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The High-Beta Rich

How the Manic Wealthy Will Take Us to the Next Boom, Bubble, and Bust

by Robert Frank

Hardcover, 239 pages, Random House Inc, List Price: $26 |


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How the Manic Wealthy Will Take Us to the Next Boom, Bubble, and Bust
Robert Frank

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Note: Book excerpts are provided by the publisher and may contain language some find offensive.

Excerpt: 'The High-Beta Rich'

Introduction: Giving Up The Gulfstream

In the spring of 2006, at the glittering peak of America's Second Gilded Age, I flew to Palm Springs, California, to meet one of the nation's newest billionaires.

His name was Tim Blixseth. And, like many new billionaires at the time, he had more household staff than he could count. "Somewhere around a hundred was his best guess at the time (it was actually 110). When I landed, I was greeted by one of his minions, a chipper Filipino chauffeur named Jesse, wearing khakis and a crisp white polo shirt, the universal uniform for helpers of the rich.

"Welcome, Mr. Frank!" Jesse said. "I'll be taking you to the residence."

Jesse and I climbed into his shiny black Land Rover, and he handed me a cold Fiji water and a lemon-scented towel from a cooler in the armrest. We pulled out of the airport and drove on Route 111, past the strip malls, car dealerships, and fast-food restaurants, and out toward the open desert. The sun was setting behind the orange peaks of the Santa Rosa Mountains, and a cool night breeze drifted across the valley from the Salton Sea. We turned onto a small road lined with neat rows of stucco homes and cactus gardens, and after about a mile the road came to an end at two wooden gates.

The gates soared more than twenty feet high, with intricate carvings of flowers and birds rising up giant block letters at the top that read: Porcupine Creek.

Jesse picked up his handheld radio. "Car three with Mr. Frank now at property," he said.

A voice answered: "Entry granted, proceed."

The gates swung open to reveal a lush, water-filled wonderland — a stark contrast to the parched desert we were leaving behind.

The freshly washed driveway was lined with tropical flowers, palm trees, and antique French streetlamps that had once lined the Champs-Elysees. Streams and waterfalls gurgled alongside the road. Birds sang, and teams of gardeners, all wearing matching white polo shirts and khakis, waved as we passed by. When we reached the top of the first hill, Jesse slowed down to offer a view of a nineteen-hole golf course stretching for 240 acres at the foot of the mountains like a vast green welcome mat.

"Does he live in a golf community?" I asked Jesse. Jesse laughed. "It's his golf course."

As I considered the practicality of owning and maintaining your own golf course in the middle of the desert, we pulled up to a circular driveway in front of an equally impressive display: a water fountain modeled after the famed Bellagio fountain in Las Vegas ("but bigger," Blixseth insisted), shooting brightly lit arcs of water into the sky. Behind the fountain, the main house came into view — a sprawling Mediterranean mansion, rising over three stories with carved balconies, porticos, pillars, and large picture windows. It was lit by dozens of outdoor torches and surrounded by guest villas, pools, and gardens.

We pulled up to the imperial entry hall, where two life-size terra-cotta Chinese soldiers stood guard in front of a pair of bronze lions. The front door of the house opened, and out burst Tim — a smiling, compact man in a Hawaiian shirt and cargo shorts.

"Roberto!" he said, holding out a glass of Chardonnay. "Welcome to our humble abode. It's not much, but we call it home."

In 2006, Tim was little known outside a small circle of rich people in Palm Springs and California. But he was about to land on the Forbes list as one of the richest people in America, with an estimated net worth of $1.2 billion.

Tim and his outgoing blond wife, Edra, had made their fortune in timber and real estate. Their biggest trophy and their greatest source of wealth was the Yellowstone Club, a 10,000-acre private golf and ski resort nestled in the Montana Rockies that counted Bill Gates, cycling star Greg LeMond, and former vice president Dan Quayle as members, along with host of other recently rich corporate chiefs and finance executives. Officially, members had to have a minimum net worth of $7 million to join, but most were far richer, since they had to build a home at Yellowstone and buy land, which cost more than $2 million an acre. Once approved, they had the run of a golf course and ski area populated solely by fellow millionaires and billionaires. No one had to worry about the occasional non-rich interlopers you might encounter in, say, Aspen or Palm Beach. They enjoyed heated gondolas and CEO-friendly ski trails with names such as "Learjet Glades" and "EBITDA" (a corporate term that means "earnings before taxes, depreciation, and amortization").

The Yellowstone Club was a huge success. By 2006, plots of land were selling for five times their original price. The club not only made Tim and Edra rich but also turned them into the unofficial innkeepers of the new elite, as they hosted the ultra-wealthy of Silicon Valley, Hollywood, Wall Street, and Washington. Porcupine Creek boasted wall after wall of photographs of the Blixseths with George Bush, Arnold Schwarzenegger, Gerald Ford, Mariel Hemingway, and other notables.

Their lifestyle was unapologetically excessive, even by the stanDards of the mid-2000s. They owned two yachts, three private jets, two Rolls-Royce Phantoms (his and hers), seven homes, a private island in the Caribbean, and a castle in France.

Porcupine Creek's staff of 110 maintained the home like a five-star resort. There was a kitchen staff of twelve manning five kitchens. There were towel boys by the pool, and waiters and chefs near every table or patio. One day, Tim was driving me around the golf course when a waiter popped up from behind a hedge to refill my wineglass. There were caddies, masseuses, security guards, drivers, gardeners, and technology experts to attend to every need.

They had a clubhouse with men's and women's locker rooms, a pro shop, and an equipment room — even though the Blixseths were sometimes the only players on the course, accompanied by their dogs named Learjet and G2 (for Gulfstream).

Every guest room and bathroom on the property was stocked with new bars of soap and robes emblazoned with the house logo, a smiling brown porcupine. When I asked Edra why she needed to run her house like a luxury resort, she was very matter-of-fact. "That's the way we've always done things, with five-star standards. The employees were happy to have the jobs and we were happy to employ them. There was just never any thought to costs."

Excerpted from The High-Beta Rich: How the Manic Wealthy Will Take Us to the Next Boom, Bubble, and Bust. Copyright 2011 by Robert Frank. Reprinted by Permission of Crown Business, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York.