Key Takeaways
- • Blackstone co-founder and CEO Steve Schwarzman outlined eight leadership and entrepreneurship lessons in a View From The Top talk at Stanford Graduate School of Business in November 2014.
- • Schwarzman said Blackstone's first private equity offering drew 488 prospectuses and only 32 positive responses, underscoring the need for resilience in entrepreneurship.
- • Schwarzman stated that Blackstone owned all or part of 74 companies employing 700,000 people and generating $117 billion in annual revenue in 2012, according to the New York Times.
- • Schwarzman argued that executives should hire top talent, measure their words carefully, and praise employees only when deserved.
- • Schwarzman recounted an investor's furious complaint over a bad Blackstone investment and said the firm created procedures so staff could criticize investment ideas, even the boss's.
Summary
Blackstone co-founder and CEO Steve Schwarzman recently shared lessons from his four decades in financial services during a View From The Top talk at the Stanford Graduate School of Business in November. Schwarzman founded Blackstone with Peter Peterson after leaving Lehman Brothers in 1985, when private equity was new and risky, and the pair had to invest their own capital to launch the venture. When Blackstone went public 12 years later, it was the first U.S. private equity firm to launch an IPO. According to the New York Times, Blackstone in 2012 owned all or part of 74 companies employing 700,000 people and generating $117 billion in annual revenue.
On hiring, Schwarzman said early affiliated companies were easier to staff because the financial services sector was consolidating, and he described a ranking of executives in which "10s" sense problems, design solutions and do new things, while "nines" are great at execution. He said firms should not tolerate those rated lower.
Schwarzman also emphasized resilience. When he and Peterson launched their first private equity offering, they sent 488 prospectuses and received just 32 positive responses, a result he called a shock. He urged entrepreneurs to believe in their basic plan, remain adaptable and keep going. He cautioned leaders against complacency, noting that competitors are always trying to do better.
On management, Schwarzman said CEOs are listened to and amplified more than they expect, so they must choose their words carefully. He said praise should be given only when deserved, but generously when it is. He also argued that people matter more than speed, since rushing a change can damage the organization, and that core values must be repeated constantly so that everyone knows what the firm stands for.
Finally, Schwarzman recalled being harshly criticized by an investor over a bad Blackstone investment. The experience led him to create procedures that let staff critique investment ideas, including the boss's, without it being taken personally.
On hiring, Schwarzman said early affiliated companies were easier to staff because the financial services sector was consolidating, and he described a ranking of executives in which "10s" sense problems, design solutions and do new things, while "nines" are great at execution. He said firms should not tolerate those rated lower.
Schwarzman also emphasized resilience. When he and Peterson launched their first private equity offering, they sent 488 prospectuses and received just 32 positive responses, a result he called a shock. He urged entrepreneurs to believe in their basic plan, remain adaptable and keep going. He cautioned leaders against complacency, noting that competitors are always trying to do better.
On management, Schwarzman said CEOs are listened to and amplified more than they expect, so they must choose their words carefully. He said praise should be given only when deserved, but generously when it is. He also argued that people matter more than speed, since rushing a change can damage the organization, and that core values must be repeated constantly so that everyone knows what the firm stands for.
Finally, Schwarzman recalled being harshly criticized by an investor over a bad Blackstone investment. The experience led him to create procedures that let staff critique investment ideas, including the boss's, without it being taken personally.
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