to start to see the things that human beings do that are not right. We've built now 17 different businesses over the course of almost 20 years. And every time we've built a business, it's been a derivative out of something else we were doing. Now we went from dental to the veterinary care space. We saw all of these things that we could accomplish, but there were derivatives of things that we understood in demographics and real estate.
The insurance business, for instance, that we built, I got tired of paying premiums on insurance for our real estate. And so I said, you know what? We are gonna build our own brokerage business so that we can broker the insurance for ourselves and save money every time we bind insurance policies on our real estate portfolio. I think everything that we have built has always been a byproduct of something we learned or something where we thought we could compete and do better than the incumbents in that industry.
- You clearly had an edge in real estate. How do you know when you'll have an edge in a new industry? - There are always little lies that are told by the incumbents in an industry. And I wanna position myself in a place where I can see the conflicts between the participants. And so if I can create a better mousetrap because I'm observing something that has just been accepted and I can do it better, then I will go into that industry. And we have done it, you know, 17 different times. - When did you convert into a family office or has Leon always been a family office?
- It's always been a family office. You could call it a holding company, I really don't know. I know that we are a group of dozens of men and women that wake up every day and build companies and lead them and whatever you want to call that, that's what we are. - Well, family offices have really taken off, right? The number of family offices out there has just surged. - For sure. We work with a lot of family offices that are, you know, second, third generation where some business was sold, you know, a couple decades ago, and they are investing mostly passively and oftentimes they invest with us. So we have about 40 family offices
from around the world. - Okay, and we do it because we create great connectivity around the world for deal flow and more than anything, like deal flow is important, but recruiting, so finding new people to help us run businesses through these family offices and wealth managers that co-invest with us. We get a lot of mileage out of that. The great advantage of a family office is the ability to not have to deploy capital. I think when institutions have to deploy, invest capital, they're sort of agnostic to the natural rhythms of a market. Whereas family offices, when I speak to them, they are usually running away when things are too good.
And then when things are, you know, down in the cycle, that's when they get the motivation to go back in and make investments and acquisitions. - Well, you don't have to answer to anyone, right? - That's a big advantage. I mean, the ability to be nimble and quick and flexible, that is a huge advantage. - How did Leon Capital evolve once you hit the billion dollar mark, which I believe was around 2024. - We've been pretty consistent from the very beginning.
We've been always frugal and focused on protecting capital. Look, I started this business with a hundred thousand dollars of savings and it's turned into several billion dollars of capital. And so if I entrust somebody to go build a business, I expect them to take a hundred thousand dollars and turn it into a billion dollars over 20 years.
