Stephen Schwarzman’s Grit, Rejections, And The Birth Of Blackstone | Ep. 22

A tuna sandwich, a casual “Put me down for 100,” and the dam finally breaks. We follow Stephen Schwarzman from 488 rejections to the $100M anchor commitment that unlocked Blackstone’s first fund and set the stage for one of the most dominant investing platforms on earth. This is a story about grit, but it’s also a playbook: secure social proof, solve LP problems, and build processes that turn momentum into durable scale.

We dive into the early Wall Street lessons that shaped his philosophy—own the upside, don’t just earn the fee—and the Transtar deal that proved the power of creative financing and operational improvement. Then we pivot to real estate, where bidding to win (and improving post-close) beat the false comfort of the cheapest price. The EOP megadeal becomes a masterclass in de-risking: buy big, sell fast, and use scale as your moat. Along the way we unpack culture—information obsession, rigorous debate, and downside protection—and how diversification across private equity, real estate, credit, and hedge strategies created a resilient earnings engine.

We don’t dodge the hard parts: outsized pay optics, political backlash, and the scrutiny that comes with influence. But the enduring takeaway is trust. Anchor investors create momentum; consistent delivery cements it. If you’re raising a first or next fund, you’ll hear practical tactics on sequencing anchors, aligning with LP strategy, and building systems that automate outreach and reporting so you can focus on judgment. Aim big, recruit tens, and play for decades, not quarters.

If this resonated, follow the show, share it with a friend who’s fundraising right now, and leave a quick review—it helps more builders find these stories and turn hard-won lessons into action.

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Transcript

The 488 Nos And The First Yes

SPEAKER_00 0:00

Stephen A. Schwartzmann was told no 488 times. He and his co-founder had quit their high-level jobs, put up$400,000 of their own savings, and started cold pitching what was at the time one of the most ambitious private equity funds ever proposed, and nobody wanted in. For months, they pitched banks, pensions, sovereign wealth funds, anyone who would take a meeting. Some of the biggest institutional investors in the world laughed them out of the room. Others said, Hey, we just wanted to meet you. We never planned on actually investing, which is absolutely brutal. But Schwartzman never quit. He refused to quit. His partner was older than him. And I remember actually laughing, reading the book, because they flew across the country for this meeting. They got into this cab soaking wet. And he and his partner looked at him and said, Don't ever do that to me again. I will kill you. Um, because they had gotten denied. It feels like they were at rock bottom. And then came a meeting in Newark, New Jersey. The man across from the table was this guy named Garnett Keith from Prudential. Quietly, he listened while eating this tuna sandwich. And when Steven finished, Keith looked at him and said, Put me down for a hundred. A hundred million dollars. No drama, no buildup, just like that. After hundreds of rejections, he had his first anchor investor. And Steven Schwartzman knew that if Prudential was in, others would follow. That one moment, that one sandwich changed the trajectory of private equity forever. It closed the door on the hardest chapter of his career, and it opened the door to Blackstone, which today manages over a trillion dollars in assets. It is one of the most dominant financial platforms in the world and made way for BlackRock, which is crazy. I start this episode here because if you're listening, you're probably feeling some version of that story. You've you're launching a fund or trying to scale one or trying to launch one, and you feel stuck in the fundraising grind longer than you'd care to admit. And you're asking the same questions Schwartzman asked during those months. Is anyone ever going to say yes? That's why we built the fund founders founder circle. It's a private focused community for fund managers who want to launch, scale, and raise capital on autopilot with the right systems, support, and strategy in place. Inside the founder circle, you're going to get weekly coaching calls where we help you to navigate structuring compliance, LP conversations, and momentum building. We give you a powerful AI-powered CRM that follows up with investors like a pro while you focus on closing deals. We give you templates, legal workflows, pitch decks, investory automation, and support from other active fund managers at every single stage. Whether you're raising for a real estate fund, a private credit fund, or a hybrid structure, this is the community that helps you do it faster, smarter, and with way less stress. And if you're trying to still figure it all out, we've created a free capital raising course that walks you through everything from legal structuring to positioning so you can get started the right way. You can access it right now at WeArefundfounders.com slash free capital. Again, we are fun founders.com slash free capital. So if you've been hitting walls, questioning your next move or wondering whether all of this work is actually going to pay off, I hope Steve Schwartzman's story shows you that yes, what you're waiting for might just be the next meeting. Now we're going to dive in because I love Steve Schwartzman. He is probably, if I had to like put it into an all-time favorite, like Ken Griffey Jr. is my all-time favorite baseball player. Steve Schwartzman is like my favorite fund manager. Um, we're gonna talk today about how he built one of the most powerful financial institutions in the world from nothing, the risks, the rejections, the mindset, and the tastics that fund managers like us can actually apply. I got a lot of this from his book, What It Takes, and I've read the book probably three or four times. I read it once a year at least, and I think it's the blueprint. It is so good, and it's cool to see an actual guy that's making that much money, has that much influence, and doing so much in the world. So I'm pretty cool, pretty excited. Now, let's jump back to the beginning. How did Steve Schwartzman become Steve Schwartzman? What shaped the mindset of a man who would one day say, it's as hard to run a small business as a big one? So if you're going to dedicate your life to a business, choose one with the potential to be huge, which I love. It reminds me of the book 10x is better than 2x and a conversation that I recently had with one of my co-founders on Funflow, where I was like, guys, why don't we just do the 10x thing? And they're younger, and so they were like freaked out. But I was like, no, like I don't want to just settle on doing 2x. That's small. Let's just go straight to 10x. So who we are. Um now, Steve Schwartzman, back to him, was born in 1947 and raised in a middle-class Jewish family in suburban Philadelphia. His father ran a linens and drapery store, which is a pretty good business. It paid the bills, but he never really expanded from there. And Steve admired his dad, but quickly realized his hunger for something bigger. Even as a teenager, he showed entrepreneur flashes. At 14, he started a tiny lawn mowing business, recruiting his younger twin brothers as his workforce while he went out and got more clients. Imagine that. The future private equity mogul was already delegating and deal making in his teens. And in high school, Steven's ambition only grew. Like, this is a really great story. He wanted to make his school dance more exciting because it was just a lot of guys. So he somehow convinced like this really popular RB group of the era, which is called Little Anthony and the Imperials, to come perform at his school. Think about the audacity of that. A teenager in the early 1960s cold calling famous musicians to play a high school gig, but he pulled it off. If you want something bad enough, you can find a way, you can create it out of nothing. That's what he learned. That lesson, the power of boldness and initiative, stayed with him. And he later talked about like to be successful, you have to put yourself in situations and places that you have no right being in. Through sheer will, you wear the world down and it gives you what you want. What a powerful statement. His drive earned him a spot at Yale University where he enrolled in 1965. And Swartzman was like no wallflower. He had a rough start like any other freshman. He felt lonely and out of place, but he didn't stay down for long. By sophomore year, he was hustling again, which you can only expect him to do. He literally started a dance club because he literally wanted to bring more ladies around, and he brought more women from nearby campuses to come and dance. He also tapped into Yale's Elite Networks. Steve became a member of the Skull and Bones Society, which is the same secret club that had groomed generations of Americans' leaders. I mean, picture the scene: young Steve Schwartzman at Skull and Bones Bones meetings, rubbing shoulders with other students with literal future presidents, dreaming about future power. These connections would later prove valuable, but at the time, he was just excited to be there to absorb knowledge and make his mark. Academically, Schwartzman did pretty well. After Yale, he served briefly in the Army Reserve and during the Vietnam era. Then it was off to Harvard Business School, where he earned his MBA in 1972. And by age 25, he had an Ivy League education and a growing Rolodex, like just numbers everywhere, and a massive hunger to do something huge. Now, here's what he says in the book, what it takes. And I love this. It says it's as easy to do something big as it is to do something small. So reach for a fantasy worth your pursuit with rewards commensurate of your effort. Right? Swartzman always believed if you're going to play the game, play to win big. That mentality would guide his career choices from that point forward. I mean, really, he talked about like he has this innate ability to just scale. Now, next up, fresh out of Harvard, Swartzman dove into Wall Street. His first job was at Donaldson, Lufkin, and Jinret, then a really prominent investment bank. But soon he landed at Lehman Brothers, which of course we know it's a massive firm. And this is where his career truly took off. Swartzman joined Lehman in the early 1970s and climbed the rates fast, like lightning speed fast. He became managing director by age 31, which is crazy for that age. And eventually the head of Lehman's global mergers and acquisition division. Imagine being barely into your 30s and you're running an MA at a place like that. It's clear Steve had serious talent and drive from the get-go. At Lehman, in the 1970s and early 80s, Schwartzman got a front row seat to the emerging world of mega deals. I mean like high-leverage buyouts. He advised on some early high-profile LBOs and large mergers. This was an absolute baptism by fire in the era's fast evolving finance scene. Importantly, he noticed something. Advising on deals was lucrative, but owning the deals was transformative. As Swartzman later explained, as an MA banker, we would be running only a service business dependent on fees. As investors, we would have a much greater share in the financial upside of our work. In other words, why settle for a fee on a billion-dollar deal when you could invest and potentially earn a chunk of the profits? He realized the leverage buyout model, putting in a bit of equity, borrowing the rest to buy companies, then improving and reselling them, almost flipping these companies. This was far more scalable and rewarding than pure advisory work. And so Lehman Brothers, however, had a very strict rule about conflict of interest. You couldn't both advise on deals and be a principal investor, and that was really frowned upon. So Steve's growing interest in becoming an investor couldn't be fully pursued there. Meanwhile, Lehman's itself was kind of a tumultuous place. In the early 1980s, a really nasty internal power struggle erupted. Lehman's CEO, and it was at that time, Schwartzmann's mentor, Pete Peterson, was ousted in 1983 after clashing with other executives. That was a huge blow to him. Pete had been the one who originally hired and championed him. Notably, Pete Peterson was no ordinary boss. He was a former U.S. commerce secretary under Nixon and a widely respected figure. Between this happening and the guy that really ousted Peterson, this signaled to Schwartzman that Lehman's environment had changed for the worse. Swartzman did help broker one last big deal at Lehman, which ironically was selling Lehman itself. In 1984, Lehman got into financial trouble, and it was some really bad bond trades that threatened the firm's stability as a whole. And the solution was a takeover by American Express. Swartzman actually played like a really key role in arranging the sale. In fact, he literally made the deal by calling a neighbor in the Hamptons who happened to be the CEO of Shears in uh American Express. It's a bit of kind of like a Wall Street lore. Steve's quick thinking saved Lehman from collapse for a little while at least. I think we all know what happened to Lehman in 2008, but that's another story. After the sale, by 1985, Schwartzman knew it was time to write his own chapter. He was pushing 38 years old, which, golly, I'm almost 38 years old. He was restless and had a ton of ideas of what he could do better. And over a breakfast meeting, him and his mentor Pete Peterson, who was recently fired, started brainstorming what to do next. They shared a vision create a new kind of investment firm that combined the best of Wall Street advisory with the ability to invest in deals for themselves and their investors. In short, they wanted to found their own private equity firm, which this was actually before the term private equity was widely used. And so they decided they would do it their own way. And I want to pause and highlight something for fund managers listening. Swordsman's leap here is a lesson for all of us. He left a prestigious position and a steady paycheck to start an independent firm with no guarantee of success. This is huge. This is like the key principle is don't be afraid to go from big platform to building your own platform if you see an opportunity. Swartzman later said one of his rules is when you're young or kind of young in venture, only take a job that provides a steep learning curve and strong training. Don't just chase prestige. At Lehman, he had learned a ton, but to achieve more, he needed to strike out on his own. So in 1985, Steve Schwartzmann and Pete Peterson quit Lehman Brothers and co-founded a new firm. They each put in 200K of their own savings, so$400,000 total seed capital. And this was a huge risk for both of them at the time. Pete was 59, an age where a lot of people think about retiring, not necessarily going and starting over. And Steve was in his late 30s, hungry, but unproven as an entrepreneur. They were a pretty unlikely duo in some respects. Um, they were kind of a generation apart, but together they believe that they had the skill and information to make a private equity model work. And Swartzman, the intense numbers-driven deal maker, Peterson, the wise elder statesman with a Rolodex of CEOs in global context. They chose to name their firm after something that symbolized their partnership, Blackstone, which kind of combines their two names. Schwartz, which in German means black, and Petros, um, which is Peter, right? In Greek means stone. That's Blackstone, literally a fusion of Steve and Pete's identities was born. And fun fact later, Swartzman joked that they had reversed the order. It kind of would it would have been Schwartz Peters, which sounds awful, honestly. Blackstone is so much better. Good thing they went with Blackstone. So in 1985, Blackstone was just two guys and an assistant and a small Manhattan office. They had no assets under management, no track record as a firm, nothing but their reputations and ambitions. And they said, and he said, We thought$400,000 was a bunch of money. And we watched it like an hourglass. We lost half of it before we had our first dollar of revenue. And in other words, overhead and startup costs were eating away at their seed capital, and the clock was ticking from day one. But this is the birth of Blackstone. Blackstone opened its doors, focusing initially on advisory services, which is kind of like MA advice, right? So to generate some of the income while they tried to get into the private equity space. Schwartzman and Peterson knew they eventually wanted to buy companies, but they needed capital, which is other people's money, to do that. So in those first months, they took on advisory assignments. They essentially acted as a boutique investment bank to keep the lights on and they pinched pennies doing it. Schwarzman had said that he and P were extremely frugal. They had to be, they knew that their$400,000 hourglass was running out. One of Blackstone's very first advisory deals is freaking awesome, and one of my favorite stories in the book. And um, it's because on their very first date in their new office, they described this guy that came in as this motorcycle guy recommended to him by Steve's sister. It ended up being Sam Zell, the famous real estate investor. And and I may do one on him next. His book, Am I Being Too Subtle, is really good. Sam Zell was already a big name. They called him the grave dancer of real estate. And he'd heard through the graveine, actually, Steve's sister, who worked for Zell, that two smart guys from Lehman had started something really awesome. And Zell basically said, I'm interested in finance and maybe expanding my real estate moves. What can you guys teach me? Picture it, Blackstone hasn't even unpacked their boxes and in walks a billionaire asking for guidance. I really love the humility. Like, like I really, really love that humility, and it speaks a lot to the type of guy that Sam Zell is. Crazy reading about what he's accomplished, but the type of person he is. That meeting led to a relationship that paid huge dividends 20 years later when Blackstone would buy Zell's company, and we'll get into that later. But more immediately, it signaled that Swartzman and Peterson's reputation could draw in serious players, even as a startup. It gave them a huge amount of confidence and probably some consulting fees, which they need. So, but still, those early days were far from glamorous. Steve and Pete were essentially cold calling for business. They sent letters, hundreds of letters, to potential clients announcing Blackstone services. They tapped their contacts. Some business trickled in, but at the end of the day, I remember reading that they just felt like, what the heck is going on? Nobody responded to them like they thought they would, but they hadn't yet proven why their firm should exist. As Peterson would say, we needed to build revenues before we could move into emerging LBO activity. By 1986, about a year in, they had saved up a bit for credibility and wanted to raise a private equity fund. This was the real test of their vision. Now, let's set the stage here. In the mid-1980s, private equity funds weren't common. A few pioneers like KKR had done deals, but institutional investors were not used to giving large sums to new managers to buy companies. Schwarzman and Peterson aimed to raise something unheard of for their first fund: a billion dollars. That's insane. They ended up later trimming the gold down to 500 to 800 million, but it was still wildly ambitious. They prepared their offering memorandum and it hit and then they hit the road to pitch investors all over the world. And let me tell you, they got beat up. Schwartzman had been candid about this part. He said, our first 19 best prospects turned us down one after another. Then 488 potential investors turned us down. He said, think about that. Almost 500 meetings and no after no after no. He said that these were like some really crowning moments of embarrassment. We were on the road for a long time, and it was hard to be told no by a lot of our friends. It was humbling and horrible, as he put it. Even people who knew them well didn't hesitate to reject the pitches. That's crazy. At one point, they met with this really large corporation pension fund. The executive listened politely and then admitted, hey guys, we really only invited you guys because you guys are famous in this finance space and we wanted to meet you. Not because they actually intended to invest in them as a first time fund. Pete Peterson walked out of that meeting, steaming, fuming, mad. He turned to Schwartzman, I mean, and half jokingly looked at him and said, If you ever do that to me again, I'm gonna kill you. The constant rejections was wearing on Peterson, who's was 60 years old, and even unwavering Schwartzman started to feel like giving up. Now, here's where their partnership was vital. Uh Peterson's patience and steady hand complimented Schwartzman's drive to never give up. Steve would get dejected, and Pete would counsel him. He would say, When you believe in what you're doing, you have to keep moving forward, even when the quest feels hopeless. Peterson had lived through adversity. I mean, he was a child of Greek immigrants who had self-made success, and he reminded Schwartzman that nothing worth doing is easy. Swartzman actually talked about this and he said that Pete was the one who picked him up during the darkest moments of his life. It's a beautiful example of the importance of co-founders supporting each other. For fund managers, the takeaway is simple. Raising capital is hard, even for great pedigrees, and having a partner who balances your emotional highs and lows is invaluable. Finally, after six months of fruitless pitching, they got to the end of their investor list. They had a couple of conditional pledges and soft commitments, like MetLife, who said, Hey, we'll put 50 million in, but only if Blackstone first raises at least 10 times that from others. In other words, come back when you have 500 million and we'll talk. A lot of people don't want to uh over-leverage and have the majority of the money in the fund. It was basically an empty commitment unless they could get momentum elsewhere. They were really feeling the pressure. And then came the fateful lunch at Prudential in Newark that we opened the episode with. Prudential was the gold standard, one of the biggest institutional investors in buyouts at the time. Schwartzman and Peterson had deliberately scheduled their Prudential meeting towards the end of their fundraising tour so that they'd be fully polished on their pitch. Steve did this presentation while vice chairman Garnett Keith quietly ate his diagonally cut sandwich, not interrupting at all. And when Steve finished, Keith casually said, you know, that's interesting. Put me down for 100. Schwarzman was kind of stunned. He was like, uh, what? It was so sudden and so casual. It was funny because he said there was nothing legal I wouldn't have done for that$100 million. And in his mind, he was thinking, please don't choke on that last bit of the sandwich and die so I can get this money. Because with that one line, Blackstone's fund went from a pipe dream to reality. If Prudential thought it was a good idea to invest with us, others would follow. He knew. And that's exactly what happened. That anchor commitment broke the dam. After Prudential said yes, Schwartzman suddenly had to move from raising capital to managing it. He had to track investors, reporting returns, structuring deals, communicating with LPs, all of it. And here's the truth most fund managers, flippers, and people managing capital are stuck in the same chaos, juggling spreadsheets, chasing investor updates, manually sending emails and hoping nothing slips through the cracks. That's exactly why we built Fund Flow OS, the world's smartest way to raise capital and manage it from your first flip to your final fund. It automates the entire investor experience from your CRM to communication, capital tracking, document storage, investor matching, and even launching your micro fund in less than seven days instead of months and for a fraction of the cost. So whether you're raising your first million or managing your 10th hundred million dollar fund, fund flow gives you the tools to do it smarter, faster, and on autopilot. Inside, you can track every investor relationship and commitment, automate email follow-ups and updates, manage distributions, payments, and compliance reporting, and it's all integrated deeply with AI to be way smarter than you ever could. It's basically what every capital raiser wishes their back end look like. You can learn more about that at funflowos.com slash fire. Again, that's funflowos.com slash fire. Now, Steve and Pete had the wind of their backs. Pete leveraged the prudential news and immediately hopped on a plane to Japan, which was in the midst of the 80s boom, to tap Japan's investors. And they had a really funny story on here on how they went to the wrong, the wrong investor. But through some ingenious maneuvering, including forming a joint venture with NYCO, NYCO or NICO securities to help them with US deals in exchange for Nico investing into the fund, they got a big ticket from Nico and with it attracted other Japanese institutions to pile in. One anchor from NYCO ended up getting them two and a half times that amount from other Japanese investors. So back in the States, they also secured commitments from General Electric's pension fund, which helped flush out remaining U.S. investors who were on the fence. All told, Schwartzmann and Peterson met with 488 potential investors and 33 of them said yes. Blackstone Capital Partners One closed on October 15th, 1987, with$850 million in commitments. This is crazy for a first-time fund. Insane, especially for that era. And then they were one of the largest first funds ever raised to that point. What's even crazier, as Schwartzman will put it, they came within a whisker of failure, but managed to succeed just in time. Now I'm not I'm not even kidding, because the very next day that that they finished the paperwork and the last wire came in, uh, it was October 19th, 1987. The stock market crashed 22% in one day, which is insane. Had they still been fundraising during Black Monday, most of these investors would definitely have gotten cold fleet and pulled out. He said, if we had not closed the fund, investors would have withdrawn support. And it was either good luck or good timing. He said, either way, Blackstone now had its war chest. Now, for aspiring fund managers, this origin story is gold. It underlies a few things that I want to talk about. Number one, like perseverance is not negotiable. 487 rejections didn't stop them. As Swordsman writes, when you face setbacks, you have to dig down and move yourself forward. The resilience you exhibit will define you. Raising funds is a grind. Expect it, endure it. Two, anchor investors are critical. Social proof matters. A lot of LPs won't move until they see someone big come in. Prudential's hundred million dollars was the domino that knocked down the others. In your own raises, think strategically about who can be that validation for you. Three, solve investors' problems, not just your own. Swordson's ability to offer Nico a solution, which was a JV to help their business in exchange for their money was brilliant. He said people in tough spot often focus on their own problems when the answer usually lies in fixing someone else's. By addressing Nico's needs, he got what he needed. This is such a savvy insight for fundraisers. Sometimes you have to sweeten the deal or align with an LP strategic goals to make it happen. Five, luck and timing play a huge role. Swordsman humbly acknowledges luck in hitting the 87 window. The key is to be prepared and then capitalized when luck breaks your way. Yeah, I think even like I like to say, luck is when preparation and opportunity meet. That's what luck actually is. You've worked hard, now the opportunity um presents itself, and now you've got luck because you can make it happen. Now, with fund one close, Schwartzman could finally do what he set out to do, which is invest in companies as a principal. The pressure now shifted from raising money to putting that money to work. Now, sitting on$850 million, Blackstone wasted no time on hunting for deals. Their very first private equity investment turned into a home run and a perfect example of Schwartzman's strategic ingenuity. In 1989, Blackstone partners with USX Corporation, which is a massive steel giant. It's a US steel holding company. To do they partner with them to do a leverage buyout of USX transportation subsidiary, a company called Transtar. The price was hefty,$650 million for 51% ownership, but Blackstone found a way to do it with very little of their own cash. They only put$13 million of equity from the fund in the deal. Like that's right. Out of$650 million, only$13.4 was Blackstone's money. Like, how? Creative deal structuring. USX actually itself provided$125 million in financing in terms of seller financing, which I talk about all the time. And Chemical Bank lent the rest. So the deal was massively leveraged. This was a pretty bold bet and essentially a turnaround situation since USX transportation asset, which is railroads mainly, was underperforming. Blackstone and USX's management got to work improving operations. This was also after a massive bank like Chase refused to work with them or give them good terms. And the result within two years, they quadrupled Blackstone's equity and 4X returns in 1994, and they didn't sell out then. They held pieces of Transstar for years, and by that time, Blackstone finally exited the last piece of that investment. 16 years later, they had made 26x return on their$13 million stake. Yes, 26 times their money. And what's cool is the bank that actually partnered with them on that one that trusted in Chemical Bank, they did a lot more deals with and they made them massive. And then I think they actually went and bought Chase, which is cool. Now, talk about validation. This early win proved to investors and themselves that Schwartzman and the team could pick and execute deals that created real value. Steve later explained Blackstone's approach with an agricultural metaphor. He said, We're like farmers. When we buy companies in real estate, it's like planting crops. You put seeds in the ground, you water, the seeds start to grow. You can't see the crop yet. Uh, then they grow really, really high, and it will be a great crop, and you're gonna be very, very happy. The Transtar deal was their first healthy crop. Over the next few years, Blackstone used fund one to do a series of deals, not all massive home runs like Transstar, but enough successes that by the time that the fund was fully invested and harvested, it returned a 2x net to their investors. In the private equity world, 2x multiple is solid, especially for your first fund. Importantly, Blackstone's cut of the profit, which was their carry, was enormous because 20% on those gains meant that the firm and its handful of partners pocketed around$250 million from the fund's performance fees. In addition, they've been earning management fees of about one to two percent annually during the fund's life. In short, Swartzman hypothesis was confirmed. Running an investment business scaled much better than just advisory. They made far more money on that first fund's investment than they had ever made, just charging hourly MA fees. This set Blackstone on a growth trajectory. Now they had internal capital to reinvest in hiring, expanding, and all those other things, and a track record to raise more funds. Now, before I continue the chronology, I want to highlight Schwartzman's evolving investment philosophy because it became a hallmark to Blackstone's success. We already saw he was creative in financing deals, right? Like Transstar, but perhaps the clearest window into his thinking came a few years later when Blackstone jumped into real estate investing. Now, by the early 1990s, Schwartzman noticed a huge opportunity in commercial real estate. The US was going through a real estate recession, banks were selling off distressed properties, and values were low. Blackstone was still primarily a corporate buyout shop, but Steve thought, why not apply their model to real estate assets? And in 1991, they joined forces with Goldman Sachs to bid on a portfolio of foreclosed garden apartments, which essentially is multifamily complexes in the U in the south of the United States. Here's where Schwartzmann's strategic mindset shown. Sachs, which is a savvy investor in its own right, wanted to bid as low as possible. They were afraid of overpaying, which is a classic stance for them. And Schwartzman, however, had a different view. He believed the biggest risk was bidding too low and missing out on a great opportunity. As he later articulated in his book, some will tell you that all the value is driving down the price or essentially buying low, you pay as low as possible. That has always seemed short-term to me. What that thinking ignores is all the value you can realize once you own the asset, the improvements you can make, the refinancing you can do, the timing of your sale to catch a rising market. If you waste all your energy and goodwill in pursuit of the lowest possible purchase price and end up losing the asset to a higher bidder, all that future value goes away. Sometimes it's best to pay what you have to pay and focus on what you can do as an owner. The returns to successful ownership will often be much higher than the returns on winning a one-off battle over price. That quote should be stapled to every fund manager's wall. Swartzman convinced Goldman to raise their bid enough to win the auction, and they won the deal. And indeed, the value they created after purchase was enormous. The deal yielded 62% annualized return for Black Blackstone and Goldman. 62%. It hammered home Schwartzman's philosophy that what you do after acquisitions matters more than nickel and diamond to get the cheapest price. This experience stuck with Schwartzman and affected his investment philosophy across all asset classes going forward. Off the success of that and a few other early property deals, Blackstone formally launched a real estate investment firm. In 1994, they raised their first standalone real estate fund, Blackstone Real Estate Partners won. The fund performed phenomenally, about two and a half to three gross 3x gross returns, setting Blackstone up to become eventually the largest owner of commercial real estate in the world. And one of their key hires during that expansion was a really young guy named Jonathan Gray. And John Gray joined Blackstone like fresh out of college in 1992 as an analyst. He was just 22 years old. He started in the corporate private equity side, but Schwartzman moved him to more of the real estate group in 1995. Gray proved to be a prodigy, and within a decade, he was running Blackstone's real estate business. Gray had two big insights that drove Blackstone's dominance in real estate. One, embraced new financial tools. He was quick to use the new commercial mortgage-backed securities market in the 1990s to finance bigger deals. This allowed Blackstone to pursue much larger property acquisitions than their equity alone would allow by tapping into debt markets in really innovative ways. And second, exploit the sum of parts. Gray noticed that many publicly traded companies owned real estate assets undervalued by the stock market. And if Blackstone could buy entire real estate portfolios or companies and then sell the asset individually, then they could arbitrage that difference. Buy low as a bulk, sell higher end pieces. These ideals fueled some of Blackstone's legendary real estate plays. The most dramatic example came in February 2007, and this is like one of my favorite stories when Blackstone, led by Gray under Schwartzman's Blessing, acquired Sam Zell's equity office properties or ELP for$39 billion. And this story is incredible. They wanted to buy the whole portfolio and then sell it really quickly. It was insane. I mean, you remember Sam Zell from earlier. We talked about the gritty real estate mogul who visited Blackstone on day one. Decades later, Blackstone was buying his company in what was the largest real estate deal in history. EOP was a giant portfolio of office buildings. It was six or seven times larger than any real estate deal Blackstone had done before, which is crazy because they did some pretty big ones. People thought they were nuts, paying top dollar at the peak of the market for a bunch of office towers and taking on a mountain of debt to do it. But here's the brilliance. Here's what I absolutely love about Steven, what he did in this Blackstone immediately started selling off chunks of ELP's portfolio. I mean, literally within two days of closing. So they closed. Two days later, they sold almost half of the assets to other investors, recouping$20 billion in two days. And within two months, they'd sold$30 billion worth, the majority of the properties by quickly flipping all of these buildings to eager buyers, some of whom were their rivals that were caught short in the bidding war. Blackstone reduced its risk massively. And in the end, ELP turned into a very successful deal for them. They didn't hold those offices long enough to get crushed by the 2008 recession the next year. And the pieces they kept or sold later did just fine. And this is crazy because it showed the scale and agility Blackstone had achieved. I mean, just how ballsy, honestly, Steve Schwartzman was to pull this off. From a fund management perspective, the EOP story shows crazy boldness and timing. Blackstone had raised a$5.5 billion real estate fund in 2005, had a proven team, and then the mega deal opportunity came. They swung for the fences. They also expertly manage downside by selling assets quickly. It's a case study and using scale as a strategic advantage. Swartzman often says scale is our niche. They can do deals so large, few others can compete. And that's it, that in itself becomes a moat for Blackstone. By the mid-2000s, Blackstone wasn't just a private equity shop or a real estate investor. It had become a diversified alternative asset manager. They had launched hedge fund businesses, and in 1990, they started a fund of funds that later grew into Blackstone's alternative asset management, which is the world's largest hedge fund allocator. They moved into credit investing in a huge way, especially after 2008, when they bought GSO Capital, which was a credit firm, to build out direct lending and credit strategies. By 2007, Blackstone had multiple arms from corporate PE to real estate, credit, hedge fund, and more. This diversification provided steady management, fee income, and resilience. If one asset class goes down, another might be up. Like it just works out. And that's the true hedge, right? Hedging the market no matter what the economic climate is. A major milestone came in June 2007 when Steven pushed back on the boundaries. Again, as far as private equity was concerned for them, Blackstone went public in the New York Stock Exchange. Yes, the firm, known for private investments, decided to sell shares of itself to the public. And it's really unique in how he did this. It was so cool to kind of read this because he went public but still retained all of his ownership. It was a really controversial move at the time. You knew how to value a private equity manager. And some thought Swartzman would just be cashing out at the market's peak. And in some ways, he was timing things impeccably again. And the IPO, just months before the 2007-2008 financial crisis hammered the market. Blackstone's IPO raised billions and made Schwartzman's personal stake worth over$9 billion on paper. And Pete Peterson actually used the IPO to exit most of his ownership. And at age 80, like he gracefully cashed out and shifted to philanthropy, leaving Steve firmly in charge. And he kind of coasted away and sailed away into the wind. Schwartzman has said that the IPO served two main purposes to give Peterson liquidity, which he rightfully deserved, and to create a permanent capital base and stock currency for Blackstone's future. Upon listing, Schwartzmann insisted they would be a different kind of public company, focusing on long-term investor returns and maintaining their partnership culture. In practice, their early years as a public company were pretty bumpy. The stock debuted at around$30,$31 a share, and within a year, post-crisis, it had cratered all the way down to$3.50. Imagine Schwartzman's own net worth swinging so wildly as Blackstone's stock plummeted. I mean, but he wasn't phased. He doubled down on building the business through the downturn. And over time, the market came to appreciate Blackstone's earning power. Schwartzman was vocal when he thought Wall Street undervalued them. And in 2012, he publicly complained that Blackstone traded at 10x earnings while growing uh their AUM at 27% a year. Whereas traditional asset managers traded higher despite slower growth. Eventually, the market caught on, and by the 2020s, Blackstone stock soared, trading at over 30x earnings at that point. In fact, in 2021, Blackstone's market capitalization surpassed that of Goldman Sachs, which is a symbolic passing of the guard in finance, right? Like, hey, you guys have done it. Here you go. Think about that. A firm that started with two guys and$400,000 outvalued the mighty Goldman. And in 2023, Blackstone achieved another milestone, becoming the first investment firm to hit a trillion in assets under management. Swartzman with a ton of pride said that Blackstone's success was largely due to sticking to its mission. We manage our business with a long-term perspective, focusing on optimizing returns to our fund investors. In other words, take care of your limited partners and your portfolio companies, and the shareholders' value follows. Globally, Blackstone expanded offices and influences across continents. They set up in Europe in the 90s, in Asia, in Hong Kong, Tokyo, later in Singapore and Mumbai in the 2000s. Schwartzman was often the firm's global ambassador, meeting presidents, sovereign wealth funds, CEOs worldwide to source deals and capital. For example, China's sovereign fund, the CIC, invested$3 billion into Blackstone around the IPO, which was controversial. A relationship fostered by Schwartzman's connections that he had made. Like they loved him. And one story, he leveraged a speaking trip Pete took to Japan in 1987 to raise a chunk of their first fund from Japanese investors, right? We talked about that. That ability to bring in capital from anywhere in the world became Blackstone's hallmark. Today, their investor base is like ultra global, from U.S. pension plans to Middle East sovereign funds and Swartzman personal Rolodex. I can't imagine the phone numbers he has in his phones. He's known to have heads of states on speed dials. He's been a huge asset to a lot of people. As Blackstone grew, Swartzman remained a hands-on leader too. This is something those who work with him often commented on. Despite being a billionaire CEO, he's intensely involved in big decisions and even small details of deals. He is known to pour over investment memos with a red pin, grilling his team with questions. One of his sayings he lives by is information is the most important asset in business. The more you know, the more perspective you have, the more likely you are to spot patterns and anomalies before your competition. He pushes his people to gather a ton of amounts of data and insight before making calls. That ties to another rule he preaches. No one person, however smart, can solve every problem, but an army of smart people talking openly with one another will. I mean, he really fostered a culture at Blackstone where teams debate investments rigorously. Schwartzman himself would often play devil's advocate, probing for weaknesses in a plan. This intense analytical culture helped Blackstone avoid a ton of bad deals and spot good ones that others missed. They honed a repeatable process for investing. For example, in real estate, as we saw, they focused not just on price, but on post-acquisition improvements in the value ad. In private equity, they had disciplined but not overpaying and frothy times. Despite the willingness to pay up for quality in certain cases, they also really timed exits well. Blackstones famously has discretion on when to sell assets, and they often choose optimal moments. Like, for example, taking Hilton public in 2013 after improving operations, and that resulted in a$14 billion profit for investors. It's so crazy to think of like his company buying Hilton and then value adding Hilton and then selling it. The other uh part of the process is scale. They deliberately built the capacity to do mega deals and raise mega funds. Scale is our niche, he continued to say. Scale lets them tackle huge opportunities others can't, like buying Invitation Homes, which is Blackstone's single family homes venture, where they started buying$100,000 houses in bulk and ended up creating a platform owning 50,000 homes, which they took public for$7 billion gain and profit. Scale also allows them to invest into better systems, higher top talent, and offer one-stop solutions to big investors like large sovereign funds that want to write billion dollar checks across various strategies. And then finally, integration. Because they are in a bunch of different asset classes, they can share information and spot themes across the economy. Schwartzman says Blackstone sees almost everything happening. So if say their credit division notices a trend in lending, their private equity folks can capitalize on it, or vice versa. They run thematic ideas across multiple funds. And for example, if they believe in logistics and e-commerce growth, then they buy warehouses in their real estate fund, related companies in their private equity fund, and maybe some tech in their growth fund and so on and so on, like all reinforcing a view. He credits this integration model with helping them to spot patterns before competitors can. And it makes sense. They've built it to be able to do that. And from my perspective, what stands out is how Schwartzman evolved from being an investor to being an institution builder. He often says his job became more about figuring other people out. He assembled the best team. And I love that he said if you attract tens, then they'll always make it rain. They sense problems, design solutions, do new things. That's what a 10 does. And I love this because he actually said this about Larry Fink. And I don't know if you guys know this. He hired Larry Fink. Larry Fink built up a massive part of his company, and then they split ways. And Larry Fink started BlackRock. And so he said, Larry Fink is a 10. I mean, um, I would say so. Swartzman's commitment to hiring 10s and not settling for less has been echoed in by his colleagues. Pete and I, he said, Pete and I always resolve to hire 10s, he wrote. Um, a lesson many firms preach, but very few practice consistently. This meant sometimes paying top dollar for talent or giving significant equity to keep them. For example, he made sure key executives had stakes in the firm pre-IPO. The result is a deep bench of people, not just John Gray, but people like Tony James, who served as Blackstone's president for years after he left. Joan Solator, who's the head of private wealth solutions, and a lot of other people who could run independent businesses on their own, but choose to build under Blackstone's umbrella because he gave so much to them. By the late 2010s, Swartzman began to groom John Gray as a successor. And in 2018, Gray was named COO and president, essentially the heir apparent to run the show. Now, Swartzman's in his late 70s, but he's often said he's not slowing down. And as a side note, his personal routine is kind of legendary. He reportedly works out every single morning for an hour, keeps an intense travel schedule, and remains deeply engaged in deals. Clearly, the man loves the game, which you have to, but no colossal success like this comes without criticism. Steve Schwartzman has had his share of public controversy, and it's important to touch on these. First, when it comes to his compensation and wealth, and this is something like as I teach about funds and we talk about this, of course, fund managers are the richest people in the world, but it doesn't come without criticism. Swartzman's personal or earnings have been eye-popping. He constantly is one of the highest paid executives in the world. For example, in 2020, which is five years ago, he took home over$610 million in dividends and pay. And then even years before that, his pay was higher at$700 million. And then I think recently, within the last couple of years, it was like$1.2 billion. And of course, this much money is gonna attract criticism, especially from those who question the fairness of tax rates on private equity income or like carried interest, which is taxed at a capital gains rate instead of an income tax rate. Swartzman famously put his foot in his mouth once on it um in 2010 on the topic when Obama administration talked about raising taxes on private equity profits. Swartzman compared it to Hitler invading Poland in World War II. Like, yes, he actually said that in a closed meeting, he said, it's a war. It's like when Hitler invaded Poland in 1939. That's what he said. The analogy was clearly over the top and offensive. And after it leaked, Schwarzman apologized for saying it. He later tried to clarify that he felt the policy was an existential attack on their business model, but he definitely regretted saying it. Uh, the incident hurt his reputation for a bit and it painted him out of touch. Equating taxation with Nazi aggression, he learned to be more careful as he should have, and at least somewhat in in public statements after that. But still, the broader critique still was around. If is anyone worth$600 million a year? Detractors argue that builders like Schwartzman have outsized influence and benefit from loopholes like carried interest tax treatment. And on the other hand, though, like, and this is where I believe it, Blackstone's investors, pensions, endowments, all these people have gained tens of billions of dollars thanks to his firm. So if he takes a slice of a very large pie he helped to bake, it's justified. He built it to do that. Swartzman himself has pointed out that much of his pay comes from stock ownership. He owns around 20% of Blackstone. So as the company does well, he does well. He's got the skin in the game to do it. And as a fund manager, I see this alignment. He's incentivized to make Blackstone thrive, just as we align GPLP um interests in our funds. Another area of controversy is his political affiliations and influence. Swartzman is a lifelong Republican and kind of like center right, as he would say. And he's been a major donor to the GOP candidates, and he raised money for George W. Bush, supported Mitt Romney, and initially stayed neutral in early 2016 primaries. However, once Donald Trump became the nominee, Swartzman's relationship with Trump became like very close, which that's polarizing in itself. After Trump's election, um Swartzman actually chaired Trump's strategy and policy forum, which is a council of CEOs advising the president. This put him in the national spotlight beyond finance. Some praised him. Uh, here was a savvy businessman guiding a new president on economic matters, but it got really tricky after in 2017 when Trump made really controversial remarks about the Charlottesville incident. A lot of CEOs quit the advisory council in protest. Swartzman in literally like tried to keep the group together, even putting together a letter to his Schwartzman scholars, which is a program he funded. We'll talk about that soon. Um, defending the idea of staying engaged, having influence, and providing sound advice is a good thing, he said, even if it attracts criticism or requires some sacrifice. That's what he said. But as outrage grew, Trump himself disbanded the whole forum in a tweet, which is very Trump to do. Swartzman later said he received hundreds of angry emails accusing him of enabling Trump by staying on initially. It was a bruise for his look. He's a man who values his reputation, and suddenly protesters were calling him a Nazi sympathizer, which is wildly unfair given his background. And that's how heated things got, though. And by 2020, Swartzman was still generally supportive of Trump's economic policies, really donating heavily to the campaign and the GOP causes. He donated over$30 million in that 2020 cycle. However, when Trump refused to concede the election in November of 2020, when the results became clear, Schwartzman publicly acknowledged Biden's win, saying the outcome is very certain today and the country should move on. He also like privately called the January 6th Capitol attack an insurrection and an affront to democracy, although he did not directly blame Trump in those comments. But by late 2022, he signaled he'd would not support Trump in 2024, arguing that the party to find a new leadership, but then he ended up supporting him and his win. All this to say, Swartzman's political opinions drew fire, but he's also exemplified something important. He's willing to have a seat at the table. He isn't shy about advising presidents on their party. He actually, like Barack Obama literally called him for advice and help during the 2012 fiscal cliff negotiations, and he was really helpful for him. And for fund managers, it's a reminder that regulatory and political environments matter. And having dialogue with policymakers can be crucial. Swartzman's approach was to engage rather than to isolate, even if it cost him some PR hits. Lastly, I want to touch on Schwartzman's philanthropy and his personal life because I think so much of this is what makes him my favorite like fund manager in the world. He's amazing. It's what really it rounds out his story and also invites like some varied opinions. He's pledged to give away much of his fortune. He signed the giving pledge in 2020, which is a promise to donate at least half of his wealth. Donate it. He has already donated hundreds of millions of dollars to educational and cultural causes. For instance, he gave$100 million to the New York Public Library, the main branch on Fifth Avenue is now literally named the Stephen A. Schwartzmann Building. He gave$150 million to Yale for a student center. He created the Swordsman Scholars program in Shungsei, I don't know how to say it, university in Beijing with a$100 million personal gift and raised more from others. It's like Rhodes Scholarship in China, intended to foster understanding between China and the West. He's funded a new campus center at Oxford University, a new college at MIT for computing, and just so many more things to advance, like to push for the advancement of technology, of health, of everything in the US. These acts have largely been praised. Even critics say, hey, he's at least putting his wealth to good use. But you know, some skeptics are just like, oh, it's just his reputation laundering. He just wants to put his name on everything and stroke his ego. You're dang right. I would too. Oh, especially if I had the money to be able to help and put my name on things. Duh. Others, especially certain political activists, have targeted Blackstone as for other reasons, like rental housing issues, where Blackstone's subsidiaries was accused of being too aggressive with rents. Schwartzman's stance on some policies, like uh opposing rent control and residential real estate, also got some negative press in local contexts. Um, but these critiques are more about Blackstone's size and actions and markets, not personal scandals on Schwartzman. One like personal story often brought up is that Schwartzman is known for throwing really lavish parties. He famously held his 60th birthday with an estimated five million dollar price tag for his 60th birthday. Uh, I mean, I remember he had like I didn't remember because I didn't go, but I read it, and he had like his favorite artist playing everything, like inviting amazing people. And his 70th birthday that was even more extravagant, complete with live camels, acrobats, celebrity performance at his estate. This kind of like opulence sometimes rubs people the wrong way in an age of inequality. But in the finance community, it's almost become part of his larger than life legend in folklore. And in his memoir, he jokes about these parties. He's aware they sound crazy, but he enjoys celebrating in grand style. And hey, if he can afford it, just do it, man. You do you, you've earned that. So, but through these controversies, Schwartzman has largely been unapologetic about his success and influence. He'll say, I earned my money by making others a lot of money, which is true, very true. And indeed, if you ask the retirees whose pension grew because they invested in Blackstone's funds, they're probably glad Steve is Steve and exactly who he says he is. Um, and for us as fund managers, I think the balanced view is Schwartzman operates at a scale where business, government, and society interact. So criticism is inevitable. What's useful for us is to study how he responds. He usually responds with data and results, pointing to positive outcomes of Blackstone's investments or adjusting strategy if needed. And oh, and occasionally he messes up, right? And like his Hitler analogy apology. He doesn't shrink from the arena and showing up and being him. Now, as we come to wrap up Schwartzman's story, I want to reflect on a few key takeaways for aspiring fund managers and entrepreneurs because ultimately that's why we study someone like Steve Schwartzman, not to idolize him, but to learn from his experience. So, number one, think big. From day one, Schwartzman's motto and mantra was that it's just as hard to do something small as something big. So you might as well aim high. When he started Blackstone, raising a billion-dollar fund with no track record was considered insane. But that big goal forced him to level up in every way from his team to his strategy to networking to achieve it for your own fund or startup. Ask, am I setting my sites high enough? Don't sell yourself short. As Schwartzman says, if you're gonna dedicate your life to a business, choose one with the potential to be huge. This doesn't mean being reckless, it means choosing a vision that's worth the blood, sweat, and tears. Number two, resilience in the face of no. The 488 rejections speak louder than any success. I personally remind myself of this when I'm in tough capital raise or a deal isn't coming together. Schwartzman was already a somebody when he got those no's, and it still happened. The difference is he didn't internalize rejection as failure, he saw it as feedback and a part of the process. As he wrote, the setback seemed endless, but when you believe in what you're doing, you keep moving forward, even when it feels hopeless. For fun managers, grit is non-negotiable. You will hear no a lot. You must adapt, refine your pitch, and sometimes just outlast the skepticism until you get the breakthrough yes. Number three, the power of strategic partnerships. Swordsman's partnership with Pete Peterson was magical. Two individuals with complementary strengths, a shared vision, and deep trust. They navigated crisis by leaning on each other's qualities, which is drive and patience. Also, their ability to partner externally with joint ventures like Nico and teaming with Goldman Sachs, bringing in experts like Henry Kissinger as advisors amplified their reach. For fun founders, the lesson is to choose your partners wisely, sync complementary skills and alignment of values, and to be open to win-win collaborations that can open doors. You can't get open alone. Number four, always be learning and adapting. Sportsman never stopped being a student of business. Whether it was learning real estate on the fly, embracing new financial instruments, or studying macro trends, he embodies the idea that the best executives are made, not born. They never stop learning. In one interview, he said he reads constantly and tries to meet people who can teach him something new. He also wasn't afraid to pivot Blackstone's strategy when needed. For example, after 2008, pushing into credit and hedging strategies to capitalize on banks pulling back. The takeaway from this is intellectual agility. The market's always changing. The fund managers who thrive are those who keep updating their playbook. And five, focus on investors' needs and long-term trust. One really striking thing about Blackstone is the longevity of its investor relationships. They've had some LPs invest across dozens of funds over decades. Swordsmith's philosophy was a good name is the most important asset. And I always say this at the end of the day, all you have is your name. An ethic he got from his father. He made sure Blackstone delivered for its clients, sometimes even at cost to himself in the short term. A story that I really love is Sam Zell. Again, Sam Zell shows up, had a practice of sometimes paying above the required interest to his lenders just to ensure they all made money and would back him next time. That resonated with Swartzman and his peers. Always leave some profits for the other guy. And in fun terms, that means don't gouge your LPs or the people that you're with. Create win-wins. Swartzman structured Blackstone's funds and later its public companies in ways that aligned interests, whether it be employee ownership, permanent capital that doesn't conflict with LP returns. I mean, that's amazing. And when things went wrong, as they sometimes do, he communicated and tried to fix it rather than hide. This builds an all-important commodity, trust. Over time, trust becomes our flywheel. Investors re-up automatically and your fundraises get easier. Today, Blackstone can raise$20 billion in a few months. That's decades of trust built up. And six, innovate and differentiate. Blackstone didn't become number one by copying others. They often did things first or differently. The first mega fund, pioneering real estate private equity, inventing new products like their recent things into perpetual funds or retail investors. And your own fund, even if you're smaller, think about your edge. It can be a niche strategy or a unique team background, a new structure. Don't just be another mid-tier VC or PE fund. Find the Blackstone-esque differentiation that makes you stand out. Seven, maintain discipline. Don't lose money. Despite his appetite for risk, Schwartzman's first will of investment is don't lose money. He is obsessed with downside protection. For example, during hot markets, he has pulled back rather than chase high prices. And in 2006, 2007, while others went out on a buying frenzy, Blackstone actually sold more assets, for example, like the EOP situation we talked about than it bought and raised cash during their IPO. Thus, they weathered 2008 relatively well. Schwartzman says time wounds all deals, sometimes fatally, meaning bad deals only get worse with time. So he tries to avoid marginal ones from the start. As a fund manager, we have to remember that capital preservation is as important as growth. One really bad deal can wipe out several good ones. And trust me, after going through the worst real estate market in the past 30 years for residential, I could tell you that because I launched my fund during that time and it was rough. One really bad deal can wipe everything out. Swartzman record isn't spotless. They've had flops too, but his batting average is high because of rigorous vetting and willingness to walk away if it doesn't feel right. Eight, succession and legacy was important for him. Swartzman's now ensuring Blackstone outlives him by grooming successor like Gray and other people. He's institutionalized the firm. It no longer relies on one man's aura. For our own firms, even if we have much smaller ones, think about building institutional resilience, processes, culture, next generation of leaders. This is all healthy. It's how you scale beyond yourself. Schwartzman often said he wanted Blackstone to be the gold standard in their industry. Something like Morgan Stanley or Goldman Sachs in prior eras. That long-term mindset guided decisions like going public, diversifying product lines, and internal succession planning. And on a personal note, I really find Steve Schwartzman's story super inspiring. Not because I aspire to have a birthday party with camels, like I mean, although I would, but because it shows that the arc of possibility in our industry. Here's a man who started basically with an idea and grit and built an empire. At one point in Schwartzman's book, What It Takes, he writes, if you're faced with a problem, you don't panic and declare immediate catastrophe. You call for quiet and give everyone time. The harder the problem, the more limited the competition, the greater the reward for whoever can solve it. I remember reading that and thinking, that's the mindset I want to cultivate. In stressful moments now, I often think about like how would Steve handle near failure fundraising or dicey negotiations. And I try to channel that calm, problem-solving approach. And as we wrap up, let's zoom out. Steve Schwartzman's journey holds a mirror to some of the most important themes in entrepreneurship and fund management: vision, perseverance, innovation, integrity. He showed that enormous institutions can be built from scratch in a relatively short time with the right strategy and the right people. Blackstone went from a two-man shop to a trillion dollar powerhouse in roughly 35 years. Today, Blackstone owns hundreds of companies and properties from the Hilton Hotels to Ancestry.com to vast logistics centers and employs over half a million people across its portfolio. Swartzman himself, as of 2025, is worth over$40 billion and has become a major philanthropist and public figure. But what I love is you can still relate to the young Steve in those early chapters. The kid who hustled to book a band for a dance, to and the analyst who outworked everyone to get the deal done, the fundraiser sweating through dozens of rejections, hundreds of rejections in many ways. He's a pure entrepreneur. His product just happened to be high finance. For fund managers listening, there's a direct line from Swartzman's experience to your own. Maybe you're raising your first fund or a next fund that feels as hard as a first. Maybe you're struggling with a key hire or debating how to differentiate your strategy. Maybe you're dealing with macro headwinds and wonder if you should pivot or stay the course. In Schwartzman's story, remember this aim big, be resilient, learn constantly, align with your partners and investors, and don't be afraid to innovate. Importantly, play the long game. Schwartzman often says he's playing for decades in the future. That perspective will help you ride out the ups and downs. And I'll leave you with one final thought that encapsulates Schwartzman's ethos. In his 25 rules for work and life, rule 25 is everyone has a dream. Do what you can to help others achieve theirs. I found that profound because from a hard-charging guy like him, it reminds us that leadership at its core is service. Schwartzman achieved his own dreams by assembling a team and a group of investors and essentially helping them achieve their goals, whether it was a pension fund meeting its obligations or an employee becoming a leader or a business he bought reaching new heights. In doing so, his dream materialized beyond what he could have done alone. Schwartzman titled his memoir, What It Takes. And after this journey, if we ask, what the heck does it take? The answer might be it takes vision bold enough to be laughed at, determination strong enough to overcome failure, integrity firm enough to build trust, and heart generous enough to bring others along for the ride. Thank you guys for listening to this in-depth look into Steve Schwartzmann's life and career. If you enjoyed this, please check out some of the other episodes I'd done. I did one on Ray Dalio, and there's going to be more to come where I dive into the stories of industry titans, pioneers, and extract lessons for our own journey. If you enjoyed this, share this with someone else that needs to hear it and leave a review because that would be awesome. Until the next time, to great success and greater impact. Peace.