Interview, Fireside Chat
Stephen Schwarzman – Blackstone CEO and Author of "What It Takes"
- Blackstone, founded in 1985 by Steve Schwarzman and Pete Peterson with $400,000, has grown to become a leading global asset manager with $550 billion in assets under management.
- Schwarzman's entrepreneurial mindset was shaped early by a failed attempt at age 13 to expand his family's curtain and linen business, teaching him that most people prefer stability over growth despite clear opportunities.
- While waitlisted for Harvard, Schwarzman bypassed protocol by personally calling the admissions director, a bold move he later apologized for when the dean acknowledged it was a "game-changing" error in judgment due to a lack of flexibility.
- Schwarzman joined Lehman Brothers with no formal finance training or knowledge of stocks, relying instead on his ability to "see patterns" and act as a "telephone switchboard" for global information flows.
- In 1972, when Lehman Brothers was near collapse with only $7 million in capital, Schwarzman was the sole employee to respond to CEO Pete Peterson's request for a strategic plan, establishing a critical working relationship based on their contrasting "process" vs. "producer" styles.
- Schwarzman delayed working with Peterson for two years until he felt his own competence matched Peterson's learning curve, noting that Peterson had reduced his unnecessary questioning from "five times more information" to "two to three times."
- Upon forming Blackstone in 1985, the partners initially failed to secure business because major clients were unwilling to fund a "no-name" firm despite the partners' high-profile reputations, forcing them to answer their own doors in a small office.
- Blackstone's founding strategy focused on three unique pillars: capital-light M&A advisory, private equity (LBOs) where they created new underwriting opportunities, and waiting for specific macro-economic inflections.
- The firm adopted a strict investment discipline requiring either hiring a "ten out of ten" talent expert in a new field or ensuring the venture generated "intellectual capital" that strengthened their existing core businesses.
- Schwarzman views the firm's success as deriving from "data mining"—producing unique knowledge and seeing pattern connections between different sectors that other trained financial professionals miss.
- During a 2016 Davos lunch, President Xi advised Schwarzman that U.S. populism is driven by domestic unhappiness regarding income stagnation and job losses, predicting that future U.S. administrations will demand significant changes from China regardless of leadership.
- Schwarzman identified two factions in China regarding U.S. relations: hardliners resisting change due to high growth rates (9-10%) versus reformers acknowledging the necessity of economic adjustment to align with U.S. political realities.
- Regarding U.S.-China trade, Schwarzman predicts a deal is likely in the near term but emphasizes that "time wounds all deals," urging stakeholders to execute transactions immediately rather than waiting for perfect conditions as market dynamics shift rapidly.
- Schwarzman cites Jack Welch as his most admired leader and reveals his personal hobby of collecting Egyptian artifacts.
- In his recent reading, Schwarzman highlighted Accidental Presidents, noting how vice presidents who ascended to power often pursued agendas vastly different from their predecessors, sometimes reshaping the course of U.S. history.