[MUSIC] I'm particularly honored to be
interviewing you today because, as many of the students know I actually worked at
Blackstone before coming to the GSB and let's just say we were a few pay grades
apart back then. [LAUGH] So I'm thrilled to be sitting here
with you and having a conversation for the next 40 minutes. >> Good. >> So I wanna take this opportunity, and along with all my classmates here to
really get to know you more as a person, as a leader, and as someone who has great
insights about the industry. And I wanna walk away from it, getting a
few advice from you, and that we can apply to our professional
and personal lives. To get started I wanna say that people
here all know you as CEO of Blackstone, one of the largest asset management
companies here. But most people might not know is, you're
actually an entrepreneur. I wanna take us back to 1985 when you were
head of Merge and Acquisition Group at Lehman Brothers, but
you decided to leave and start your own company with your
cofounder, Pete Peterson. That was during a time when private equity
was very new and considered a very risky asset. And you and Pete, neither of neither of
you had a track record in investing. So can you talk about how did you overcome
these early challenges? [LAUGH]. >> Well that was some time ago but immense pain keeps you in touch with that
time. And it's, being an entrepreneur is much
better after you're successful than when you're
thinking about it. And let alone thinking about it, doing it. Because the beginning of most things is
very, very difficult. More difficult than you imagine because
otherwise more people would do it and the failure rate is quite high as you
know. It used to be like nine out of ten new
enterprises fail. I'm not sure cuz I'm, I'm not in the
academic world exactly what the number is, but it's high. what, what we did is after, after I sold
Lehman to America's Press Company in 1984, I stayed
for a year and then Pete and I left to start
our, our new business. But what was interesting is I've, I've,
I've found that, that the most important thing about a new
business is, is figuring out what you're doing before
you're doing it. In other words, why does anybody need you? There were plenty of people in finance
when I was in it in 1985, but you, you have to offer something
that's, that's distinctive. And to do that you have to think through
what, what your strategy is and so, so Pete and I used to meet every
morning for like three hours at a hotel because we,
we, we didn't even have an office. It's like your garage concept I guess. And [LAUGH] and, and you know, we'd think about what do we
wanna be, what do we wanna do? Why should anybody like wanna do anything
with us, other than the fact that we were friendly
and loveable, which apparently isn't enough
to, to, to basically prove victorious. Except in your own conference room. Meeting only with yourself. And where you always win by the way. And it's still. We're very successful in our own
conference room. that, that what we did is we tried to say,
okay. Here, here, here's. I, I call this a, a great fantasy. Right? You, you have to have great fantasies in
life and then realize them. So our fantasy was, what did we wanna be
when we grew up? First we wanted to be in the M and A business cuz they didn't wanna raise
capital. We wanted to keep owning the whole firm. That was a cash flow business. Why not just do that? It's easy.
We knew the people. We found out it wasn't easy. We did know the people. But the, the second part was the, at that point the private equity business
was pretty much of a low, no-brainer. Prices were low. Capital was available. Weren't many people in it. That was a way of, of also raising
management fees at that time because you, you wanted predictable income. Don't, don't, I'm always in the risk
minimization business. And the third thing, because the industry
was restructuring was to, to basically take advantage of the fact
that there were like a host of little firms to consolidate into only a
few big ones. And, and when I joined Leeman we had 550
people. When it died it, it had around 30,000. The difference between working in a place
with 500 and some odd people, is you know everyone by
sight. You may not know their names, you know
them by sight. It's possible to have a cohesive
environment when you have 30,000 people. It doesn't feel the same and I, I, I
always liked the small feeling. And so, so, I, I figured if I liked the small pe feeling,
a bunch of other people would too. And so as the firms were, were
consolidating you'd have great people you never could normally
attract, but they'd be there. So the, the challenge was to figure out
what these kinds of new areas was. And we called them and I'm not trying to
make this about Blackstone particularly. I'm just giving you a sense of how to
approach an entrepreneurial situation. we, we called them affiliates and we set
them up as 50/50 deals. And, and we didn't know what they'd be. But we knew they needed three criteria. The first was an amazing investment
opportunity. So good even a non-manager like myself
could not screw it up. secondly, we wanted to attract somebody to
run it who was a ten on a scale of ten. Because you'll find in your careers if
you're a ten, God bless you. You'll be wildly successful. If you attract tens, they always make it
rain if you need rain. And they just have an ability to sense
problems, design solutions, do new things, and
that's what a ten does. A nine is great at executing, can come up
with good strategies, but not great strategies. A firm full of nines, that's a winning
firm. eights, they, they just sort of do stuff
that you tell them. And sevens and below, I don't know what
they are. [LAUGH] So, so, cuz, cuz we don't tolerate
them. So, so, it doesn't work in our industry. It may work in other industries. Doesn't work in our industry. So, so, the third part of these affiliates
which are now folded into Blackstone was, was to
make sure they’re manufacturing intellectual capital that enhances the
business we, we're already here in. So, because you're in the constant
intellectual capital building business. Forget that we're called money managers or
whatever else you wanna call us. That's really our business. Right? And so it's just a question of waiting for
one of those opportunities, and then acting on it. and, and that was our plan. And at the time we did it, there was no independent investment
banking boutique didn't exist. But we figured, with only you know, the
arrogance that you can have when you're young that if they were doing this huge
amount of merge your own acquisition business with us, when we were
called Lehmann brothers, why wouldn't the same two people do it when it was just
some made up name like Blackstone? And we just assumed we'd be successful. By the way, that was not universally held
as a belief because we'd go to the same people and
they wouldn't hire us. And we said, why wouldn't you hire us? We're, we're like the same people, and we
have the same knowledge base. And they said, well, we, we don't even
know what you are, some little thing, why, how can we hire you? So you had to convince them that you could
do the same thing you did the day before you started. Sort of odd, isn't it? I mean, can you imagine if you were like a
football player and you were a Heisman trophy winner and you
just changed teams and nobody would let you play, cuz you only
could play with the other uniform. Just doesn't make sense. But that was the world so, so, so that
worked. And we finally managed to convince the
people and we started all these businesses. And now we're the biggest in the world at
what we do because- And we're still five. Following the same basic plan. But one thing, just as an entrepreneurial,
you must be crazy thing. When we did our first private equity fund, we sent out 488 offering circulars to
people we knew. I, we, we ended up with 32 investors, and
they all didn't come at the beginning. So, I don't know how often you like to be
rejected. But try it that many times. My math skills aren't that good, but it's gotta be somewhere around 350
something, 450 something rejections. People who look at you, and you have a
meeting where they consider you. And I don't know if any of you remember
the movie Gladiator, but the emperor sits there and he goes. [LAUGH]
And it's about you. [LAUGH] It's, it's not a product, it's
you. You're a loser. And how many times can you be told you're
a loser? The answer apparently is almost infinite. [LAUGH] and, and, and, and, [LAUGH] and so
anybody's who's been through a process like that ends up as a
much nicer, more humble person, no matter where you started, because the
world is telling you, you are a loser. And we ended up raising the biggest first
time fund in history, with two people who'd never made an
investment just by force of will. So it does show you that force of will
counts. It counts. And, and you'd be amazed at the number of people who reject you who are completely
dishonest. One of my favorite ones. And my [LAUGH] I have many favorite ones. But one of my favorite ones was the head
of one of the biggest banks in the world. Who we'd saved on some disaster by
restructuring it, and, and it was a very difficult situation
for them. Anyhow, we thought they'd be nice, and throw us $10 million, which is the time
was a little, a lot of money. And, you know, we had a meeting with him,
he's a famous guy, and you know, he would invite him out here,
maybe he was here. And he, he said to us, you know, you're,
you're really good people, we'd give you money but we, we just don't
do this type of investing. We're, we're a bank, we don't, we don't do
this. So, you know, sometimes you're defeated by
structure. And we sort of slunked out of his office
and, and for some reason this man forgot that my partner's wife was
on his Board of Directors. I, I don't know exactly how he forgot
that. And she told us that in fact, they were regularly approving these types
of investments. You save the person, you save their job,
the guy just lies to you. It's stunning. It's really stunning. So for all of you people out there who
wanna be entrepreneurs, you gotta have a thick skin. You, you, you, you almost need some
friendly psychologist training traipsing around with you, to buck you up
from all the setbacks that you have. It's always great after your [UNKNOWN] but
it's not so great, you know, if you file a chapter. and, and the difference in that, you know, Jack Setton, he almost did go down several
times. that, that scrambling ability, the ability
to take that kind of abuse and rejection, and believe in your basic plan, but be
adaptable and just keep going. It's, it's really difficult. As you can see it's you know, that was
quite some time ago, it was 29 years ago. It's still a searing experience and now, you know, we have this wonderful
business with people like this and you know, I couldn't even get hired at our
firm now, I'm not smart enough. but. And it's, it's, it's fantastic. We turn out these great results year after
year after year, and it's easy now. But these early years where you'll find
that your own capabilities which you think are remarkable, are, are, are
perhaps not exactly suited for purpose, and you have to hire someone
else, you have to do something else. You, you, you never sleep because of the
fear of failure. And if you don't have that fear, you'll
stay asleep. You will fail. You know, because it takes these kind of
remarkable human effort to overcome a world that isn't as anxious for
you as you are for it. And if, you know, it's good that you have
to be fundamentally delusional to get out there on the field of battle,
and make it happen. And we invent new things all the time, I
love it. That's what I spend, I spend a lot of time
doing a lot of things, but in terms of stuff that I really enjoy is starting new
things and bringing them into reality. And, you know, the idea I'm running a, a
really su, eh, consequential, big company of some type is a bit of a mystery
cuz I think it's all just a startup. And, and one of the other things, is if
you lose that sense, that, that things have to be done right, that
other organizations, people, and so forth, are, are trying to you know,
sort of succeed at, at your expense. Then, your organization becomes
vulnerable. You become sloppy. You become self-confident, and you can
never, ever let that happen. And there are examples that you study all
the time. I mean, that's why, I think, business
schools exist is to look at these sort of train wrecks of
companies that used to be great. That stopped being great, lost their, their vision, wandered around, became
self-confident. And people came to work believing that
things would be fine the next day because they always have
been. It's, it, it's not necessarily like that. You know, somebody's always invading. Somebody's always trying to do better. And if it's at your expense, then you're
just a, you're just a victim. And, and your jobs are not to be victims. It's to have someone else be a victim. >> That was very inspiring, Steve. >> [LAUGH]. >> Thank you.
At least I've, my takeaway from that was, if I walk out and face rejections, I'll
know Steve had faced more. [LAUGH]. >> all, all jokes aside. We actually want to now move forward, and
as you mentioned- >> Right.
>> The 29 years you've built Blackstone. And you've really built it into a
diversified platform with many distinct business lines and alternative
investments. So, a lot of people think it's actually
very difficult to be a founder and a CEO. And, Mike, because it actually takes
different traits to do both. But you've clearly succeeded in doing
both. So, my question to you, is, do you agree
with that statement? And if so, how did you make that
transition? >> I, I agree completely. It, it, it's, these are different kinda
skills. Somebody once said to me that no, no one
was born as a CEO. That there's not a CEO gene, it's a trained behavior not a necessarily
an intuitive one. And, you know, being an entrepreneur is, a
different set of skills. I, I've learned a lot, and I've, I've done
this now for 29 years, so there's a lot of evolution. I made a, a whole bunch of mistakes
earlier in our business's history because I, I
actually didn't really know what to do. It's and I got a little coaching from my
partner who had been a CEO twice before. But there, there's a, a whole skill set of
learning to be a skee, CEO. First, first of all, I mean, I'm sure you
have classes that teach this. But, when it's done live it's it's, it's
different. One, one of the things that, that, that
is, that you have to recognize when you're CEO
is people listen to you way more and they, than you'd think and, and they
amplify everything that you say. And, and so you have to be exceptionally
careful about what you say. ev, even just sort of a joke can get
misinterpreted. People look for you know, your, your,
your, your approbation your praise. You, you can't give it unless it's
deserved, but, but if it's deserved you have to be really
generous doing that because, because people respond to it and it's
important. You have to realize that human beings are
not like parts of a deal. You know, in a deal, it's a, pretty much
of a closed system. What one person gets, the other one loses
and that's the way it is. With an ongoing team of really terrific
people, you, you can't manage that way. You, sometimes you see a problem and you
have to game it out. If, if, if people were just like, like
chess pieces, you know, you just sort of move em and, and it's
over. But they're not. And, you know, sometimes you can see a
problem and, and you have to strategize it out so, so if
you're moving people around, you don't want anybody particularly to
lose confidence in themselves. You wanna be nice to everybody, but you
want to accomplish the objective. So sometimes it can take two years to do
something that you know should happen in ten minutes. But if you did it, then you'd break so much glass through the organization that
you'd threaten the institution or you'd threaten core people, and there's a
way to work that out. So, so time actually you know, as opposed
to some, some cartoon-like swashbuckling CEO. It doesn't work that way. You, you have to be careful with every
move. You have to give people dignity. But you have to accomplish your
objectives. So time is something that you give up,
sometimes, to do that. and, you, you also have to articulate the
core values of your business. And you can never stop doing that, and you
can never stop doing that enough. Everybody has to know what you stand for,
and they have to see you a lot as a CEO, because that way, organizations
don't lose their soul. On the other hand, you have to surround
yourself with phenomenal people, who share that value system. And there's a very interesting almost
internal debate you have to go through between control and
ceding control. Because nobody wants to work at a place if
they're brilliant, terrific people like we have, if they're
so tightly controlled they don't, they don't feel they have any autonomy,
or, or, or dignity. And that may be an issue in finance, not
some other industries. so, so you have to develop controls, and
the, nobody can blow up the, the firm. But autonomy enough so that everybody
thinks that, that they have self-worth and importance
and can utilize their, their gifts. It is very useful as a CEO to have plans
to expand your business, not for earnings per share reasons,
interestingly. It's so, everybody in the organization can
grow up and not be forced out. So you start new businesses cuz most
people, in an audience of the type that I'm speaking to don't wanna be
subordinated work units. That's what they called them in the 1980s. You all wanna be at least, brigadier
generals, if, if not more. You, you don't want to be like a private
or corporal, you want to be in charge of your
destiny. You're not so unusual. Most people would like to have ownership
of their own growth. So, so part of being a CEO is figuring out
how can you provide that for everybody? And one way to do that is to start new
businesses where people can move up and, and exercise, you know, their creative
abilities, you know, so that, you know, a firm is continually
entrepreneurial. so, so it, it was a big, step for me to
slow down, cuz I was like a deal person. And that's a different world. And, and, and just learn how to do that. And it's, it's a transition, and you make
mistakes while you're doing that. But after you've done it for a long time,
I, I actually have fun with, like people who
are newly appointed CEOs. So, they'll call me up and say, can I have
lunch with you? Can you tell me how to do this job? And, because they don't know. And the smart ones know they don't know
and, and, you know, so none of us know everything, but there are, there are like
help, helpful hints as to how to do that. >> Thank you, Steve. I wanna switch gears a little bit and talk
about your leadership. Because View from the Top, as you know, is
a series of leadership. We wanna know, what was your personal
leadership philosophy that led you to lead bl, Blackstone over
the past 29 years? You know, I, I've have always been a
leader. You know, I was like one of those- >> Apologies. >> Student council, choose your high
school people and, you know, you know, president of your high
school people, and did stuff in college like that, did stuff
in business school like that, so. I don't, I don't know how I got that way. I, I've always been like that. I've always enjoyed being in charge of
things and doing new things. And, and I remember I brought a rock group
that was, that was famous at the time to my high school, and everybody said it
couldn't be done. I thought it would be fun, and, you know,
sort of interesting. So, I like doing new things, and I like
being a leader, and I like dealing with, complexity, and I, I
like dealing with problems. I like creating, and, and usually that's
the best spot to be in. >> So, here we have a course at the GSV,
it's called Touchy Feely. It many of you might have taken it here. Basically, it's about how to be a leader
by being more aware of your emotional reactions. And building deeper connection with people
through self disclosure, vulnerability, and really showing your
authentic emotions. So, we're actually trying to figure that
out is, how do we apply that in our leadership
style and especially in a work place? So what's your take on this touchy feely
kind of leadership style? >> well, I I, I went to a different
business school. >> [LAUGH]. >> This, this course potentially, at least
when I went, could have been antithetical to everything
that people believe. And [LAUGH], and it was, it was pretty
rough. But I understand where you're coming from. I, I, I think it's- >> Thanks for understanding. >> Okay.
>> [LAUGH]. >> Do, do we have a therapist in the group
here? Say, step up. The I, I, I think it's important as, as I
was saying before to treat people in a way where they feel
secure, or where they feel valued. Where they, they feel that you must tell
the truth. And there are different ways of, of doing
that. But in our investment process, for
example, we, we, I was gonna say something like, we encourage that people come
forward with different points of view. In fact, we demand it. It's not encouraging. And, and that's because I did a, I approved a terrible investment as the
second investment we did. And we lost money, and it was incredibly
devastating to me. because, as long as you're talking about
emotions, I, I had some investor who wanted to see us,
and he started screaming at me. I'd never been screamed at before and nobody in my house had ever raised their
voice. And here's this person screaming for
about, felt like an hour. It was five minutes. Completely outta control. And I mean, I, I was I, I almost wanted to
cry, actually because he was right. I, I had made the wrong decision. And that's because we didn't have as
organized an investment process cuz we were new. So, so the best thing we did,
retrospectively, although it was gruesome, was, was to lose that money because we set
up a process where everybody, in, at the firm at that time, was just private
equity, now we're doing a lot more things. We had to go around the table and everyone
had to express themselves. And they had to do it with something
negative about the proposed investment, risks that people didn't see. And so we got used to if you brought an
investment, you knew you, you weren't gonna get universal
approbation. The job of everyone around the table was
to critique it so that we, we, we got rid of the risk or understood it. >> At the GSB we call that giving
feedback. >> Yeah but, it's, it's, it's giving
feedback that gets people angry, that's the problem right? >> [LAUGH]. >> So, so, so you, you have to set up an
environment where people feel secure that, that, that act of criticism is not
personal, it's impersonal. It has nothing to do with you bringing the
deal. It has nothing to do with them pointing
out the shortfalls in the deal, because every deal will be treated exactly
the same, and every person will have that same role. So what we tried to do as, as part of an
overall I don't know whether it's touchy feely or,
or you know, it's, it's more in, institutional comfort for
individuals is to have that direct conversation in a way
that ma, made it, made it non-personal. And, so, so the concept of worrying about
these things which is, I think, what you're actually asking, is, is, is,
is really important to have an ongoing. Successful business, but to have the
people in it always feel protected. and, and we set up processes like that
and, and, you know, we have we have very, very, very low turnover at, at our firm. And I guess the last two or three years we were voted like the best
place to work in finance. By Pension and Investment Age and some
other stuff, and so forth. So, care to these issues is, is really
important. >> You mentioned not, not keeping those
criticism personal. But I actually wanna get a little bit more
personal with you. Which is, I wanna learn more about your
personal background and motivations. So when you were first graduating from
HBS, what motivated you back then? And now, now what motivates you now? And how has that changed over the years? >> Well, there are a few answers to that. When I, I remember interviewing at,
[LAUGH] it's a shame this is video. >> [LAUGH]. >> That, that, when I was graduating from
college, I was interviewing with, with some employer, and they said, well,
what did you want to be? Why do you want to work here? I, and I said, well I, I, I wanna be a
telephone switchboard. And the person looked at me. He said, what are you talking about? I said, I wanna have all these inputs
running up my arm, going in my head, twist them around, and
shoot them out some other place. That's what I want to do. As a process. And the guy looked at me and said, you're
wrong for us. >> [LAUGH]. >> but, but what, what. By the time I was a little more you know,
sorta developed. I graduated from business school. I, I still wanted to do the same thing. It's this insatiable need to learn what's
going on and see something new, and, and do something
as a result of that. And that's, that's never really stopped
now. That, that expresses itself in, in
different ways. I also wanted to make a lot of money. I guess you're not allowed to say that
anymore because that's unfashionable. Or if you only have to do it through
capital gains with new apps. But, but, back, back in the olden days you, you sorta did
it, you know, with more current income. And so I, I, I had, I had $1400 when I
graduated. from, from money that somebody, group of
people, gave me on my bar mitzvah. I didn't even know my parents had held it
aside, and I, I was getting married, so I saw this wonderful ring at Tiffany's
for 1300. So I sorta looked at it. I said don't you have something a little
better? I might as well blow the whole thing. So I spent 1400 I started at zero. [LAUGH] So, I, I decided I, I, I needed
fuel. So that was one of my objectives. But the, the basic objective was, was to
put yourself in situations. Where the, the learning curve was so steep, and, and the outcomes were so
consequential. That it just was gonna be f, really
fascinating and interesting and fun, and I'm still doing
that, and I love it. It's great.
I, it's yesterday I had Henry Kissinger come over he was doing
a video for the Schwatzman Scholars and it's nice
venue to do that. He's, he's on our advisory board and we were walking down the hall after he'd
done this video. And, and you know, he said something like,
gee, Steve, you know, like, 91 and a half, I still feel like I'm in my 30s. And, and, he said, he said, I think you're
the same. I said, yeah, except I'm not 91 and a
half, but, but, but, but I, you know, feel exactly the same way. And he said, you, you'd never retire,
would you? And I, I said well, why would I retire
when my life's so interesting, and I'm learning all the
time. And I'm traveling all over the world and
it's great, it's fantastic. And he said yes, so he said I do what,
what I do, f, for, for no compensation. And I said, yeah, I, I get it, I mean
absolutely. I mean it's as you'll find cause they're
mostly young people in the audience. That, when you find something you love
and, and you're good at it and, you know, you go to your touchy feely
course and your self-actualized. Right?
I mean that's, that's what it's like. That's the game. It's, it's no, it's not about money. It's about creation. It, it's about feeling you know, you're
totally alive everyday and it's interesting. And you run into heads of state or, or finance ministers and my kinda industry
or with unique transaction. So doing things that are the biggest in
the world with great returns and doing unusual things. You're always out on our front tier. This type of life is completely seductive
and, and it's, it's not age determinant. It's really. it's, it's really about you. And remember when I was interviewing for a
job just graduating from business school. And I went to some firm and you meet a lot
of people when you're interviewing. It's very interesting. And I was sitting in front of a guy who
looked like he was in his 80s, named, his name was Clifford Michelle. And he had all these bound volumes of
financings and things he'd done. And the guy had these brilliant blue eyes,
and he was sitting alertly, and he's in his 80s, and the guy was
amazing. And I said, you know what? I wanna be him.
I wanna be somebody at that age can do what he's doing cuz he's completely
engaged, with life. You can do that, and that's the fun of it,
and that's what I wanted to do, and. You know I was lucky, to be in an industry
that was going through enormous expansion at
the time when I was a young person. And so I was lucky, and I didn't blow
myself up, that was good too. And, and, I have one saying in. To those of you who are interested in
finances, which is apparently like 12 people in your
whole school now. [LAUGH] You know that, that there are, there are no brave old people in finance. They usually get blown up by the time
they're 40. And if they're given authority by the time
they're 45. Because you always have to have balanced
risk, you always have to worry about your down
side. If I, if I could say just one thing, as a
little commercial for the Schwartzman Scholars program. This is like really a wonderful thing
we're doing. It's like the Rhoades. except, you get to go to Tsinghua
University, where we have a distinguished graduate. and, and, and, it's gonna be a marvelous introduction to
China for one year, program. where, you know, be taught in English. It's the universal language. And, you know, we have three different
majors. But we're going to start out with core
courses everything about China and have a leadership course. Designed by the other business school. Where they have cold weather. On the other side, of the country, and
then, you, you'll have courses in your major. Everybody will get a mentor, from the real
world. Some of the people, I haven't disclosed
yet. I mean, they're some of the most famous
people in the world. and, ya, you, you get to take trips,
around China. You'll meet the leaders of the country. And, and then we'll have a study flow of
really fascinating people that come to Beijing doing this in a, a new
building that we built. That looks like a college at Oxford or Cambridge, except it's looks like a
Chinese building. Same thing, residential college and we're having some meeting, Rob, I think,
later today? Yeah, we are, I guess people are allowed
to come? So where is this mystery meeting? >> Wallenberg Hall. Okay, so I got my commercial in, which I
wasn't supposed to do, but then again, I am an entrepreneur. [LAUGH]
>> Thank you Steve. Thank you for answering all the questions
with such tremendous candor, I really appreciate it. At this point, I am going to have everyone
here in the audience have an opportunity to ask
Steve any questions you want. There are two mics going around the
auditorium. Ryan on the left, Caroline on the right. We're also taking questions from Twitter,
especially if you're sitting up there. We don't have mics there, so please Tweet
you questions to, GSB VFTT. I'll start with a question from Twitter. >> Sure. So this is a question that came into
Twitter. As you grew Blackstone, how did you ensure
you got the right people for the right seats? >> To the right people? >> For the right seats at Blackstone. >> How did, hiring is a wonderful
exercise. It's really fun. What you're trying to do is, is match people's capability with, with
who they really are. One thing we're doing with for the
Schwarzman Scholars program is trying to, to figure out who will be great future
leaders. And, and then give them a year to learn
about China. And, and people say, you know, ha, ha, how
to you know who's gonna be good. And you, you have to talk to them. It, it's not a resume. A resume, it’s like a building block. Are they smart, or are they dumb? If, if they're dumb you don't see them. but, but smart people come in much
different versions. And, and you know, when, when, when people
like myself meet other people I, I, I don't know how to interview anybody. They, they walk in to your room and they
sit down and you look at them. And somebody says something. Or they have something on their resume
that's interesting. This is, you know, like the, somebody
who's won the World Chess Championship and still runs the 400 meters in less than
four minutes. And you go, when do you spend time to do
all this stuff? And you start a conversation. And what you're trying to do is figure out
how flexible their minds are how emotionally stable they are. How they will do under stress? Are they self-reliant what, what's their ability to express
themselves? Sometimes you can see fear in people's
eyes. This is usually not a good thing, right? Fear.
I mean like complete fear. What are they doing sitting there? I, I'm sorta easy. They shouldn't be scared of me. If they're scared of me, they're gonna be
scared of somebody else, and, and that's not good, at least from a
sales perspectives. You know, being scared. So there are all kinds of things that
people will tell you. And you're trying to burrow into their
head and predict future behavior. And, and if you can do that and, and you have certain criteria that they have
to be nice. We don't, we don't hire anybody that's not
nice, or anybody that's political. That's what happens, cuz they're a bunch
of, there's entrepreneur stuff in the air
here. So you don't have to hire anybody who's
disagreeable, just because they wanna be hired. You don't have to do that. So you can make whatever culture you want
to make. It's hard at the beginning cuz not
everybody wants to join you because you're not successful so you're
desperate. Right?
But you'll find that you don't do well unless you're hiring people who are
consistent with your values. So you've got to know yourself and you
gotta stick to those kinda people. Meritocracy. Good thing. You know, sorta being able to operate
horizontally instead of being, you know, sorta a controlled monster. We, we can't do those. You can't have those people around. Even if they're smart. Even if I see movies with people who are
like that and smart. It's, it doesnt work well as you get more
mature. You can have exceptions. But basically you, you, you have to have
people who you think can really adapt, really have a gift, really are nice,
really can communicate. And you have to imagine them under big
stress. How will they behave? Will they be honest? Things like that. >> Thank you.
Do we have more questions? Right there. Thank you. >> So, when you were first starting your
business, all, all entrepreneurs have to, sorta overcome an established order. In your case, you mentioned that you had a
great team wearing a brand new jersey. And you found it hard to get people to, to
deal with you, so to speak. What motivates that sorta conservativism. How did you overcome that? And, and how did you sort of build
Blackstone into today's establishment? >> Finishing the last answer, one of the
thing as you're hiring people that people over 40 are their reputation. Below that, they change, they adapt. When they're over 40, if you're
interviewing somebody, and you think you're a good person. But like five people tell you they're
really not, don't believe yourself. Believe the five people. Who've had experiences with them. Don't let your own perception, somebody who's really a certain
personality overrule the other stuff. Every time I did it,I was wrong. So I've learned some lessons. The question about the world not accepting
new things and how do you change it? I've, I've, I've learned that, other than
at Stanford and, you know, this part of California, people basically
don't like change. As distressing as it is to imagine that,
they don't like change. Every time we've tried to change
something, for example, we renovate, we were renovating
a, a hotel in London that was called
Claridge's, and it was very prominent. And we bought in 1995 and it was quite
run-down and needed to be you know, sorta modernized in
a variety of ways. And I got these endless barrage of things. Don't change it, right? Don't change it, it's so wonderful. Don't change a stick of furniture even
though you were sitting in a couch and your knees
were over your eyes, right? Don't change anything. And, you know, you get sort of like
protests and so forth, so, so we change things. But, but we, we didn't change it bad. We changed them good. And I had one particular person who was
born there during World War II. Who you know, really became very unhappy. And so, so you know, we did the change
with English heritage. Everything was like beautifully done. And at the end of that he wrote me this
long letter saying how wrong he was and, and how obnoxious he
was. And this is a famous person. And it's absolutely wonderful and I just
wanted to tell you I was completely wrong. You usually don't get that satisfaction. but, but change is really hard for a lot
of people. And, and so you have to recognize that
whenever you start something new and you go out of your way to make them
comfortable. Because you can introduce them to change. At, at, at Blackstone it's not directly
applicable. We keep doing new things. And as long as you, you really do good
returns and people know that you care about them, the investors,
and you'll never do anything to hurt them. And you're on their team, on their side. And you're, you're just, like trying to
make their lives better. They have to understand your motives. And if you can explain your motives, and
your motives are direct and pure, really, I mean, we wanna make money,
but we, we only wanna do this for the benefit of people we're investing for. And if they never un, if they understand
that you never will introduce a product that, that is not
terrific. You believe completely in it, that's your
business. Then what happens is, they start trusting
you and they should. And that's building up in effect brand
equity. >> Steve, I wish we had more time with you
but I've saved actually a last question that I wanna ask of you and it has become
a from the top tradition. And it's a question we all had to answer
when we applied to the GSB, which is, what matters most to you, and
why? >> You all answered this? [LAUGH] >> And they, they all answered it very
well, to be sitting here today. [LAUGH]. >> what, what matters to, to me most is
excellence. And delivering sort of a vision into
reality. It could be commercial. It could be, you know, in the art
business. It could be imagining something that's never been done or beautiful and
making that happen. That's, that's what I really love doing
and, you know, sitting in a, in a room that's perfectly beautiful from
every angle. That gives me pleasure. Having investments that are fantastic and
work out right. That gives me pleasure. A perfectly hit tennis ball against a
great player. So they can't get it and they're better
than you, that gives me pleasure. All of these types of visualizations where
you're executing perfectly, give me pleasure. So, you know, what was that so, psychology course where they had the bird that kept
hitting something to get, you know, they put some electrode in its brain, and
it would hit the bar to keep getting, you know, stimulated with the with the
pleasure, I do that. Except I'm not a bird, I don't have that. But, but basically, you know, people like
that. And, and there are a lot of different ways
where you can create that scenario. And I'd, I'd, I love a perfect sunset. I love these just wonderful things that
they all line up and they're, they're just excellent. Excellent, so that's what I like. Maybe I wouldn't be admitted here. [LAUGH]
>> Well, well to the pursuit of excellence, and
thank you for your time here with us. >> Thank you.
[APPLAUSE] [MUSIC]
