Stephen Schwarzman on The David Rubenstein Show:

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Nov.14 — Blackstone Group Inc. Chairman and Chief Executive Officer Stephen Schwarzman talks about starting the firm, surviving the real estate crash of 2007, and being rejected from Harvard. Schwarzman appears on “The David Rubenstein Show: Peer-to-Peer Conversations.” The show was recorded on Sept. 4 in New York.
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it worked out and alchemy you did the
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IPO and Chinese invested and then after
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you did the IPO let me mention two deals
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that you did one was the biggest real
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estate deal in history GOP real estate
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company built by Sam Zell and you did a
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40 billion dollar buyout in effect is
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that right yeah it’s 39 actually okay
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all right thirty nine billion dollars it
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was a bidding war you won the bidding
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war but the real estate market crumbled
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right after the deal was done so how did
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you survive with that deal well we
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worried
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because the same reason we were going
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public I sense we were a market top for
real estate so so just buying 39 billion
dollars of real estate III thought was
dangerous because you had to pay a
pretty good price to get it because it
was competitive so as as soon as we
decided we were going to actually raise
our price enough to be the winner there
were two or three of us sitting around
saying this deal is potentially
dangerous we’ve got to reduce the
leverage and we’ve got to take advantage
of the crazy prices
that people are paying so we’ve decided
to sell half of what we bought the same
day we bought it so when I told people
that they just sort of looked at me and
and said the same day I said I don’t
want to take any risk that the world’s
gonna change and we’re gonna be stuck
with all of this so we basically had
every conference room at the firm active
one buying but then we broke it up into
all these pieces but if you hadn’t done
you would have lost all your money I
think that’s probably a market cratered
virtually the next day right because
most of the people who bought from us
basically got into enormous financial
trouble or went insolvent and and so
after we did that and closed everybody
went home
they’d been sleepless three days later
they came back and we said let’s sell
half of what we got left now and be even
more conservative so everybody went back
to work
and we ended up with one quarter of what
we bought very conservatively priced so
we could survive any kind of nuclear
winter we ended up making three times
our money buying right this this giant
thing at the top and and
there’s never been more than ten billion
dollars bought or sold by a group we did
70 billion so you wants to blot another
company before the recession really hit
that was caught Hilton and that was a
leveraged buyout and some people might
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say at the top of the market and that
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deal went down in terms of the debt and
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maybe the equity but then you openly did
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things that made it the most profitable
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buyout in the history of buyouts what
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did what did you do well that was pretty
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easy actually looked hard but you know
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Hilton had not been integrated they were
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running for different headquarters and
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there was a huge modernization and and
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and and cost takeout Oklahoma you sold
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it up about a fourteen billion dollar
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profit yes well if we had held it it
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would have been held it longer it would
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have been over 20 so so it was a good
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day
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cuz nice forty nine billion in recent
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years you’ve become one of the nation’s
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biggest philanthropists you gave three
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hundred and fifty million dollars to MIT
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for a computing Center and related to
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artificial intelligence you never went
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to MIT you had no connection there how
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did that come about well that was that
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was really fascinating i I’m not a
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technologist I had met the president of
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MIT Rafael Reif and we started talking
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and you know I we were concerned that
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the u.s. was just not investing enough
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in these technologies and I said do you
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have any interesting ideas so he came
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back with a let’s double the computer
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science faculty let’s take our it’s
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established a new department in effect a
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new school called it a college which is
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now gonna be the MIT schwartzman College
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of Computing and let’s connect AI to all
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the other departments at MIT so MIT will
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become the first AI enabled university
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in the world and I said now that’s a
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vision I could buy in on final question
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I’d like to ask you it just deals with
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this if somebody is watching or reading
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your book
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and they want to be a leader a leader in
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business or philanthropy or or in
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government what do you think is the key
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quality to be a leader and what have you
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seen as their key quality enable you to
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be a leader I I think to be a leader you
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have to be a really good listener you
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have to understand what’s going on
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around you you you have to be measured
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and and you have to realize that
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everything you do is amplified in the
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minds of the people who are listening to
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you so so care nuance kindness but
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defining a culture it’s what a leader
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does Steve thanks very much for this
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time I appreciate it thanks David