Stephen Schwarzman | Full Q&A | Oxford Union

[Music] right I think we should get straight to it and let's start at the beginning of your career and I'd like to know how your meteoric rise happened how you became a managing director at Lehman Brothers at the age of 31 well I hello everybody thanks for being here well then at that point there was really very much of an apprentice kind of approach and it was the first time that my class in 1972 is the first class of MBAs that went to Lehman Brothers and so there were very few people there and a good deal of business and and so I found it to be a great place because we had a ratio of only one partner to one associate so you had to do everything because the partners didn't like doing a lot so it was a forced learning experience and a really good one and and I got very lucky on one large project and I was working as a as a associate someplace in Chicago and I got a phone call on a Friday night from the head of a company that I had met once called Tropicana which in the United States is an orange juice company and he asked me if I would come to Florida Friday night because they were having a board meeting Saturday morning and to sell their company and he wanted me to represent them on the sale there was only one problem I had never done a merger acquisition in my life so this is um this is what you call a high-stress moment and so I flew down there and it was big snowstorm so I didn't get into around 5:00 in the morning and I wasn't expecting to be overnight so I had no clothes other than the same clothes I was wearing and I had to be at the company at 7:30 and they they gave me three different structures it ended up being the second biggest deal in the world and I was just alone and I was scared out of my mind because there's legal liability I also was like making it up and and it was also uh was a consumer product that everybody in America knew so if you messed it up they'd all know that too and so I learned that that the phone is almost always on the wife's side of the bed because I started calling the senior partners as fast as I could to say help you know I've got a few options what do you think I should do and I had never been to a board meeting before so there were all these grown-ups there and and they had two tape recorders and a stenographer taking down everything I said and we got the thing done somehow and as I say it was the second biggest deal in the world and I wasn't a partner I was just sort of a worker so that was sort of I guess what you'd say was a bit of a breakout moment for me so moving beyond no time at Lehman Brothers I'm wondering what the motivation was for you to go it alone and in partnership with Peter and to set up your own firm where did that motivation come from well the motivation came the fact that when Lehman Brothers was blowing up I saw a lot of behavior that I didn't like the firm was founded in 1850 you could have saved it when it had some big losses and the people who were 10 years from me older than me were not interested in saving the firm they just didn't want to get fired and take on the management that had mismanaged the business and you know I thought I knew what needed to be done and nobody wanted to do it they were not brave and so I ended up selling the business to American Express company and I didn't want to be with the people who I thought didn't defend the organization it was it was sort of a moral position and so decided to go out and do something with my partner who had been thrown out here before by the management that went in and ultimately blew up the company and did you ever imagine you'd be so successful well I didn't think about it like that when we started the business it were very few investment banking firms when I went into that field and we had a you know very big footprint and I just loved the activity and the you know sort of the interesting things that were going on so when we started our firm I wanted to repeat that same feeling but do it without all the people just like only do the most profitable things and do something that was global where you had a lot of feeds a lot of things that were always going on and that's what we did I never really had a an expectation of what size would be and all that kind of stuff I always just wanted to do great things and as many of the measure could and the rest of it falls out of that and yesterday we hosted Treasury secretary Jack Lew as we discussed and in between his time in the Clinton administration and the Obama administration he was CEO of Citigroup and I'm wondering what you make of the revolving door between Washington and Wall Street particularly as your partner in pounding Blackstone had been the Secretary of Commerce well when when I was the age of the people in this room it was very normal to have people from the business world go into government and come back in World War two for example there were a lot of business people that that went into the US government they were called dollar-a-year people and and and that occurred also in during the Depression where successful people would go and work for the government for no compensation just to help out and and that situation was quite normal and in fact when I was in college that was sort of a model that I thought I'd do at some point because that's what was expected now that sort of has some kind of a taint which strikes me as odd since most of my life it didn't have that so what do you think this sort of trigger was when that taint came into play I think it's more along with general populism unhappiness interesting because that one of the main things secretary Lew spoke about was populism so interesting that you're in agreement there now when I was doing some research I came across a few quotations and my favorite one is when I'm about to read you and I'd like to ask you a question about it and it's describing your view of the financial market you say I won't war not a series of skirmishes I always think about what will kill off the other bidder so I'm wondering how do you kill off the other bidder well that was the most unfortunate quote I think it's great and it's been cited before and what that was is is you know you can just tactically you know if you go to an auction to buy paintings sometimes there are bids that go up by you know almost nothing you know so somebody bids $10,000 and somebody says ten one or ten two or ten three and you know what I was referring to there is if you save fifteen thousand that usually shuts the thing down and it usually gets up pretty close to there but just psychologically at some point there are different ways to play a situation and when you do something that's surprising sometimes it allows you to to to end up winning at a price that sometimes is lower than where you would have gotten to in some other way so that's that's really all it is just as tactical description sounds a lot tamer than killing yeah well you can't do that they always come back yeah and so the point of your success in negotiation in business and Forbes 400 gives you a self-made score of 8 out of 10 which is quite impressive and do you think it's still possible in America's current socio-economic climate for a smart son of a dry goods retailer to become a billionaire yeah sure I mean we we have a like a really pretty remarkable system in America we we have if you look for example just in the tech area I was at Stanford I guess it was about a year ago talking to a group like this and to me it sort of seemed that everybody was sitting down playing with their laptop and you know I basically stopped the discussion I said you know all you people feel you're going to be billionaires two years out of school and you could see yes and and you know they have smart students out there and and America has always been a country where there's been a real entrepreneurial spirit if you look on the continent here you failure has terrible consequences and people tend to be very orderly and buttoned up and relatively cautious compared to in the states where if you have a really great idea and it's totally logical you're encouraged to go out and do it if it fails as long as it fails for some like sensible reason that you couldn't have anticipated and it's sort of like okay get yourself up to it again in Texas where I was two weeks ago almost every affluent person in the oil and gas business at some point was broke because they're looking for something underground that you can't really see so you have you know sort of machinery and all kinds of other things and you know but that's not the same as knowing what's there and so there's enormous sympathy for trying sensibly not having it work try it again and America is quite tolerant I'd say it's probably the most tolerant country that I've visited or lived in for that type of behavior and so yes I would say that you know it's definitely possible for people from all backgrounds to become successful it is really helpful to have a great education which you all here at Oxford or are doing but people without that kind of high-quality education in a globalized world really don't have as much of an opportunity as people who have terrific education so we're going to come onto education very shortly but I just wanted to pick up on one of the things you said and you sort of implied that failure is a rudimentary part of ambition and innovation so what was your biggest failure in business and how did you come back from it well you don't get to be successful in life without failing I wish that weren't the case it's better to be winning all the time but it doesn't work that way so my probably biggest failure came early and if you're an entrepreneur which is which is sort of what I am emotionally having big failures early can actually be fatal you want to avoid those if at all possible and in my case what what happened is I you know with the third investment that we made and we didn't have any processes people would just walk up to my desk and say I like this and I sort of thought I was a little like King Solomon you know like okay do we split that in half or would you know what do we do and so I had a case where I could choose between two individuals and their views on a investment night I picked the one sitting on my right and who appeared much more knowledgeable and that was the wrong choice and we got in a situation where we basically were going to all of our money and I was called by one of our investors to come and see him and he I sat down the chair in front of his desk and and he started screaming at me and in my family nobody ever raised their voice I thought that was normal apparently that's odd but in my house it was normal so nobody had ever raised their voice and this man was screaming at me for what seemed like an endless period of time I mean and he you know he's saying I was unqualified I was incompetent I was a probably all of which was true which was even worse and I started my face started getting red and I thought I was going to start crying and I was supposed to be in charge of a firm and I was just just totally shamed and I left that that meeting and I took a ride back to my office was about half an hour ride and I vowed I was never going to have another meeting like that in my life we were never going to lose money again we had to set up different processes and we did and the result of that is we one of the best investment firms in the world certainly you know the largest in our class and all that type of you know good stuff but it all stemmed from this one miserable thing and and at that time as mementos from transactions they had what were called tombstones where there were basically lucite cubes and you had something inside of it you know describing the deal company a you know buys Company B or this company goes public or something like that and so I had a special tombstone made up for that deal was called Edgecombe steel and I did it in the form of an actual tombstone and I inside it I had a black you know sort of background with some white letters and I kept it on my my desk for several decades so despite all the successes we have I'd never forget that one and it's still in my bookcase 30 years later so you find that adapting from bad things that happen is really the mark of what it takes to become successful because bad things can take you down or learning from those things makes you much more adaptable and stronger and come up with new processes and approaches that protect you from whatever mistakes you made the first time as a result of that business success you've been able to amass quite a large very large personal wealth and how do you ensure that that doesn't become a distraction how do you stay focused on work when you're in possession of so much money well first of all you have to be aware could always go away and so it came it can disappear and the only reason it came is because everything you focus on must be perfectly done and as you get bigger you can never forget that and and so I believe that that we're sort of like a restaurant and we're only as good as our last meal and if you poison your customer with a really bad meal even if you're a famous restaurant you won't go back to that restaurant for quite a long time if you poison your customer twice they never come back and so Finance has more fragility involved with it and and so every time we make a decision it's like a complete life and death situation and we must do it well and so I don't really think about the financial consequences to myself I I'm just thinking about you know how do we do something that's marvelous how do we be the best in the world at what we do and if we do that all the time what happens is they're good things happen to you personally but you don't you don't think about it because once you have your basic you know things in your life your house or houses or cars or whatever they are you know the rest of it is you know the more you accumulate you're going to have to give it away one way or another and you know so that becomes a different phase in your life so on that point of giving it away what led you to create the Schwartzman Scholars and why choose to put your money into that as opposed to something different yeah that's a good one I really enjoy this one I I started a program with some of my colleagues who were sitting in the first row and this is - - program like the roads but instead of sending you know sort of similar kind of you know future leaders and people of potential influence to Oxford we're sending them to Gen Y University in Beijing tissue oarsmen college as Schwarzenegger so why did we do this and part of it is a story you know when our firm went public in 2007 the Chinese government showed up without us asking them to and offered us three billion dollars and what was a four billion dollar IPO so for those of you who are in financial people when somebody shows up to buy three quarters of an offering it sort of says why do you need the offering and and so we made it seven billion and it was the second-biggest of the of the decade first decade of this century second to Google that was larger than ours so I went on the board at the request of the government to Gen Y University of their business school it's called school of economics and management and they have an advisory board there that's really amazing and you know they have many many people from the government and they have famous people from the business world so for example right now we have just in the tech business Mark Zuckerberg from Facebook Tim Cook from Apple Jack Ma from Alibaba Ponemah from $0.10 which is WeChat there which everybody uses Robin we from biood to so this if you listed your top five people in the world most of these people would be on that list and and so it's a fascinating group of people and they were doing a fundraising for their 100th anniversary so they came to me in the midst of the financial crisis and I told them I had something better to focus on like the financial crisis they should go away and they changed presidents in the normal rotation and I was living in Paris for six months with my wife and he came to see me and and basically said we'd like you to do something significant and I had thought about what what problems interest me not what their needs are that's something as advice I would give you you think about what interests you not what interests somebody else and what interested me was the increasing prominence power and scale of China and the fact that I could see the beginnings of populism occurring and that meant that people in society led by leader who benefit from it start getting angry at somebody because they're frustrated they could be legitimately frustrated in their lives but I felt that after they go after income inequality and wealthy people and people in finance and other types of people they'd start running out of targets and then eventually they'd go after countries and one of the countries that I thought would be one of the first on the list would be China because of globalization and and and the fact that a professor at Harvard Graham Allison who did a study in that when you have a challenger country the world otter challenging the incumbent China is the Challenger number two economy in the world challenging incumbent which is the u.s. since the year fifteen hundred and seventy five percent of those cases there's been wars between the challengers and incumbents and so I looked at that and I saw this trend coming and I said I really want to do something to get in the way of that trend to try and change outcomes because in the modern world you can't have military conflict between two giant countries like this and and so I figured if we could attract you know sort of a amazing group of people and send them to China for a year to learn uniquely about China meet the leaders of the country go on trips and learn about other parts of the country besides just Beijing and Shanghai and Hong Kong if you had a mentor from the real world who was a famous person in in your area of interest [Music] lived at genoise met all the students there that if you could have these unusual experiences that for example we arranged for president george w bush to do an interactive video with the students their second week there that was a lot of fun actually I I was tuned in secretly on my iPad and you know George was very relaxed and candid and you know sort of the we have a variety of really unique type of opportunities that when these students graduate and go back to their own countries that we're trying to select them to be leaders in people of influence in their fields and they'll set up a network among themselves and between them and their Chinese cohort that will allow them to interpret what China is doing sometimes John will be doing some things that are destructive of China's relationship and not even know it and feed that back sometimes the rest of the world will overact rather react to something that China is doing and they need just sort of more rationality and so this group will provide that role and also in terms of being a network that's ongoing could affect other important issues and so that's why I did it okay and by 2030 you know the website points out that the Schwartzman scholar website Prince how that China will be home to one out of every six people in the world will boast 17 of the 50 largest cities in the world and we'll have more college graduates than the entire US workforce and all of this is in a context of repressive governance and other human rights abuses should the u.s. not be incredibly fearful of China's rise well I I think you have to look at this historically historically in China China is over 5,000 years old and as best as academics can put records together they've had about 20 to 25 percent of global GDP during that period on average the the low point was in the late 1970s when they had the Cultural Revolution and their GDP was about two percent so they were going to be growing ten times from there as soon as they could get their government straightened out so I I look at China's growth is as really sort of somewhat inevitable and China taking its normal place in the world they tend not to be an expansion istic country because they're so big already and I think the world is going to accommodate to that growth and accommodate to you know a second global power and it's a question of how you work together productively so for example on the cop21 environmental thing the two basic leaders were China in the United States if China hadn't signed on for that you wouldn't have this environmental framework now and and so I think there's a lot of area for for common goals and you know this is going to happen so the idea of being scared about it usually when things happen you're supposed to engage and and have it come out to be like a win-win situation rather than driving people into corners where they overreact and you know you get like bad outcomes Thanks we're now going to get the audience for some questions let's go to gentleman in the front row over there at red shirt so obviously you had a lot of experience with mergers and acquisitions so I was wondering if you could take us through let's say the steps in the process of a merger and acquisition and what priorities you hold in mind at each step in the process what what are the priorities yeah well the priorities just make the thing work and so the reason you buy a company you you can do it two ways basically you can buy it with an existing company you own in which case you're interested in seeing you know what kind of synergies there are both for growing the company faster or eliminating duplicate functions in other words making the company more more efficient when you buy a company just freestanding you're looking at the same factors but it's it's a little simpler because you don't have another company you're dealing with at the same time and when we analyze things were we're we only want to buy something if we can make it much better to buy something just to happen that's like going into a retail store right you buy a retail and then you try and sell it to somebody there's always a loss try that sometimes with jewelry that you know what what you want to do is transform a business make it better have it grow faster what what happens is the faster a business grows the more somebody's willing to pay you when you sell it whether you take it public or whether you sell it to somebody else it also has some other really good characteristics for society the faster you grow a company the more people you inevitably to employ and so they get paid more and then that's a good thing so so the key is when you buy something how can you make it better so we do big studies and we do it before we buy the company buying a company isn't supposed to be an adventure you're supposed to take as much as the adventurer out of it because there's always enough adventure anyhow because you never really know as much as you think but you're trying to make this as riskless an operation as you can so on a normal thing we have at least one or two consulting firms working with us to see how you can introduce new products how you can grow faster we have all kinds of experts and so you know whether you know you can save money on their insurance or combine it we have a group buying program that we use at the firm so that when we buy the exact same thing for a company we add it to the other companies we have so we have greater buying powers we could buy that cheaper we've all kinds of ways that we analyze at the end of the day you sit around and figure out one can we ever lose money by buying this company it's the first thing you have to do and if you get lose money with any realistic set of scenarios you never do it even to make a lot I mean making a lot is fun but losing your money is dreadful so so you never never put yourself in that position knowingly got to be very tough on that and and then you execute the plan after you buy it and that's how we do things and it tends to work out right you know somewhere around 93% of the time if you buy stocks tends to work out right if you're good 55 percent of the time so I'd rather be sort of hitting in the 90s then a little bit more than flipping coins a question please we go to the gentlemen standing up over there there's an amazing story about you that I'm going to get completely wrong about how you got your first job something like you couldn't get a job so you started working at the Yale alumni office and one day there was a family having a picnic and you managed to start talking to the family having the picnic and from there somehow you land yourself up at an interview I believe it was a deal Jay and when the guy asked you you know so what do you do or why do you want this job you said well I have no idea what you do but everyone seems so excited I really want to be a part of it my question is you probably hear all the time from people or about the age in this room how hard it is to get a job these days and get a first job and this sort of thing and you talked about failures so I I really just had a simple question which was were there other families through the Yale alumni office that you had approached that you had met in other ways that you hadn't had the same luck with before you before you hit gold with what the interview you did get well I he's telling a story which is actually it was a funny thing I was I was working at a Yale reunion because I had no plans after graduating I mean this is actually pretty pathetic when you think about it and so I was just working to get some money because I forget what they were paying $30 for two or three days which was like 30 more than I had and so I I was working at a 15-3 Union these were old people they graduated for 15 years so they were 37 and they were old and they had children so a lot of them and there was a family just sitting having you know sort of a lunch on the lawn and I I looked at the family it seemed like like an ideal family and I went out and to a bookstore and and I bought Bob Barr the elephant which is a children's book that my father used to read to me at night and so I just went over and I handed it to this his family and I said I just want you to have this book and the four of them looked up at me like you know who is this person I thought that's a pretty legitimate thing for them to do and I you know I just gave him the book they said why are you giving me a book I said because you look like just such happy people that I just wanted you to have the book and then I walked away and the father came after me and he said that was one of the nicest things that anybody's ever done I said well thanks he said well what are you doing after graduation I said I have no he said well you know the the the reunion ends in another day this is much of a career and he said look I I work at the Yale admissions office and what once you come and see me and so I I saw him two days later and he said what do you want to be when you grow up and I said I don't know and he said we'll look I've got some friends who were my age and you know 37 they're old and you know I'll introduce you to some of them and and so I bought my first suit and I went down to New York to meet some of his friends and I had never been in an office building before and the first person I met was the vice-chairman of a big bank it was pretty weird went up this elevator very high and they had wide halls with white carpet I couldn't imagine a business would have white carpet and you know I walked down there were like policemen there I mean I don't know why they had guards there up on like the 48th floor and who was going to do it was Superman was going to fly in and give him a problem and you know met with him and and he said after a while he said are you hungry well students are always hungry right so so you know he opens this door and there was a there was a dining room and them with a man with a white coat and I couldn't believe any of this was real and so we were eating any he said you know I you know I'm going to offer you a job at Bankers Trust I said well thank you and then he said but I'd advise you not to take it and I said why not he said you'll be really bored here and you'll last for a year and then you'll leave so don't take the job so I didn't I hadn't had much to do with grown-ups so I thought this was a little odd right you know guys given me a job telling me to not take the job he's giving me and so I went back saw the other guy and he said how did it go I says a little strange you know so he said okay here's another one so I went down to see you know the bill Donaldson at tlj who started the Yale they call it Yale School of organization management Yale Business School yeah and so I didn't know what he was doing either but you know he had like a great-looking group of people there they were all excited and he sat down and he said why do you want to work at deal J us and I don't have any idea what DL J does but you know wow these people here look great and whatever they're doing I want to do this is very scientific interviewing I I advise you not to follow my advice on this and and so so I he said well that's interesting so he had me meet all of his partners I was completely unqualified and I was going into the Army in about six months um and they hired me so he calls me and he says he said okay we're going to offer you a job it's ten thousand dollars and I had no money and so I said that is great that's wonderful thank you but I need ten five he said why do you need ten five I said because I want to be the highest compensated graduate of Yale University 1969 there's one other person who has ten thousand he said well why should I care about that I said because I care about it he said I don't care that you care about it this is like ten thousand he said by the way in case you haven't realized it you're basically worthless I said yes I'm aware of that but I still want ten five and he said are you not going to take this job at ten I said no I'm not going to take it so he said listen let me call you back so he calls me back next day and he said I don't know why I'm doing this but okay ten five and that was the start of my career so so that was just nothing but a reward for being a nice person in other words I just did this for Larry Noble who was the guy with the kids for no reason no motives nothing just because emotionally I felt connected to him and and he got me into his network of super super achieving people you know the person who hired me became Deputy Secretary of State he started the yell Business School and was also chairman of the New York Stock Exchange but I had no access no nothing you're all better served than I was you have a career counseling here my career counseling was nothing another question please yes the yell invention hi my name is Paloma and be a student my question is the financial services industry has changed drastically since you know post the financial crisis and and what kind of bias would you give us as leaders financial services industry has gone through a very difficult time under its new regulatory regime for those who bother to look they'd find that it's not both it's not just the financial system on financial institutions that are having a tough time it's societies who've reregulate ADIZ institutions they're having a bad time too and those two things are linked and so it's been very fashionable after the financial crisis to take a very harsh regulatory position which I believe is leading to very slow growth throughout every country that that's taken that approach and at some point that's going to have to be reversed because certainly in the United States our financial institutions are extremely safe we've shrunk them they're way more liquid but but we've minimized the amount of lending that's gotten done which is one reason why these economies haven't recovered to the extent that they were expected to so it'll take some time more not convenient for you at this stage in career where that will reverse because we're going to need to get growth back for the benefit of the middle classes and lower-income people also in our society you can't do that without you know well-functioning financial institutions but there are always companies that survive that in the olden days like when I was your age you would go to the very largest institutions they were very prestigious and you would get trained in a normal apprentice type of approach that still exists but there are relatively few of those institutions there are many more other types of institutions like nowhere in the at Blackstone were in the alternative asset management business which means we do private equity and real estate and hedge funds and leveraged credit and some other things so so you know there are other businesses that are smaller than ours that do some of those things and those are good places to work because they're smaller they aren't regulated in the same manner as depository taking institutions where regulators are protecting depositors and consequently control those institutions because we don't take deposits from anybody we raise our money from pension funds and university endowments like Oxford and other types of institutions sovereign wealth funds that we we have the freedom to do actually what we'd like to do for customers and and there are places like that in the money management business interestingly for those of you who have any mathematical orientation that the money management business itself is becoming much more quantitative and that that presents all kinds of opportunities in different areas of Finance so in finance is also starting new things because of technology this whole thin tech area which is more like venture cap type of opportunities to grow your ear on things finance is a necessary part of society and it always evolves it always changes and there's always a way to do things governments are trying to discourage people from going into finance because they they articulated as being unproductive that's a political statement I think and you know without finance you can't grow an economy and so I think there will be plenty of opportunities but it'll be an evolving field I have time for a couple more questions with the gentlemen on the front bench here so I was reading an article in Forbes recently about the Schwartzman Scholars and it said that despite having the support of President Obama and the support of President Xi Jingping you still came up against some challenges from the Chinese government in founding the program could you maybe talk a bit more about those challenges and how you overcame them well the I think it was talking about the Schwartzman Scholars Program and what what problems we faced my goodness whenever you do something that's cross-cultural that's never been done before good luck and you're not even aware of all the things you're going to encounter and the Chinese system is a lot different than you know sort of the anglo-saxon system and you know we built a building and the quality standards typically in China much below what would be acceptable in the US or the UK so I would say that was that was an adventure and there's so many funny stories with that you know you can't believe it we sent one of our people up into a quarry up in the mountains because we couldn't get the right you know sort of stone because somebody shipped it wrong and this poor guy was a PhD from MIT he's up in a quarry someplace trying to figure it out so we had a lot of scrambling that went on with that we were trying to do a fusion type of teaching with Chinese professors and professors from around the world and that took like two and a half years to set ups been very successful but the first few meetings are always you know like what are we all doing here type things that worked out really nicely and and you know what the whole workings of a bureaucracy in China are much different than than here I mean you may think you help bureaucracy at Oxford that's probably not the case it's just they use their bureaucracy to protect themselves from illegal behavior and and so you know the first answer isn't always yes right in anglo-saxon culture you know a lot of times you just present something that's interesting so me says hey that's great let's try that you know there's a there's more of a reluctance at the middle levels of their organization to do new things because you can get in real trouble because of all the regulations the senior people tend to be pretty visionary and you know so that doesn't always immediately you know translate down so it's a you know it takes longer to accomplish something in China then it would you know in sort of a you know Western approach because you you have to keep going back up again if you can't make it through the middle layers so it takes longer it takes enormous effort but when you get it right and you have all country behind you we have support from the president of the country and that's that's a big deal in China Minister of Education head of the country I had a Chen hua University which is you know sort of the University the president the country went to the previous president of the country it's sort of their power Ally University depends whose ranking them see they're number one or two in China but you do something that's cross-cultural no matter where it is in the world if you're out of your native culture it's more complicated if you're in a place where you know in effect there you know laws are like creative concept you know they don't hover rule-of-law the way we would have rule of law it's it can be challenging but you know our first class of students unbelievable unbelievabl we selected amazing students we have fun was to rob from Oxford and we had 3,000 applications and first class 110 this little group of 110 people besides being verbal and creative and really super smart three weeks ago I get an email they just won the track and field championship at Chen hua university with 30,000 people 110 people they won the genoise check and field championship we didn't even select them to be athletes he said so this is this has been so exciting and you know we have this beautiful building like modeled off of a Oxbridge college except it's it's looks like a Chinese Oxbridge you know with like the you know the peaked roof that slopes and courtyard you know double courtyard like you have except you got bamboo you don't have your stuff but it's it's designed beautifully and people are incredibly happy and and you know it's it's one of the few things that I've worked on that dramatically exceed expectations it's one of the top programs in the world and and you know what's what's wonderful is I get a steady stream of emails from people having unbelievable experiences I mean just off the chart off the chart so sometimes you have to work hard to get something good but we've done all the work for everybody so now you the people who go can just have a good time and learn uniquely let's go to on the back there's a blue jumper right at the back hi thanks for coming um so I've been reading that a lot of sources of investment who would normally be giving a lot of their money to private equity firms such as sovereign wealth funds or big family houses or pensions are now directly investing by themselves without sort of investing with the private equity firms I was wondering what you think that means for the private equity landscape is to make it stronger or are they a threat for you guys or are they potential future allies and Co Investment Partners yeah you know the you um it investing isn't totally as simple as what I described you or else everybody would be terrific and most people aren't I I think it's pretty logical you know I can explain it that way and and so um there's always shifts in the investment business nothing is stable because in the investment area there are no patents so if you invent something or think of doing something you start doing it anybody in the world can replicate what you're doing or replicate it with with the spin so you have to constantly be looking for smart ways to do things and and understanding that no matter what you did once somebody's going to show up and play with it in some way and and so the trends keep you know sort of modifying its its evolution not revolution and some of the customers become huge say well geez I don't need these people to do this I can do this myself and you know there have been several periods where that's happened usually you know it's a mixed outcome and sometimes misfortune you know sort of visits people who do things directly because they can't pay people the same or even close to the same so if you think there's any correlation between what you pay somebody and what you get you should get better execution and and so people try to cut cost you know you can't blame them and and do things directly and if that worked out there'd be more people doing it it takes usually you know sort of three four or five years because before you have any idea if it's working and you know that's about where it started and we'll see what happens in in a in a world where two-thirds of the governments have their securities with interest rates below 1% and about a third of governments have negative interest rates what that means is you give them your money and then you keep paying them interest you're paying them interest instead of them giving you something it's it's really pretty bizarre right so in that kind of world where last year the United States about 80 percent of the university's lost money in their endowment the average return for pension fund was zero last year if we can earned double-digit rates of return on a regular basis and sometimes I think I'm limited by what I'm allowed to say by the SEC but just take that as a given that it's a lot more then for firms like ours we don't we don't particularly worry about you know whether there's a few people do things directly all we know is is if your alternatives are very low rates of return and we do very high logic would say they'd give you the money to do very high instead of doing very low right I realized this is a controversial concept but that's actually what happens in real life and so raising money in you know in our position at Blackstone now is radically changed from when I started the business and people would say why would I give you any money you don't know what you're doing well that I didn't know what I was doing it worked out anyhow but now after 31 years you have a long track record and that builds up a certain level of confidence and and so you know a few customers or relationships drift away it's such a big world with so much money that you know we're more limited by the number of investment opportunities than the amount of money and please do remain seated whilst mr. Schwartzman and I leave but first and foremost do join me in thanking him first and events [Music] you [Music]

Channel: OxfordUnion

Views: 80,703

Rating: 4.7741275 out of 5

Keywords: Oxford, Union, Oxford Union, Oxford Union Society, debate, debating, The Oxford Union, Oxford University, Stephen Schwarzman

Id: Je2q-tOzQc8

Length: 60min 18sec (3618 seconds)

Published: Thu Dec 15 2016