I dont consider myself a journalist. Nobody us would consider myself a journalist. I began to take on the life of being an interview or even though i have a day job running a private equity firm. How do you define leadership . What is it that makes somebody tick . David before we get into blackstone, i want to talk about other things. You grew up in a middleclass environment in philadelphia and now you are one of the wealthiest men in the world. You are one of the biggest philanthropists in the world. The last three president s have asked your advice on things. When you were growing up in philadelphia, did you ever imagine this could happen . Steve no. dave do you pinch yourself every day when you think about how you have achieved your status in life . Steve every day is an adventure and a privilege. David you have come to know President Trump quite well in recent years. Did you know him before he was president . Steve i knew him before he was president. David what he said i am going to run for president , did you tell him he did not have a chance . What did you tell him to do . Steve i told him it was an impossibility. Did he say that you are wrong why dont you serve in the administration . Steve i cant tell you what he said. I do not want to be part of the government. I have a wonderful life as it is. I did not want to disrupt that. David you have been an advisor off and on. He has asked you to do a number of assignments. I have never seen him tweet anything unfavorable about you. You managed to stay on his good side. What is the secret . Steve you tell people the truth. I dont work for the administration. I am an independent person. I give my views. I find that he likes to listen. I think that is a good thing. David let us suppose he is reelected and said i would like you to be secretary of state, secretary of treasury, would you consider that steve . That . Steve when i was younger. I dont have time. That is not where i want to spend my time. Writingou have started this new book. I read the book and it is quite fascinating. I know you well but i dont know you well but i did know about your background. Lets go through the creation of blackstone. You grew up in the suburbs of philadelphia. You are from a middleclass family. Your father had a curtain store. Steve it would have been a Bed Bath Beyond type of store. David it was started by his father. He came into the business. Did they say you are the oldest of the three sons . Now it is time for you to come into the business . Steve that was expected. I felt that standing up and i found that standing up and waiting on people buying linen handkerchiefs might not have perhaps not my highest and best use. David you told your father that maybe he should expand and do more than one store. What did he say . Steve he said i dont feel like doing that. That is interesting. I said why not . I think we could be national. David he just said not for him . Steve he just said im not interested. I said why dont we open stores all over pennsylvania . He said i dont want to do that. I had a third option. I said why dont we open stores all over philadelphia . He said i dont want to do that either. I said why not . He said i am happy the way i am. I have a house, two cars. I have enough money to send you and your brothers to college and that is really all i want. I shook my head and said i dont understand that. I just saw the opportunity to open stores all over the country. He just did not want to do it. What was surprising to me is that he was very intelligent. David you said that he was far more intelligent than you. That might have been an exaggeration. He was obviously a smart person. Steve that was not an exaggeration. I talked to him when i was beginning my career on things. No matter what i was working on he could always find the , weakness in the deal. David what about your mother . What did she do . Steve she was aggressive. She was a housewife. It was the 1950s and 60s. I had Twin Brothers and the three of us were a handful. That was the paradigm at that time. Steve david i did know you for a while but i did not know you were a track star. Where there a lot of white jewish boys on the track team . Were you in the minority . Steve i was a minority of one. David you apply to harvard, you say that you did something audacious. You applied to harvard, yale, and princeton. Harvard did not accept you. So you got some coins and called the director of admissions at harvard and said you made a mistake. What was that like . Steve that was frightening. We did not have cell phones then. I got some quarters and i found the phone number for the admissions office. The payphone was outside the gym. I stood there and put those quarters on and you could hear the ringing when they dropped down. I asked for the dean of admissions and i was put right through. He picks up the phone and i said i am Steve Schwarzman from pennsylvania. I am on the waiting list. I would really like to go to harvard. Why dont you take me out the waiting list. He said how in the world did you get through to me . You are not allowed to talk to me. I dont talk to applicants. I said that we are talking. He said yes. You sound like a very nice young man but unfortunately, we are not going to be taking anyone from the waiting list this year. Our yield was higher than we thought. Where else were you accepted . I said yale. He said you will have a very good time at yale. You will enjoy it. At yale, you will enjoy. I said i am sure that i would but that was not my objective. He said im so sorry. Did you ever see him . Steve ironically, it is really a great story. The ceo of mackenzie was on the in my office 25 years later. He was on the harvard corporation. I told him the story. He asked what year. The dean of admissions was a close friend of his. He said do you mind if i told him that i ran into you . I said that is fine. I got a letter two weeks later from that former dean of admissions. He said i remember getting a phone call. In 1964. He said that every time i see you in the newspaper, i realize that i blew it. I wish i made all the right decisions but as i told you of the time, there were no beds at the inn. David you interviewed with a number of firms and the one you decided to go with with was Lehman Brothers. Steve people were fascinating, you have exceeded excia agents who are people who worked on oil rigs. David you then went to Harvard Business school. Did you enjoy it . Steve no. David did you want to drop out . Steve yes. David what kept you from doing dropping out. Steve i wrote a letter to the president of the firm which is where i worked a bit right after i graduated and went into the army. I said it is cold up here. The classes are highly repetitive. I would like to come back to work. If you dont want me to, i will do something else. What do you think . He wrote me a six paid letter page letter that said that is just the way i felt in december of my first year. I was going to transfer to get an economics phd. I did not drop out and neither should you. You should complete what you are doing. I was so dumbfounded that he was so kind and thoughtful and had similar feelings and basically said dont you do that. Dont do the wrong decision. I just listened to him and stay. Stated. David you mustve done well because you had lots of offers afterwards. Steve yes. David you interviewed with a number of firms. You went with Lehman Brothers. Why . Steve the most interesting cast of characters. That was before mbas went to wall street. They just hired at random. This was the first class of mbas that lehman was going to hire. The people were fascinating. You had excia agents. You had people that had worked on oil rigs. You had all kinds of unusual people working at the firm. I thought for whatever reason that it was the right personality fit for me. David you begin a partner at 31. 31 years old, partner at Lehman Brothers, lets is going well. Then there was a problem, Lehman Brothers was sold. Steve that is right. I sold it to american express. There was a position taken in the firm that really went wrong. David you decided to join someone who had previously been the president of Lehman Brothers. He had been eased out. That was pete peterson. He was the secretary of commerce in the nixon administration. You guys started a new firm in 1985. The firms name was . Steve blackstone. David blackstone starts. It was you and peterson. Where did you get the money . Steve they did not require much. It was an advisory business. You talk and people give you money. David you each put into hundred in 200 200,000. Steve the Strategic Plan for the business was the m a advisory business. It required no capital. The second was going into the private equity business. David you have never been a private Equity Investor before. Pete said let us have an up and let us bit lets us raise a fun. You said, let us raise 1 billion. That is fairly audacious. Where we going to get that . Steve we went to our top 18 prospects. Everyone said no except for metropolitan life and new york life. One said i will give you 50 million and one said 25 million. But, i do not be a big part of things, you have to raise 500 million or our commitment is worthless. I looked at that and i said but, omg, we are going to fail. We met one more company. It was an insurance company. It was the number one financier in those days. Having lunchwark with the chief investment officer. He was having tuna on white bread cut across. I am busy pitching this habit private equity fund, and you can share part of our advisory profits. He keeps chewing, and his adams apple is going up and down. I keep doing my thing. He finishes the first half of his sandwich. He gets halfway through the other sandwich and he says i think that is a good idea. Put me down for 100. I can still remember that moment. Did he ask is that he is going did he actually say that he will give us 100 million . The number one investor in the world. If he gives us money, other people will follow him. I realized somehow, in newark, on some dreary friday, he gave us the money. I just did not want him to choke on the rest of the sandwich. David make sure that he lives to give you the rest of the money. Steve exactly. David you did very well and your business was booming. You decided to get into other businesses . Steve the first one ended up as blackrock. They were called blackstone financial. David blackstone financial. You actually own to the firm . Steve 5050. David you go 5050. Now blackstone financial is now blackrock. That is managing 6 trillion or Something Like that. Steve 6. 5 trillion. David how did they escape from blackstone . Steve they did not really escape. We set up an economic arrangement that ended up being inappropriate for a business that was growing has rapidly. That was growing rapidly. I made a mistake. I took the original agreement and i did not want to change it. It was advantageous for my side. The blackrock people, blackstone financial people were frustrated with that. That was the judgment of an amateur. David the Real Estate Market crumbled right after the deal was done. How did you survive with that deal . Steve just buying 39 billion of real estate. I thought that was dangerous. David 2007, you decided if you took the from public, it was private, why did you . Steve i had a sixth sense that something terrible was going to happen in the environment. Money was so available. Money was cheap. Everybody was doing things. Prices were crazy. I just had a sense this was going to come to a bad ending. And that we should have a lot of capital to make sure that we were bombproof. That was one reason. A second reason is i thought it would be a great branding event to put the firm on a global basis. Everybody would know who we work and it would make it easier to raise money as well as to have people sell us companies and other assets. David in the process of being the sovereign the chinese sovereign wealth is being created and they heard about you going public. Through an intermediary, they said can we buy a big stake in the ipo and you said yes. Steve the ipo was going to be 4 billion and they offered to invest 3 billion. We did not even ask them. I had not been to china since 1990. It was shocking that china had not invested in another Public Company since it was founded in 1949. This was a complete paradigm shift for china. We were chosen by them. It was pretty heavy stuff. David it worked out. You ultimately to the ipo. After you did the ipo, let me mention to deals that you did. Two deals that you did. One was the biggest real estate deal in history. Company built by sam. You did a 40 billion buyout of this real estate company. Steve 39 billion. Dave it was a bidding war, but the Real Estate Market crumbled right after the deal was done. How do you survive did you survive with that deal . Steve we worried. I sense that we were market top for real estate. So just buying 39 million of , real estate i thought was dangerous. You had to pay a pretty good price to get it. It was competitive. As soon as we decided we were going to actually raise our prices enough to be the winner, there were two or three of us sitting around saying this deal is potentially dangerous. We have to reduce the leverage and we have to take advantage of the crazy prices people are paying. We decided to sell half of what we bought. When i told people that, they looked at me and the same day i said i dont want to take any risks. We basically had every Conference Room at the firm buying and then we broke it up into all of these pieces. Dave if you had not done that you would have lost all of your money . Cratererestate market the next day. Steve most of the people that bought from us got into enormous financial trouble. After we did that and clothes, and closed, everybody went home. We had been sleepless. Three days later they came back and we said lets sell half of what we have left now and even more conservative. Everybody went back to work and we ended up with one quarter of what we bought, very conservatively priced so that we could survive any kind of nuclear winter. We ended up making three times the money buying this giant thing at the top. There has never been more than 10 billion bought or sold by a group. We did 70 billion. David you also bought another company before the recession hit. That was a leveraged buyout. Some people might say at the top of the market. That deal went down in terms of the death and the equity. You ultimately did things that made it the most profitable buyout in history of bias. Buyouts. What did you do . It was pretty easily actually. Hinton hilton head not integrated, they were running four different headquarters. It was fairly easy. It was a huge modernization and cost takeout. David you sold it at a 14 billion profit. Steve if we held, it would have been over 20. It was a good day. That is 14 billion. David in recent years, you have become one of the nations biggest philanthropist. You get through hundred 50 million to m. I. T. For a computing center. You never went to m. I. T. How did that come about . Steve that was really fascinating. I am not a technologist. The president of m. I. T. Started talking to me. We were concerned that the u. S. Was just not investing enough in these technologies. I said to you have any interesting ideas . He came back with lets double the Computer Science faculty. Lets establish a new department, under school it is in fact, a new school that is going to be the m. I. T. Schwarzman college of computing. He said lets connect the ai of all the other departments. M. I. T. Will become the first ai enabled university in the world. I said that is a vision i could buy in on. David if somebody is watching or reading your book and they want to be a leader, a leader in business, philanthropy or government, what do you think is the key qualities to be a leader . What enabled you to be a leader . Steve you have to be a really good listener. You have to understand what is going on around you. You have to be measured and you have to realize that everything you do is amplified in the minds of the people were listening to you. So care, nuance, kindness. Defining a culture, that is what a leader does. David thank you for this time. I appreciate it. Steve thank you, david. I am scarlet fu. This is etf iq, where we focus on the access, risks, and rewards offered by Exchange Traded funds. No more playing it safe. Investors stop doing the safety dance and slide back into risk mode. 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