Carlyle’s Rubenstein on Politics, Economy, Tech

all right thank you very much for those of you you know this guy but for those of you don't know me my name is Jason Kelly I'm the New York bureau chief here at Bloomberg I also am the executive editor of Bloomberg Television which puts me in the unique position of overseeing in some ways this guy who I wrote about you don't want to say you're my boss I don't want to say that no that would make me very uncomfortable but actually I've been your father's boss for a while that was true I'm the chairman that I've Estonian he ran the National Zoo for a long time which is owned by the Smithsonian it's all very awkward and interesting all tied up together thank you for pointing that out by them so and I'm certainly not your peer but you do have this show on Bloomberg Television and it's the David Rubenstein show peer-to-peer conversations so to bring you up to speed for those of you who don't know about this show which you should we put together a little highlight reel so let's take a look at that now what was this thing on why would you consider a job that has a smaller home and a older plane that you currently have a very tough question and a very good question okay so an ask me about the person okay thank you i watch your interview shows i know how to do what it's a like in the backroom what are you a to each other when your former presidents are getting together do you actually tell secrets that you never tell anybody else audio difficulties so can we go back to trump for a second sure how'd that come about well when he was running for president not yet what happened was over the years my parents lived in a suburb of Baltimore called West Palm Beach Florida and when we would have family events I would always want to do a nice play so we do it at mar-a-lago which you didn't really need to be a member of you just need to have a credit card she show up for a special event probably do that many times I would have Donald Trump show up and he would get a photo op with us and so I got to see him a little bit and he figured out eventually who I was and very pleasant didn't have any business with him but I knew him a little bit so as the president of the Economic Club of Washington my job is to bring speakers in and and interview them and over the years I was always looking for somebody could be a draw and though somebody said what about Donald Trump says I don't know if he'll really do it but I'm saying I wrote him a letter and about five minutes later he fax back said I'll be there so we worked out the date back that's a fact the exit back then came back the true facts I don't think he uses email and so he came down and we drew a big crowd we normally have 500 people we do 800 people maybe 850 as he might say the biggest crowd we'd ever had and what happened was in the greenroom he said to me David happy to do this I I said he said ask me anything you want but ask me two questions for sure he asked me if I'm gonna run for president I said president what he said pres United States I said Donald you have no chance believe me I know a lot about politics no chance being president night States what's the second question he asked me if my hair is real and then you can feel it I don't know if I want to feel your hair but I'll ask you about it and so we had a very nice conversation and then later he told me that he liked the interview was one of the best he ever had and he made me an honorary member of Mar Lago subsequently and then he told me it was the highest-rated show in the history of c-span so I called the president c-span and said where are the ratings they said there are no ratings nobody can but it might have been the highest-rated show I don't know could be who knows so that was the interview right all right till we go back to the I wanted I want to make sure people see the rest of this can we do this let me have to start now we're gonna find that about how much bitcoins worth how much does Bitcoin worth whatever anybody's willing to pay for at any given time I guess right all right if we don't do this I have a lot of other questions that one that okay all right we do this again I'm not gonna stop it again whoa is this thing on why would you consider a job that has a smaller home and a older plane that you currently have that was a very tough question and a very good question what would you say are the greatest pleasures that you have received or the Wicker motto okay so these are good thank you this is good watch your interviews I know how to do so what is it like in the back room what do you actually say to each other when your former presidents are getting together do you actually tell secrets that you never tell anybody else or yeah you generally will you say when is this program going to start and when is it going to end give shorter answers back to your current job what is the greatest pleasure of being Speaker of the House can you think of one how much time do I know very few people in the world are known by one name the Koch brothers Elvis there's Jesus very few people I mean let's suppose your name was just Mary or changing the work you have said your secretary pays a higher tax rate than you do yes all right and so your favor of changing that some years ago somebody from the White House called and said would you mind having a tax named after you and I said well all the diseases have been taken away why shouldn't I'll take a tax why were you interested in me in the head of McDonald's did you like McDonald's food or you just what was it you don't have to look at me you don't have to talk to me you can keep on walking whatever you're doing I just want to see his face for three minutes what about snack products how are you trying to make those healthier the single celled bag of fleas has no salt then a slice of bread so you should eat your bag of Lay's with a smile on your face and a show with even money smile like yes but I wonder whether I gain some weight yeah the wealthiest man in the world for 20 years or more how does it affect your life daily people come up to you all the time and ask for money or they expect you to buy them things you know I think that President Bush would humbly actually he you know he could talk trash by the way and he and he did with me he challenged me I was in the Oval Office with my family after the surgeon Iraqi so general when are you gonna have the guts to ride a mountain bike with me and I said mr. president you have any idea who you're talking to I said I'm gonna give you an experience that you can write off on your income taxes education right did you ever do it with him I did and I was he knew them and I was glued to it he's terrific oh yeah and he he also knew the course he had the best bike in the world he and I had a borrowed clunker I was a road biker but Secret Service will ditch you if you try to pass him so I mean this is a full-contact sport when you ride with President Bush when you go to the ER annual shareholder meetings and you get a standing ovation for what you've done no I get a lot of people's asking me hey look go come home and fix my computer okay you're now both former presidents and what's the difference between being a former president and president now one day you have the nuclear codes you can send nuclear bombs off everybody is working for you and the next day when you leave office you have no power what was the transition like nobody plays a song when you walk in the room anymore when I was lost for the first three weeks after I left office I kept waiting for the music you know well so I woke up and Crawford the day after the presidency expecting someone to bring me the coffee Laura didn't bring the coffee there was the iran-contra scandal yep noon a security adviser Frank Carlucci came in and he wanted you as his deputy and I said Frankie can't be that important he says it is that important so then I said okay see if you can risk your entire career by saying the next sentence I said well Frank if it's that important why doesn't the president calling half hour later get a call from hello general Powell this is Ronald Reagan yes sir would it be fair to say that you don't suffer from a lot of self-doubt you seem to be very you know I mean I always I don't you know I'm more like Woody Allen I don't really know you know what I should be doing I'm not sure if I made a mistake here you don't really have that issue so much I probably do have that issue I mean I I think a lot about different things well I went back to my childhood home not too long ago with my mother those TV show and I knocked on the door and I said can we come in I used to live here a long time ago and they called the police suppose the next president said you know that's those are pretty good ideas would you like to be my Secretary of Treasury what would you say I'd say yes David Rubin sane so there you go there's the highlight reel tune into bloomberg television I have to ask you your several seasons in now what's what have you learned from all these famous people that you've sat down everybody has an interesting story and the trick is to try to get people relaxed so they're willing to talk about their background and everybody realizes that there's been luck involved in they're emerging from modest backgrounds to national leader political leader business leader so everybody wants to talk about their story more or less and I think you can you can get people relaxed and get them to talk about their background I think it makes an interesting story people always want to want to listen about how people became successful so when you can talk about that with somebody and they can say here's how I became a leader this is what I overcame this is the things I learned I think it's interesting to people who's surprised you the most well there's no doubt Donald Trump I didn't think he'd be like the president United States I'd say that but I think they were all they're all pretty good I think nobody I disappointed with I think what I try to do is do it in a what my style is as some people have seen it is this I try to prepare by knowing the facts pretty well know it was background and then I outlined the interview in my writing it out and I kind of memorize it and what I try to do is not use notes because I try to realize that if you have notes your eyes will never be looked down and as soon as you look down you lose the eye contact with the person you look like grabbing a conversation and I always try to make people look reasonably good I mean I'm not a journalist as I say I'm not trying to embarrass people put them on a hard spot make news that they didn't really want to make so I think they feel comfortable in their relaxed and you don't really feel I'm gonna try to threaten them or embarrass them and therefore they often tend to say more things and they might have otherwise said because they're relaxed I'm gonna put my notebook to the side account but at the end of me they say the truth is I prepare the question so I suppose I prepare 40 questions I've written them out myself I've done I'm done the way my mind works so if I'm doing the interview and I remember 35 of the 40 nobody's gonna know in the audience I forgot five questions right and so it's not like anybody's gonna be upset and it it's just I think it works better when you have notes in front of you you you you usually look down when you look down you just looks different this is my style is that that way right so let's start the broader conversation in your current home town you grew up in Baltimore much you live in Washington or right when you are at home you were in Washington right it's not that frequently you still travel 200 plus daisies correct what's going on in Washington right now when Washington is a city that is bitterly divided as it was under President Obama and to some extent under george w bush I worked in Capitol Hill in the late 1970s and I would say the Democrats Republicans then tried to work together and get bills done today you just don't see any of that I started a program five years ago to bring Democrats and Republicans together for dinner at least where I bring in a great American story and I interview them and we have a dinner and the Democrats sit with Republicans and they love it because they say they rarely ever get to have contact with people from the other house or the other party right now members of Congress are not there that much because they're out raising money all the time and it's not as good as it used to be in my view Washington is not likely to change in terms of the bitter divide any time soon I think the president has really aligned himself with the Republicans as you would expect the Democrats are basically waiting for the midterm election they think they're gonna do very well if they gain control the house it's gonna be very difficult for the president the next 2 to 2 years I think so barring that sort of change is there anything as an observer of Washington as you say for a long time you worked in the Carter White House is there if you could wave a magic wand or if you could tell them to do one thing to come back together what would it be well the things that I think would be great to do would be eliminating money from politics we you know the Congress tried that years ago in the Supreme Court more or less struck it down they have to spend so much time raising money that they really and they don't need the money that much most incumbents usually win but they want money because they think the more money they have it'll threaten other people or make other people afraid to run again some also they use money to buy leadership positions you can give money to your your peers and maybe that helps get you elected to a leadership position because it's not by seniority anymore in most cases so I think the money is terror well secondly they're not there that much used to be they were there five days a week and and they really you know we get to know each other they just not there that much and secondly or thirdly they don't do as many congressional delegations abroad called hotels where they would travel and bond with each other maybe I was going overseas now gets heavily criticized and I guess the Internet and the social media has made it impossible to do anything in secret so everything they do is known and therefore some things that might look good for one party might not be done by somebody from the other party they just are afraid of of being primary that's what their big fear is they're being primary which means that somebody running against them on the right at the Republicans or on the left or the Democrat and therefore there's nothing in the middle anymore so let's talk about the economy domestically and globally in in your business you obviously have to keep a pretty close eye on that from a deal-making perspective what's your sense of where we are in the economic cycle how how worried are you at this point well a broken clock is Right twice a day as they say so I've been saying for years there's gonna be a slowdown and they'll be a recession and for years I've been wrong sorry I'm gonna keep saying it someplace somebody I'll be right I don't know when that's gonna be since world war two we've had on average a recession in the United States every seven years not exactly seven years but on average the longest time we've gone without a recession was from 1991 to 2001 roughly ten years that's better about 120 months we're now a hundred and eight months into a growth cycle the last recession ended in June of 2009 at some point there'll be some slowdown I don't see it happening right now no economist is predicting it for this year that I'm aware of and even next year I don't I don't see it but at some point there'll be a slowdown now I don't know what will cause it I couldn't predict the last recession really that it would be caused by let's say the subprime mortgages being undone I think one thing that people should realize is that what we've really done over the last ten years is this the same amount of indebtedness exists in the United States today as did ten years ago the same amount of indebtedness but it's shifted it used to be that the the sixty percent of it was held by the private sector and 40 percent by government now it's 60 percent by government and 40 percent by the private sector so the private sector has delivered government has levered up and let me give you an example when I left the White House in 1981 the US debt of the United States government was roughly five hundred billion dollars that was thought to be very very high it's now 21 trillion 21 trillion and we are adding enormous amounts every year this year's fiscal budget outlay will probably be a billion dollar annual deficit next year 1.2 trillion and the difference is that we are we we seem to be out of control because it's not likely that's going down it's going to go up because the entitlement programs are not being chopped we're increasing defense spending today all the money we bring in to the US government just pays basically for the entitlement programs and a little bit more but not much more so we really have to figure out how we're gonna deal with a government debt problem if we don't deal with it at some point I think that could be the cause of a recession right now Wall Street doesn't seem to be worried about it the market markets doing quite well so nobody is really worried about the government debt and it's not just federal debt it's state debt and pension debt so at some point that could be the biggest cause of a slowdown but I don't know when that will occur it might not be for a couple years so you move around the world a lot as we've alluded to you talk to the world's biggest investors what are they worried about well everybody is worried about the fact that you're taught that there's a recession that comes every once in a while and the lesson of the last recession is if you're over levered you can be in trouble but if you're very smart and you're willing to take some risk you buy your own debt back at a discount or if you hold on your asset long enough you know it'll come back so people are just wondering when this slowdown is going to occur and are they buying things when the music is going on in the music's going to stop are they going to be caught standing so I think everybody's worried on the other hand people don't want to miss out on great deals so people saw in the technology world that there was a company called Google company called Facebook and they lot of people missed out on those opportunities so now you see so many technology unicorns because everybody's afraid that they'll miss the next Facebook or Google at some point is that on Facebook I I did my my son-in-law to be told me about it when he was in college and I said this will never get anywhere it's a dating service for college kids I've looked at those kind of deals before they don't get anywhere I was wrong by by putting the initial ten million dollars that's worth about thirty five billion today so that was a mistake yeah I've made a lot of mistakes like beats was one you got right beats is one that we did get right that's a company that was started by Jimmy Iovine and dr. Dre who was I didn't really know rap that well at the time now I'm a rapper but yeah right into it well I did a rap for Carlile video once and they heard a young african-american in Washington DC 21 years old to teach me how to rap and he wrote out the rap song and he said look this will take five minutes to do it was definitely four hours to learn how to do it and he said later mr. rubenstein you're the whitest man I've ever met so we were trying to do beats they thought because I'm chairman like any senator I would have some a patina of entertainment knowledge they sat me down with Jimmy Iovine and dr. Dre and at the end of the meeting we agreed that we would ultimately probably invest and we did by 50 percent or almost 50 percent of the company for about five hundred million dollars dr. Dre stood up and I he was he's like six foot four six foot five and he looked really chiseled I kind of felt you know really out of shape and I stood next to him and I said you look like you must work out a lot he says yes four hours a day he said how much you do I say four hours a year that's a good year so yeah we did that deal when we we doubled our money and it worked out pretty well sorry I got you off track but you were talking about technology well companies well technology companies are everybody wants to be in the ground floor of whatever might be the next Facebook or Google or whatever it might be in dusters are concerned that prices that are being paid or high the average EBIT DOM multiple or cashflow multiple pay for a buyout before the Great Recession was around nine point seven times what we rose up for not from let's say thirty years ago to maybe six or seven times in 9.7 almost ten times today it's probably eleven and a half times so people are paying more now the cost of debt is lower but the major change that has occurred as investors are willing accept lower rates return when I first started Carlisle with my partners I think investors wanted 20% net and maybe they could get 25% net if you were lucky but a base case would be 20% net today I think investors are happy to take 14 15% net because they realize there's so much competition people are paying a higher prices but today you can get 15% net on a private equity deal that's considered pretty good right so geopolitically how much are you worried you look at North Korea you look at Iran you look at the Italian elections well if you go back in any period of time there's always some geopolitical concerns I'd say a year ago Korea North Korea seemed more dangerous than it does today as we talk today there gonna be a summit who knows what will come out of it but the talk seems to be pretty positive Iran even though the United States is more or less pulled out of the agreement the Iranians have are still complying with the agreement so it may turn out that maybe they'll make some more concessions and maybe the US will go back into it I don't really see anything that's immediately gonna cause us to go into any military confrontation now you don't know some of these things come unexpectedly right now Ukraine seems to be relatively quiet Syria I wouldn't say is quiet but I wouldn't say it's it's as bad as it's been I think Iraq has been worse than it is today so I don't really see anything that today I can say this is a geopolitical problem and this is the one that's gonna cause us to go into some kind of recession right I want to spend the last couple minutes that we have talking a little bit about philanthropy you've been increasingly vocal about where and how you are donating your money you're a signatory of the giving pledge if I have that right you have espoused what I think you call patriotic philanthropy Washington Monument a number of other you recently bought another copy of the Declaration I didn't name is Madison's copy um how many do you need do I need yeah how many do you want well it's not that I want or need any of them I'm all these will go to the institution's I don't have anything in my house on my walls I know I'm fine so I just put in a place with people and see and the reason I do this most of my philanthropy is like many people's into education and medical research because those areas that clearly can make the world a better place in so many ways but I have this little niche and patriotic philanthropy where I'm trying to do things that remind people of our history because I think character mericans know so little about it we don't teach civics very much anymore in junior high school Highschool you don't really have to take an American history course in most colleges in fact you can major in history in 80% of our colleges and still not have taken American history course I am convinced that the average American native born citizen could not without taking a test to prepare be able to pass the citizenship test that he immigrant has to pass because we don't really know so many things for example Annenberg Institute really did a survey that showed that three-quarters of Americans cannot name the three branches of government three-quarters of Americans cannot name the three branches of government and it turned out that more than a third Americans could not name a single right not a single right protected by the First Amendment and it turned out that almost 10% of American college graduates think that Judge Judy is on the United States Supreme Court which which was I hesitate to say is not yet the case so you know I just think that what I try to do is say I'll have these original documents of the Magna Carta the declaration dependents put in places and then make sure the monticello or Montpelier Washington Monument or Mount Vernon are in good shape more people will go there if they go to these places they view the documents they view that these places they might be inspired to go back and learn more about history and they learn more about history maybe we won't make some of the mistakes we made before we'll have a more informed citizenry and a more more informed citizenry but hopefully they make a better democracy that's the theory time will tell whether I'm right or not so what's the next leg of your philanthropy well what I intend to do is do more in education but in patriotic philanthropy that it's a narrow part of what I do I'm just I would probably buy some more documents or historic books and ultimately put them on display and there's some other monuments and memorials and I'm working on that I think can be used fixed up so for example take the Lincoln Memorial that memorial is I need some repair let's say and I agreed to put up the money for that and then we're gonna do is build an underground Education Center about Lincoln there so people can go there they won't just see that Lincoln but they'll actually could learn about Lincoln in this education center and when I was announcing this about a year or so ago it turned out there was snow and we did it in front of the Lincoln Memorial and it was covered live on c-span and so I'm sitting there with the head of the Park Service and I'm waiting by the way we're not as good as when you interviewed Trump right right so I'm sitting there and I'm getting ready to make my little speech about why I'm doing this and snowing of the support service look we don't care about snow we don't we word the Park Service so I'm sitting there all of a sudden get a call on my phone and it's my mother she said David put your hat on because I was you know she was watching the c-span she said I and I was the snow is coming out she's put your hands I like to put my hat on but you know it's always good to have your mother remind you these things true that is true so give us in the last few seconds that we have give us a preview for what's coming up on the David Rubenstein show peer to peer conversations on bloomberg television well we've taped a few that haven't yet been broadcast and they will be soon but one that I did recently was as I serve as chairman of the board of Duke University for a number of years my alma mater I went there on a scholarship but not a basketball scholarship I assure you open and recently when I stepped down as a chair I decided to stay involved with the school so I went back to this year's commencement and this year's commencement the speaker was the graduate of Duke Business School Tim Cook so I interviewed him in front of a number of people and you know that'll be I think the air in a few weeks and that'll be I think it'll be it's a very interesting interview about his life and so forth and so that one has been a so give these fine people a preview well what's one of the more interesting things that he told you well he told me that I don't know how to use my iPhone appropriately and because a couple of one time I was I was somewhere with him on a board in China and I said look I can't get this this iPhone to work and he said David I'll fix it for you but normally I don't do tech support for people but for you I'll do it so he got it he got to work he can he's better than I am at but he actually has a very interesting story he he came from very modest circumstances and when Steve Jobs passed away many people thought this stock would go down but the truth is the stock is more than double the stock was about valued about 350 billion dollars when Steve Jobs died I think 2011 and now the stock is about 930 billion of market caps so he's done a spectacular job and obviously a lot of it was done by other people as well but he's done a pretty good job of making this perhaps the first company is gonna be worth a trillion dollars so as you've talked to all these peers what have you learned that you've employed either in your own life personally in your philanthropy or in your business world well I don't know I've learned anything I've employed directly I I do think that the people that I've interviewed who have been the most impressive or the ones that have a sense of humor about their lives and have some humility and this is not an age when humility is might be valued as much but I do think that humility is something that that and all these people have when you meet with Bill Gates or Warren Buffett they've obviously accomplished a great deal but they make fun of their their lives and the situation's they they're in and you know there's many things you just don't expected them so for example Bill Gates I didn't it wasn't on the show but he told me his wife told me this once Bill Gates is taking his daughter to college the first time - she went to Stanford she's now I think graduated and so you know the roommate wasn't told in advance who the roommate was gonna be so there the parents are and the parents are dropping their daughter off and there is Bill Gates with his daughter and their little surprise and then it turned out that they didn't have all the stuff as everybody knows when you go to college you drop your kid off you don't have all the stuff so they said we have to go to Lowe's to get it so you have a picture of Bill Gates driving to Lowe's and shopping around looking for the stuff and then of course when he got back to the dorm room this was wrong stuff he wasn't sure if he could take it back for a refund or not but you know how would you like to be walking around low standing the checkout line there's Bill Gates checking out stuff so you know the people like to make fun of there's unusual secretive situations and that's what a lot of the interviews I have do billionaires they're just like us thank you very much thank you very much time you should thank you everyone for coming

Channel: David Rubenstein

Views: 36,474

Keywords: Bloomberg, David Rubenstein, Carlyle Group, show, trump, marolago, donald trump, economic club, west palm beach, florida, fax, green room, cspan, bloomberg invest, new york, the economic club, oprah, winfrey, paul ryan

Id: AYq5h55ZF2U

Length: 28min 37sec (1717 seconds)

Published: Wed Jun 06 2018