Latest / Masters in Business / Joan Solotar on Private Equity Funds (Podcast)

Transcript

Joan Solotar on Private Equity Funds (Podcast) · Masters in Business

0:02
Speaker 1: This is Mesters in Business with Very Results on Bluebird Radio.
0:09
Speaker 1: This week, on the podcast, I have an extra special guest,
0:12
Speaker 1: Joan Solitar. She's the global head of Private Wealth Solutions
0:17
Speaker 1: at private investment giant black Stone. They run about six
0:22
Speaker 1: four billion dollars in assets. The Private Wealth Solution Group
0:26
Speaker 1: runs over a hundred billion dollars and man, this is
0:30
Speaker 1: name it. If you're interested in any sort of alternative investment,
0:34
Speaker 1: from private equity to real estate, to non traded rates
0:39
Speaker 1: to debt and credit, you're gonna find this to be
0:43
Speaker 1: absolutely fascinating. Joan has had really an amazing career from
0:47
Speaker 1: from research uh to she helped bring black Stone public.
0:53
Speaker 1: She's just got a tremendous background and is incredibly knowledgeable
0:57
Speaker 1: about the space. I only suggests listening to this twice
1:02
Speaker 1: because a lot of stuff goes by quickly with no
1:04
Speaker 1: further ado. My conversation with Joan Solotar. This is Master's
1:11
Speaker 1: in Business with Very Renaults on Bloomberg Radio. My special
1:18
Speaker 1: guest this week is Joan Solotar. She is Blackstone's global
1:23
Speaker 1: head of Private Wealth Solutions. She has been named one
1:26
Speaker 1: of the hundred most Influential Women in Finance several years running.
1:31
Speaker 1: Black Stone is the world's largest alternative asset manager, with
1:35
Speaker 1: six four billion in assets. Jones Department, the Private Wealth
1:40
Speaker 1: Solution manages over a hundred billion dollars in assets. Before
1:45
Speaker 1: joining black Stone in two thousand and seven, Miss Solotar
1:48
Speaker 1: was head of equity research at Bank America Securities and
1:53
Speaker 1: a highly ranked institutional investor All Star. Joan Solotar, Welcome
1:58
Speaker 1: to Bloomberg. Thank you, thanks for having me my pleasure. So,
2:02
Speaker 1: so let's talk a little bit about your career. You
2:05
Speaker 1: were at Credit Swiss and uh D l J as
2:09
Speaker 1: a highly ranked analyst. What what did you cover? What
2:11
Speaker 1: was your space? I covered financial services pretty much anything
2:16
Speaker 1: non bank uh so started in insurance and then wound
2:21
Speaker 1: my way to you know, mortgage insurance companies. Eventually really
2:27
Speaker 1: focused on the brokerage industry and asset management. Very interesting.
2:31
Speaker 1: And then you end up at a Bank America Maryland Securities.
2:35
Speaker 1: You were head of research there, correct that I know
2:38
Speaker 1: lots and lots of folks from old Mother Meryl were
2:42
Speaker 1: either strategists or in the research department. How did you
2:46
Speaker 1: leap from there to Blackstone? So? When I was at
2:50
Speaker 1: D l J, I worked on the firm's public offering.
2:53
Speaker 1: We were spun out of Equitable and Tony James was
2:59
Speaker 1: president of d LJ Very Senior credit Suites, and then
3:02
Speaker 1: he went over to become president of Blackstone and called
3:06
Speaker 1: me when they filed to go public to see if
3:08
Speaker 1: I would join to help them with that process and
3:12
Speaker 1: run sharehold relations and strategy, which is what I did initially. So,
3:16
Speaker 1: so how do you transition from shareholder relations to private
3:20
Speaker 1: wealth solutions? So I I've held a few different roles
3:25
Speaker 1: at Blackstone. I'd say the common theme among them is
3:31
Speaker 1: that I've always worked across the entire firm and in
3:35
Speaker 1: private wealth. I was asked to move in and and
3:39
Speaker 1: really create a scale, global business, and so I took
3:45
Speaker 1: the skill set that I had around uh, being a
3:49
Speaker 1: strategic thinker and being able to manage teams of people,
3:53
Speaker 1: which I did at UM at b of A, and
3:58
Speaker 1: really applied that here the last six years. So you
4:02
Speaker 1: were there pre I p O, two weeks pre IPO. Okay,
4:08
Speaker 1: so that counts a little bit a little. I was
4:10
Speaker 1: going to ask you what the difference was working at
4:14
Speaker 1: a private company versus a public company, but I don't
4:16
Speaker 1: know how much that would apply you've mostly been at
4:20
Speaker 1: public companies your whole career. Yes, well, d l J
4:24
Speaker 1: was subsidiary of Equitable, which was a subsidiary of Access,
4:29
Speaker 1: So until it yourself went public, didn't feel like that.
4:33
Speaker 1: It felt very much UM in a lot of similar
4:37
Speaker 1: ways to Blackstone, like a partnership, and even Blackstone when
4:42
Speaker 1: I first joined, you know, fewer than a thousand employees,
4:45
Speaker 1: it was, it felt like a partnership, still small, and
4:50
Speaker 1: now it's considerably larger than than a thousand employees, isn't
4:54
Speaker 1: it correct? So probably not as big as many think,
4:58
Speaker 1: But we're about a little more than three thousand employees globally.
5:01
Speaker 1: That's that's quite a chunk. So black Stone has made
5:05
Speaker 1: a very large bet on the individual, focusing on one
5:09
Speaker 1: to five million dollar clients through investment advisors. Tell us
5:15
Speaker 1: a little bit about the thinking behind that move, because
5:18
Speaker 1: I think when most people think of of black Stone,
5:21
Speaker 1: they think big institutions, not individuals. So you have to
5:26
Speaker 1: really go back in time, and I'll put my strategy
5:29
Speaker 1: pat back on UM. During the financial crisis, we were
5:33
Speaker 1: thinking a lot about where money was coming from for
5:38
Speaker 1: our funds, and we were very heavily dependent upon us
5:44
Speaker 1: pension funds, who are still quite an important set of
5:49
Speaker 1: clients for the firm, And at that time we made
5:53
Speaker 1: the decision to expand internationally, both Europe and Asia, and
5:59
Speaker 1: then also start to think about how we would approach
6:02
Speaker 1: private wealth. Uh So we started distributing through the big
6:09
Speaker 1: wire houses initially and really focused on qualified purchasers. Uh
6:14
Speaker 1: so those five million and above who could invest in
6:17
Speaker 1: the traditional private equity funds UM. But more and more
6:22
Speaker 1: we were getting inquiries, well, how do we give access
6:26
Speaker 1: to good products, good service to more people. And for that,
6:32
Speaker 1: uh we began creating bespoke funds to address that market.
6:38
Speaker 1: And these are accredited investors or not, and somewhat more
6:43
Speaker 1: sophisticated than UM the average investor. When I was preparing
6:49
Speaker 1: for this, I came across a Business Insider column that
6:54
Speaker 1: described what you you said was your AHA moment that
6:59
Speaker 1: totally changed your career. Tell us what was that moment
7:03
Speaker 1: I believe you're referring to. When I was at d
7:08
Speaker 1: l J and one of the we call them principles
7:13
Speaker 1: like partners came into my office and said, Hey, you know,
7:16
Speaker 1: I'm going to this dinner tonight for Principles and and
7:21
Speaker 1: you really should be there, but you need to tell
7:24
Speaker 1: people that becoming a principle is important to you. And
7:28
Speaker 1: that just never occurred to me. I just thought, like,
7:30
Speaker 1: you put your head down, you do a job, and
7:32
Speaker 1: someone's like, oh, let's make let's make her a principle.
7:36
Speaker 1: And I'm sure that often is the case, but it
7:38
Speaker 1: certainly isn't always the case. And so I went into
7:41
Speaker 1: the office of the head of research and just said,
7:45
Speaker 1: I think I deserved to be principal for the following reasons.
7:48
Speaker 1: It is something that's very important to me. And I
7:51
Speaker 1: was named a principle that year. So let's talk a
7:54
Speaker 1: little bit about black Stone. They've created a tremendous amount
7:59
Speaker 1: of wealth with their limited partners and employees as well
8:02
Speaker 1: as their shareholders. What do you have to do to
8:05
Speaker 1: stay ahead of the pack? This is a hyper competitive
8:09
Speaker 1: space with billions and billions of dollars looking for an edge.
8:13
Speaker 1: What does Blacks don't have to do to keep its
8:15
Speaker 1: leadership role. I think it's a great question. Uh. Steve
8:19
Speaker 1: Schwarzman often says that there's nothing patentable in finance, meaning
8:26
Speaker 1: everyone in the world can see what you're doing and
8:28
Speaker 1: they're app to copy it. If it's successful, so you
8:31
Speaker 1: have to keep moving and for our firm, that means
8:36
Speaker 1: continuing to find new areas where we see great investment
8:41
Speaker 1: opportunities where others aren't as competitive, and that might mean
8:48
Speaker 1: you know, we are, for example, the biggest real estate
8:51
Speaker 1: investor in the world, so from a scale perspective, there
8:54
Speaker 1: are transactions we can do that no one else can do.
8:58
Speaker 1: And building that kind of scale in life sciences, in
9:02
Speaker 1: direct lending, in private equity, which is a bit more competitive,
9:08
Speaker 1: but again not at the scale that we're at, that's
9:11
Speaker 1: been a huge advantage for us, especially in this environment.
9:17
Speaker 1: Huh So, so you're running the Global Private Wealth Group,
9:21
Speaker 1: tell us about that role and what your responsibilities include.
9:26
Speaker 1: So it's been just terrific to be involved in the
9:30
Speaker 1: building of this business. So essentially we are running Private
9:34
Speaker 1: Wealth as an end to end business rather than a
9:38
Speaker 1: sales organization. And what does that mean. It means everything
9:42
Speaker 1: from product development on the front end, to providing education
9:48
Speaker 1: for advisors and marketing material, using data analytics to better
9:55
Speaker 1: focus our salespeople, and having a robust investors erviss team
10:00
Speaker 1: on the back end and doing that globally, so serving
10:06
Speaker 1: your clients. Uh In Japan with folks who are on
10:12
Speaker 1: the ground speaking Japanese and having websites in native language,
10:18
Speaker 1: which may sound obvious, but takes a lot of people,
10:22
Speaker 1: a lot of effort, and we've been able to continue
10:26
Speaker 1: to vault ahead of the competition. So you mentioned investors
10:32
Speaker 1: and clients, who are the clients tell us about a
10:34
Speaker 1: typical PWS investor. So I'll divide the clients into really
10:40
Speaker 1: three buckets. At the wealthiest end our family offices which
10:47
Speaker 1: are often run like institutions with the chief investment officer, cetera,
10:53
Speaker 1: but really want a single point of contact into all
10:56
Speaker 1: the Blackstone offers. The next tronche would be qualified purchasers,
11:02
Speaker 1: so folks also very wealthy individuals with five million dollars
11:06
Speaker 1: or more, and they really are by SEC standards allowed
11:11
Speaker 1: to invest in anything. A big part of the market.
11:15
Speaker 1: It's what we call accredited in the US. It has
11:17
Speaker 1: different names all over the world, but essentially investors with
11:22
Speaker 1: one to five million dollars who want and historically have
11:25
Speaker 1: not had access to great product. And we also do
11:30
Speaker 1: serve investors who are below the million dollar level, but
11:37
Speaker 1: not with that many products that are suitable for them,
11:41
Speaker 1: and and so one to five five plus. I tend
11:44
Speaker 1: to think of family offices as fifty plus, but I
11:48
Speaker 1: know that number some people say, some people say hundred.
11:51
Speaker 1: How do you look at family offices? Typically we really
11:54
Speaker 1: haven't defined it that way, but I think you're fifty
11:59
Speaker 1: million is probably a good place. So now an investor
12:04
Speaker 1: has five or ten million dollars in a total portfolio,
12:08
Speaker 1: and I'm just spit bowling here. They have a million immunis,
12:12
Speaker 1: they have another six seven million in traditional, active and
12:16
Speaker 1: passive funds, and they have a couple of million dollars
12:21
Speaker 1: lying around that. They're looking for a little more non correlated,
12:25
Speaker 1: maybe a little alpha. How do you fill that gap
12:29
Speaker 1: for that client? Are you selling that through O I
12:33
Speaker 1: A S or you're selling it direct? Tell us a
12:35
Speaker 1: little bit about what that um slug in that portfolio
12:39
Speaker 1: looks like. So we are absolutely partnering with R A
12:43
Speaker 1: S and with advisers again around the world, whether they're
12:47
Speaker 1: in global banks, private banks, big wire houses, or independence. Uh.
12:54
Speaker 1: And you know, to you to your question about where
12:56
Speaker 1: people are invested now and what they're looking for at
12:58
Speaker 1: the moment, historically you would say, oh, you know, our
13:04
Speaker 1: clients are are really looking at portfolio that's sixty forty
13:08
Speaker 1: something like that the traditional mix. And I would say today,
13:12
Speaker 1: given the search for yield, which is very hard to
13:16
Speaker 1: find everywhere in the world, the need for private credit
13:21
Speaker 1: is greater. Uh, given where market valuations are, private investing
13:27
Speaker 1: is more attractive because you have more control over the asset,
13:31
Speaker 1: you're not subject to the whims, and we're not investing
13:33
Speaker 1: in the market per se. We're choosing the neighborhoods we
13:37
Speaker 1: want to be in. So you know, I'm fortunate in
13:40
Speaker 1: that the performance of Blackstone funds across all the alternative
13:46
Speaker 1: asset classes has been good over a long period of time,
13:50
Speaker 1: So we have a lot of material to work with,
13:52
Speaker 1: and then we meet the individual needs. So it could
13:55
Speaker 1: be that your client, as an advisor, you know, want
14:00
Speaker 1: to put of her or his assets into alternatives and
14:05
Speaker 1: they want a diversified portfolio. We have a product that
14:10
Speaker 1: matches that. Or they're earning you know, x percent three
14:16
Speaker 1: on the municipal Bomb portfolio. And we have other funds
14:21
Speaker 1: in real estate and credit that can return much more
14:25
Speaker 1: that are also floating rate, which gives them better inflation protection.
14:30
Speaker 1: So some of what you're doing is a non correlated
14:34
Speaker 1: substitute for traditional equity, Hey, equity prices are let's call
14:40
Speaker 1: it fully valued. Some people think it's gone beyond that um,
14:45
Speaker 1: although we seem to be having delightful earnings this quarter,
14:48
Speaker 1: so maybe this market can grow into its valuation. But
14:51
Speaker 1: that's one alternative. You reference yield and and what what
14:58
Speaker 1: investors are looking for. If someone says, hey, I want
15:03
Speaker 1: a higher return, I'm willing to take a little more risk,
15:06
Speaker 1: but not I don't want to run into the same
15:08
Speaker 1: problem we run into with subprime What sort of products
15:12
Speaker 1: do you have for I'm gonna ap peel some of
15:16
Speaker 1: my forty off to to something that is going to
15:20
Speaker 1: do better than one point two percent that I'm getting
15:23
Speaker 1: on on my treasuries? What do those fixed income like
15:26
Speaker 1: products look like? Are they structured notes? Are they real estate?
15:30
Speaker 1: Tell us a little bit about that, sure. Uh so.
15:33
Speaker 1: For example, one fund right now that has a lot
15:39
Speaker 1: of traction is our non traded read, which invests in
15:44
Speaker 1: high quality US real estate. Again, the same themes that
15:50
Speaker 1: we're investing in for the institutional fund and the same team. Importantly,
15:57
Speaker 1: so areas like multi family housing where there's a supply
16:02
Speaker 1: demand mismatch or logistics playing on a very long term
16:07
Speaker 1: theme around e commerce, which is only accelerated during COVID.
16:13
Speaker 1: Tell us a little bit about the credit side you mentioned. So,
16:16
Speaker 1: there's a secular trend in private credit that really started
16:19
Speaker 1: in the financial crisis where banks no longer wanted to
16:23
Speaker 1: hold onto risk and we're syndicating out. And it also
16:30
Speaker 1: at that time became clear that they were less willing
16:33
Speaker 1: to lend to middle market companies. So originally what began
16:37
Speaker 1: as a middle market industry in private credit emerged, and
16:42
Speaker 1: we were certainly one of the leaders in that. But
16:46
Speaker 1: I would say today, because of the scale that we have,
16:49
Speaker 1: we're actually able to lend to much larger companies. So
16:54
Speaker 1: it's an industry that has real secular tail winds in
16:58
Speaker 1: terms of the demand for private credit, and we're able
17:01
Speaker 1: to deal with you know, large companies, complex transactions, unitron
17:07
Speaker 1: to take the whole deal, uh, And we've been able
17:10
Speaker 1: to create funds around that for individuals that deliver good returns.
17:17
Speaker 1: And importantly, we've been able to create structures that also
17:21
Speaker 1: work outside of the US. And so both of these areas,
17:25
Speaker 1: whether it's private real estate or private credit, have appeal
17:32
Speaker 1: right now in the US, in Europe, in Latin America
17:35
Speaker 1: in Asia. Uh. And you know we're able to service
17:39
Speaker 1: those folks because our businesses of scale on the private
17:42
Speaker 1: wealth side and also of scale in terms of how
17:45
Speaker 1: much we can invest. That's quite quite intriguing. Let's talk
17:50
Speaker 1: a little bit about E. S. G. Blackstone has said,
17:53
Speaker 1: as the world's largest alternative asset manager, we are uniquely
17:57
Speaker 1: positioned to make a positive impact through our investments. Tell
18:00
Speaker 1: us a little bit about how you approach environmental, social,
18:04
Speaker 1: and governance impact investing. So we've really taken a holistic approach,
18:11
Speaker 1: both for our own company as well as the companies
18:17
Speaker 1: that we own inside our various funds. And to start
18:22
Speaker 1: with the environmental even going back, you know, many years now,
18:27
Speaker 1: we looked at efficiency around energy and water, etcetera. So
18:33
Speaker 1: for example, if you own hotels, thinking about what kind
18:36
Speaker 1: of light bulbs, where do you set the temperature? Things
18:39
Speaker 1: of that nature. Flushers on toilet's probably a little less sexy,
18:43
Speaker 1: but actually important. And today we've made a commitment that
18:48
Speaker 1: for any property or a company that we control, we
18:51
Speaker 1: will reduce emissions by at least fifteen percent um. You know,
18:58
Speaker 1: we we I don't know if you know, in one
18:59
Speaker 1: of the folios we actually own uh Sty Town here
19:02
Speaker 1: in New York, and we created the largest solar farm
19:08
Speaker 1: on any multi family housing development in the US. There,
19:13
Speaker 1: that's one example, uh And I would say around the
19:17
Speaker 1: other areas when it comes to UM governance, and by
19:23
Speaker 1: that I assume you mean diversity on board director C
19:28
Speaker 1: we have likewise a commitment there for at least thirty
19:32
Speaker 1: percent representation by women underrepresented groups, and again for our
19:40
Speaker 1: own company as well as for our portfolio companies. So
19:45
Speaker 1: let's talk a little bit about PWS as it's called. Internally.
19:49
Speaker 1: Your group runs over a hundred billion dollars. Tell us
19:53
Speaker 1: about some of the attractive places that you're deploying capital today. Sure,
20:00
Speaker 1: so we tend to be very thematic at Blackstones. A
20:06
Speaker 1: lot of research comes into play upfront. We figure out
20:11
Speaker 1: where we have the most conviction, and then we're not
20:15
Speaker 1: afraid to go all in. And importantly, if you think
20:20
Speaker 1: about investing as pattern recognition, and you think about everything
20:25
Speaker 1: we own real estate companies, all different types all over
20:29
Speaker 1: the world. It's just a lot of information flow that
20:32
Speaker 1: comes into play. So today areas off of themes, like
20:38
Speaker 1: you know, the digitization of everything. So if you think
20:42
Speaker 1: about our investment in Bumble or Ancestry was on that
20:49
Speaker 1: in e commerce. This has been a long running theme
20:52
Speaker 1: through the firm over the last ten years. So that
20:56
Speaker 1: informs not just what you invest in, but what you avoid.
20:59
Speaker 1: So we we have not been investing in closed malls,
21:02
Speaker 1: but we have been buying up warehouse assets, especially first
21:07
Speaker 1: mile those that are closest to clients. Again, everywhere around
21:12
Speaker 1: the world housing there's a housing shortage, uh really in
21:17
Speaker 1: a lot of different regions, and and what just meaning
21:20
Speaker 1: that there hasn't been enough supply. And when you think
21:23
Speaker 1: about all of the delays caused by shutdowns due to COVID,
21:29
Speaker 1: it's just exasperated those or exaggerated those trends even more so.
21:34
Speaker 1: And um, when you have supply demand and balances, that's
21:38
Speaker 1: usually pretty good for appreciation. We coming through the financial crisis,
21:43
Speaker 1: had created the largest single family housing you know, owned
21:46
Speaker 1: to rent company, and we're continuing to invest in those
21:50
Speaker 1: types of assets. We really like life sciences. You mentioned uncorrelated.
21:55
Speaker 1: That's an area that is uncorrelated, and we partner with
21:59
Speaker 1: major pharmaceutical companies. We invest in their Phase three trials
22:04
Speaker 1: which have very good high percentage UH chance of success.
22:10
Speaker 1: Cloud computing, and there's a lot of different neighborhoods that
22:13
Speaker 1: we like. And then I would say, also we like
22:17
Speaker 1: the industries that serve those. So once we find a
22:20
Speaker 1: theme something like life sciences, were also then interested in
22:26
Speaker 1: owning the real estate that's catering to life sciences companies.
22:31
Speaker 1: So the intellectual capital really moves through the firm, and
22:34
Speaker 1: we're able to whether it's growth equity, private equity, real estate,
22:39
Speaker 1: life sciences credit, run that all the way through. And
22:44
Speaker 1: so you would find over the firm's history and continuing today,
22:48
Speaker 1: our various different businesses may invest in a different part
22:52
Speaker 1: of the capital structure. Uh, they may invest in different companies,
22:58
Speaker 1: but they're all focused on this idea of good neighborhoods. Huh.
23:04
Speaker 1: So that that's very intriguing. I always have a hard
23:09
Speaker 1: time drawing a bright line between what sounds a lot
23:14
Speaker 1: like private equity but looks a little bit like late
23:18
Speaker 1: stage venture capital. I hear cloud and life sciences and
23:22
Speaker 1: bumble and ancestry dot com. How does that distinction make
23:27
Speaker 1: any difference to you, guys? Is it really just an
23:30
Speaker 1: academic distinction or clearly you're not doing seed investing. We
23:34
Speaker 1: understand that, but what is the difference between black Stone
23:39
Speaker 1: private equity and very late stage venture investing. So, by
23:44
Speaker 1: and large, we have not been venture investors in the
23:50
Speaker 1: way that you're thinking about, in part because the outcomes
23:57
Speaker 1: are binary, and when we're making an investment, we always
24:03
Speaker 1: try to think about protecting on the downside, and that's
24:07
Speaker 1: quite difficult to do in a venture deal. So I'm
24:11
Speaker 1: distinguishing that from growth equity because these are larger companies
24:18
Speaker 1: where the entrepreneur doesn't want to seed control but is
24:24
Speaker 1: attracted to what we can bring in helping her him
24:29
Speaker 1: really scale the business. So again I'll go back to
24:33
Speaker 1: UH company like you know, Bumble or where we made
24:37
Speaker 1: an investment in Totally and what is it we bring.
24:41
Speaker 1: We have this massive portfolio of companies and properties that
24:45
Speaker 1: we can introduce them to. We have a data science
24:49
Speaker 1: team of more than thirty people that we then deploy
24:54
Speaker 1: right onto these companies. We have a suite of highly
24:58
Speaker 1: talented former CEOs executives who partner with UH. Those CEOs,
25:06
Speaker 1: who again are are often entrepreneurs who may have not
25:10
Speaker 1: usually have not taken their company and built it into
25:13
Speaker 1: some major global institutions. So I would distinguish it in
25:17
Speaker 1: a lot of Uh, those aspects were coming in much later.
25:21
Speaker 1: We're not saying this technology works or doesn't. It's already proven,
25:27
Speaker 1: and then we're bringing something to much greater scale. Right.
25:30
Speaker 1: I like the concept of Hey, if it's truly binary,
25:34
Speaker 1: then that's much more like UM venture capital. If there's
25:38
Speaker 1: a range of potential outcomes with a very very low
25:41
Speaker 1: possibility that the whole thing goes to zero, that's more
25:44
Speaker 1: private equity that that. That's a really good framework for
25:47
Speaker 1: that UM. So let's let's stick with you mentioned the
25:51
Speaker 1: intellectual capital that moves around the firm. UM. We're kind
25:55
Speaker 1: of sort of reopening people little nervous around delta UM.
26:00
Speaker 1: How did you guys operate during the pandemic. I assume
26:03
Speaker 1: everyone was working from home, and what are your plans
26:07
Speaker 1: going forward? How are you going to manage? Yeah, it
26:09
Speaker 1: was certainly turbulent times. We acted very quickly. So one
26:17
Speaker 1: thing that UM launched literally the week that we shut
26:22
Speaker 1: down in the US is John Gray, our president and CEO,
26:28
Speaker 1: launched a global call for all employees, which still happens
26:33
Speaker 1: every single week. And during that meeting, we hear about
26:39
Speaker 1: macro government, what's happening in some of the portfolio companies,
26:44
Speaker 1: new investments, and the basic trends. It was also just
26:48
Speaker 1: the best mechanism for everyone at the firm UH to
26:53
Speaker 1: know what was going on, talk about COVID and really
26:56
Speaker 1: around the world, and we do that on Zoom so
27:00
Speaker 1: that you're present. And again this has now been going
27:04
Speaker 1: on since mid March of with my own team, I
27:10
Speaker 1: made great efforts to stay connected. Again, we were all
27:14
Speaker 1: on Zoom, not telephone, so you can actually see people.
27:18
Speaker 1: I personally added many more meetings than I had previously,
27:22
Speaker 1: regularly scheduled meetings with my sub teams, with the leaders
27:27
Speaker 1: of my business to make sure we were connected. And
27:31
Speaker 1: we also added in a lot of virtual events, you know,
27:36
Speaker 1: whether they were virtual cocktail hours or lunches or breakfast
27:41
Speaker 1: we did hold. I my my children make fun of
27:45
Speaker 1: me because I did the same cooking class like five
27:47
Speaker 1: different times, so I can now make an excellent you know,
27:50
Speaker 1: pasta sauce um. But I think it was important not
27:54
Speaker 1: just to get the business done, to prosecute the business,
27:57
Speaker 1: of course, that's important, and serve your clients, but equally
28:01
Speaker 1: important was to keep the team together, have everyone with
28:05
Speaker 1: full information feel connected, even though we weren't physically in
28:10
Speaker 1: the same place, and then I didn't mention, but as
28:14
Speaker 1: importantly was staying connected with our clients, and so we
28:19
Speaker 1: immediately launched webinars conference calls about what we were seeing
28:25
Speaker 1: from a macro level in our portfolio. Companies very transparent
28:30
Speaker 1: about what was happening in the funds and just providing
28:34
Speaker 1: advisors and clients with the most up to date information
28:40
Speaker 1: that we had, and I think they appreciated that. Huh.
28:46
Speaker 1: Quite quite interesting. So so within financial services, people like
28:50
Speaker 1: Jamie Diamond at JP Morgan Chase Morgan, Stanley Goldman, Sachs
28:55
Speaker 1: a roll calling staff back to work. Other places are
28:58
Speaker 1: talking about a hybrid all going forward. You're in a
29:01
Speaker 1: couple of days a week, but it's not Monday to
29:03
Speaker 1: Friday nine to five. Have you, guys thought about what
29:06
Speaker 1: you want to do and have have you come out
29:08
Speaker 1: with any decision yet publicly? Yes, So we have. The
29:14
Speaker 1: investing teams have by and large been back full time
29:18
Speaker 1: now for several months. For my team, I said we
29:23
Speaker 1: would remain flexible through the summer and then we'll figure
29:27
Speaker 1: out the cadence. But the vast majority of my team
29:32
Speaker 1: comes in and there were several employees not surprisingly who
29:40
Speaker 1: were quite nervous. But the firm invested a lot uh
29:45
Speaker 1: in terms of creating our own testing mandatory testing, distancing
29:52
Speaker 1: tracing app that we have to keep open at all
29:55
Speaker 1: times to make people feel safe in the environment that
30:01
Speaker 1: we were in. A number a number of big firms
30:04
Speaker 1: are mandating vaccines? Did you guys go that far? Also?
30:07
Speaker 1: It makes perfect sense to me, but I know you
30:10
Speaker 1: can get pushed back from some quarters. So just this
30:13
Speaker 1: week we told employees that if they're not vaccinated, they
30:18
Speaker 1: shouldn't come to the office, and if you're not in
30:21
Speaker 1: the office, your career is probably not fast track. I
30:27
Speaker 1: hope that everyone will decide to take the vaccine just
30:32
Speaker 1: for their own health. We have not said you can't
30:37
Speaker 1: work at the firm um, but I think it's it's
30:41
Speaker 1: in the interim. You can certainly do whatever you're doing remotely,
30:45
Speaker 1: but you just you lose the connectivity. And to me,
30:50
Speaker 1: what you know, one of the great parts of my
30:53
Speaker 1: job is actually being with the team, interacting, exchanging ideas.
30:57
Speaker 1: I think that's much harder to do when your box
31:01
Speaker 1: on someone's computer. So you referenced earlier the impact of
31:05
Speaker 1: low rates where clients were previously allocating money to the
31:10
Speaker 1: bond portion of a sixty forty portfolio. How are low
31:15
Speaker 1: rates impacting everything today and what is black Stone doing
31:19
Speaker 1: about it? So I think about the impact of low
31:23
Speaker 1: interest rates from two perspectives. One is how does it
31:28
Speaker 1: affect an investor, an individual investor or an institutional investor,
31:33
Speaker 1: and how does it affect Blackstone investing in companies and properties.
31:40
Speaker 1: So on the former, it is much harder to reach
31:44
Speaker 1: your goals, whether their retirement or sending your kids to college,
31:50
Speaker 1: or even just saving for the next few years at home, whatever.
31:54
Speaker 1: If interest rates are very low, you're earning nothing on
31:57
Speaker 1: your bank account, You're earning very little from your simple
32:00
Speaker 1: bond portfolio, etcetera. So how do you create more wealth?
32:06
Speaker 1: And for that, individuals institutions have been seeking yield in
32:14
Speaker 1: private credit, private real estate, as we mentioned, where you
32:17
Speaker 1: could just get better returns where you can apply a
32:20
Speaker 1: bit of leverage, but you don't have to extend all
32:23
Speaker 1: the way out on the risk curve. To do that,
32:27
Speaker 1: you don't have to be in highly levered funds, you
32:30
Speaker 1: don't have to be in the riskiest assets. And I'm
32:35
Speaker 1: often asked like, do you like non traded reads? Do
32:39
Speaker 1: you like private credit, and I always say it's it's
32:43
Speaker 1: for me. It's really not the fund structure as much
32:47
Speaker 1: as it is who is the investor putting the assets in.
32:51
Speaker 1: I mean, there's certainly not all created equally. So you
32:55
Speaker 1: want to be with a very high quality GP like
32:59
Speaker 1: black Stone if you will, But you want to, you know,
33:03
Speaker 1: really think about who you're entrusting your wealth or your
33:06
Speaker 1: client's wealth with. As it relates to Blackstone. On the
33:11
Speaker 1: investing side, I'll put credit aside for the moment. That
33:15
Speaker 1: means that you can borrow at much better rates um
33:21
Speaker 1: and you know that certainly helps the return. But I
33:25
Speaker 1: would say, really importantly, we always think about when we're underwriting,
33:31
Speaker 1: what will the next buyer have to borrow at to
33:34
Speaker 1: make it work. You don't want to get lulled into
33:39
Speaker 1: this false sense of complacency where you're like, oh, I
33:42
Speaker 1: could borrow for nothing and therefore, wow, this looks really attractive. Uh.
33:46
Speaker 1: Kind of similar to what happened to people when you
33:49
Speaker 1: think about, you know, the housing crisis, where they were
33:53
Speaker 1: just taking on way too much debt. So you know,
33:56
Speaker 1: it's it's that toggle between yes, we can borrow at
33:59
Speaker 1: very attract to rates but that doesn't mean that we
34:02
Speaker 1: want to inflate the price of the assets that we're buying.
34:06
Speaker 1: So it's it's really quite a balance, so not the
34:09
Speaker 1: greater fool approach to investing it. You're looking for a
34:14
Speaker 1: long time. So you mentioned equity richly valued and bond
34:18
Speaker 1: rates at long time uh lows. When we look at
34:23
Speaker 1: both asset classes, there each at all time highs. The
34:27
Speaker 1: one exception seems to be commercial real estate is in
34:30
Speaker 1: fact still at levels UM that are far below where
34:35
Speaker 1: we were during the pandemic. How attractive is commercial real estate?
34:40
Speaker 1: And we know Blackstone is a big investor in UM
34:45
Speaker 1: individual homes, rent to own, etcetera. What about traditional commercial
34:51
Speaker 1: real estate? So there too, you have to divide it
34:55
Speaker 1: into sectors. So if you're talking about offices or example
35:02
Speaker 1: today you would say, wow, like how could you invest
35:05
Speaker 1: in offices Actually not a big part of our portfolio,
35:09
Speaker 1: but with a pandemic and people working from home, and
35:12
Speaker 1: I would say you have to distinguish where you're investing
35:16
Speaker 1: and the type of offices. So on the lending side
35:20
Speaker 1: in real estate for us, you know we think about
35:23
Speaker 1: are these high end offices that are open plan that
35:26
Speaker 1: have a lot of amenities for tenants, those would be attractive.
35:31
Speaker 1: We look at office space for life sciences companies, UH,
35:37
Speaker 1: for production studios because one of the big themes for
35:41
Speaker 1: us is live streaming and how that's increasing. We look
35:46
Speaker 1: at where regionally we're investing. So if you use data
35:52
Speaker 1: and see you know where in which areas are the
35:57
Speaker 1: greatest number of ads for were jobs? Where are young
36:01
Speaker 1: people going? You can get a feel for housing trends,
36:05
Speaker 1: office trends, and very importantly in real estate, because buildings
36:10
Speaker 1: don't just pop out of the ground, you know what
36:13
Speaker 1: supply is, and so you're always looking for supplied demand
36:16
Speaker 1: imbalance and UH, we typically don't invest in new construction,
36:23
Speaker 1: and so we want to buy at a discount to
36:27
Speaker 1: replacement value. And that's really the formula. It sounds simplistic,
36:32
Speaker 1: but it's supplied demand discount to replacement value. That is
36:36
Speaker 1: the mantra that Blackstone has stuck to everywhere in the
36:40
Speaker 1: world since the early nineties. So I'm hearing two things.
36:44
Speaker 1: I'm hearing data matters, and what you pay for an
36:47
Speaker 1: investable asset is important. Yes, all right, that that makes
36:51
Speaker 1: a lot of sense to me. Uh, tell us what
36:53
Speaker 1: your clients are asking about today that you guys are
36:57
Speaker 1: not currently doing. What what's the next thing out there
37:02
Speaker 1: that's interesting. We typically when we venture into a new area, Uh,
37:09
Speaker 1: it's because we see an interesting investment opportunity, So we
37:14
Speaker 1: never think about it in terms of how much money
37:16
Speaker 1: can we raise. It's always how much money can we deploy.
37:20
Speaker 1: But to your question, increasingly investors are asking us about
37:24
Speaker 1: E s G investing, and Uh, it started more so
37:30
Speaker 1: outside of the US, in Europe in particular, but I
37:34
Speaker 1: am increasingly asked about it in the US. And E
37:40
Speaker 1: s G is something that's infused in all of our
37:43
Speaker 1: funds and investments. It's not something that to date we've
37:48
Speaker 1: really carved out as a product, but it's certainly something
37:52
Speaker 1: we're thinking about. So that's kind of interesting because the
37:55
Speaker 1: criticism has been E s G captures a huge amount
37:58
Speaker 1: of mind share, but only near as much capital as
38:01
Speaker 1: you would imagine. And when we do surveys of who's
38:05
Speaker 1: going to inherit the baby boomers money, it's invariably women
38:10
Speaker 1: and younger people, and they're both much more enthusiastic about
38:14
Speaker 1: E s G than the average investor. Is this something
38:17
Speaker 1: that you're really seeing start to change or is that
38:21
Speaker 1: change still out there. So there are different elements to it.
38:25
Speaker 1: One is that people are mindful of E s G,
38:29
Speaker 1: but they don't want to sacrifice on returns. So when
38:33
Speaker 1: you talk to foundations and endowments for example, very mindful
38:38
Speaker 1: of E s G, but the responses usually that's why
38:42
Speaker 1: we want to generate the greatest returns on the portfolio,
38:45
Speaker 1: so that we can then distribute the money, you know,
38:48
Speaker 1: to those causes. And when it comes to individuals, by
38:51
Speaker 1: and large, it's the same. They want to support these
38:57
Speaker 1: are topics that are important, but they don't want to
39:01
Speaker 1: really detract tremendously from returns. I don't imagine Blackstone will
39:06
Speaker 1: ever create a copycat or me too product Um. We
39:11
Speaker 1: spend quite a lot of time at the front end
39:14
Speaker 1: thinking about what we'll go into any of our funds.
39:17
Speaker 1: So I think when we do launch something, uh, it
39:20
Speaker 1: will be unique in the market. Interesting. So some people
39:25
Speaker 1: are quite worried about valuations, not just in the public market,
39:29
Speaker 1: but there's so much capital slashing around and it's found
39:32
Speaker 1: its way into the private markets. How concerned are you
39:35
Speaker 1: about valuations and and what sort of advice do you
39:39
Speaker 1: have for investors about that? So I am a warrior
39:44
Speaker 1: by nature, and I worry when valuations are high. I
39:48
Speaker 1: worry when they're low. And in my fourteen years at Blackstone,
39:53
Speaker 1: I don't think that I've really sat through a meeting
39:58
Speaker 1: where anyone thought the kind of investing we do is easy.
40:02
Speaker 1: There are always challenges, uh, and either you know, prices
40:08
Speaker 1: are low but no one's selling, or prices are too high.
40:12
Speaker 1: I think the key is not to buy a market
40:16
Speaker 1: and to focus on the sectors that you like, the
40:20
Speaker 1: companies where you think you can affect change. And this
40:24
Speaker 1: is a key in private markets versus public So we
40:27
Speaker 1: sign non disclosure agreements, we get inside information if you will,
40:32
Speaker 1: we have six months or whatever the time period is
40:34
Speaker 1: to do full due diligence. We have our portfolio operations
40:38
Speaker 1: team all over the company figuring out where we can
40:42
Speaker 1: make improvements. And you know, when in the old days,
40:45
Speaker 1: when those were industrial companies, was more about cost cutting.
40:48
Speaker 1: Today it's much more about leaning in on growth, connecting
40:51
Speaker 1: our portfolio companies to one another, making them more tech enable, etcetera.
40:58
Speaker 1: And that's really the of formula. You know, it's taking
41:01
Speaker 1: the company or the asset and applying either capital or
41:06
Speaker 1: talent to it. Rather than relying on on the market.
41:11
Speaker 1: If all you're doing is paying more than anyone else,
41:14
Speaker 1: that's a hard way to make money. To say the least.
41:17
Speaker 1: You mentioned fourteen years at black Stone. I remember the
41:20
Speaker 1: Blackstone I p O and I'm the pandemic has completely
41:24
Speaker 1: ruined my sense of time, because I never would have
41:27
Speaker 1: guessed that was fourteen years, but that was two thousand
41:29
Speaker 1: and five. That's a long long It seems like a
41:33
Speaker 1: long time ago. Um. One of the things I wanted
41:35
Speaker 1: to ask that I didn't get to before was the
41:38
Speaker 1: liquidly or illiquidly premium. When someone puts money in a
41:42
Speaker 1: black Stone funds, my assumption is they don't have access
41:47
Speaker 1: to that the way they would a regular publicly traded
41:51
Speaker 1: stock for an extended period of time. What's the typical
41:56
Speaker 1: lock up without penalty like for for your funds? And
41:59
Speaker 1: I'm also assume there's a wide range and there is
42:02
Speaker 1: no one number. So for the typical private equity or
42:06
Speaker 1: private real estate fund, uh, those are only accessible to
42:11
Speaker 1: qualified purchasers or institutional investors, and you're locked up for
42:16
Speaker 1: the life of the fund very deliberately, which is seven
42:19
Speaker 1: years typically or so. It's usually a ten year fund
42:24
Speaker 1: varies a little bit, but you control the timing going
42:31
Speaker 1: in and you control the exit. So you never want
42:36
Speaker 1: to be in a position where you're forced to invest
42:40
Speaker 1: quickly or you're ever forced to sell. So there is
42:43
Speaker 1: no early redemption. The redemption happens as you start selling
42:48
Speaker 1: down companies or assets in that portfolio. Makes a lot
42:53
Speaker 1: of sense. So I want to circle back to your
42:57
Speaker 1: You mentioned you're a warrior. Everybody I know who worked
43:00
Speaker 1: in equity research is a giant warrior. They're like, what
43:03
Speaker 1: did I miss? What's gonna ruin my investment thesis? How
43:07
Speaker 1: has the world of equity research changed from your perspective?
43:11
Speaker 1: You got to see it from the public side, from
43:13
Speaker 1: the private side, and over a couple of decades of investing,
43:16
Speaker 1: tell us a little bit about how research has changed. Yeah,
43:20
Speaker 1: it really has evolved. So in my earliest days, it was,
43:26
Speaker 1: first of all, we didn't even have excel um and
43:30
Speaker 1: there was, you know, no way to reach clients other
43:33
Speaker 1: than meeting with them or or calling them or companies
43:36
Speaker 1: for that matter. Um And but you were really an advisor,
43:42
Speaker 1: not just two investors, but also to the companies that
43:46
Speaker 1: you covered, and that endured, Uh, most of my tenure.
43:49
Speaker 1: It was what I enjoyed the most, getting to know
43:52
Speaker 1: the management teams, understanding their strategies, working on you know,
43:56
Speaker 1: I worked on dozens of I P those UH secondary offerings,
44:02
Speaker 1: M and A transactions and there was nothing nefarious about it.
44:06
Speaker 1: I worked closely with the investment bankers to really help
44:10
Speaker 1: the companies figure out their strategy. That all changed, if
44:14
Speaker 1: you remember, UH Elliot Spitzer came in looked at research.
44:18
Speaker 1: This was during the tech bubble and found that there
44:22
Speaker 1: were conflicts of interest UH that maybe investors didn't know about,
44:28
Speaker 1: maybe they did, but really hived off equity research from
44:34
Speaker 1: every other part of the business. And in many ways,
44:39
Speaker 1: I think it diminished um the value of the equity analysts.
44:46
Speaker 1: And you know, by and large, who's folks who had
44:49
Speaker 1: studied really probably knew these industries better than many of
44:52
Speaker 1: the management teams, if you will, working in them, because
44:54
Speaker 1: they had such a good feel for the competitive landscape
44:57
Speaker 1: as well. And at the same time, you had the
45:02
Speaker 1: proliferation of the hedge fund industry, so a lot of
45:07
Speaker 1: research analysts went to the buy side, left the cell side.
45:12
Speaker 1: You've had compression of commissions, etcetera, making cash equities a
45:18
Speaker 1: less profitable business that it once was. And so, uh,
45:23
Speaker 1: while I still know very many talented research analysts, I
45:28
Speaker 1: think it's unfortunate that what they're doing has been so restricted.
45:33
Speaker 1: Makes a lot of sense. What about social media has
45:36
Speaker 1: that disrupted cell side research? That is a good question.
45:42
Speaker 1: I don't know that social media has disrupted as much
45:46
Speaker 1: as information comes generally much more quickly than it ever did,
45:52
Speaker 1: and the expectation to have an immediate response. You know,
45:58
Speaker 1: when I go back in time where you really really
46:00
Speaker 1: had the time to think through and crunch numbers and
46:06
Speaker 1: you know, form of an opinion. Today it's much harder,
46:10
Speaker 1: and like you know, with social media, to to your point,
46:12
Speaker 1: everyone's out there with a view, with an opinion. It
46:16
Speaker 1: probably does make it much more challenging. So let me
46:19
Speaker 1: switch up gears on you a little bit. I want
46:21
Speaker 1: to ask you about uh black Stone Woman's Initiative, which
46:27
Speaker 1: I know you're involved with. Tell us about that. So
46:31
Speaker 1: I was involved in the formation of it, and at
46:36
Speaker 1: the time that I joined black Stone, only about ten
46:40
Speaker 1: percent of the analysts, applications applicants were female, and about
46:48
Speaker 1: of the class was female, and so I was really
46:52
Speaker 1: interested in how we can improve that. Uh, there was
46:58
Speaker 1: a perception that somehow, how private Equity Alternatives is in
47:02
Speaker 1: a great career for women. Not true, and so um,
47:08
Speaker 1: you know, I was trying to figure out what what
47:10
Speaker 1: we could do. So at the beginning, we really focused
47:14
Speaker 1: on educating young women, sophomores, juniors in college, inviting them in,
47:20
Speaker 1: teaching them you know what you need to know, uh,
47:23
Speaker 1: figuring out, you know, why they weren't applying, why we
47:27
Speaker 1: weren't hiring more, and going to those solutions. Today it's
47:31
Speaker 1: light years ahead of that. You know, between forty and
47:34
Speaker 1: fifty percent of our classes female now. Yeah, so big
47:38
Speaker 1: improvement there, and a lot of focus on professional development
47:44
Speaker 1: and networking and really trying to find common derailers for
47:49
Speaker 1: women and addressing those. So there's a quote of yours
47:53
Speaker 1: that I very much like because it's a philosophy that
47:57
Speaker 1: could apply to a lot of different people. But I
48:00
Speaker 1: like quote, get comfortable being uncomfortable. Explain what that means.
48:06
Speaker 1: It means that many women, especially young women, are comfortable
48:14
Speaker 1: doing the things that they know well. And unless you're
48:20
Speaker 1: willing to stretch, you're just never going to grow in
48:25
Speaker 1: your career. You don't have to know it all on
48:29
Speaker 1: day one, it's all learnable. You know, nothing that we're
48:33
Speaker 1: doing in at least in the roles that I've had,
48:36
Speaker 1: is rocket science. So if you apply yourself, if you
48:41
Speaker 1: ask questions, if you really want to learn it, you
48:45
Speaker 1: can learn it. But you have to be willing to
48:47
Speaker 1: push yourself a little bit and know that the first
48:50
Speaker 1: time you do anything, whether it's you know, speaking in
48:53
Speaker 1: front of a large group or presenting to senior people
48:56
Speaker 1: at the firm, whatever it is, it's not going to
48:59
Speaker 1: be as good as the hundredth time you do it.
49:01
Speaker 1: And that's okay. Is that a gender specific difference? And
49:05
Speaker 1: my flavor of sexism is dudes are just reckless and
49:10
Speaker 1: we are. They are not smart enough to think I
49:14
Speaker 1: don't know anything about this, so I'm just gonna plow
49:16
Speaker 1: ahead anyway. I get the sense that women tend to
49:19
Speaker 1: be a little more circumspect and thoughtful, or is that
49:23
Speaker 1: you know a stereotype and it's not accurate. So there
49:27
Speaker 1: have been studies showing that, for example, um, women will
49:32
Speaker 1: not raise their hands for the promotion unless they think
49:36
Speaker 1: they can tick off every single skill set, where as
49:41
Speaker 1: men may have very few of those skills, but they
49:44
Speaker 1: raise their hands, say I could do it. So that's
49:46
Speaker 1: definitely a gender difference. Hold my beer, that's a that's
49:52
Speaker 1: a dude thing. So this leads me right into tell
49:55
Speaker 1: us about truth for our daughters. So my daughter, Lindsay
50:02
Speaker 1: at the time was a freshman in college. She was
50:07
Speaker 1: a math major, so very few women already, you know,
50:11
Speaker 1: breaking barriers exactly, and some of her classes, although I
50:15
Speaker 1: guess increasingly there are a lot of women majoring in
50:17
Speaker 1: math now. And she had applied for leadership program and
50:23
Speaker 1: called me in tears and said, I just got called
50:26
Speaker 1: for the third round and I'm not qualified. And I said,
50:31
Speaker 1: you're a freshman in college. What qualifications do you think
50:34
Speaker 1: you need? Um? But it really made me sit back
50:38
Speaker 1: and think, here is this daughter of mine who is
50:44
Speaker 1: so capable, and she's showing all the insecurities that I,
50:50
Speaker 1: of course also had and that I've witnessed so many
50:54
Speaker 1: other women had. So it it really caused me to
50:56
Speaker 1: put pen to paper sort of a if I knew then,
51:00
Speaker 1: you know what I know him now? And um, and
51:05
Speaker 1: it was she she loved it. So it was it
51:07
Speaker 1: was and some of this some of the bullet points,
51:11
Speaker 1: we're pretty straightforward and and not a big surprise, but
51:16
Speaker 1: some were giant surprises that when I when I read
51:19
Speaker 1: through this, be ready for anything. That's good advice for
51:22
Speaker 1: anybody in finance. Be confident. I see the gender specific
51:27
Speaker 1: but um reasons for that. But but some of the suggestions, UM,
51:34
Speaker 1: speak twice as loudly as you think you need to.
51:37
Speaker 1: And I have a problem. I don't hear how loud
51:39
Speaker 1: I speak, so I speak too loud. Why is that
51:42
Speaker 1: advice necessary for women to tell them you have to
51:46
Speaker 1: speak loudly if you're a room full of people. So again,
51:51
Speaker 1: if you're generalizing, women tend to speak more softly and
51:58
Speaker 1: therefore don't come across having as much conviction in their
52:03
Speaker 1: ideas even if they do. Uh. And it really harkened
52:08
Speaker 1: back to when I was in a room, uh filled
52:13
Speaker 1: it was a boardroom and I was presenting on something
52:16
Speaker 1: I actually knew a lot about, and so and said, oh,
52:19
Speaker 1: can you speak up. I couldn't hear you, know, I
52:21
Speaker 1: couldn't hear you, And it just set me back, and
52:23
Speaker 1: I thought, this will never happen again. I also think
52:28
Speaker 1: there is sometimes a tendency when someone is speaking softly
52:33
Speaker 1: for someone else in the conference room to just come
52:36
Speaker 1: right over the top, and you know, interrupt and that
52:40
Speaker 1: doesn't happen when you're forceful. So it's one of the
52:44
Speaker 1: basic things I tell any mentee I have, any women
52:49
Speaker 1: that I'm meeting with, just speak loudly. Uh, make your
52:54
Speaker 1: voice heard. Uh. You don't need to know it all
52:57
Speaker 1: on day one. Very straightforward. You have no idea where
52:59
Speaker 1: you career will lead. Very straightforward. Here's another one that
53:03
Speaker 1: leapt out at me that I never would have thought of.
53:06
Speaker 1: Draw lines in the sand. Tell us what that means.
53:10
Speaker 1: So for me as a parent once I had kids,
53:14
Speaker 1: it was figuring out what I wouldn't give up. I
53:20
Speaker 1: think there many women are conflicted. They feel awkward saying
53:27
Speaker 1: I'm leaving the office because I have to take my
53:30
Speaker 1: child to the doctor, etcetera. And there were certain things
53:33
Speaker 1: I just wouldn't give up. I never missed a school
53:37
Speaker 1: performance or play. I never missed a parent teacher conference.
53:41
Speaker 1: But was I able to go to the gym? Was
53:43
Speaker 1: I able to make it home for dinner every night? No,
53:46
Speaker 1: So figure out where your lines in the sand are.
53:49
Speaker 1: Although I will tell you after a year of work. Um.
53:53
Speaker 1: My daughter was reflecting on those truths and she said,
53:58
Speaker 1: I get it, but as a for sere, I just
54:01
Speaker 1: have to put my head down work. I don't have
54:03
Speaker 1: lines in the sand. So well, it's different when you're
54:05
Speaker 1: twenty four and single versus married with kids. Obviously the
54:10
Speaker 1: obligations are different. Well, well, I found it to be
54:12
Speaker 1: really interesting, and um, I'm glad we got to talk
54:15
Speaker 1: about a little bit. Let's I only have you for
54:18
Speaker 1: a limited amount of time. Let's jump to everybody's favorite questions,
54:23
Speaker 1: starting with so, tell us what you were watching during lockdown?
54:27
Speaker 1: What was your Amazon Prime or Netflix favorite shows? I
54:32
Speaker 1: don't know what this says about my emotional state. So
54:36
Speaker 1: I've definitely evolved a little more, you know, high brow
54:40
Speaker 1: versus where I started, is what I'll say. Uh. So,
54:43
Speaker 1: at the beginning, I was watching shows like Love Is Blind.
54:49
Speaker 1: I don't know, uh And my version of that, by
54:53
Speaker 1: the way, was The Gilmore Girls. In the beginning of Lockdown,
54:55
Speaker 1: my wife and I streamed the whole Gilmore Girls, which
54:59
Speaker 1: I should be embarrassed us to admit, but I'm not.
55:01
Speaker 1: And now it's evolved to something a little more sophisticated exactly.
55:06
Speaker 1: And then I enjoyed shows like ted Lasso and others.
55:11
Speaker 1: Right now I'm watching White Lotus on HBO literally teed
55:16
Speaker 1: up for tonight. I hear it's hilarious. Is it as
55:19
Speaker 1: funny as everybody says it's Is it as funny sardonic? Yes? Okay,
55:25
Speaker 1: is what I would say. You probably won't like anyone
55:29
Speaker 1: on the show, right, which is usually a bad sign,
55:32
Speaker 1: Like people love succession, I hate everybody on that show.
55:36
Speaker 1: When I never got past this second episode, I think
55:39
Speaker 1: you'll find I hear similarities, okay, where as something like
55:45
Speaker 1: Ship's Creek in the beginning, everybody is totally contemptible, but
55:50
Speaker 1: they all become lovable characters over time. So it's funny
55:54
Speaker 1: you mentioned Ship's Creek. So so my two go twos
55:57
Speaker 1: when I need to just relax and laugh. Stressful day.
56:01
Speaker 1: Modern Family so good, so good. I could just watch
56:05
Speaker 1: them over not right, and they're they're both. So I'm
56:08
Speaker 1: going to come back to Ship's Creek in a couple
56:10
Speaker 1: of years and rewatch it um because like the Nightcap
56:15
Speaker 1: is it has been these classic sitcoms like UM, thirty Rock,
56:22
Speaker 1: and Community. It's like a good way to um. Modern
56:29
Speaker 1: Family is terrific. And there's another one that you know.
56:33
Speaker 1: It only lasted four seasons, but it's so good called
56:37
Speaker 1: Life and Pieces tells the story of a family, an
56:40
Speaker 1: extended family. In each episode is three vignettes, one about
56:45
Speaker 1: the parents, one about the kids, one about the grandparents,
56:48
Speaker 1: and they're all into related. If you like modern family,
56:52
Speaker 1: try that. It's like it's just a nice relaxing and
56:56
Speaker 1: all the actors and actresses are great in it. It's
56:59
Speaker 1: just it's just a sort of show. Um. And I
57:06
Speaker 1: was like the last two Ships Creek that my wife
57:09
Speaker 1: had a drag me kicking and screaming because the first episode,
57:12
Speaker 1: everybody is just so contemptible. But if you give it
57:15
Speaker 1: a little breathing room, they grow out of it. Tell
57:20
Speaker 1: us about your early mentors who helped to shape your career.
57:24
Speaker 1: So I really had several. Unfortunately, I'm sure I'll be
57:30
Speaker 1: leaving people out here because I really do feel like it.
57:33
Speaker 1: It took a village. But my first mentor was David Cipher.
57:39
Speaker 1: He was an insurance analyist. He was the number one
57:41
Speaker 1: ranked equity research analysts at First Boston. That's where I started. Uh,
57:46
Speaker 1: he was not my first boss. I was working for
57:48
Speaker 1: someone else and I was there one night at ten
57:53
Speaker 1: o'clock at night, David had hosted a dinner for a
57:57
Speaker 1: company I think it was Tokyo Marine and came back
58:00
Speaker 1: to the office. I was the only one still there,
58:03
Speaker 1: and so he said, I need you on my team. Literally.
58:06
Speaker 1: That was our connection, and UM goes to show you
58:11
Speaker 1: being in the office has as could have positive results.
58:14
Speaker 1: So another female thing here. You know, Historically I would
58:18
Speaker 1: have said I was lucky. Now I just say I'm fortunate.
58:21
Speaker 1: There's no goiness there. So we connected and I followed
58:26
Speaker 1: him to d l J. But he really pushed me.
58:29
Speaker 1: He was the one who, when I didn't feel ready,
58:32
Speaker 1: had me go meet with portfolio managers and he used
58:35
Speaker 1: to say, like, you know all the numbers. You can
58:38
Speaker 1: answer all their questions, you know. I So I credit
58:41
Speaker 1: my career really to him and uh Tom Letty, who
58:46
Speaker 1: ran the morning meeting at d l J. He's a
58:50
Speaker 1: wonderful person, but he was very tough and very tough
58:53
Speaker 1: on me, and I'm ever grateful to him for that.
58:57
Speaker 1: He would let me come in super early. I would
59:00
Speaker 1: tell him what I was thinking of saying, and he
59:02
Speaker 1: would just say, that's not what you want to say,
59:04
Speaker 1: you know, in a in a pretty harsh tone. Um,
59:07
Speaker 1: But it forced me to just get better and better
59:11
Speaker 1: at it. So those were the two early but you know,
59:14
Speaker 1: I have to say, even my time at Blackstone, I've
59:17
Speaker 1: learned a lot from just watching Steve and Tony and
59:24
Speaker 1: John Byron ween Is on my team and um, you know,
59:28
Speaker 1: just the collective experience and different style. So uh, you know,
59:34
Speaker 1: from all of them, I would say, just thinking big
59:38
Speaker 1: about building your business, and you know, not incrementally. My
59:43
Speaker 1: team hears me say this at nausea. I did a
59:46
Speaker 1: hundred this year, so next year I'm going to do
59:47
Speaker 1: a hundred of ten. No, I want to think about
59:50
Speaker 1: how big can this be and how do we get
59:52
Speaker 1: there quickly? So that combination of you know, thinking big, impatience,
59:57
Speaker 1: really focusing and just being a flex civil thinker and
1:00:01
Speaker 1: you know, an equity research you certainly go through different cycles.
1:00:07
Speaker 1: But at Blackstone I've really learned, uh to not say like, well,
1:00:13
Speaker 1: when a happens, you do be or etcetera. It's really,
1:00:17
Speaker 1: well a happened, But I don't know, maybe we should
1:00:19
Speaker 1: be thinking about X, Y and Z that no one
1:00:21
Speaker 1: else has done. And so it's been expansive for me,
1:00:25
Speaker 1: very interesting. Uh, tell us about some of your favorite
1:00:29
Speaker 1: books and and what are you reading right now. So
1:00:32
Speaker 1: I just finished reading Hamnet, which I don't know if
1:00:35
Speaker 1: you've heard of it, but it's so it's fiction, but
1:00:39
Speaker 1: it's based on Shakespeare's son Hamnet. Notice connection to Hamlet,
1:00:46
Speaker 1: who died when he was eleven, and uh, and around
1:00:52
Speaker 1: Shakespeare's wife. The story itself is fictional because there's just
1:00:55
Speaker 1: very little information on them, but it was beautifully written
1:00:59
Speaker 1: and fatacinating. Um. I often also am drawn to biographies,
1:01:06
Speaker 1: either autobiographies or or others. So uh, the Einstein biography
1:01:11
Speaker 1: and Steve Jobs. I loved Phil Knight's book Shoe Dog. Um.
1:01:17
Speaker 1: On audio, I listened to Ruth Bader Ginsburg Obama, and
1:01:24
Speaker 1: I just love hearing one about for none of them,
1:01:28
Speaker 1: you know, was any of this easy? They all had
1:01:31
Speaker 1: repeated failures, but also Einstein in particular. It was this
1:01:36
Speaker 1: light bulb went on that here's the guy we all
1:01:38
Speaker 1: call a genius. He was and um, we refer to
1:01:44
Speaker 1: people who excelled in in all different subjects geniuses, but
1:01:47
Speaker 1: he really excelled in one. He was nniacally focused on
1:01:51
Speaker 1: one area. He didn't do well in chemistry. He needed
1:01:55
Speaker 1: language tutors. I just thought it was I never really
1:01:58
Speaker 1: thought about that in that was that Walter Isaacson's book,
1:02:01
Speaker 1: because I know he did the Steve Jobs book as well.
1:02:05
Speaker 1: And then I'd say the final category for me is
1:02:08
Speaker 1: just something that's so beautifully written. So my favorite book
1:02:12
Speaker 1: of all time is Crossing to Safety and it's not
1:02:16
Speaker 1: a big story, it's sort of a quiet story, but
1:02:19
Speaker 1: the use of language is just wonderful. There's an autobiography
1:02:24
Speaker 1: I read last summer by David McCullough on the right
1:02:28
Speaker 1: Brothers that if if you're an autobiography fan, I have
1:02:32
Speaker 1: no interest in that particular genre of flying or it's
1:02:37
Speaker 1: just so well done. And if you like autobio, if
1:02:40
Speaker 1: you like biographies, everything mccullo writes is coming away with
1:02:45
Speaker 1: great recommendations. Well thank you. You know. That's the beauty
1:02:48
Speaker 1: of where I sit is I get recommendations from some
1:02:51
Speaker 1: everybody each week, and you're getting the cherry picked versions
1:02:55
Speaker 1: of that um our. Last two questions, what sort of
1:02:59
Speaker 1: a vice would you give to a recent college grad
1:03:02
Speaker 1: who was interested in a career in either private equity
1:03:06
Speaker 1: or investing or finance. So this is the advice that
1:03:11
Speaker 1: I've given my own adult children, and and I give
1:03:15
Speaker 1: to their friends and anyone I speak to um, which
1:03:19
Speaker 1: is when choosing not a job, think about the skill
1:03:25
Speaker 1: set that you want to acquire. Make sure you're going
1:03:29
Speaker 1: to a place where you could really learn, where you
1:03:32
Speaker 1: think it's a quality firm and you're gonna learn from
1:03:36
Speaker 1: quality people. But most importantly, just about how you act,
1:03:40
Speaker 1: how you present. You want to be the person that
1:03:43
Speaker 1: everyone says, I want her on my team. And what
1:03:46
Speaker 1: does that mean. It means you're working hard, You're willing
1:03:50
Speaker 1: to put whatever it takes to get the job done.
1:03:54
Speaker 1: You're focused on the details, you're reviewing everything you know.
1:03:59
Speaker 1: What can your value be as a young person, and
1:04:04
Speaker 1: it's that you know no one's expecting you to have
1:04:07
Speaker 1: the judgment of the partner. But whatever you're doing, just
1:04:11
Speaker 1: make sure it's as excellent as it can possibly be.
1:04:14
Speaker 1: Good good advice. Our final question, tell us what you
1:04:18
Speaker 1: know about the world of investing today that you wish
1:04:20
Speaker 1: you knew thirty years or so, or go thirty years
1:04:25
Speaker 1: ago or so when you were first getting started. So
1:04:29
Speaker 1: when I look back and I think about all of
1:04:33
Speaker 1: the market disruptions during my career, so starting in the
1:04:38
Speaker 1: summer of eighty six, when I began shortly after that
1:04:41
Speaker 1: you had the stock market correction when five points seemed
1:04:45
Speaker 1: like a day. That's can we call that a crash?
1:04:49
Speaker 1: That's more than a correction. That's true. That's true, that's
1:04:52
Speaker 1: a crash. And then you know the SNL crisis, interest
1:04:58
Speaker 1: rate shock of nine for the tech bubble rise and
1:05:03
Speaker 1: then deflation, the global financial crisis, disruption from a pandemic.
1:05:07
Speaker 1: I mean, it's like, wow, floods every couple of years,
1:05:11
Speaker 1: don't So in hindsight, it would have been wonderful to
1:05:16
Speaker 1: know that we get these floods and that you have
1:05:19
Speaker 1: to be nimble and flexible, uh in your thinking and
1:05:25
Speaker 1: anticipatory and understand that you have no idea what's coming
1:05:29
Speaker 1: your way. Uh So I think the other thing is,
1:05:33
Speaker 1: which maybe I did know but proved to be true.
1:05:37
Speaker 1: Finance is in my mind one of the most fascinating
1:05:42
Speaker 1: industries because I mean, think about what I just mentioned
1:05:45
Speaker 1: and all of the the derivative impacts of that and
1:05:51
Speaker 1: inputs from that. I mean, you have to be thinking
1:05:55
Speaker 1: about not just an industry, but what is happening on
1:06:01
Speaker 1: the regulatory front, geo politically, secular trends. You know, we
1:06:06
Speaker 1: were talking about the Internet disrupting retail. You know in
1:06:13
Speaker 1: the nineties, the late nineties. Now it took a while
1:06:16
Speaker 1: to to really um disrupt. But for someone who is
1:06:22
Speaker 1: intellectually curious, there is just so much going on. Huh.
1:06:27
Speaker 1: Quite fascinating. UM. Joan, thank you for being so generous
1:06:32
Speaker 1: with your time. We have been speaking with Joan Solitar.
1:06:35
Speaker 1: She is the global head of Private Wealth Solutions for
1:06:40
Speaker 1: Investing Giant black Stone. If you enjoyed this conversation, well
1:06:45
Speaker 1: check out all of our previous interviews. You can find
1:06:49
Speaker 1: them at iTunes, Spotify, wherever finer podcasts are sold. We
1:06:54
Speaker 1: love your comments, feedback and suggestions right to us at
1:06:58
Speaker 1: m IB podcast at Blomberg dot net. Give us a
1:07:01
Speaker 1: review at Apple itunesh You can sign up for my
1:07:05
Speaker 1: daily reading list at rid Halts dot com. Check out
1:07:09
Speaker 1: my weekly column on Bloomberg dot com slash Opinion. Follow
1:07:13
Speaker 1: me on Twitter at rit Halts. I would be remiss
1:07:17
Speaker 1: if I did not thank the crack staff that helps
1:07:20
Speaker 1: put these conversations together each week. Paris Wald is my producer,
1:07:25
Speaker 1: Attica val Bron is my project manager. Tim Harrow is
1:07:29
Speaker 1: my audio engineer. Michael Batnick is my head of research.
1:07:33
Speaker 1: I'm Barry Ridholts. You've been listening to Masters in Business
1:07:37
Speaker 1: on Bloomberg Radio