Latest / Money And Wealth With John Hope Bryant / The Power of Access with Joe Baratta

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The Power of Access with Joe Baratta · Money And Wealth With John Hope Bryant

• 0:00
  Speaker 1: Welcome The Money in Wealth with John O'Bryant, a production
• 0:03
  Speaker 1: of the Black Effect Podcast Network and iHeartRadio. Hey, Hey,
• 0:15
  Speaker 1: this is John O'Brien and this is the Money in
• 0:17
  Speaker 1: Wealth podcast on iHeartRadio Black Effect Network. I want to
• 0:22
  Speaker 1: thank you all for helping him make this podcast top
• 0:24
  Speaker 1: podcasts in the North America and around the world for
• 0:27
  Speaker 1: business and entrepreneurship. I am here today. As you know,
• 0:31
  Speaker 1: I normally do my podcast solo, so if I have
• 0:35
  Speaker 1: a guest, they're pretty special. I've had Michael Milkin on.
• 0:38
  Speaker 1: I've had a bunch of heroes and sheros I really
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  Speaker 1: respect on. This is one of them. This is a
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  Speaker 1: new friend, but a friend you meet with a friend
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  Speaker 1: from the very first time, an acquaintance remains an acquaintance
• 0:49
  Speaker 1: for a lifetime, and they were quite comfortable with an acquaintance.
• 0:53
  Speaker 1: Joe and I hit it off almost instantly. The first
• 0:57
  Speaker 1: time I met him, ME thought I was a costumna.
• 0:58
  Speaker 1: We're at a conference. Who the heck? I was like,
• 1:01
  Speaker 1: I know, we don't do private equity in the streets,
• 1:03
  Speaker 1: but that's not what he's not what he said. But
• 1:06
  Speaker 1: he was moving, and he was gracious, he was he
• 1:08
  Speaker 1: was a place to go. He stopped and we talked,
• 1:11
  Speaker 1: and we met their mutual friend and actually Michael Milkin
• 1:16
  Speaker 1: and we got together and instantly hit it off, and
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  Speaker 1: I really do consider him a friend. He's a great
• 1:22
  Speaker 1: human being, which is my most important credential today. I
• 1:26
  Speaker 1: don't deal with jerks. It's nice when somebody has influence
• 1:30
  Speaker 1: and power, they're also decent, they also care. And Joe
• 1:36
  Speaker 1: has a feel from the streets to the suites, and
• 1:41
  Speaker 1: he just so happens to be the head of private
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  Speaker 1: equity at one of the biggest firms in the world, Blackstone,
• 1:49
  Speaker 1: the offices with which we are in today. I want you,
• 1:53
  Speaker 1: while you're listening to this podcast, but not while you're driving,
• 1:56
  Speaker 1: to do a little research on Blackstone. You think you
• 1:59
  Speaker 1: know who they are are, but they are multifaceted and
• 2:03
  Speaker 1: probably bigger and more substantial than you consider them to be. Joe,
• 2:09
  Speaker 1: the first thing I want to break down in this
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  Speaker 1: podcast private equity. That's the big We've got to not
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  Speaker 1: presume and us soon that people know all these fancy terms.
• 2:20
  Speaker 1: People are ashamed to acknowledge that they don't know what
• 2:24
  Speaker 1: the Wall Street journalis say. They have no idea what
• 2:28
  Speaker 1: FDI C means cec all these phrases that we throw around, ebadah,
• 2:34
  Speaker 1: all this stuff. People have not a clue, but they're
• 2:38
  Speaker 1: shamed to acknowledge it. So oftentimes people will say, in
• 2:43
  Speaker 1: underserved communities of all races, we hate rich people. I respond, no,
• 2:51
  Speaker 1: you don't. You hate rich people until you become rich.
• 2:56
  Speaker 1: What you hate is a game system. What you hate
• 2:59
  Speaker 1: is a no matter how hard you work, you can't
• 3:02
  Speaker 1: seem to get ahead. And so there's been this disconnect,
• 3:06
  Speaker 1: in my opinion, between hustle and aspiration and different between
• 3:15
  Speaker 1: the hustler and a businessman or businesswoman to me is paperwork.
• 3:19
  Speaker 1: There's a there's a disconnect between that aspirational achievement and
• 3:23
  Speaker 1: the achievement that people who seem to have made it
• 3:26
  Speaker 1: have figured out The language and what I want to
• 3:31
  Speaker 1: do in sessions like this, in addition introducing you as
• 3:35
  Speaker 1: a human being and talk about things that are mutually
• 3:38
  Speaker 1: of interest, like human development and what you're doing here
• 3:41
  Speaker 1: around that one of our initial conversations. I want to
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  Speaker 1: unpackt private equity itself in a way that people can
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  Speaker 1: feel comfortable with it and feel that this is a
• 3:51
  Speaker 1: ladder that actually touches the ground. Near them and they
• 3:55
  Speaker 1: can get on it one day and be successful themselves. Now, Joe,
• 4:00
  Speaker 1: I think you from a personal story. I think you
• 4:03
  Speaker 1: you come out of Washington, Uh, Sacramento, Well, Sacramento, but
• 4:07
  Speaker 1: you had you had an.
• 4:08
  Speaker 2: Education, yeah, Georgetown to Georgetown.
• 4:11
  Speaker 1: Yeah, I'm sorry I jumped ahead in my apologies. But
• 4:15
  Speaker 1: you you grew up in Sacramento, Yeah, which I think
• 4:18
  Speaker 1: no one would assume. So tell us a little about
• 4:21
  Speaker 1: my path. Yeah, and then you went to London and
• 4:23
  Speaker 1: you build a business there. But let's get let's step
• 4:26
  Speaker 1: back for a minute. Tell us a little bit about
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  Speaker 1: Sacramento and why that was an important touchdown for you. Yeah.
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  Speaker 2: Well, Sacramento is like any suburban community across America. It's
• 4:40
  Speaker 2: definitely not La or New York, even though it's in California.
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  Speaker 2: I was not My parents graduated from college. My dad,
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  Speaker 2: Well that's slowed down, did you guys hear that?
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  Speaker 1: Okay, he's a head of private equity, the whole firm
• 4:55
  Speaker 1: globally for Blackstone, and neither of is his parents graduated
• 5:00
  Speaker 1: from college. So we're breaking a lot of eggs here,
• 5:01
  Speaker 1: a lot of receptions.
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  Speaker 2: My dad was an entrepreneur. He moved when he was
• 5:07
  Speaker 2: nineteen from Cleveland, Ohio to southern California. He was a
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  Speaker 2: bodybuilder in the early nineteen fifties. And this was before
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  Speaker 2: Arnold Schwarzenegger and all that, and yeah, and he needed
• 5:20
  Speaker 2: he needed a job, so he opened a gym and
• 5:26
  Speaker 2: was he was. He was a fitness enthusiast. He loved
• 5:30
  Speaker 2: weightlifting and bodybuilding, kept care of himself. He wasn't really
• 5:35
  Speaker 2: focused on the business necessarily. He wanted to do something
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  Speaker 2: that he loved where he could make a living and
• 5:41
  Speaker 2: provide for his family. And that's exactly what he did.
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  Speaker 2: And my mom worked in one of my dad's gyms,
• 5:46
  Speaker 2: and you know, they got married, they had me. I
• 5:50
  Speaker 2: drew up, you know, in a family that valued being healthy,
• 5:56
  Speaker 2: valued education. But my parents didn't have that language. Like
• 5:59
  Speaker 2: they didn't know where I applied to college. You know,
• 6:02
  Speaker 2: they weren't, Hey, Joe Sat is coming up, you know,
• 6:05
  Speaker 2: go take the sat prep course. They were not saying
• 6:09
  Speaker 2: They were not saying that. I mean, they didn't because
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  Speaker 2: it just wasn't there.
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  Speaker 1: It wasn't their language family either, But they.
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  Speaker 2: Made sure that I went to the best schools I could.
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  Speaker 2: I went to an all boys Jesuit High school. In Sacramento,
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  Speaker 2: got a great education, understood the importance of college, certainly
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  Speaker 2: wanted to go to college. I wanted a profession. I
• 6:27
  Speaker 2: didn't want to work in the gyms, you know, for
• 6:31
  Speaker 2: my dad, maybe much to his chagrin, but I wanted
• 6:34
  Speaker 2: to have a profession and I wanted and that's probably
• 6:37
  Speaker 2: why I went east and didn't stay west. It was
• 6:39
  Speaker 2: not common in the nineteen eighties to go from a
• 6:43
  Speaker 2: suburban high school in Sacramento to the East Coast for college.
• 6:46
  Speaker 2: But I wanted to see what that was about and
• 6:49
  Speaker 2: pursue a profession. And I got into Georgetown, which itself
• 6:54
  Speaker 2: is a funny story. We probably don't have enough time
• 6:57
  Speaker 2: to go through that, but but I sort of side
• 6:59
  Speaker 2: on scene. I'd never seen the school before I applied.
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  Speaker 2: First time I went was to was the early Decision
• 7:06
  Speaker 2: weekend in February. After you got in, you go see
• 7:09
  Speaker 2: the school, and I said, yep, this, please check all
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  Speaker 2: the boxes. Beautiful, old Gothic style of building, East Coast,
• 7:15
  Speaker 2: pretty girls. Well I did meet my wife there, so yeah,
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  Speaker 2: and so so that's where I went. They had an
• 7:25
  Speaker 2: undergraduate business school, which I thought was interesting because you know,
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  Speaker 2: my dad was a was a business person, and I
• 7:32
  Speaker 2: was really interested in politics and political science, and of
• 7:35
  Speaker 2: course Georgetown's great for that, sitting in the nation's capital,
• 7:38
  Speaker 2: and so that's why I went there. So that was
• 7:40
  Speaker 2: the that was the origin story.
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  Speaker 1: So it wasn't obvious that you were going to go
• 7:45
  Speaker 1: into finands.
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  Speaker 2: And I didn't even know what that was. I mean
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  Speaker 2: to me, like a stockbroker. Was that was?
• 7:51
  Speaker 1: That was?
• 7:51
  Speaker 2: That was, And that's all I knew about it really
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  Speaker 2: till my junior year in college.
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  Speaker 1: So the first thing that I need to you guys
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  Speaker 1: to understand is half of this is just showing up,
• 8:06
  Speaker 1: like showing up and believing in yourself. And you don't
• 8:09
  Speaker 1: have to have all the right credentials or all the
• 8:11
  Speaker 1: right family environment or support steam, but you have to
• 8:15
  Speaker 1: believe in yourself. You have to believe there's a place
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  Speaker 1: for you, and you got to show up. And you know,
• 8:20
  Speaker 1: no one washes rental cars. You got to own your
• 8:23
  Speaker 1: own story. And so the first thing that you gained
• 8:27
  Speaker 1: from your parents was some confidence and some self esteem
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  Speaker 1: for sure. So confidence from your dad.
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  Speaker 2: Yeah, my dad always he was an optimist and he
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  Speaker 2: believed fundamentally in the American dream, like you can if
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  Speaker 2: you can think it, you can be it, and there
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  Speaker 2: is no You'd always say, you know, you're limited only
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  Speaker 2: by your own imagination and aspiration, and you can achieve
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  Speaker 2: whatever you put your mind to. And he firmly believed
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  Speaker 2: that and he had I mean, he had far more
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  Speaker 2: confidence in me than I had in me as a
• 9:02
  Speaker 2: seventeen eighteen year old, including like where I get into
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  Speaker 2: college and everything else. He's like, well, all these schools
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  Speaker 2: will be I'm like, not really, Dad, I'm not sure
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  Speaker 2: if it's gonna work that way. And he was wrong
• 9:12
  Speaker 2: about that, but he was right about if you can
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  Speaker 2: drink it, you can achieve it. And he you know,
• 9:20
  Speaker 2: he so. And I always used to think, like, somebody's
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  Speaker 2: got to do these jobs.
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  Speaker 1: Like that's right, what why me?
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  Speaker 2: Why not me?
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  Speaker 1: Why not?
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  Speaker 2: I mean, maybe I'll get there and I'll realize I'm
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  Speaker 2: not good enough, I'm not smart enough. I'm not But
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  Speaker 2: at least let's try it right and see if we
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  Speaker 2: can survive, see if we can play at that level
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  Speaker 2: all forward.
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  Speaker 1: Yeah, and mom, does she give you a measure of self? Esta?
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  Speaker 2: Oh yeah, no, my mom is I will say if
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  Speaker 2: my mom was born into different families Credit Joe senior
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  Speaker 2: and sadly he's not with us. He died in twenty thirteen.
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  Speaker 2: My mom has been promoted very much with us. She's
• 9:59
  Speaker 2: eighty and with a picture of health. Jill Jill. She
• 10:03
  Speaker 2: lives in Oregon. Very cool my mom. She did write Jill.
• 10:08
  Speaker 2: She was born sort of. I don't know if anybody's
• 10:10
  Speaker 2: read The Grapes of Wrath, great book by John Steinbeck
• 10:13
  Speaker 2: about the dust bowl that literally didn't rain for like
• 10:16
  Speaker 2: a year and a half, two years, and all the
• 10:19
  Speaker 2: all the farms kind of couldn't grow stuff, so everybody
• 10:23
  Speaker 2: was migrating Wes. This was in the forties, thirties and forties,
• 10:27
  Speaker 2: and she ended up she was born in Oklahoma, ended
• 10:29
  Speaker 2: up being raised in the Central Valley of California where
• 10:32
  Speaker 2: there wasn't a drought and could grow stuff and her
• 10:35
  Speaker 2: father was a farmer.
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  Speaker 1: That's how you got the Sacramento.
• 10:38
  Speaker 2: Yeah, that's how I got to Sacramento.
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  Speaker 1: Rainbows after storms and literally.
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  Speaker 2: And I'll tell you, had my mom been born in
• 10:44
  Speaker 2: different circumstances to different family, I think she'd be if
• 10:48
  Speaker 2: not president of the United States Clubs. And she is
• 10:50
  Speaker 2: one talented.
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  Speaker 1: That's great and everybody should love their mother. Like that
• 10:54
  Speaker 1: might love her. By the way Joe and I in
• 10:58
  Speaker 1: my story is very similar. I grew up in a
• 11:01
  Speaker 1: working class family. Mom and dad didn't go to college,
• 11:05
  Speaker 1: south central Los Angeles. My dad owned a business, never
• 11:10
  Speaker 1: left the local community. I had big dreams. I was
• 11:15
  Speaker 1: in south central LA. I went east to Washington, d C.
• 11:19
  Speaker 1: To h I was you know, President Reagan recognized me,
• 11:22
  Speaker 1: President George W. George H. W. Bush recognized me for
• 11:27
  Speaker 1: my town. Jack Kemp, secretary of then Secretary of huck
• 11:29
  Speaker 1: I wrested so and Bill Clinton. But I was nosy
• 11:35
  Speaker 1: and I didn't know whether I could succeed, but I
• 11:39
  Speaker 1: know I was gonna try. Yeah. I can't guarantee you
• 11:41
  Speaker 1: that being positive is going to make you success, but
• 11:44
  Speaker 1: I absolutely guarantee you being negatives going to make you fail.
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  Speaker 2: We can't even get started unless you believe that's right.
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  Speaker 1: And my mother gave me self esteem, told me you
• 11:52
  Speaker 1: loved me every day in my life. And my dad
• 11:56
  Speaker 1: owned his own business, so gave me confidence. So it
• 11:59
  Speaker 1: was very similar store. So, so you end up now
• 12:02
  Speaker 1: in Georgetown and you plant your flag in your future.
• 12:07
  Speaker 1: Now you thought it was initially tied to Washington. How'd
• 12:11
  Speaker 1: you pivot to finance.
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  Speaker 2: Well it's important, yeah, And I ended up majoring in finance,
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  Speaker 2: and I was good at it. You know, I did
• 12:20
  Speaker 2: well in school and I liked it. Most importantly, I
• 12:23
  Speaker 2: liked it. I worked one summer on Capitol Hill for
• 12:27
  Speaker 2: a senator, and I saw what those recent college grads
• 12:31
  Speaker 2: were doing, said well, maybe maybe I'd rather pursue this
• 12:34
  Speaker 2: business thing. So I really doubled down on that track.
• 12:39
  Speaker 2: And you know, back then, it was hard to get internships. Now,
• 12:44
  Speaker 2: if you don't have an internship when you're a sophomore
• 12:46
  Speaker 2: in college, it's hard. Back then, they didn't really do
• 12:51
  Speaker 2: a lot of college internships. And my path to at
• 12:55
  Speaker 2: least getting an interview at one of these investment banks
• 12:59
  Speaker 2: was to get good grades. So I'm like, I'm gonna
• 13:01
  Speaker 2: get COO crats and so I did that. I had
• 13:05
  Speaker 2: a high GPA. I did as much as I could.
• 13:07
  Speaker 2: I actually worked for a stockbroker. One summer. I had
• 13:10
  Speaker 2: a job where I was an actual job, getting paid,
• 13:13
  Speaker 2: working in a clothing store. And I did everything I
• 13:17
  Speaker 2: could to position myself self well to get an interview,
• 13:22
  Speaker 2: and I did. I interviewed it. You know, three or
• 13:24
  Speaker 2: four firms when senior year on campus, and I got
• 13:30
  Speaker 2: a job at Morgan Stanley, which I would have worked anywhere,
• 13:33
  Speaker 2: and I was surprised, and actually it was a friend
• 13:36
  Speaker 2: who's known now no longer with us, very sadly died
• 13:39
  Speaker 2: of brain cancer. But he actually was interviewed early by
• 13:44
  Speaker 2: Morgan Stanley and they said, hey, is there anybody else
• 13:46
  Speaker 2: at Georgetown who maybe has gotten offer somewhere else that
• 13:50
  Speaker 2: we should talk to? And he's like, you should talk
• 13:51
  Speaker 2: to my friend Joe. We actually weren't that close, but
• 13:54
  Speaker 2: we had a lot of mutual respect for each other.
• 13:56
  Speaker 2: And they called me up over my Christmas break and said, hey,
• 14:00
  Speaker 2: would you come in and I did and they gave
• 14:02
  Speaker 2: me a job and that was the beginning of my career.
• 14:05
  Speaker 2: So thanks to this to JP Burella, and that's why
• 14:10
  Speaker 2: I ended up there.
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  Speaker 1: So first lesson or a second lesson. First one was
• 14:14
  Speaker 1: you can come from any place and do anything. You
• 14:17
  Speaker 1: have to show up and believe yourself. But here's another
• 14:19
  Speaker 1: lesson for you that environment matters and we all live
• 14:23
  Speaker 1: in relationship capital. So I want you to be successful
• 14:26
  Speaker 1: because I need for you to do for somebody else
• 14:29
  Speaker 1: what this gentleman did for Joe. And what somebody did
• 14:31
  Speaker 1: for me, which is the vouch for him. If you
• 14:34
  Speaker 1: hang around nine broke people, you'll be the tenth. And
• 14:37
  Speaker 1: the opposite is also true. There are brilliant people in
• 14:40
  Speaker 1: the world, Joe, and I will tell you there's a
• 14:43
  Speaker 1: lot of people who are pretty mediocre who succeeded pretty
• 14:46
  Speaker 1: spectacularly because they have the right relationship capital. Just real talk,
• 14:50
  Speaker 1: like why do you go to major university. That's a club.
• 14:53
  Speaker 1: They're going to hook each other up for the rest
• 14:55
  Speaker 1: of their lives. And by the way, the whole lives
• 14:58
  Speaker 1: filled with clubs, private club, tennis clubs, you know, social clubs.
• 15:03
  Speaker 1: And what I want you to be part of is
• 15:05
  Speaker 1: an aspirational club. And so Joe just sort of unpack
• 15:09
  Speaker 1: some of that without even knowing. And again that also
• 15:13
  Speaker 1: we share that Joe did internships and I went joined
• 15:18
  Speaker 1: committees for the Mayor Tom Bradley in LA because that's
• 15:21
  Speaker 1: where power brokers would come to give back. And I
• 15:25
  Speaker 1: could never meet these people if I went to their office,
• 15:29
  Speaker 1: their their guard their date keepers, would never let me
• 15:31
  Speaker 1: pass the front desk. But there I'm sitting right next
• 15:34
  Speaker 1: to them in the boardroom. Very much like this, and
• 15:37
  Speaker 1: we build a relationship and rapport and at some point like, oh,
• 15:40
  Speaker 1: you seem like a nice young man. Let's do something together.
• 15:42
  Speaker 1: Let's have lunch. Okay, let's I want to get into
• 15:44
  Speaker 1: the meet because Joe has limited time. I want to
• 15:47
  Speaker 1: get in the meat of this. He went to London
• 15:49
  Speaker 1: to build a business, was at at Blackstone. Let's get
• 15:53
  Speaker 1: into the meat of what private equity is at some
• 15:56
  Speaker 1: point here I want to really get into And I
• 15:58
  Speaker 1: think it's connected to your ear story of internship and
• 16:02
  Speaker 1: people sponsoring you. This thing you're doing that really inspires
• 16:05
  Speaker 1: and nurtures human capital to put them to give them
• 16:08
  Speaker 1: a seat at the table. And maybe it's a connected story.
• 16:12
  Speaker 1: But well, let's first unpack for people who who just
• 16:16
  Speaker 1: they're curious and knows no one's are explaining to them
• 16:19
  Speaker 1: what is private equity?
• 16:20
  Speaker 2: Yeah, and it's hard to really understand it because it's not,
• 16:24
  Speaker 2: you know, part of the public discourse. We are we
• 16:27
  Speaker 2: own companies that are private at its simple as we
• 16:32
  Speaker 2: raise money from large pension plans and institutions. So the
• 16:36
  Speaker 2: California State teachers, for example, are they investor with us?
• 16:39
  Speaker 2: This is the pension plan for the many hundreds of
• 16:43
  Speaker 2: thousands of not millions of retirees in current employees who
• 16:48
  Speaker 2: are teachers in the state of California. They give us
• 16:51
  Speaker 2: some of their money. We invest it in buying companies.
• 16:56
  Speaker 1: So Main Street and Wall Street are already.
• 16:58
  Speaker 2: Connected, so we're not. This isn't sort of a bunch
• 17:02
  Speaker 2: of wealthy people's money. This is this is retirement savings
• 17:07
  Speaker 2: of I think I think the number is almost forty
• 17:10
  Speaker 2: million workers across the country. In the world, we manage
• 17:14
  Speaker 2: money on behalf of other nations, you know, for their
• 17:17
  Speaker 2: social security, like Canada country, Canada, Government of Singapore. We
• 17:23
  Speaker 2: might we manage money for you know, other states, State
• 17:28
  Speaker 2: of Washington, organ So so we take that money, retiree money.
• 17:32
  Speaker 2: It's a sacred obligation to be responsible and ethical with
• 17:37
  Speaker 2: this money, to do a certain thing, which is to
• 17:40
  Speaker 2: buy in our case, control of companies, help make them,
• 17:44
  Speaker 2: give them the capital they need to grow, help make
• 17:46
  Speaker 2: them better, and then ultimately sell, take them public, sell
• 17:50
  Speaker 2: them to another strategic buyer. We call them another company.
• 17:55
  Speaker 1: I keep telling you the whole purpose of building a
• 17:57
  Speaker 1: company is to sell it.
• 17:59
  Speaker 2: Well, what we do, it's like we don't have the
• 18:01
  Speaker 2: money forever and they expect to return. They give us
• 18:04
  Speaker 2: a dollar, they want a couple dollars back, And that's
• 18:06
  Speaker 2: that's what we're in the business of doing. We have
• 18:07
  Speaker 2: a long time to do it, five years, six years,
• 18:10
  Speaker 2: but that's but we don't own these businesses forever.
• 18:13
  Speaker 1: And again in this example, the return is going not
• 18:17
  Speaker 1: back to fat cats or big weeks as people would say.
• 18:20
  Speaker 1: It's going to average everyday people and their retirement accounts.
• 18:25
  Speaker 1: That's right, the pension funds, the public, that's right, municipalities,
• 18:29
  Speaker 1: et cetera. That who happened to be some of your
• 18:30
  Speaker 1: By the way, how big is Blackstone Acid wise?
• 18:33
  Speaker 2: We have one point two trillion dollars of assets, which is.
• 18:36
  Speaker 1: A lot at one point how much?
• 18:38
  Speaker 2: One point two trillion dollars? Yeah, and that summer very slowly.
• 18:45
  Speaker 2: In what I do, we manage about four hundred billion
• 18:48
  Speaker 2: dollars of equity investments in companies big and small, which is.
• 18:53
  Speaker 1: Almost as big as Singapore itself as a GDP. Yeah, yeah,
• 18:58
  Speaker 1: a Singapore's five five billion, five hundred bllion and change.
• 19:02
  Speaker 1: So four to billion is a lot of that's a
• 19:05
  Speaker 1: lot of powder.
• 19:06
  Speaker 2: Yes, that money is invested on behalf of these pension
• 19:09
  Speaker 2: plans and social security funds. If we do a good job,
• 19:14
  Speaker 2: meaning if we make a return greater than eight percent
• 19:17
  Speaker 2: across most of the funds, then we get to keep
• 19:20
  Speaker 2: a percentage of the profits, which varies, but somewhere between
• 19:22
  Speaker 2: ten and twenty percent depending on the fund and the
• 19:25
  Speaker 2: vehicle and the strategy of the eight percent of the
• 19:29
  Speaker 2: total return above any of both.
• 19:31
  Speaker 1: So we're not talking about folks making eighty percent of
• 19:34
  Speaker 1: the money. Is so crazy. It's eight percent, right, eight, nine, ten,
• 19:37
  Speaker 1: twelve percent. And so you take a company that is
• 19:41
  Speaker 1: doing reasonably well, you'll tell me about what the size
• 19:44
  Speaker 1: of the company is, and you bucket up. You give
• 19:47
  Speaker 1: it some capital and some also some management ortises my
• 19:50
  Speaker 1: guess as well, and then you prepare it maybe for
• 19:54
  Speaker 1: an exit on correct well that's even going public or
• 19:57
  Speaker 1: some other strategic trans information exactly. But going public is
• 20:02
  Speaker 1: the audience would know, you know, listed on NASDAGG or
• 20:05
  Speaker 1: listed on New York Change and so on so forth.
• 20:08
  Speaker 1: There is a more traditional example of a company that
• 20:11
  Speaker 1: has been nurtured enough.
• 20:12
  Speaker 2: Well, let me give you two types of things we do,
• 20:16
  Speaker 2: and I'll use real life examples. When I was a
• 20:28
  Speaker 2: young partner is probably two thousand and five in London,
• 20:32
  Speaker 2: because I started Blackson and nine. Take a step back,
• 20:34
  Speaker 2: I started Black cent in ninety eight. Back then, we
• 20:36
  Speaker 2: didn't have a trillion dollars assets. We had about.
• 20:41
  Speaker 1: Maybe yeah, which sounds like a lot of money everybody,
• 20:44
  Speaker 1: but not in this.
• 20:44
  Speaker 2: Space, and we had maybe one hundred and fifty employees.
• 20:47
  Speaker 2: Today we're one point two trillion in almost five thousand employees.
• 20:51
  Speaker 2: That's fantastic across a bunch of different businesses all over
• 20:55
  Speaker 2: the world, and it's global and it's spread.
• 20:58
  Speaker 1: So you're one of the top five companies in the
• 21:01
  Speaker 1: world that does this.
• 21:02
  Speaker 2: I think we're the largest. We're for sure the largest
• 21:05
  Speaker 2: alternative asset manager, and I think arguably we're also the
• 21:08
  Speaker 2: largest manager of private equity assets.
• 21:10
  Speaker 1: The largest manasure of private Yeah.
• 21:12
  Speaker 2: I mean we can. That's the way, and there's some
• 21:17
  Speaker 2: great guys doing a KKRS, CBC in Europe and others.
• 21:21
  Speaker 1: The way, whenever you're really successful, you always give it.
• 21:23
  Speaker 1: You're always fast to give everybody else credit. Oh yeah,
• 21:25
  Speaker 1: this person's well, you got the power, you don't need
• 21:27
  Speaker 1: to use it.
• 21:28
  Speaker 2: So when I was young partner in London in two
• 21:30
  Speaker 2: thousand and five, we found this little company it's called
• 21:33
  Speaker 2: Merlin and it owned some aquariums, the London Dungeon, which
• 21:38
  Speaker 2: is just kind of funny. It's still in existence. You
• 21:40
  Speaker 2: go to London, you've got to go there, kind of
• 21:42
  Speaker 2: a historical uh tour thing. And a great young CEO
• 21:47
  Speaker 2: who said, there are all these theme parks and visitor
• 21:49
  Speaker 2: attractions across Europe owned by sort of people who should
• 21:53
  Speaker 2: known a long term A publishing company owned bat I'm
• 21:57
  Speaker 2: Tusso's in the largest theme parks in the UK and Germany.
• 22:02
  Speaker 2: That Lego owned four theme parks called Lego Land. Lego Yeah, well,
• 22:07
  Speaker 2: Lego's great, and actually Merlin owns Lego Land, and that's
• 22:10
  Speaker 2: part of the story. So we said, let's back. Let's
• 22:13
  Speaker 2: back this young entrepreneur. Let's back this company, which was
• 22:16
  Speaker 2: pretty small, had maybe fifteen million dollars of annual cash flow.
• 22:21
  Speaker 1: Which is small for a small a business considering it.
• 22:24
  Speaker 2: And he said, I think if I had the right partner,
• 22:27
  Speaker 2: I could operate these things better that are not in
• 22:29
  Speaker 2: the hands of real operators of visitor tractions. If you
• 22:33
  Speaker 2: back me, we'll go buy these things and we'll make
• 22:36
  Speaker 2: a big company. And I said, this sounds like a
• 22:38
  Speaker 2: great idea, and he was great, and we backed him.
• 22:41
  Speaker 2: The first thing we did was bought by from Lego.
• 22:44
  Speaker 2: The four Lego Land theme parks. Wow, now there's ten
• 22:47
  Speaker 2: plus other things. Lego has been a partner. Now they
• 22:51
  Speaker 2: took back thirty percent. Stage Land yesterday, Lego Experience in
• 22:56
  Speaker 2: Atlanta and the mall yeah that'll be Yeah, that's owned
• 22:59
  Speaker 2: Lego Toy Company. But if you go to Florida, Lego Land, Orlando,
• 23:03
  Speaker 2: there's a Lego Land. Here in New York, there's a
• 23:05
  Speaker 2: Lego Land in California, there's one in the UK.
• 23:07
  Speaker 1: I got a little Lego Land in my house because
• 23:09
  Speaker 1: I've got ten boxes of the techniques, Lego Techniques where
• 23:13
  Speaker 1: I put together Lego race cars.
• 23:18
  Speaker 2: I do it with my daughter still she's fifteen. I
• 23:20
  Speaker 2: love it. That's one of my pastor those of you
• 23:22
  Speaker 2: haven't gone to Lego Land. If you have kids under
• 23:24
  Speaker 2: the age of fifteen, for sure go because it's a
• 23:27
  Speaker 2: great experience. So you rolled this company and we bought
• 23:30
  Speaker 2: another thing and another thing, and then it became little
• 23:33
  Speaker 2: and we took the company public in London. On the
• 23:38
  Speaker 2: it was a Footsy one hundred company, which is one
• 23:40
  Speaker 2: hundred largest companies listed in London in twenty thirteen, fourteen,
• 23:44
  Speaker 2: we took a public.
• 23:44
  Speaker 1: So the Footsy one hundred are the largest one hundred
• 23:47
  Speaker 1: companies in the UK the UK.
• 23:49
  Speaker 2: And it had something like a three four billion pound
• 23:55
  Speaker 2: market cap, so.
• 23:56
  Speaker 1: That would be for US trainanslation.
• 24:02
  Speaker 2: So we took a company that was really small, worth
• 24:05
  Speaker 2: maybe fift one hundred million dollars, and through acquisition and
• 24:09
  Speaker 2: growth and capital deployment, we made it the Strategic Council, Yes,
• 24:14
  Speaker 2: TGIC council capital we made it. We in the management
• 24:18
  Speaker 2: team and our partners at Lego made it worth three
• 24:23
  Speaker 2: million dollars. So that is a great example of that
• 24:25
  Speaker 2: company without private equity would never have exist gotten to
• 24:29
  Speaker 2: that scale.
• 24:30
  Speaker 1: Yes, and that has employees, and those employees are taking
• 24:34
  Speaker 1: hold of a salary, and they're got a life insurance,
• 24:36
  Speaker 1: they got health insurance, and they're buying a house hopefully,
• 24:39
  Speaker 1: and they're they're going on vacations and all the stuff
• 24:42
  Speaker 1: trickles down because eighty eight percent of all jobs in
• 24:46
  Speaker 1: America are private jobs and most of the growth comes
• 24:49
  Speaker 1: in the world from entrepreneurs and small business owners. So
• 24:53
  Speaker 1: you don't get credit for this because nobody sees you
• 24:55
  Speaker 1: guys doing this, but that this is an example of
• 24:57
  Speaker 1: the benefits of private equity.
• 24:59
  Speaker 2: This one example, and there's many, many, many other examples,
• 25:02
  Speaker 2: both in our portfolio and in the portfolios of other
• 25:05
  Speaker 2: great private equity firms that have taken businesses and grown
• 25:09
  Speaker 2: them and created companies that really wouldn't have existed without
• 25:12
  Speaker 2: the efficient capital allocation, the efficient decision making, and the
• 25:16
  Speaker 2: alignment between shareholder, management team order directors. Sometimes the problem
• 25:22
  Speaker 2: with public companies is that the CEO and the board
• 25:25
  Speaker 2: members aren't perfectly aligned with the shareholders. Yeah, they want
• 25:29
  Speaker 2: the share price to go up, but they don't own
• 25:30
  Speaker 2: much of the stock. Right here, we own the company,
• 25:34
  Speaker 2: control the company. The management team really is only going
• 25:37
  Speaker 2: and the employee base. And Merlin's actually a great example
• 25:41
  Speaker 2: of one of the early companies where nearly every full
• 25:44
  Speaker 2: time employee at Merland own owned equity in the company.
• 25:47
  Speaker 2: So when it went public there were many hundreds, if
• 25:50
  Speaker 2: not I think there are maybe almost two thousand people
• 25:54
  Speaker 2: who owned stock in Merlin at the time it went public,
• 25:57
  Speaker 2: right in twenty fourteen. Now we talk about a broad
• 26:01
  Speaker 2: based biholder capitalism. Yeah, broad based employee ownership private equity
• 26:05
  Speaker 2: companies is now much more of a thing that's talked about,
• 26:08
  Speaker 2: but it wasn't invented through four years ago. I mean,
• 26:11
  Speaker 2: we we've been doing this for a long time in
• 26:14
  Speaker 2: Marlin's and a great you're one of.
• 26:15
  Speaker 1: The pioneers in that space. And now there's other folks
• 26:18
  Speaker 1: who are doing as well. Our friend Pete stavros Are and.
• 26:21
  Speaker 2: Frank really elevated that that conversation and the profile that
• 26:25
  Speaker 2: he deserves a lot of credit.
• 26:26
  Speaker 1: And as a company, ed Bashian at Dealt Airlines does
• 26:30
  Speaker 1: profit sharing with his employees and they're having to be
• 26:32
  Speaker 1: the biggest market cap airline in the world, most profitable
• 26:35
  Speaker 1: going back to private equity. In this role, my audience
• 26:39
  Speaker 1: would be FAMI And by the way, any term you've
• 26:40
  Speaker 1: heard you don't understand, just search it like that. The
• 26:43
  Speaker 1: Internet's free, people just search it. And and by the way,
• 26:47
  Speaker 1: AI is a step up on that and it'll tell
• 26:49
  Speaker 1: you just write the herm down and search it. Later
• 26:52
  Speaker 1: you can replay the interview. But my audience would know
• 26:55
  Speaker 1: of what we call the Martin Luther King Junior of
• 26:58
  Speaker 1: Wall Street, his Reginald and Reginald Lewis was the first
• 27:02
  Speaker 1: black man ever to acquire a billion dollar firm on
• 27:06
  Speaker 1: Wall Street. He was a lawyer from Harvard, highly educated,
• 27:10
  Speaker 1: but he didn't have relationship capital, did not have access
• 27:13
  Speaker 1: to capital. And there's a guy that you and I
• 27:14
  Speaker 1: both know who backed him when no one else would.
• 27:19
  Speaker 1: His name is Michael Milkins. And Mike was told, well,
• 27:24
  Speaker 1: gradual Blewis was told that you can't buy this company
• 27:28
  Speaker 1: when Wall Street said we don't know you and we're
• 27:31
  Speaker 1: not going to back you, and you don't have support.
• 27:33
  Speaker 1: And Michael Milkin said, well, he's got my support. And
• 27:36
  Speaker 1: Michael put together alternative financial instruments and rolled it up
• 27:41
  Speaker 1: to a billion dollars. He bought this company called Beachri's
• 27:44
  Speaker 1: International in forty seven countries and had operations and it's
• 27:49
  Speaker 1: still to parts of it still existed this very day.
• 27:51
  Speaker 1: He'd unfortunately died of brain cancer, but a legend and
• 27:54
  Speaker 1: that was only possible because private equity in Wall Street
• 27:59
  Speaker 1: something other Introyce Finance decided this person had talent. By
• 28:02
  Speaker 1: the way, for those you know, Regin Lewis isn't African,
• 28:04
  Speaker 1: American was, and and that created philanthropy that there's a
• 28:09
  Speaker 1: Rerigial Lewis Museum in Baltimore, Maryland that lives on today
• 28:12
  Speaker 1: because of an endowment and so on and so forth.
• 28:13
  Speaker 1: So the hidden hand of capitalism is really a horrible
• 28:19
  Speaker 1: marketer of itself. Yeah, and it's not good at storytelling.
• 28:23
  Speaker 1: So I think it's really important to unpack this so
• 28:25
  Speaker 1: that people understand that money is not evil. The love
• 28:28
  Speaker 1: of money, it's it's it's Capitalism is not evil. It's
• 28:31
  Speaker 1: bad capitalism. There's good capitalism. And that's really largely what
• 28:35
  Speaker 1: we're talking about.
• 28:37
  Speaker 2: Look, how innovative the US economy is, like, is capitalism
• 28:42
  Speaker 2: like the force for good?
• 28:43
  Speaker 1: That's right?
• 28:44
  Speaker 2: The US has the most dynamic, most innovative, most growth
• 28:48
  Speaker 2: oriented for mature developed economy economy there is in the
• 28:52
  Speaker 2: world is and it's because of the capitalist structure. It's
• 28:58
  Speaker 2: there's definitely some inherent injustices along with it, but it's
• 29:03
  Speaker 2: been a great driver of innovation and wealth creation and
• 29:07
  Speaker 2: standard of living in the United States over the last
• 29:10
  Speaker 2: one hundred plus years.
• 29:12
  Speaker 1: And it's allowed for people like you and me to
• 29:14
  Speaker 1: come from relatively the bottom to relatively the top, and
• 29:17
  Speaker 1: then we look back and try to bring somebody up
• 29:19
  Speaker 1: with us. That does happen.
• 29:21
  Speaker 2: When I tell my story to people in Europe, they're
• 29:25
  Speaker 2: literally dumbfound that doesn't happen here. People are like, oh wow,
• 29:30
  Speaker 2: that's interesting.
• 29:30
  Speaker 1: In Europe, you have to have the right name, you
• 29:32
  Speaker 1: gotta have the go to the right schools, and all
• 29:34
  Speaker 1: this stuff.
• 29:36
  Speaker 2: Here, And I mean, there's a lot of success stories
• 29:39
  Speaker 2: in here, but I'm just saying that I still think
• 29:41
  Speaker 2: social mobility is intact in this country and here stories
• 29:47
  Speaker 2: like yours and stories like mine are commonplay. I mean
• 29:52
  Speaker 2: there's a lot of people who've lifted themselves up, uh
• 29:56
  Speaker 2: and didn't have all the in build advantages of network
• 29:59
  Speaker 2: and acts that were able to you know, change their faith.
• 30:04
  Speaker 2: And I think that happens much more frequently here in
• 30:08
  Speaker 2: the US than it does elsewhere.
• 30:10
  Speaker 1: I agree with that. I don't think I could have
• 30:11
  Speaker 1: been me in Germany or France, or Japan or I
• 30:17
  Speaker 1: mean China. I couldn't. My story would not have been
• 30:20
  Speaker 1: possible have to go from from the poor zip code
• 30:23
  Speaker 1: in southern California to the top zero one percent. Okay,
• 30:28
  Speaker 1: So is there another example you want to talk about
• 30:31
  Speaker 1: a produc.
• 30:31
  Speaker 2: Yeah, I mean, then there's bigger companies that you know
• 30:35
  Speaker 2: the other About three years ago, we bought a business
• 30:39
  Speaker 2: that was a division of a large industrial business called Emerson.
• 30:44
  Speaker 2: This division makes compressors that are used in cooling and
• 30:49
  Speaker 2: heating all of our homes. If you have an air
• 30:52
  Speaker 2: conditioning system, there's a very high probability you have a
• 30:55
  Speaker 2: COPE one compressor in the box. Emerson was changing its
• 30:59
  Speaker 2: businusiness to be more of industrial technology software automation equipment
• 31:05
  Speaker 2: because they wanted to have a higher growth rate. This
• 31:08
  Speaker 2: business we bought Copland was lower growth, but super high
• 31:11
  Speaker 2: quality and enormously important to the US economy. If Copland
• 31:15
  Speaker 2: went around and your air conditioning breaks, and you know
• 31:17
  Speaker 2: how often your air conditioning breaks more and you want
• 31:20
  Speaker 2: it's almost always the ware parts, one of which is
• 31:23
  Speaker 2: the compressor.
• 31:24
  Speaker 1: Air Conditioning Integrated the South because Americ conditioning everybody wanted
• 31:28
  Speaker 1: to come to the South wouldn't work.
• 31:29
  Speaker 2: So this is an important company in the US. It
• 31:32
  Speaker 2: just wasn't super high growth and it became non core
• 31:36
  Speaker 2: for the corporate parent. So that's another area where we
• 31:39
  Speaker 2: can come in, bring in a great management team that's
• 31:42
  Speaker 2: super aligned with the performance of the business. Investment alignment.
• 31:48
  Speaker 2: All the interests are the interest and the upside is
• 31:51
  Speaker 2: shere and the CEO running the business both really want
• 31:56
  Speaker 2: to see this business get better. They're perfectly aligned and.
• 32:01
  Speaker 1: Hopefully someday that include.
• 32:03
  Speaker 2: Well, I'm going to get to that. Copland's a good
• 32:05
  Speaker 2: example of that. Fifteen thousand employees. So this is a
• 32:08
  Speaker 2: big company. This isn't Merlin small little fifteen million dollar
• 32:13
  Speaker 2: cash flow company. This company had a billion three of
• 32:17
  Speaker 2: cash flows when we bought. It's a big company. And
• 32:21
  Speaker 2: we were able to bring to bear focus management, more
• 32:26
  Speaker 2: investment in new products, more investment in the manufacturing footprint.
• 32:34
  Speaker 2: And the nicing about this company is it largely manufacturers
• 32:36
  Speaker 2: in the United States, which itself is a competitive advantage
• 32:42
  Speaker 2: particularly now, and and focus to this business because it
• 32:48
  Speaker 2: was sort of unloved in the large corporate parent. We
• 32:51
  Speaker 2: can bring more focus, more capital, more management talent, and
• 32:54
  Speaker 2: better alignment, and the business is doing great. Large we
• 32:59
  Speaker 2: took it out.
• 33:00
  Speaker 1: I got it.
• 33:00
  Speaker 2: We took it out. Emerson retained a minority stake in
• 33:04
  Speaker 2: the business, which actually we've subsequently purchased back from them
• 33:08
  Speaker 2: because they're they're still on their journey and their company's
• 33:11
  Speaker 2: doing great. So it was a win for Emerson shaholders.
• 33:14
  Speaker 2: It's a win for Copeland the company, it's a win
• 33:17
  Speaker 2: for Blackstone investors, and it's a win for Copeland employees
• 33:21
  Speaker 2: because this was This was one of the I think
• 33:26
  Speaker 2: is the largest employee ownership program. Fifteen thousand full time
• 33:32
  Speaker 2: Copeland employees are participants in the equity value creation. Shareholders
• 33:38
  Speaker 2: their share the correct in this company. And that that
• 33:43
  Speaker 2: was we implemented that a couple of years ago. And
• 33:47
  Speaker 2: so to the point of broad based employee ownership, Copeland
• 33:52
  Speaker 2: is a great example of literally every full time employee
• 33:56
  Speaker 2: beautiful at Copeland will participate in the value creation. And
• 34:01
  Speaker 2: so that's that's the other example. We have already a
• 34:04
  Speaker 2: big business that just doesn't have the right level of
• 34:08
  Speaker 2: focused care, attention alignment, and we make that business better.
• 34:14
  Speaker 2: And so those are and then there's you know, there's
• 34:16
  Speaker 2: another good example. We bought a company called Jersey Mikes.
• 34:21
  Speaker 2: Most of you will have heard of Jersey Mike's great business.
• 34:26
  Speaker 2: We believe it has huge potential to grow both in
• 34:28
  Speaker 2: the US and outside of the US, where it is
• 34:31
  Speaker 2: very limited exposure outside of maybe six restaurants in Canada.
• 34:34
  Speaker 2: Family owned business talk about the American dream. One guy
• 34:38
  Speaker 2: built this company from scratch. He was one. He and
• 34:41
  Speaker 2: his family, one shareholder built it to something worth eight
• 34:44
  Speaker 2: billion dollars.
• 34:45
  Speaker 1: Wow, from nothing, from.
• 34:47
  Speaker 2: Nothing, and he was he was a high school football player.
• 34:50
  Speaker 2: Peter Cancro, great guy. He's retained. He continues to be
• 34:55
  Speaker 2: on the board of this company. So with that company,
• 34:59
  Speaker 2: what he understood is that he needed a professional investor
• 35:03
  Speaker 2: to come in and build the process and structure and
• 35:07
  Speaker 2: hire a professional management team. And so that'll be another
• 35:11
  Speaker 2: And that was a big you know. So Copeland and
• 35:14
  Speaker 2: Jersey Mike's are big. Start with a big company, we
• 35:17
  Speaker 2: make them better. Marilin was small and we made it
• 35:20
  Speaker 2: big through capital allocation, backing great manage teams and those
• 35:24
  Speaker 2: when private equi's done right ninety percent of the time, we.
• 35:28
  Speaker 1: Do it well.
• 35:30
  Speaker 2: It adds enormous value to the economy, to the people
• 35:33
  Speaker 2: who are working there, to the management teams, to the
• 35:37
  Speaker 2: underlying investors.
• 35:38
  Speaker 1: So let me tell you why I'm here. I've never
• 35:39
  Speaker 1: said this to you before. So one of my friends
• 35:43
  Speaker 1: I'm honored to call our friend is somebody who gave
• 35:46
  Speaker 1: me an award fifteen years ago, twenty years ago, Oprah Winfrey.
• 35:50
  Speaker 1: She gave me a User Life Award, and she sent
• 35:53
  Speaker 1: an investigator to have lunch with me. This is why
• 35:56
  Speaker 1: I lived in Los Angeles maybe twenty five years ago,
• 35:58
  Speaker 1: and the investigators said, look, I'm not trying to offend you,
• 36:01
  Speaker 1: but we're going to go all into your underwear, like
• 36:03
  Speaker 1: we're going to get everything about you. So there's anything
• 36:05
  Speaker 1: we need to know? No, and it's looked no disrespect intended.
• 36:09
  Speaker 1: But Oprah has a rule we called the Oprah Rule.
• 36:12
  Speaker 1: She doesn't put her arm around anybody who doesn't have
• 36:16
  Speaker 1: as much reputationally to lose as she does, and that
• 36:20
  Speaker 1: stuck with me. She was putting her credibility in the meanings.
• 36:24
  Speaker 1: She wanted to make sure I didn't blow up, because
• 36:26
  Speaker 1: if I imploded, it destroys everything else She's trying to do.
• 36:29
  Speaker 1: With what was then called the User Life Awards. I
• 36:31
  Speaker 1: passed the test and she gave me an award, and
• 36:34
  Speaker 1: we're now we're actually now friends, which I'm deeply honored by.
• 36:38
  Speaker 1: But I stuck reputation and brand in credibility means a lot.
• 36:42
  Speaker 1: Also have another rule that I don't part with anybody
• 36:44
  Speaker 1: who's not larger than me does. I want to make
• 36:46
  Speaker 1: sure they're adding value. Those are my personal bench words.
• 36:49
  Speaker 1: But that first one, that first one, that was being
• 36:53
  Speaker 1: a kind, decent, authentic person, that integrity not just money.
• 37:00
  Speaker 1: Money is good money. Uh, and being in which aligns
• 37:03
  Speaker 1: with the authenticity that matters to me. When I met you,
• 37:07
  Speaker 1: it was in a private room, a private meeting, and
• 37:09
  Speaker 1: no one ever known of You were just talking about me, me, me.
• 37:11
  Speaker 1: I'm tired talking about me. You talk about me. If
• 37:14
  Speaker 1: you were breaking your arm track patches up on the back,
• 37:15
  Speaker 1: nobody would have said a word, because you are the
• 37:19
  Speaker 1: largest in your space. You were frustrated because you were
• 37:22
  Speaker 1: trying to give the word out about something you were
• 37:24
  Speaker 1: that that was doing good in the world, and you
• 37:26
  Speaker 1: couldn't seem to figure out what no one was interested
• 37:29
  Speaker 1: in talking about. They were talking about the bad stuff,
• 37:31
  Speaker 1: not the good stuff. And I was fascinated how preoccupied
• 37:36
  Speaker 1: and obsessed you were with being a decent human being.
• 37:38
  Speaker 1: I didn't know you back then, but I said, that's
• 37:40
  Speaker 1: my kind of person. And so I wasn't impressed with
• 37:43
  Speaker 1: how big Blackstone was. I wasn't impressed with your job.
• 37:46
  Speaker 1: I wasn't impressed with any stuff I meet. You meet
• 37:49
  Speaker 1: fancy people all the time that are underwhelming. I was
• 37:53
  Speaker 1: impressed with your authenticity and that has borne to be
• 37:57
  Speaker 1: one hundred percent true. And so I'm here because I
• 38:00
  Speaker 1: want to. You're the kind of private equity example, and
• 38:03
  Speaker 1: by extension of the firm that I want to profile.
• 38:07
  Speaker 1: No one's perfect. We all fall short of the grace
• 38:10
  Speaker 1: of God. We're all a saint, you know, and angels.
• 38:15
  Speaker 1: You know, we all woke up with sort of a
• 38:17
  Speaker 1: saint with dirty faces. You know. We we walk, we
• 38:19
  Speaker 1: we wake up and we brush our the dirt off.
• 38:22
  Speaker 1: We try to be the best version of ourselves we can.
• 38:24
  Speaker 1: So there's no perfect, But from what I've seen, you've
• 38:27
  Speaker 1: been a force for good in the world. You personally
• 38:30
  Speaker 1: and the firm talk to some in the remaining moments
• 38:33
  Speaker 1: we have about this thing, this program that you have.
• 38:37
  Speaker 1: So and then I want to come back. We've got
• 38:41
  Speaker 1: to do part two.
• 38:42
  Speaker 2: And yeah, not not coming from uh a background that
• 38:49
  Speaker 2: that gave me easy access. I mean I had much
• 38:51
  Speaker 2: easier access than you because it could.
• 38:53
  Speaker 1: Have born acknowledging that authenticity.
• 38:57
  Speaker 2: I didn't have easy access, right, Dad wasn't going to
• 39:00
  Speaker 2: call his friendic gold. And so I sort of understood
• 39:08
  Speaker 2: through my life that what the access is what's important, Like,
• 39:15
  Speaker 2: you can't have a meritocracy if not, if you don't
• 39:17
  Speaker 2: have equal access to opportunity. And there's tons of people
• 39:21
  Speaker 2: with great skills and ambition' who just don't have the
• 39:27
  Speaker 2: access and that I sort of I think I understood
• 39:30
  Speaker 2: that as a young person and I was able, I
• 39:32
  Speaker 2: got lucky, the ball bouts my way and so and
• 39:37
  Speaker 2: I didn't really understand it until I moved back from
• 39:40
  Speaker 2: London twenty twelve and one of my colleagues here got
• 39:44
  Speaker 2: me involved in your organization called Europe. Europe was the
• 39:49
  Speaker 2: I think that the original, and I think today is
• 39:52
  Speaker 2: still the best organization that takes kids who've got all
• 39:58
  Speaker 2: the skills, all the ambition, all the capability, but for
• 40:01
  Speaker 2: whatever reason in that kind of high school to early
• 40:05
  Speaker 2: college transitional years, they got derailed. Some happen in their family,
• 40:10
  Speaker 2: some happen to them, and they just couldn't stay on
• 40:14
  Speaker 2: that linear path that you kind of need to be
• 40:17
  Speaker 2: on to have the access. And it gives them a
• 40:22
  Speaker 2: year of training in technical skills and in soft skills
• 40:27
  Speaker 2: how do you operate in a room like this? How
• 40:30
  Speaker 2: do you dress? And then the technical skills that's required
• 40:34
  Speaker 2: for career sustaining.
• 40:36
  Speaker 1: Which nobody teaches jobs.
• 40:38
  Speaker 2: And then it gets them internships at places like Bank
• 40:41
  Speaker 2: of America, Gold and Sacks and Alphabet and Salesforce and
• 40:49
  Speaker 2: those people are able to convert those internships at a
• 40:53
  Speaker 2: very high percentage to full time jobs and their lives
• 40:55
  Speaker 2: are fundamentally changed. These are people who come from under
• 40:59
  Speaker 2: access community. They come from the wrong zip codes. It's
• 41:07
  Speaker 2: tons of different ethnicities, and they just were detailed and
• 41:11
  Speaker 2: they didn't have access. And when I saw the quality
• 41:14
  Speaker 2: of these people, like what they were capable of and
• 41:17
  Speaker 2: their ambition, I said, Wow, like this, we have to
• 41:23
  Speaker 2: try to do something about this at more scale. And
• 41:26
  Speaker 2: it took me a while because when I came back,
• 41:29
  Speaker 2: I was put in charge of our private equity business.
• 41:31
  Speaker 2: I was focus on making sure I knew how to
• 41:32
  Speaker 2: do that and that our business was growing. But maybe
• 41:36
  Speaker 2: five or six years into the job, I said, geez,
• 41:38
  Speaker 2: I need to start thinking about what else can we
• 41:41
  Speaker 2: do to be a force for good. And I said, well,
• 41:44
  Speaker 2: we can employ hundreds of thousands of people. We own
• 41:47
  Speaker 2: control of about one hundred businesses and equity stakes, and
• 41:50
  Speaker 2: maybe two hundred we should We should look at the
• 41:53
  Speaker 2: recruiting practices across all of our companies and look at
• 41:58
  Speaker 2: educational requirements and the educational institutions from which they're recruiting,
• 42:03
  Speaker 2: and can we increase access to groups that have been understirred,
• 42:10
  Speaker 2: people from the wrong zip codes, people didn't go to
• 42:13
  Speaker 2: the to the right colleges, people who are veterans of wars,
• 42:18
  Speaker 2: people who are new immigrants to this country who for
• 42:20
  Speaker 2: whatever reason didn't have access. And we piloted it with
• 42:23
  Speaker 2: six companies we now have I think fifty. This probably
• 42:26
  Speaker 2: all started maybe five years ago, five six years ago.
• 42:29
  Speaker 1: It's pretty amazing. So no government program, no mandate, just.
• 42:35
  Speaker 2: And what's frustrating about it. And the reason I was
• 42:37
  Speaker 2: expressing this in in that milk and thing was we've
• 42:41
  Speaker 2: tried to get mainstream media to cover like what we're doing,
• 42:47
  Speaker 2: because we think it's important to amplify the message. Like
• 42:50
  Speaker 2: if we can do it, so can all these other companies,
• 42:54
  Speaker 2: not just as owned by private equity firms, but privately
• 42:57
  Speaker 2: owned businesses all over, family own businesses, companies.
• 43:00
  Speaker 1: Everybody can do this. Everybody. And it's not all by
• 43:03
  Speaker 1: the way all finance. My friend, our friend Tony Wrestler
• 43:06
  Speaker 1: is doing with Areas, is doing all finance with a
• 43:08
  Speaker 1: bunch of other companies, and so they're that their version
• 43:11
  Speaker 1: of of of coming up folks of from nothing. What
• 43:15
  Speaker 1: you're doing, it's really.
• 43:16
  Speaker 2: Important so it's frustrating to me that this yeah, great,
• 43:20
  Speaker 2: great guy, great firm. What's what's frustrating is that this
• 43:26
  Speaker 2: effort isn't getting anywhere near as much coverage as the
• 43:29
  Speaker 2: effort on employee ownership. So somebody sells a company employees
• 43:33
  Speaker 2: make each employee makes ten grand, fifteen grand. That's amazing
• 43:36
  Speaker 2: and that should happen. But what's I think more fundamental
• 43:40
  Speaker 2: and transformational for the people is getting the job in
• 43:43
  Speaker 2: the first place that allows them to fundamentally change their life.
• 43:45
  Speaker 2: That's right, and that should have equal billing in my
• 43:49
  Speaker 2: opinion with the broad based employee ownership, and it hasn't.
• 43:54
  Speaker 2: And maybe because we're not good storytellers, maybe because it's
• 43:58
  Speaker 2: harder to quantify, I don't know what, but that that
• 44:03
  Speaker 2: was the frustration we were sensing. And I think we've
• 44:05
  Speaker 2: been doing a better job. We have an opportunity summit.
• 44:08
  Speaker 2: There was wanted a Walmart that I was at. Yah.
• 44:12
  Speaker 1: I just I was followed weeks ago. I just wanted
• 44:15
  Speaker 1: to talk to Doug McMillan on the way here. He
• 44:17
  Speaker 1: invited me to come back. Then this relationship capital of
• 44:20
  Speaker 1: forces for good people. Doug McMillan, Michael Harraghetty, Tony Westler,
• 44:24
  Speaker 1: Michael Milkin, h our friend, you know our friends with
• 44:28
  Speaker 1: a KKR, folks Apollo, These are all uh you know,
• 44:32
  Speaker 1: these are all folks who are found a way to
• 44:36
  Speaker 1: succeed themselves. Yes, but they want to do well and
• 44:39
  Speaker 1: do good also because they also see this in there
• 44:42
  Speaker 1: enlightened self interest. It's it's it's in everybody's best interests
• 44:45
  Speaker 1: to expand the table and add a chair to grow
• 44:48
  Speaker 1: the economy for a number of reasons. We're going to
• 44:52
  Speaker 1: run out of time today and want to respect the
• 44:54
  Speaker 1: fact you've got a global company to run. By the way,
• 44:56
  Speaker 1: how many how many countries are you in as the
• 44:59
  Speaker 1: head of Global Week? How many countries are responsible for?
• 45:02
  Speaker 2: I mean it's wherever we invest in private equity, which
• 45:06
  Speaker 2: is US, Europe, of Asia, Asia at least.
• 45:11
  Speaker 1: Yeah, I want to get you, want to get you
• 45:12
  Speaker 1: in Africa. Yeah, it's a huge for sure. So look,
• 45:28
  Speaker 1: we could talk all day. I hope people got a
• 45:32
  Speaker 1: tone in a texture for in a foothold and the
• 45:35
  Speaker 1: what private equity is? They understand maybe banking, and they
• 45:38
  Speaker 1: understand that they heard of investment banking. It might have
• 45:40
  Speaker 1: heard of venture capital. This is a bit of a mystery,
• 45:42
  Speaker 1: a bit of a black box, and uh, there's no
• 45:45
  Speaker 1: sign outside it says private equity here. Question as we
• 45:49
  Speaker 1: wrap up, there's somebody listening to this, A young Joe,
• 45:55
  Speaker 1: a young John with incredible potential, incredible who's what they
• 46:01
  Speaker 1: call it? Ambition male female. They're wondering if they can
• 46:07
  Speaker 1: do a roll up. Roll up is to take an
• 46:09
  Speaker 1: industry and find commonality in other markets and buy these
• 46:14
  Speaker 1: companies and roma is there hope for some dreamer out there?
• 46:20
  Speaker 1: Who's who is sitting there and thinking? Because your private
• 46:23
  Speaker 1: equity is big with you, but you also have small
• 46:25
  Speaker 1: private quity. There are small private equity firms all across.
• 46:29
  Speaker 1: So is there a hope for in this current environment
• 46:32
  Speaker 1: for a young lady or a young man, urban or rural,
• 46:37
  Speaker 1: black or white, doesn't matter, who have a dream and
• 46:42
  Speaker 1: they want to be part of the American dream. They
• 46:44
  Speaker 1: want to They've found some niche, they found some business
• 46:49
  Speaker 1: or industry and they think it can be rolled up
• 46:51
  Speaker 1: and grown. Can they steal to this in this day?
• 46:54
  Speaker 1: Feel they can get the attention of a private equity
• 46:57
  Speaker 1: firm and be their partners.
• 46:59
  Speaker 2: I think so. I think it's easier today than it
• 47:01
  Speaker 2: was thirty odd years ago. Because there are just private
• 47:04
  Speaker 2: equity is a much more accepted asset class. It's become
• 47:10
  Speaker 2: an institutional asset class. There are thousands of firms, thousands,
• 47:14
  Speaker 2: thousands who are doing this and looking for great ideas
• 47:20
  Speaker 2: and great entrepreneurs. Now you've got to find them. But
• 47:24
  Speaker 2: I think also you can now find them because there's the.
• 47:29
  Speaker 1: Internet and artificial intelligence.
• 47:31
  Speaker 2: It takes if you have a great idea, like I
• 47:33
  Speaker 2: go roll up you know some professional services or home
• 47:37
  Speaker 2: services or whatever, and you've got a relationship with a
• 47:40
  Speaker 2: with a family that owns a small business and you
• 47:42
  Speaker 2: want to use it as a platform and they want
• 47:45
  Speaker 2: to do business with you, and you you can go
• 47:47
  Speaker 2: find funding. It's you know, it's a lot of work,
• 47:51
  Speaker 2: but you can do it.
• 47:53
  Speaker 1: So last couple of off PhDs are good. PhDs are
• 47:56
  Speaker 1: better or at least as good. Right, So hustle is
• 48:00
  Speaker 1: what we really have more than degrees. Is gives you
• 48:03
  Speaker 1: a leg up, gives you an opportunity to get in
• 48:05
  Speaker 1: the game. And for those who were questioning capitalism, and
• 48:11
  Speaker 1: there are really crooks and bad people out there, we
• 48:13
  Speaker 1: both acknowledge that, but they get all the attention the
• 48:17
  Speaker 1: folks who are doing it right need to be your
• 48:20
  Speaker 1: light on the heel. And I say to people all
• 48:22
  Speaker 1: the time, even if you want to distribute money like
• 48:25
  Speaker 1: a socialist, you're the first collected like a capitalist, right,
• 48:29
  Speaker 1: And this isn't a good example of doing well by
• 48:31
  Speaker 1: doing good. I liked that you said you became you
• 48:35
  Speaker 1: had to focus on your job as leeting private equity,
• 48:38
  Speaker 1: because if you didn't do that job, you'd be out.
• 48:40
  Speaker 1: You had to perform before you have anybody else. You
• 48:42
  Speaker 1: have to help yourself. And then you said, Okay, now
• 48:45
  Speaker 1: that I've done well, maybe i'll do a little good.
• 48:47
  Speaker 1: That's the right tone and texture. Joeannah, thank you, Thank
• 48:52
  Speaker 1: you again. I want to respect the time, the fact
• 48:54
  Speaker 1: that you're busy. If you wanted to come back, let
• 48:56
  Speaker 1: us know. In the comments, he's already said he's self volunteered,
• 48:59
  Speaker 1: but that's cool. But if you want to come back,
• 49:01
  Speaker 1: and you know, let us know what you think. I'm
• 49:03
  Speaker 1: sure I'd love to come back because I think that
• 49:06
  Speaker 1: just listening to this, there's probably a half dozen of
• 49:09
  Speaker 1: subtopics we could have gotten into going down this route,
• 49:12
  Speaker 1: down that route to really unpack this for people so
• 49:14
  Speaker 1: they can get their hands around it and believe that
• 49:18
  Speaker 1: they can do it too. But if this is the
• 49:21
  Speaker 1: only time we get together, it's been incredibly valuable and
• 49:24
  Speaker 1: exactly what I had in moth. Great.
• 49:26
  Speaker 2: Thank you, that's great.
• 49:27
  Speaker 1: Thank you, Joe.
• 49:27
  Speaker 2: I appreciate it.
• 49:29
  Speaker 1: And we were teasing earlier about I say. His name
• 49:31
  Speaker 1: is Joe Barrata and he's a great guy. He's the
• 49:34
  Speaker 1: head of a global private equity for Blackstone, which is
• 49:39
  Speaker 1: a one point two trillion dollar transformational platform for capitalism
• 49:46
  Speaker 1: for good in the world. Look them up and attached
• 49:50
  Speaker 1: their dream making with your dream Planning. John O'Briant is
• 49:55
  Speaker 1: Joe Barata. This is Money and Wealth on iHeartRadio and
• 49:59
  Speaker 1: the Black Effect Network. Go live your dreams starting today.
• 50:20
  Speaker 1: Money and Wealth with John O'Brien is a production of
• 50:23
  Speaker 1: the Black Effect podcast Network. For more podcasts from the
• 50:26
  Speaker 1: Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts,
• 50:31
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