Skip to content

By playing, you agree to uListen's Terms and Privacy Policy and YouTube's Terms of Service.

Stanford Graduate School of BusinessStanford Graduate School of Business

Blackstone's Stephen Schwarzman on Hiring Phenomenal People

“You won’t do well unless you’re hiring people who are consistent with your values,” shared Blackstone Chairman, CEO, and Co-Founder Stephen Schwarzman during his November 18th View From The Top talk at Stanford GSB.

Stephen Schwarzmanguest
Nov 26, 201451mWatch on YouTube

Summaries, chapters, transcripts, and FAQs on this page are made by uListen, not YouTube.

Transcript

  1. 0:00 – 0:05

    Intro

    1. SP

      [on-hold music]

  2. 0:05 – 4:05

    Why Blackstone? Defining a distinctive strategy before starting

    1. SP

      I'm particularly honored to be interviewing you today because as many of the students know, I actually worked at Blackstone before coming to the GSB. And let's just say, we were a few pay grades apart back then. [laughs]

    2. SS

      [laughs]

    3. SP

      So I'm thrilled to be sitting here with you and, uh, having a conversation for the next 40 minutes.

    4. SS

      Good.

    5. SP

      So I wanna take this opportunity and along with all of my classmates here, to really get to know you more as a person, as a leader, and as someone who has great insights about the industry. And I wanna walk away from it getting a few advice from you, and that we can apply to our professional and personal lives. To get started, uh, I wanna say that people here all know you as CEO of Blackstone, one of the largest asset management companies here. But most people might not know is you're actually an entrepreneur. I wanna take us back to 1985 when you were head of merger and acquisition group at Lehman Brothers, but you decided to leave and start your own company with your co-founder, Pete Peterson. That was during a time when private equity was very new and considered a very risky asset. And you and Pete, neither of, uh, neither of you had a track record in investing. So can you talk about how did you overcome these early challenges? [laughs]

    6. SS

      Well, uh, that was some time ago, but, uh, immense pain keeps you in touch with that time. Uh, and, uh, it's, it... Be- being an entrepreneur is much better, uh, after you're successful than- ... when you're thinking about it, and let alone thinking about it, doing it. Uh, because the beginning of most things is very, very difficult. More difficult than you imagine, uh, uh, because otherwise more people would do it. Uh, and the failure rate is quite high. Uh, as you know, uh, it used to be like 9 out of 10 new enterprises fail. I'm not sure, uh, 'cause I'm, I'm not in the academic world exactly what the number is, but it's high. Um, what, what we did is, um, after, after I sold, um, Lehman to, um, American Express Company in 1984, I stayed for a year and then, uh, Pete and I, uh, left to start a, a new business. Um, but what was interesting is I, I've, I've found that, that the most important thing about a new business is, is figuring out what you're doing before you're doing it. In other words, why does anybody need you? Uh, there were plenty of people in finance, uh, when, when I was in it, uh, in 1985, but y- you have to offer something that's, that's distinctive. And to do that, you have to think through what, what your strategy, uh, is. And so, so Pete and I used to meet every morning for like three hours at, uh, a hotel because we, we, we didn't even have an office. Um, it's like your garage concept, I guess. And- ... and, and, you know, we'd think about what do we wanna be? What do we wanna do? Why should anybody, like, wanna do anything with us, uh, other than the fact that we were friendly and lovable, which apparently isn't enough, uh, to, to, to basically prove victorious, uh, except in your own conference room, uh, meeting only with yourself. Uh, and where you always win, by the way. It's, uh, still we're very successful in our own conference room. Uh, that, that what we did is we tried to say, okay, here, here, here's... I, I call this, uh, a great fantasy, right? You, you have to have great fantasies in life and then realize

  3. 4:05 – 5:38

    The original “great fantasy”: three-part plan for a new firm

    1. SS

      them. So our fantasy was what did we wanna be when we grew up? Um, first, we wanted to be in the M&A business 'cause I didn't wanna raise capital. Uh, uh, we, we wanted to keep owning the whole firm. That was a cash flow business. Why not just do that? It's easy. We knew the people. We found out it wasn't easy. We did know the people. Uh, but the, the second part was the, at that point, the private equity business was, um, pretty much of a low no-brainer. Uh, uh, prices were low, capital was available, weren't many people in it. Uh, that was a way of, of also raising management fees, uh, at that time because you, you wanted predictable income. Don't, don't... I'm always in the risk minimization business. And the third thing, because the industry was restructuring, uh, was, um, to, to basically take advantage of the fact that there were like a host of little firms to consolidate into only a few big ones. And, and when I joined, uh, Lehman, we had 550 people. Uh, when it died, uh, it, it had around 30,000. The difference between working in a place with 500 and some odd people is you know everyone by sight. You may not know their names, you know them by sight. It's possible to have a cohesive environment. When you have 30,000 people, it doesn't feel the same, and I, I, I always like the small feeling. And, uh, so, so I, I figured if I like the small p- uh, feeling, a bunch of other people would too.

  4. 5:38 – 9:13

    Building “affiliates”: investment opportunity, hiring “tens,” and intellectual capital

    1. SS

      And so as the firms were, were consolidating, you'd have great people you never could normally attract, but they'd be there. So the, the challenge was to figure out what these kinds of new areas is. And we called them, uh... And I'm not trying to make this, uh, about Blackstone particularly. I'm just giving you a sense of how to approach an entrepreneurial situation. Uh, we, we called them affiliates, and we set them up as 50/50 deals, and, and we didn't know what they'd be But we knew they needed three criteria. The first was an amazing investment opportunity so good even a non-manager like myself could not screw it up. Uh, secondly, we wanted to attract somebody to run it who was a 10 on a scale of 10. Because you'll find in your careers if you're a 10, God bless you, you'll be wildly successful. If you attract tens, they always make it rain if you need rain. Um, and they just have an ability to sense problems, design solutions, do new things, and that's what a 10 does. A nine is great at executing, can come up with good strategies, but not great strategies. A firm full of nines, that's a winning firm. Um, eights, they, they just sort of do stuff that you tell them. And sevens and below, I don't know what they are.

    2. SP

      [laughs]

    3. SS

      So, so, so, so, so, um... 'cause it's just we don't tolerate them.

    4. SP

      [laughs]

    5. SS

      So, so, um, it doesn't work in our industry. It may work in other industries. It doesn't work in our industry. So, so w- the third part of these affiliates, um, which are now folded into Blackstone, um, uh, w- was, was, um, to make sure they're manufacturing intellectual capital that enhances the business we, we already are in. So because you're in the constant intellectual capital building business, forget that we're called money managers or whatever else you want to call us, that's really our business, right? And so it's just a question of waiting for one of those op- opportunities and then acting on it. Uh, and, and that's was our plan. And at the time we did it, there was no independent investment banking boutique, didn't exist. But we figured with only, you know, the arrogance that you can have when you're young, that if they were doing this huge amount of merger and acquisition business with us when we were called Lehman Brothers, why wouldn't the same two people do it when it was just some made-up name like Blackstone? And we just assumed we'd be successful. By the way, that was not universally held as a belief because we'd go to the same people and they wouldn't hire us. And we said, "Well, why wouldn't you hire us? We're, we're like the same people, and we have the same knowledge base." And they said, "Well, we, we, we don't even know what you are. Some little thing. Why, how can we hire you?" So you had to convince them that you could do the same thing you did the day before you started. Sort of odd, isn't it? I mean, can you imagine if you were like a football player and you were a Heisman Trophy winner and you just changed teams and nobody would let you play 'cause you only could play with the other uniform. Uh, just doesn't make sense, but that was the world. Uh, so, so, so that worked. Uh, and we finally managed to convince the people, and we started

  5. 9:13 – 13:34

    Rejection, resilience, and “force of will” in fundraising

    1. SS

      all these businesses, and now we're the biggest in the world at what we do because... And we're still fi- fo- following the same basic, uh, plan. But one thing, just as a entrepreneurial you must be crazy thing, um, when we s- did our first private equity fund, we sent out four hundred and eighty-eight, um, offering circulars to people we knew. I... We, we ended up with thirty two investors, and they all didn't come at the beginning. So I don't know how often you like to be rejected, but try it that many times. My math skills aren't that good, but it's got to be somewhere around three hundred and fifty something, four hundred and fifty something rejections. People who look at you and you have a meeting where they consider you, and I don't know if any of you remember the movie Gladiator, but the emperor sits there and he goes...

    2. SP

      [laughs]

    3. SS

      And it's about you.

    4. SP

      [laughs]

    5. SS

      It's, it's not a product, it's you. You're a loser. And how many times can you be told you're a loser? The answer, apparently, is almost infinite.

    6. SP

      [laughs]

    7. SS

      Uh, and, and, a- and, and so anybody who's been through a process like that ends up as a much nicer, more humble person no matter where you started because the world is telling you, you are a loser. And, um, we ended up raising the biggest first-time fund in history with two people who'd never made an investment just by force of will. So it does show you that force of will counts. It counts. And, and you, you'd be amazed at the number of people who reject you who are completely dishonest. One, one of my favorite ones, and, uh, my f- [laughs] I have many favorite ones, but one of my favorite ones was the head of one of the biggest banks in the world, uh, who we'd saved on some disaster, uh, by restructuring it and, and it was a very difficult situation for them. Anyhow, we thought they'd be nice and throw us ten million dollars, which at the time was, uh, a lot of money. And, you know, we had a meeting with him. He's a famous guy. You know, you'd invite him out here. Maybe he was here. Uh, and he, he said to us, "You know, you're, you're really good people. We'd give you money, but, um, we, we just don't do this type of investing. We're, we're a bank. We don't, we don't do this." So, you know, sometimes you're defeated by structure. Uh, and we sort of slunked out of his office and- For some reason, this man forgot that my partner's wife was on his board of directors. I, I don't know exactly how he forgot that. And she told us that in fact, they were regularly approving these types of investments. You save the person, you save their job, the guy just lies to you. It's stunning. It's really stunning. So for all of you people out there who wanna be entrepreneurs, you gotta have a thick skin. You, you, you almost need s- some friendly psychologist training, t- tra- traipsing around with you to buck you up from all the setbacks that you have. It's always great after you're Jack Ma, uh, but it's not so great, you know, if you file a chapter. Um, and, and the difference in that, you know, Jack's a 10, he almost did go down, uh, several times. Uh, it's that scrambling ability, the ability to take that kind of abuse and rejection and believe in your basic plan, but be a- adaptable and just keep going. It's, it's really, uh, difficult. As you can see, it's, uh, you know, that was quite some time ago. It's 29 years ago. It's still a searing experience. And

  6. 13:34 – 16:36

    Keeping a startup mindset: fear of failure, innovation, and avoiding complacency

    1. SS

      now, you know, we have this wonderful business with people like this, and, you know, I couldn't even get hired at our firm now. I'm not smart enough. Uh, but... And it's, it's, it's fantastic, and we turn out these great results year after year after year, and it's easy now. But these early years where you'll find that your own capabilities, which you think are remarkable, are, are, are perhaps not exactly suited for purpose, and you have to hire someone else, you have to do something else. Y- y- you never sleep because of the fear of failure. And if you don't have that fear, you'll stay asleep, you will fail, uh, you know, because it takes these kind of remarkable human effort, uh, to overcome a, a world that isn't as anxious for you as you are for it. Uh, and if, y- you know, it's good that y- you have to be fundamentally delusional to get out there on the field of battle and make it happen. Uh, and we invent new things all the time. I love it. Uh, that's what I spend... I spend a lot of time doing a lot of things, but in terms of stuff that I really enjoy is starting new things and bringing them into reality. And, you know, the idea I'm running a, a, a really s- consequential big company of some type, uh, is a bit of a mystery, 'cause I think it's all just a startup. And, and one of the other things is if you lose that sense that, that things have to be done right, that other organizations, people, and so forth are, are trying to, um, you know, sort of succeed at, at your expense, then your organization becomes vulnerable. You become sloppy, you become self-confident, and you can never, ever, uh, let that happen. And there are examples that you study all the time. I mean, that's why I think business schools exist, is to look at these sort of train wrecks of companies that used to be great, that stopped being great, lost their, their, um, vision, wandered around, became self-confident, and people came to work believing that things would be fine the next day because they always have been. It, it, it's not necessarily like that. Uh, you know, hope somebody's always innovating, somebody's always trying to do better, and if it's to your expense, then you're just a, you're just a victim. And, and your jobs are not to be victims. It's to have someone else be a victim.

    2. SP

      [laughs] That was very inspiring, Steve.

    3. SP

      [laughs]

    4. SP

      Thank you. At least I've-- my takeaway from that was if I walk out and face rejections, I'll know Steve had faced more. [laughs]

    5. SP

      [laughs]

    6. SP

      Um, all, all jokes aside, um, we actually want to now move forward, and as you mentioned-

    7. SS

      Right

  7. 16:36 – 24:02

    Founder vs. CEO: learning the job, communication impact, and managing people over time

    1. SP

      ... the 29 years you've built Blackstone. And you've really built it into a diversified platform with many distinct business lines and alternative investment. So a lot of people think it's actually very difficult to be a founder and a CEO, and, uh, mi-- because it actually takes different traits to do both. But you've clearly succeeded in doing both. So my question to you is: Do you agree with that statement? And if so, how did you make that transition?

    2. SS

      I, I agree completely. It, it, it's... These are different kind of skills. Um, somebody once said to me that n- no one was born as a CEO. There, there's not a CEO gene. It's a trained behavior, uh, not a necessarily an intuitive one. And, um, you know, being an entrepreneur is a, a, a different set of skills. I, I've learned a lot, and I've, I've done this now for 29 years, so there's a lot of evolution. I made a, a whole bunch of mistakes earlier, uh, in, um, our business's history because I, I actually didn't really know what to do. It's, um, uh, and I got a little coaching from my partner, uh, who had been a CEO, uh, twice before. Um, but there, there's a, a whole skill set of, of learning to be, um, a sk- CEO. Fir- first of all, I mean, I'm sure you have classes that teach this But, uh, when it's done live, uh, it's, um, it's, it's different. Uh, o- o- one of the things that, that, that is, that you have to recognize when you're CEO is people listen to you, w- way more and they ... than you'd think, and, and they amplify, uh, everything that you say. And, and so you have to be exceptionally careful about what you say. Um, e- e- even just sort of a joke can get misinterpreted. Um, uh, people look for, uh, you know, y- your, your, your, your approbation, uh, your praise. You, you can't give it, uh, unless it's deserved, but, but if it's deserved, you have to be really generous doing that because, because people respond to it and it's important. Um, uh, you have to realize that, uh, human beings, um, are not like parts of a deal. Uh, you know, in a deal, it's, uh, pretty much of a closed system. Uh, what one person gets, the other one loses, and that's the way it is. Uh, with an ongoing team of really terrific people, um, you, you, you can't manage that way. You ... Sometimes, um, you see a problem, and you have to game it out. I- if, if, if people were just like, like chess pieces, you know, you just sort of move them and, and it's over, but they're not. And, you know, sometimes you can see a problem, and, and you have to, uh, strategize it out. So, so if you're moving people around, you don't want anybody particularly to lose confidence in themselves. You want to be nice to everybody, but you want to accomplish the objective. So sometimes it could take two years to do something that you know should happen in 10 minutes. But if you did it, uh, then you'd break so much glass through the organization that you'd threaten the institution, or you'd threaten core people, and there's a way to work that out. So, so time actually, uh, you know, as opposed to some, some cartoon-like, uh, uh, squash-buckling, uh, CEO, uh, it doesn't work that way. You, you have to be careful with every move. You have to give people dignity, uh, but you have to accomplish your objective. So time is something that you give up sometimes, uh, to do that. Uh, and you, you also have to, uh, articulate the core values of your business. Uh, a- and you can never stop doing that, and you can never stop doing that enough. Everybody has to know what you stand for, and they have to see you a lot as a CEO, because that way, organizations don't lose their soul. On the other hand, you have to surround yourself with phenomenal people who share that value system. And there's a very interesting, um, uh, almost internal debate you have to go through between control and ceding control because nobody wants to work at a place if they're brilliant, terrific people, uh, like we have, if they're so tightly controlled, they don't, they don't feel they have any autonomy or, or, or dignity. And that may be an issue in finance and not some other industries. Uh, so, so you have to develop controls so that nobody can blow up the, the firm, but autonomy enough, uh, so that everybody thinks, uh, that, that they have self-worth, uh, and importance and can utilize their, their gifts. Uh, it is very useful as a CEO to have plans to expand your business, n- not for earnings per share reasons, interestingly. It's so everybody in the organization can grow up and not be forced out. So you start new businesses because most people in an audience of the type that I'm, uh, speaking, uh, to, uh, d- don't want to be subordinated work units. That's what they called them in the 1980s. You all want to be at least brigadier generals i- if, if not more. You, you don't want to be like a private or a corporal. You want to be in charge of your destiny. You're not so unusual. Most people would like to have ownership of their own growth. So, so part of being a CEO is figuring out how can you provide that for everybody. And one way to do that is to start new businesses where people can move up and, and exercise, you know, their creative abilities, uh, you know, so that, uh, you know, a, a firm is continually entrepreneurial. Uh, so, so it, it was a big, uh, step for me to slow down because I was like a deal person, and that's a different world, and, and, and just learn how to do that. And it's, it's a transition, and you make mistakes while you're doing that. Um, but after you've done it for a long time, I, I actually have fun with like people who are newly appointed CEOs. They'll, they'll call me up and say, "Could I have lunch with you? Can you tell me how to do this job?" And because they don't know, and the smart ones know they don't know, and, and, you know, so none of us know everything, but there are, there are like hel- helpful hints, uh, as to how to do that.

  8. 24:02 – 30:40

    Personal leadership style and the “touchy feely” question: creating psychological safety through process

    1. SP

      Thank you, Steve. I want to switch gears a little bit and, um, talk about your leadership because View From The Top, as you know, is a series of leadership. We wanna know what was your personal leadership philosophy that led you to lead B- Blackstone over the past 29 years?

    2. SS

      I don't know. I, I've always been a leader. You know, I was like one of those student council-

    3. SP

      Apology [laughs]

    4. SS

      ... junior high school people and, you know, uh, uh, you know, president of your high school people and did stuff in college like that, did stuff in business school like that. So I don't, I don't know how I got that way. Um, I've, I've always been like that. I've, I've always enjoyed being in charge of things and doing new things and, and, um, I remember I brought a rock group that was, that was famous at the time to my high school, and everybody said it couldn't be done. I thought it would be fun, uh, and, you know, sort of interesting. So I like doing new things and I like being a leader and I like dealing with, um, complexity, and I, I like dealing with problems. I like creating. Uh, and, and usually that's the best spot, uh, to be in.

    5. SP

      So here we have a course at the GSB, uh, it's called Touchy Feely. Uh, it, uh, many of you might have taken it here. Basically, it's about how to be a leader by being more aware of your emotional reactions and building deeper connections t- with people through self-disclosure, vulnerability, and really showing your authentic emotions. So we're actually trying to figure that out is, how do we apply that in our leadership style and especially in a workplace? So what's your take on this touchy feely kind of leadership style?

    6. SS

      Uh-

    7. SP

      [laughs]

    8. SS

      Well, I, um, I, I went to a different business school.

    9. SP

      [laughs]

    10. SS

      This course, potentially, at least when I went, could have been antithetical to everything that people believed.

    11. SP

      [laughs]

    12. SS

      Uh, and [laughs] and that was, that was pretty rough. Uh, um, but I understand where you're coming from. Um, I, I, I, I think it's-

    13. SP

      Thank you for understanding.

    14. SP

      [laughs]

    15. SS

      Do, do we have a therapist in the group here?

    16. SP

      [laughs]

    17. SS

      Step up. Uh, the, um... I, I, I think it's important, uh, as, as I was saying before, to treat people in a way where they feel secure, where, where they feel valued, um, where they, they feel that you must tell the truth. Uh, a- and, um, there are different ways of, of doing that. Uh, but in our investment process, for example, we, we, we... I was gonna say something like, we encourage that people come forward with different points of view. In fact, we demand it. Uh, it's not encouraging. And, and that's because, uh, I did a, I, I approved a terrible investment as the second investment we did, and we lost money, and it was incredibly devastating to me, uh, because, um, uh, as long as you're talking about emotions, I, I had some investor who wanted to see us, and he started screaming at me. Uh, I had never been screamed at before, and nobody in my house had ever raised their voice. And here's this person screaming for about, it felt like an hour, it was five minutes, completely out of control. And I mean, I, I was, um, I, I almost wanted to cry, uh, actually, because he was right. I, I had made a, a, the wrong decision, and that's because we didn't have as organized an investment process 'cause we were new. So, so best thing we did retrospectively, although it was gruesome, uh, was, was to lose that money because we set up a process where everybody, uh, in, at the firm at that time, it was just private equity, now we're doing a lot more things. We had to go around the table and everyone had to express themselves, and they had to do it with something negative about the proposed investment, risks that people didn't see. And so we got used to, uh, if you brought an investment, you knew you, you weren't gonna get universal approbation. The job of everyone around the table was to critique it so that we, we, we got rid of the risk or understood it. And-

    18. SP

      At the GSB, we call that giving feedback.

    19. SS

      Uh, yeah, but it's, it's, it's giving feedback that gets people angry. That's the problem, right?

    20. SP

      [laughs]

    21. SS

      So, so, so you, you have to set up an environment where people feel secure that, that that act of criticism is not personal. It's impersonal. It has nothing to do with you bringing the deal. It has nothing to do with them pointing out the shortfalls in the deal, because every deal will be treated exactly the same, and every person will have that same role. So what we tried to do, uh, a- as part of an overall, I don't know whether it's touchy feely or, or, uh, you know, it's, it's more in- institutional, um, comfort for individuals, is to have that direct conversation in a way that ma- made it non-personal. And so, so the concept of worrying about these things, which is, I think, what you're actually asking, is, is, is, is really important to have an ongoing, um, uh, successful business. But to have the people in it always feel protected. Uh, and, and we set up processes like that and, and, you know, we have, uh, we have very, very, very Low turnover at, at our firm. And, and I guess the last two or three years, we were voted, like, the best place to work, uh, in finance, um, by Pension & Investment Age and some other stuff, and so forth. So care to these issues is, is really important.

  9. 30:40 – 39:19

    Motivation over time: learning, creation, money, and staying fully engaged

    1. SP

      You mentioned, uh, not, not keeping those criticism personal, but I actually wanna get a little bit more personal with you, which is I wanna learn more about your personal background and motivations. So when you were first graduating from HBS, what motivated you back then? And now, now what motivates you now, and how has that changed over the years?

    2. SS

      Oh, there are a few answers to that. When I... I remember interviewing at [laughs] um... It's a shame this is video. Um, I-

    3. SP

      [laughs]

    4. SS

      [laughs] That, that, that, um, when, when I was graduating from college, um, I was interviewing with, with some employer and they, they said, "What, what did you wanna be? Um, why do you wanna work here?" I, and I said, "Well, I, I, I wanna be a telephone switchboard." And the person looked at me, he said, "What are you talking about?" I said, "I wanna have all these inputs running up my arm, going in my head, twist them around, and shoot them out some other place. That's what I wanna do as a process." And the guy looked at me and said, [laughs] "You're wrong for us."

    5. SP

      [laughs]

    6. SS

      Uh, uh, uh, but, but, uh, when, w- by the time I was a little more, uh, you know, sort of developed, uh, graduating from business school, I, I still wanted to do the same thing. It's this insatiable need to learn what's going on and see something n- new and, and do something as a result of that. And, uh, that's, that's never really stopped. Now, that, that expresses itself in, in different ways. I also wanted to make a lot of money. I guess you're not allowed to say that anymore because that's unfashionable or you only have to do it through capital gains with new apps.

    7. SP

      [laughs]

    8. SS

      But, but b- back, back in the olden days, you, you sort of did it, you know, with more current income. Uh, and so I, I, I, I had, I had, uh, $1,400 when I graduated, uh, from, um, uh, from money that somebody, a group of people gave me on my bar mitzvah. I didn't even know my parents had held it aside, and I, I, I was getting married, so I saw this wonderful ring at Tiffany's for 1,300. So I sort of looked at it, I said, "Don't you have something a little better? I might as well blow the whole thing." So I spent 1,400, I started at zero.

    9. SP

      [laughs]

    10. SS

      So I, I, I decided I, I, I, I needed fuel. Uh, so that was one of my objectives. But the, the, the basic objective was, was to put yourself in situations where the, the learning curve was so steep and, and the outcomes were so consequential that it just was gonna be f- really fascinating and interesting and fun. And I'm still doing that, and I love it. Uh, it's great. I s- uh, um, yesterday I had, uh, Henry Kissinger come over. Uh, he was doing a video for, uh, the Schwarzman Scholars and, um, it's nice of Henry to do that. He's, he's on our, um, advisory board, and we were walking, uh, dow- down the hall after he'd done this video and, and you know, he said something like, "Geez, Steve, you know, at like 91 and a half, I still feel like I'm in my 30s." And, and, uh, uh, he said, he said, "I think you're the same." I said, "Yeah, except I'm not 91 and a half."

    11. SP

      [laughs]

    12. SS

      But, but, but, but I, you know, feel exactly the same way. And he said, "You'd, you'd never retire, would you?" And I, I said, "Well, why would I retire? My life's so interesting, and I'm learning all the time, and I'm traveling all over the world, and it's great. It's fantastic." And he said, "Yes," he said, "I do, uh, what, what I do for, for, for no compensation." And I said, "Yeah, I, I, I get it. I mean, absolutely." I mean, it's, as you'll find, 'cause there are mostly young people in the audience that, um, when you find something you love and, and you're good at it, and you know, you go to your touchy feely course and you're self-actualized, right?

    13. SP

      [laughs]

    14. SS

      I mean, that's, that's what it's like. That's the game. It's, it's, it's not about money, it's about creation. It's, it's about feeling, uh, you know, you're totally alive every day, and it's interesting, and you run into heads of state or, or finance ministers in my kind of industry, or, or unique transactions, or doing things that are the biggest in the world with great returns and doing unusual things. You're always out on a frontier. This type of life is completely seductive and, and it's, it's not age determined. Uh, it's really, um, it, it, it's really about you. Uh, and I remember when I was interviewing, um, for a job in, um, I was graduating from business school, and, uh, I went to some firm and, you know, you meet a lot of people when you're interviewing. It's very interesting. And I was sitting in front of a guy who looked like he was in his 80s, uh, named, uh, uh, his name was Clifford Michelle, and he, he had all these bound volumes of financings and things he'd done. And the guy had these brilliant blue eyes, and he was sitting alertly, and he's in his 80s, and the guy was amazing. And I said, "You know what? I wanna be him." I want to be somebody at that age who can do what he's doing because he's completely engaged, uh, with life. You can do that, and that's the fun of it, and that's what I wanted to do. And, you know, I was lucky, uh, to be in an industry that was going through enormous expansion at the time when I was a young person. And so I was lucky and I didn't blow myself up. That was good too, boy. And, and, um, I have one saying and to those of you who are interested in finances, it's apparently like 12 people in your whole school now.

    15. SP

      [laughs]

    16. SS

      Uh, you know, uh, that, that, uh, uh, there, there, there are no brave old people in finance. They usually get blown up by the time they're 40, and if they're given authority, by the time they're 45, uh, because you always have to have balanced risk. You always have to worry, uh, about your downside. Um, if I, if I could say just one thing, uh, this little commercial for Schwarzman Scholars, uh, uh, program, this is like really a wonderful thing we're doing. It's like the Rhodes, uh, except you get to go to Tsinghua University, where we have a distinguished graduate. Uh, and, um, uh, and, and, um, it's gonna be a marvelous introduction to China for a one-year, uh, program, uh, where, you know, be taught in English, um, which is a universal language. And, you know, you have three different majors. Um, but we're gonna start out with a core course, is everything about China, then have a leadership course, uh, designed by the other business school, um, where they have cold weather, uh-

    17. SP

      [laughs]

    18. SS

      ... on the other side, uh, of the country. Uh, and then you, you'll have courses in your major. Everybody will get a mentor, uh, from the real world. Some of the people I haven't disclosed yet. I mean, they're some of the most famous people in the world. Um, uh, and, um, you, you, you get to take trips, uh, around China. Uh, you'll meet the leaders of the country. Uh, and, and then we'll have a steady flow of really fascinating people who come to Beijing. We're doing this in a, um, a, a new building that we built that looks like a college at Oxford or Cambridge, except it's-- looks like a Chinese building, but the same thing, residential college. And, uh, we're having some meeting, Rob, I think, uh, later today? At 3:15. Yeah. Where, where I guess people are allowed to come? Yeah. So, so where is this mystery meeting? Wallenberg Hall, 3:15. Okay. So I got my commercial in-

    19. SP

      [laughs]

    20. SS

      ... which I wasn't supposed to do, but then again, I'm an entrepreneur.

    21. SP

      [laughs]

  10. 39:19 – 44:02

    Audience Q&A on hiring: interviewing beyond resumes and protecting culture

    1. SP

      Thank you, Steve. Thank you for answering all the questions with such tremendous candor. Really appreciate it. Um, at this point, I'm going to have everyone here in the audience have the opportunity to ask Steve any questions you want. There are two mics going around the auditorium, Ryan on the left, Carolyn on the right. We're also taking questions from Twitter, especially if you're sitting up there. We don't have mics there, so please tweet your questions to GSB VFTT. Um, I'll start with a question from Twitter.

    2. SP

      Sure. Um, so this is a question that came in through Twitter. Um, as you grew Blackstone, um, how did you ensure you got the right people for the right seats?

    3. SS

      Uh, to the right people?

    4. SP

      For the right seats at Blackstone.

    5. SS

      How did... Uh, hiring is a wonderful exercise. Um, it's really fun. Uh, and, um, what you're trying to do is, is match people's capability with, with who they really are. One thing we're doing in the Schwarzman Scholars program is trying to, to, to figure out who will be great future leaders and, and then give them, uh, a year to learn about China. And, and people say, you know, "How, how, how do you know who's gonna be good?" Uh, and, um, you have to talk to them. It, it's not a resume. A resume is like a, a building block. Are they smart? Are they dumb? If, if they're dumb, you don't see them. Uh, but, but smart people come in much different versions. And, and, um, you know, when, when, when, when people like myself meet other people, I, I, I don't know how to interview, uh, anybody. They, they walk into your room, and they sit down, and you look at them. And somebody says something, or they have something on their resume that's interesting. This is, you know, like the... somebody who's won the World Chess Championship and still runs the 400 meters in less than four minutes. And you go, "When do you spend time to do all this stuff?" And you start a conversation, and what you're trying to do is figure out how flexible their minds are, uh, how emotionally stable they are. How will they do under stress? Are they self-reliant? Um, uh, what, what's their ability to express themselves? Uh, sometimes you can see fear in people's eyes. This is usually not a good thing, right? Fear. I mean, like complete fear. What are they doing sitting there? I'm, I'm sort of easy. They shouldn't be scared of me. If they're scared of me, they're gonna be scared of somebody else and, and that's not good, at least from a sales perspective, you know, being scared. So there are all kinds of things that people will tell you, and you're trying to burrow into their head and predict future behavior. And, and if you can do that, uh, and, and you have certain criteria, they have to be nice. We don't, we don't hire anybody that's- Not nice or anybody that's political. That's what happens 'cause there are a bunch of-- There's entrepreneur stuff in the air here, so you don't have to hire anybody who's disagreeable just because they wanna be hired. You don't have to do that. So you can make whatever culture you want to make. It's hard at the beginning 'cause not everybody wants to join you because you're not successful, so you're desperate, right? But you'll find that you don't do well unless you're hiring people who are consistent with your values. So you've gotta know yourself, and you gotta stick to those kind of people. M- m- meritocracy, good thing. You know, sort of being able to operate horizontally instead of being, you know, sort of a controlled monster. W- we can't do those. You can't have those people around. Even if they're smart, e- e- even if I see movies with people who are like that and smart, it's-- it doesn't work well, uh, as you get more mature. You can have exceptions, but basically, um, you, you, you have to have people who you think can really adapt, really have a gift, really are nice, really can communicate, um, and you have to imagine them under big stress. How will they behave? Will they be honest? Things like that.

    6. SP

      Thank you. Do we have more question? Right there.

  11. 44:02 – 48:34

    Overcoming conservatism and building trust: explaining motives and delivering returns

    1. SP

      Thank you. Uh, so when you were first starting your business, all, all entrepreneurs have to sort of, uh, overcome an established order. In your case, you mentioned that you had a great team wearing a brand-new jersey, and you found it hard to get people to, to deal with you, so to speak. Um, what motivates that sort of conservatism? How did you overcome that, and, and how did you sort of build Blackstone into today's establishment?

    2. SS

      Um, finishing the last answer, one other thing as you're hiring people, um, that people over 40 are their reputation. Below that, they change, they adapt. When they're over 40, if you're interviewing somebody and you think they're a good person but, like, five people tell you they're really not, don't believe yourself. Believe the five people who've had experiences with them. Don't let your own perception, somebody who's really a set personality, uh, overrule the other stuff. Every time I did it, I was wrong, uh, so I've learned some lessons. The question about the world, uh, not accepting new things and how do you change it. Um, I, I, I've, I've learned, uh, that other than at Stanford and, you know, this part of California, um, people basically don't like change. As distressing as it is to imagine that, they don't like change. Every time we've tried to change something... For example, we renovate, we were renovating a, um, a hotel in London that was called Claridge's, and it was very prominent. And, um, we bought it in 1995, and it was quite run down, and it needed to be, uh, you know, sort of, um, modernized in a variety of ways. I mean, I got these endless barrage of things. "Don't change it," right? "Don't change it. It's so wonderful. Don't change a stick of furniture," even though you were sitting in a couch and your knees were over your eyes.

    3. SP

      [laughs]

    4. SS

      Right? "Don't change anything." And, you know, you get sort of like protests and so forth. So, so we changed things, but, but we, we didn't change them bad. We changed them good. And I had one particular person who was born there during World War II who, you know, really became very, um, unhappy. And so, so, you know, we did the change with English Heritage. Everything was, like, beautifully done, and at the end of that, um, he wrote me this long letter saying, um, uh, how wrong he was and, and how obnoxious he was, and this is a famous person. "And it's absolutely wonderful, and I just wanted to tell you I was completely wrong." You usually don't get that satisfaction, um, but, but change is really hard for a lot of people. And, and so you have to recognize that whenever you start something new, and you go out of your way to make them comfortable, um, because you can introduce them to change. Uh, at, at, at, at Blackstone, um, it's not directly applicable. We keep doing new things, and as long as you, you really do good returns, uh, and people know that you care about them, the investors, and you'll never do anything to hurt them, and you're on their team, on their side, and you're, you're just, like, trying to make their lives better. They have to understand your motives. And if you can explain your motives, and your motives are direct and pure, really... I mean, we wanna make money, but we, we, we only wanna do this for the benefit of people we're investing for. And if they never un... If they understand that you never will introduce a product that, that is not terrific, you believe completely in it, that's your business, then what happens is they start trusting you, and they should, and that's building up, in effect, brand equity.

  12. 48:34 – 51:28

    Closing question: what matters most—excellence and turning vision into reality

    1. SP

      Steve, I wish we had more time with you, but I've saved actually a last question that I want to ask you, and it has become a View From The Top tradition, and it's a question we all had to answer when we applied to the GSB, which is, what matters most to you and why?

    2. SS

      You all answered this?

    3. SP

      [laughing]

    4. SP

      And they, they all answered it very well to be sitting here today.

    5. SP

      [laughing]

    6. SS

      Um, what, what, what matters, uh, to, to me most is excellence, uh, and delivering sort of a vision into reality. It could be commercial. It, it could be, uh, you know, in the art business. It could be, um, imagining, uh, something that's, uh, uh, never been done or beautiful and making that happen. Uh, that's, that's what I really love doing. And, you know, sitting in a, in a room that's perfectly beautiful from every angle, that, that gives me pleasure. Having investments that are fantastic and work out right, that gives me pleasure. Um, a perfectly hit tennis ball-

    7. SP

      [laughing]

    8. SS

      ... against a great player, so they can't get it and they're better than you, that gives me pleasure. All of these types of visualizations where you're executing perfectly give me pleasure. So, you know, well, who was that? So it was a psychology course where they had the bird that kept hitting something to get... You know, they put some electrode in its brain, and it would hit the bar to keep getting, you know, stimulated with the, um, with the pleasure. Uh, I, I do that, except I'm not a bird and I don't have that. But, but basically, you know, people like that, and, and there are a lot of different ways where you can create that scenario, and, and I, I, I, I, I love a perfect sunset. I love these just wonderful things that they all line up and they're, they're just excellent, excellent. So that's what I like. Maybe I wouldn't be admitted here, but just...

    9. SP

      [laughing]

    10. SP

      Well, well, to the pursuit of excellence, and thank you for your time here with us.

    11. SS

      Thank you.

    12. SP

      [applauding] [upbeat music]

Episode duration: 51:28

In the uListen app, the transcript lights up word by word as you listen. Get uListen

Transcript of episode 3jGc8biSYHA

Get more out of YouTube videos.

Read along on your phone, search it beside the video, or ask your favorite AI app what was said.

iOSAndroidClaudeChatGPTChrome