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Stephen Schwarzman · The David Rubenstein Show

• 0:01
  Speaker 1: Stephen Schwartzman is the founder of Blackstone Group, the largest
• 0:04
  Speaker 1: alternative asset manager in the world with five hundred fifty
• 0:07
  Speaker 1: four billion dollars worth of assets under management. With a
• 0:11
  Speaker 1: wide range of global business interests in private equity, debt financing,
• 0:15
  Speaker 1: hedge fund management, and real estate acquisitions, Schwartzman is one
• 0:19
  Speaker 1: of the most powerful people on Wall Street. He was
• 0:22
  Speaker 1: named one of Time Magazine's most Influential People in two
• 0:25
  Speaker 1: thousand seven, and has donated hundreds of millions of dollars
• 0:29
  Speaker 1: to different causes over the years. Schwartzman sat down with
• 0:33
  Speaker 1: David Rubinstein, co founder of the Carlisle Group and host
• 0:36
  Speaker 1: of the Bloomberg television show Peer to Peer Conversations, to
• 0:39
  Speaker 1: discuss starting the firm, surviving the real estate crash of
• 0:42
  Speaker 1: two thousand seven, and being rejected from Harvard. Before we
• 0:47
  Speaker 1: get into Blackstone, I like to talk about a couple
• 0:49
  Speaker 1: other things. Um, you grew up in a middle class
• 0:52
  Speaker 1: environment in Philadelphia, and now you're one of the wealthiest
• 0:55
  Speaker 1: men in the world. You're one of the biggest philanthropists
• 0:57
  Speaker 1: in the world, and you are an advised with the presidents.
• 1:00
  Speaker 1: The last three presidents have asked your advice on various things.
• 1:02
  Speaker 1: And you're very close to President Trump. So when you're
• 1:04
  Speaker 1: growing up in Philadelphia, did you ever, in your wildest dreams,
• 1:07
  Speaker 1: imagine this could possibly happen? No? Did you? Are you?
• 1:11
  Speaker 1: Do you pinch yourself every day now you think about
• 1:14
  Speaker 1: where you have achieved your status in life? Yeah, frankly,
• 1:18
  Speaker 1: every day is an adventure. Uh, and every day is
• 1:21
  Speaker 1: a privilege. Now you've come to know President Trump quite
• 1:25
  Speaker 1: well in recent years since he's been president. Did you
• 1:27
  Speaker 1: know him before he was president? Or know him very well? Then?
• 1:29
  Speaker 1: I knew him before he was president. So when he
• 1:34
  Speaker 1: told you I'm running thinking of running for president, did
• 1:36
  Speaker 1: you tell him you have a good chance? Or do
• 1:37
  Speaker 1: you tell him that's a tough thing to do. I
• 1:40
  Speaker 1: thought that was a veritable impossibility. Okay, So when he
• 1:44
  Speaker 1: got elected, did he say, Steve Um, you were wrong
• 1:47
  Speaker 1: and why don't you come in and serve in the administration?
• 1:50
  Speaker 1: I can't tell you exactly what he said, but it
• 1:52
  Speaker 1: was very funny. Uh, And uh, you know I I
• 1:57
  Speaker 1: didn't want to be part of, uh the government. I
• 2:00
  Speaker 1: have a wonderful life as it is, and I didn't
• 2:04
  Speaker 1: want to disrupt that. So you've been an advisor off
• 2:07
  Speaker 1: and one for from the beginning administration to president. And
• 2:10
  Speaker 1: he's actually to do a number of assignments. But I've
• 2:11
  Speaker 1: never seen him tweet anything unfavorable about you. So you've
• 2:14
  Speaker 1: managed to stay on his good side. What's the secret
• 2:17
  Speaker 1: to staying on his good side? Well, you tell people
• 2:19
  Speaker 1: the truth. Uh. You know, I don't work in the administration.
• 2:23
  Speaker 1: I'm an independent person and I give my views. I
• 2:28
  Speaker 1: find that he likes to listen. Uh, and and that's
• 2:32
  Speaker 1: I think a good thing. But I suppose he's reelected
• 2:35
  Speaker 1: and he said, I, Steve like to be Secretary of State,
• 2:38
  Speaker 1: Secretary of Treasury. Would you ever consider that? When I
• 2:41
  Speaker 1: was younger, I would do that, David, I'm at a
• 2:43
  Speaker 1: point in my life now where that that's not where
• 2:46
  Speaker 1: I want to spend my time. Okay, So you have
• 2:49
  Speaker 1: spent some time recently writing a new book. Um, this
• 2:52
  Speaker 1: is Steve Schwartzman. What it takes Lessons in the Pursuit
• 2:55
  Speaker 1: of Excellence? Well, I read the book and it's quite fascinating.
• 2:58
  Speaker 1: I know you quite well, but I didn't know a
• 3:01
  Speaker 1: lot about your background, and which I found quite interesting.
• 3:03
  Speaker 1: And why don't we start with your back when I
• 3:05
  Speaker 1: take you through the creation of Blackstone. So you grew
• 3:08
  Speaker 1: up in the Philadelphia suburbs, is that right? That's right?
• 3:11
  Speaker 1: And you were from a middle class family. Your father
• 3:13
  Speaker 1: had a curtain store. Yeah, curtain story sort of would
• 3:18
  Speaker 1: have been a bed bath and beyond the type of store.
• 3:22
  Speaker 1: And it was started by his father, and so he
• 3:25
  Speaker 1: came into the business. And did they say, Steve, you're
• 3:28
  Speaker 1: the oldest of the three sons that he had. Now
• 3:30
  Speaker 1: it's time for you to come into the business. So
• 3:32
  Speaker 1: that was sort of expected. And I found that standing
• 3:36
  Speaker 1: up and waiting on people buying linen handkerchiefs was perhaps
• 3:41
  Speaker 1: not my highest and best use. But you told your father,
• 3:46
  Speaker 1: according to the book, that maybe he should expand it,
• 3:48
  Speaker 1: do more than one store, and maybe become bead bath
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  Speaker 1: and beyond. What did he say to that advice? He said, Steve,
• 3:54
  Speaker 1: that's really interesting. I don't feel like doing that. And
• 3:58
  Speaker 1: I said, Dad, why why don't you want to do?
• 4:00
  Speaker 1: Would we have lots of people in this store. I
• 4:03
  Speaker 1: haven't seen another store like this. I think we could
• 4:06
  Speaker 1: be national and he just said not for him, he said,
• 4:10
  Speaker 1: I'm just not interested. So I I said, well, why
• 4:13
  Speaker 1: don't we open stores? All over Pennsylvania because I was
• 4:17
  Speaker 1: from Philadelphia. And he said, I don't want to do that.
• 4:21
  Speaker 1: So then I had a third option, which is why
• 4:24
  Speaker 1: don't we open stores all over Philadelphia? And he said
• 4:28
  Speaker 1: I don't want to do that either. I said, Dad,
• 4:30
  Speaker 1: why why don't you want to do this? And he said,
• 4:34
  Speaker 1: I'm happy the way I am. I have a house,
• 4:39
  Speaker 1: I have two cars. I have enough money to send
• 4:43
  Speaker 1: you and your brothers to college, and that's really all
• 4:46
  Speaker 1: I want. And I shook my head and I went,
• 4:50
  Speaker 1: I don't understand that. I just saw the opportunity to
• 4:54
  Speaker 1: open stores all over the country, and he just didn't
• 4:58
  Speaker 1: want to do it. And surprising to me is he
• 5:01
  Speaker 1: was very very intelligent. When you're saying your book that
• 5:04
  Speaker 1: he was far more intelligent than you, that might be
• 5:07
  Speaker 1: an exaggeration, but he obviously was a very smart person.
• 5:10
  Speaker 1: That was not an exaggeration because I would talk to him, Uh,
• 5:14
  Speaker 1: when I was starting my career on things, and no
• 5:17
  Speaker 1: matter what I was working on, he could always find
• 5:20
  Speaker 1: the weakness in the argument or in the deal. And
• 5:25
  Speaker 1: what about your mother? What did she do? She she
• 5:28
  Speaker 1: was just aggressive? Uh, she was a housewife. Was the
• 5:33
  Speaker 1: nineteen fifties, uh, and in sixties, and I have twin brothers,
• 5:38
  Speaker 1: and three of us were a handful, and that that
• 5:42
  Speaker 1: was the paradigm at that time. So, as I said,
• 5:44
  Speaker 1: I've known you for quite a while, but honestly, until
• 5:46
  Speaker 1: I read this book, I did not realize you were
• 5:48
  Speaker 1: a track star. Were there a lot of you know,
• 5:51
  Speaker 1: white Jewish boys on the track team or were you
• 5:54
  Speaker 1: a minority in that regard. I think I was a
• 5:56
  Speaker 1: minority of one. You say in the book, which obviously
• 5:59
  Speaker 1: is true, that you did something that's quite audacious. You
• 6:02
  Speaker 1: applied to Harvard Yale, and I think Princeton and Harvard
• 6:06
  Speaker 1: did not accept you. So you then got out some
• 6:09
  Speaker 1: coins and called the director of admissions at Harvard and
• 6:12
  Speaker 1: said you made a mistake. What was that? Like? That
• 6:15
  Speaker 1: was frightening? Actually, uh, you know, we didn't have cell
• 6:19
  Speaker 1: phones then, so so I got some quarters, uh, and
• 6:24
  Speaker 1: I found the phone number for the admissions office and
• 6:27
  Speaker 1: some document and and the pay phone was was outside
• 6:32
  Speaker 1: the gym. Uh, And I stood there and put those
• 6:36
  Speaker 1: quarters on in and you could hear the ringing when
• 6:39
  Speaker 1: they dropped down, and I asked for the dean of admissions,
• 6:42
  Speaker 1: and I was put right through. And so he picks
• 6:45
  Speaker 1: up the phone and I said, Hi, I'm Steve Schwartzman
• 6:48
  Speaker 1: from Abington High School in Abington, Pennsylvania, and I'm on
• 6:52
  Speaker 1: the waiting list and I'd really like to go to Harvard,
• 6:57
  Speaker 1: So why don't you take me off the waiting list?
• 7:00
  Speaker 1: And so he said, how in the world did you
• 7:04
  Speaker 1: get through to me? He said, you're not allowed to
• 7:07
  Speaker 1: talk to me. I don't talk to applicants. Um And
• 7:11
  Speaker 1: I said, but we're talking and he said yes, he said,
• 7:15
  Speaker 1: he said, you sound like a very nice young man,
• 7:18
  Speaker 1: but unfortunately, we're not going to be taking anyone from
• 7:22
  Speaker 1: the waiting list this year, you know, we are. Yield
• 7:25
  Speaker 1: was was higher than we thought. And where where else
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  Speaker 1: were you accepted? I said, well, I've accepted at Yale.
• 7:33
  Speaker 1: And he said, well, you'll have a very good time
• 7:35
  Speaker 1: at Yale and you'll enjoy it. I said, I'm sure
• 7:38
  Speaker 1: I would. I said, but that wasn't my objective for
• 7:41
  Speaker 1: the phone call. He said, well, I understand that. I'm
• 7:44
  Speaker 1: just so sorry. Did you ever see him again or
• 7:46
  Speaker 1: hear from rom again in life? Ironically, it's really a
• 7:50
  Speaker 1: great story. Uh. The CEO of Mackenzie was in my
• 7:55
  Speaker 1: office twenty five years later, and he was on the
• 8:00
  Speaker 1: Harvard Corporation. Uh and Um I told him this story.
• 8:07
  Speaker 1: So he asked what year. And that dean of admissions
• 8:11
  Speaker 1: UM was a close friend of his. He said, do
• 8:14
  Speaker 1: you mind if I told him that I ran into you.
• 8:16
  Speaker 1: I said, no, that's fine. Uh. And and so I
• 8:19
  Speaker 1: got a letter two weeks later from that former dean
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  Speaker 1: of admissions. Uh. And he said, I remember getting that
• 8:26
  Speaker 1: phone call in sixty four and he said, every time
• 8:34
  Speaker 1: I see you in a newspaper, I realized I blew it. Uh.
• 8:40
  Speaker 1: I wish I made all the right decisions, but as
• 8:43
  Speaker 1: I told you at the time, there were no no
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  Speaker 1: beds at the end you Um then went to Harvard
• 8:50
  Speaker 1: Business School? Yes? And did you enjoy Harvard Business School?
• 8:54
  Speaker 1: Did you want to drop out? Yes? And what kept
• 8:57
  Speaker 1: you from dropping out? I wrote a letter? Uh? There
• 9:02
  Speaker 1: was no internet. Uh. I wrote a letter to Dick Jennerette,
• 9:05
  Speaker 1: who was president of a firm called Donaldson Lufkin Jennerette,
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  Speaker 1: which is where I worked a bit right after I graduated,
• 9:12
  Speaker 1: before I went into the army. And I said, Dick,
• 9:15
  Speaker 1: it's called up here. The classes are highly repetitive. Uh.
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  Speaker 1: And I'd like to come back to work, and if
• 9:23
  Speaker 1: you don't want me to d LJ, I'll do something else.
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  Speaker 1: What do you think? So, so he wrote me a
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  Speaker 1: six page letter and he said, that's just the way
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  Speaker 1: I felt in December of my first year, and I
• 9:35
  Speaker 1: was going to transfer uh to to the Economic School
• 9:39
  Speaker 1: and get a PhD. And I didn't drop out, and
• 9:43
  Speaker 1: you shouldn't either. You should complete what you're doing. And
• 9:46
  Speaker 1: I was so dumbfound that he was so kind and
• 9:51
  Speaker 1: thoughtful and had similar feelings and and basically said, don't
• 9:56
  Speaker 1: you do that. It's the wrong decision that I just
• 10:00
  Speaker 1: listened to him and stay. You stayed. You must have
• 10:03
  Speaker 1: done pretty well because you had lots of offers afterwards. Yes,
• 10:06
  Speaker 1: so you interviewed with number of firms and the one
• 10:08
  Speaker 1: you decided to go with was Lehman Brothers. Yes, why
• 10:10
  Speaker 1: did you pick Lehman Brothers? So? I thought it would
• 10:12
  Speaker 1: be the most interesting cast of characters. Uh. You know
• 10:16
  Speaker 1: that was before m b a's went to Wall Street,
• 10:20
  Speaker 1: uh and um so, so they just hired at random.
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  Speaker 1: And this was the first class of MBA's that Lehman
• 10:27
  Speaker 1: was going to hire, and the people were fascinating you
• 10:29
  Speaker 1: had x CIA agents, you had people who had worked
• 10:33
  Speaker 1: on oil rigs, who who had all kinds of unusual
• 10:38
  Speaker 1: people working at the firm. So I thought, for whatever
• 10:43
  Speaker 1: the reason, it was the right personality fit for me.
• 10:45
  Speaker 1: And you became a partner at an early age, I
• 10:47
  Speaker 1: think thirty one, something like thirty one, thirty one years old.
• 10:51
  Speaker 1: You're a partner at Lehman Brothers and life was going well.
• 10:54
  Speaker 1: But then there's a problem at Lehman Brothers. And Lehman
• 10:56
  Speaker 1: Brothers ultimately was sold is that right? Yes, that's right.
• 11:00
  Speaker 1: I sold it, uh, and to American Express. And the
• 11:03
  Speaker 1: problem was that in the trading side of the firm
• 11:06
  Speaker 1: there was a position taken that really went wrong. So
• 11:10
  Speaker 1: you then decided to join somebody who had been previously
• 11:13
  Speaker 1: been the president of Lehman Brothers, but he was eased out. Um,
• 11:16
  Speaker 1: that's Pete Peterson, previously also Secretary of Commerce and the
• 11:19
  Speaker 1: Knick's administration. And you and he decided to start a
• 11:22
  Speaker 1: new firm in Yes, and that firm's name was um Blackstone.
• 11:29
  Speaker 1: So Blackstone starts two people, you and Pete Peterson. Uh.
• 11:34
  Speaker 1: Where did you have to get the money for the firm? Well,
• 11:36
  Speaker 1: it didn't require much. It was an advisory business, so
• 11:39
  Speaker 1: you talk and people give you money. You each put
• 11:42
  Speaker 1: in two hundred thousand dollars. The strategic plan for the business,
• 11:46
  Speaker 1: which we announced in letter to everyone we knew, was
• 11:50
  Speaker 1: first you know, the m and a advisory business because
• 11:53
  Speaker 1: it required no capital. Right. Uh. The second was going
• 11:57
  Speaker 1: into the private equity business. And you had never been,
• 12:00
  Speaker 1: you or Pete privately invested before, and Peach that since
• 12:03
  Speaker 1: we haven't been, we'll go out and raise a small fund,
• 12:05
  Speaker 1: fifty million dollar fund. You said, if I recall the book,
• 12:09
  Speaker 1: let's go raise a billion dollars. Billion dollars. So that's
• 12:12
  Speaker 1: fairly audacious. Where were you gonna get a billion dollars?
• 12:15
  Speaker 1: So we went to our top eight team prospects. Everyone
• 12:19
  Speaker 1: said no, except Metropolitan Life in New York Life. One
• 12:23
  Speaker 1: said I'll give you a fifty million. The other one said,
• 12:26
  Speaker 1: I'll give you twenty five. But I don't want to be,
• 12:29
  Speaker 1: you know, sort of a big part of the things
• 12:30
  Speaker 1: that you have to raise at least five million dollars
• 12:34
  Speaker 1: or else our commitments are worthless. And we had already
• 12:38
  Speaker 1: gone to everybody we knew who was the best targets,
• 12:41
  Speaker 1: and I sort of looked at that and I went,
• 12:43
  Speaker 1: oh MG, we are going to fail. And we just
• 12:48
  Speaker 1: met one more company is called Prudential Life Insurance Company,
• 12:52
  Speaker 1: which was the number one financier in in those days.
• 12:57
  Speaker 1: And we're over at Newark on a Friday, having uh
• 13:02
  Speaker 1: lunch with the chief investment officer, and he was having
• 13:07
  Speaker 1: a two nail and white bread cut across and I'm
• 13:11
  Speaker 1: busy pitching this private equity fund and you can share
• 13:16
  Speaker 1: part of our advisory profits as a merchant bank. And
• 13:20
  Speaker 1: he keeps chewing and Adam's apples going up and down,
• 13:24
  Speaker 1: and I keep doing my thing, finishes the first half
• 13:28
  Speaker 1: of the sandwich, gets through the other half halfway, and
• 13:33
  Speaker 1: he looks over at me and he says, I think
• 13:36
  Speaker 1: that's a good idea. Put me down for a hundred
• 13:40
  Speaker 1: and I just I can still remember that moment. Did
• 13:46
  Speaker 1: did he actually say he's going to give us a
• 13:50
  Speaker 1: hundred million dollars? The number one investor in the world,
• 13:55
  Speaker 1: so if he gives us money, other people will follow him.
• 14:00
  Speaker 1: I realized somehow in Newark on some dreary friday, and
• 14:06
  Speaker 1: he gave us the money. I just didn't want him
• 14:08
  Speaker 1: to choke on the rest of that Sandwich, make sure
• 14:11
  Speaker 1: he lived to give you the money exactly. You did
• 14:13
  Speaker 1: pretty well and your devise, your business is booming. You
• 14:16
  Speaker 1: decided to get into um other businesses. The first one
• 14:20
  Speaker 1: was ended up is black Rock with Larry Fink, and
• 14:23
  Speaker 1: Larry brought people over and they were called Blackstone Financial,
• 14:28
  Speaker 1: Blackstone Financial. And so you actually owned the firm, or
• 14:32
  Speaker 1: own part of the Okay, so you owned fifty fifty
• 14:37
  Speaker 1: and now black Stone financials now black Rock, which is
• 14:40
  Speaker 1: managing like six trillion dollars I guess or something like that,
• 14:44
  Speaker 1: six and a half six and a half trillion. Okay,
• 14:46
  Speaker 1: So how did they escape from black Stone? Well, they
• 14:50
  Speaker 1: didn't really escape. Uh. You know, we set up in
• 14:53
  Speaker 1: an economic arrangement which ended up being inappropriate for a
• 15:00
  Speaker 1: business that was growing as rapidly needed to add as
• 15:03
  Speaker 1: many people. Uh. And I made a mistake, you know,
• 15:07
  Speaker 1: I took the original agreement. I didn't want to change it,
• 15:09
  Speaker 1: which was advantageous, uh, you know for my side. Uh.
• 15:14
  Speaker 1: And uh, the black Rock people, Blackstone Pavior, Blackstone Financial
• 15:18
  Speaker 1: people were frustrated with that. And and that was the
• 15:22
  Speaker 1: the judgment of an amateur me. On two thousand seven,
• 15:27
  Speaker 1: you decide maybe you should take the firm public. It's
• 15:30
  Speaker 1: a private company. Why did you take the firm public? Well,
• 15:33
  Speaker 1: I took a public for a lot of different reasons.
• 15:36
  Speaker 1: I had a sixth sense that something terrible was going
• 15:39
  Speaker 1: to happen in the environment. Money was so available, money
• 15:43
  Speaker 1: was cheap, everybody was doing things, prices were crazy, and
• 15:49
  Speaker 1: I just had a sense this was going to come
• 15:51
  Speaker 1: to a bad ending and we should have a lot
• 15:53
  Speaker 1: of capital to make sure we were bomb proof. So
• 15:57
  Speaker 1: so that was one reason. A second reason is I
• 16:01
  Speaker 1: thought it would be a great branding event for the
• 16:04
  Speaker 1: firm on a global basis. Everybody would know who we were,
• 16:08
  Speaker 1: and that would make as easier to raise money as
• 16:11
  Speaker 1: as well as to um have people sell us companies
• 16:15
  Speaker 1: and other assets. So ultimately what happened was the China,
• 16:18
  Speaker 1: Chinese sovereign wealth from was the process of being created.
• 16:21
  Speaker 1: They heard about your going public and they threw an intermediary,
• 16:25
  Speaker 1: Actually somebody working for you said can we buy a
• 16:27
  Speaker 1: big stake in the I p O? And you ultimately
• 16:29
  Speaker 1: decided to let them do that. Right. I PO was
• 16:31
  Speaker 1: going to be four billion dollars. They offered to invest
• 16:34
  Speaker 1: three billion, which we didn't even ask them. Uh, and
• 16:38
  Speaker 1: I hadn't been to China since, so this was it
• 16:42
  Speaker 1: was shocking because um that China had not invested in
• 16:48
  Speaker 1: another public company since since it was founded in nine
• 16:55
  Speaker 1: So so this was a complete paradigm shift for for China.
• 17:00
  Speaker 1: We were chosen by them. It was pretty heavy stuff.
• 17:03
  Speaker 1: It worked out and UM ultimately you did the I
• 17:06
  Speaker 1: p O and Chinese invested. And then after you did
• 17:09
  Speaker 1: the I p O, let me mention two deals that
• 17:12
  Speaker 1: you did. One was the biggest real estate deal in history,
• 17:15
  Speaker 1: e OP real estate company built by Sam's l and
• 17:19
  Speaker 1: you did a forty billion dollar buyout and effect is
• 17:22
  Speaker 1: that right? Thirty nine actually? Okay, all right, thirty nine
• 17:26
  Speaker 1: billion dollars. It was a bidding war. You won the
• 17:28
  Speaker 1: bidding war, but the real estate market crumbled right after
• 17:31
  Speaker 1: the deal was done. So how did you survive with
• 17:33
  Speaker 1: that deal? Well, we worried because the same reason we're
• 17:37
  Speaker 1: going public. I since we were in market top for
• 17:42
  Speaker 1: real estate. So so just buying thirty nine billion dollars
• 17:47
  Speaker 1: of real estate, UM, I thought it was dangerous because
• 17:53
  Speaker 1: you had to pay a pretty good price to get
• 17:55
  Speaker 1: it because it was competitive. So as soon as we
• 17:59
  Speaker 1: decided we were going to actually raise our price enough
• 18:03
  Speaker 1: to be the winner. Um, there were two or three
• 18:07
  Speaker 1: of us sitting around saying, this deal is potentially dangerous.
• 18:12
  Speaker 1: We've got to reduce the leverage, and we've got to
• 18:17
  Speaker 1: take advantage of the crazy prices that people are paying.
• 18:22
  Speaker 1: So we decided to sell half of what we bought
• 18:26
  Speaker 1: the same day we bought it. So when I told
• 18:29
  Speaker 1: people that, they just sort of looked at me and
• 18:33
  Speaker 1: and said the same day I said, I don't want
• 18:37
  Speaker 1: to take any risk that the world's going to change
• 18:42
  Speaker 1: and we're gonna be stuck with all of this. So
• 18:44
  Speaker 1: we basically had every conference room at the firm active
• 18:50
  Speaker 1: one buying. But then we broke it up into all
• 18:53
  Speaker 1: these pieces. But if you hadn't done that, you would
• 18:55
  Speaker 1: have lost all your money. I think that's probably market creater.
• 18:58
  Speaker 1: Virtually the next day because most of the people who
• 19:02
  Speaker 1: bought from us basically got into enormous financial trouble or
• 19:08
  Speaker 1: went in solvent. And so after we did that and closed,
• 19:14
  Speaker 1: everybody went home. They've been sleepless. Three days later they
• 19:17
  Speaker 1: came back and we said, let's sell half I've always
• 19:24
  Speaker 1: got left now and be even more conservative. So everybody
• 19:30
  Speaker 1: went back to work. And we ended up with one
• 19:32
  Speaker 1: quarter of what we bought very conservatively priced so we
• 19:37
  Speaker 1: could survive any kind of nuclear winner. We ended up
• 19:40
  Speaker 1: making three times our money buying this, this giant thing
• 19:46
  Speaker 1: at the top end. And there's never been more than
• 19:49
  Speaker 1: ten billion dollars bought or sold by a group. We
• 19:54
  Speaker 1: did seventy billion. So you also bought another company before
• 19:59
  Speaker 1: the recession, the hit that was called Hilton, and that
• 20:02
  Speaker 1: was a leverage buy out, some people might say, at
• 20:05
  Speaker 1: the top of the market, and that deal went down
• 20:09
  Speaker 1: in terms of the debt and maybe the equity, but
• 20:11
  Speaker 1: then you ultimately did things that made it the most
• 20:13
  Speaker 1: profitable buy out in the history of buyouts. What did
• 20:16
  Speaker 1: you do, Well, that was pretty easy, actually looked hard,
• 20:20
  Speaker 1: but uh, you know Hilton had not been integrated. They
• 20:24
  Speaker 1: were running four different headquarters. Uh, and there was a
• 20:28
  Speaker 1: huge modernization and and and and cost take out. Ultimately,
• 20:33
  Speaker 1: you've sold it about a fourteen billion dollar profit. Yes, well,
• 20:36
  Speaker 1: if we had held it, it would have been held
• 20:38
  Speaker 1: it longer, would have been over twenty So so it
• 20:41
  Speaker 1: was a good day because in recent years you become
• 20:46
  Speaker 1: one of the nation's biggest philanthropists. You gave three and
• 20:49
  Speaker 1: fifty million dollars to m I T for a computing center.
• 20:52
  Speaker 1: And relating to artificial intelligence, you never went to m
• 20:55
  Speaker 1: I T. You had no connection there. How did that
• 20:57
  Speaker 1: come about? Well? That was that was really fascinating. Uh.
• 21:00
  Speaker 1: I'm not a technologist. I had met the president of
• 21:04
  Speaker 1: m I T, Raphael Raefe, and we started talking, uh,
• 21:08
  Speaker 1: and you know, we were concerned that the US was
• 21:12
  Speaker 1: just not investing enough in these technologies. And I said,
• 21:16
  Speaker 1: do you have any interesting ideas? So he came back
• 21:22
  Speaker 1: with a let's double the computer science faculty. Let's take
• 21:27
  Speaker 1: our established a new department, in effect, a new school,
• 21:32
  Speaker 1: called it a college, which is now going to be
• 21:34
  Speaker 1: the m I T. Schwartzman College of Computing. And let's
• 21:38
  Speaker 1: connect AI to all the other departments at m I T.
• 21:43
  Speaker 1: So m I T will become the first AI enabled
• 21:47
  Speaker 1: university in the world. And I said, now that's a
• 21:51
  Speaker 1: vision I could buy in. On final question, I'd like
• 21:54
  Speaker 1: to ask you it just deals with this um. If
• 21:57
  Speaker 1: somebody is watching, we're reading your book and they want
• 22:00
  Speaker 1: to be a leader, leader in business or philanthropy or
• 22:03
  Speaker 1: or in government, what do you think is the key
• 22:05
  Speaker 1: quality to be a leader, and what have you seen
• 22:07
  Speaker 1: as your key quality enable you to be a leader.
• 22:09
  Speaker 1: I think to be a leader you have to be
• 22:12
  Speaker 1: a really good listener. Um. You have to understand what's
• 22:16
  Speaker 1: going on around you. You have to be measured um,
• 22:22
  Speaker 1: and you have to realize that everything you do is
• 22:27
  Speaker 1: amplified in the minds of the people who are listening
• 22:30
  Speaker 1: to you. So so care, nuance uh, kindness uh. But
• 22:38
  Speaker 1: defining a culture, that's what a leader does. Steve, thanks
• 22:43
  Speaker 1: very much for this time. I appreciate it. Thanks David.
• 22:46
  Speaker 1: That's Blackstone Group Chairman and chief executive Officer Steven Schwartzman.