Stephen Schwarzman, Blackstone Group: A Financial Services Forrest Gump (Part I)

Stephen Schwarzman, Blackstone Group: A Financial Services Forrest Gump (Part I)

NOTE: This blog post and the following two instalments are based on Stephen Schwarzman, What It Takes[:] Lessons in the Pursuit of Excellence (New York, NY: Simon & Schuster, 2019). The page citations are listed in brackets throughout.

He is a titan of Wall Street, worth US$19 billion, who has lived through and been part of half a century of Wall Street cycles and deals. He is co-founder and chairman of the Blackstone Group. As he sums up, “We have been able to turn $400,000 of start-up capital in 1985 into over $500 billion of assets under management in 2019—a growth rate of about fifty percent a year since we started.” [347] Further, “…we own approximately two hundred companies, employing over 500,000 people, with combined revenues of over $100 billion, over $250 billion in real estate….” [347]

How did he get there? One deal at a time, which includes a number of blockbusters. One example is the purchase of the Hilton Hotel chain: “Our investors ultimately made over $14 billion on Hilton, making it the most profitable private equity investment in history.” [273]

Stephen A. Schwarzman recounts his life and insights in What It Takes[:] Lessons in the Pursuit of Excellence (New York, NY: Simon & Schuster, 2019). He has embodied the excesses of Wall Street, with lavish parties and a collection of oversized mansions in various locales. His book is his side of the story, referring obliquely to some PR challenges and skirting over various issues. The title was presumably chosen to sell the book, as it doesn’t directly reflect the content. Despite this miscue, the book, an autobiography and apologetic, is a sometime enthralling, but always intriguing, read.

His tales from the trenches have the unmistakable ring of authenticity, from someone who has been there and done that. It offers a first-hand glimpse into the mind and work of one of the most successful finance entrepreneurs of recent times. Few people have and will achieve what he has. In light of his track record, his insights and lessons are well worth pondering, despite a veneer of braggadocio.

He is seemingly a private equity Forrest Gump, showing up in many important places. He covers his role in politics (Canada-US-Mexico agreement, relations with China, trying to work with Trump), philanthropy (MIT, Yale, Oxford), candidly recounts his mistakes and awkward situations and keeps his humble Philadelphia roots in mind. He is fairly candid and offers succinct lessons rooted in experience, all with the self-satisfaction of overall success.

He speaks somewhat rationally about various life experiences. He had a brush with career death in the form of a meeting with Ivan Boesky, later a renowned jailbird. He makes no mention regarding any personal faith or religion. He speaks of his family’s Jewish heritage, but deliberately avoids any discussion as to whether it is of any personal importance. His second and current wife is Catholic, which is relevant to the extent that he has funded Catholic causes. He speaks in a detached way about his divorce from his first wife. It wasn’t working for him. His therapist gave him some reasons for how he could move on—so he did.

As he explains, “This book is a collection of some of the inflection points that led to who I am today and the lessons they taught me, which I hope will be useful to you.” [4] The book doesn’t delve deep, there is no philosophizing about meaning in life – rather it’s an account of a very successful entrepreneur: my experiences, what I learned, how I had an impact—like many other such tales, except that it is by a person who has succeeded on a grand scale.

What is at the core of his success? Early on he reflects on his key skill: “…my ability to see patterns and develop new solutions and paradigms, and with the sheer will to turn my ideas into reality.”[5] In addition, he is an inveterate learner: “…the most important asset in business is information. The more you know, the more perspectives you have and the more connections you can make, which allow you to anticipate issues.” [64]

What accounts for the success of his Company? “Blackstone is a remarkable success because of our culture. We believe in meritocracy and excellence, openness and integrity. And we work hard to hire only people who share those beliefs. We are fixated on managing risk and never losing money.” [6]

As with any entrepreneur, setbacks are mere speedbumps on the road to success. “If you’re going to pursue difficult goals, you’re inevitably going to fall short sometimes. It’s one of the costs of ambition.” [15]