3 Takeaways - The Long Game: How to Build Wealth in Turbulent Times with Blackstone President Jon Gray (#258)

Episode Date: July 15, 2025

How do the savviest investors navigate today’s uncertainty? Jon Gray, President of Blackstone, one of the world’s most successful asset management firms, shares the timeless principles that helped grow the firm from under $1B to over $1T in assets. He reveals how to spot great businesses, invest with conviction, and think decades ahead. This episode is a masterclass in building lasting wealth—especially in turbulent and uncertain times. This is a rare window into the mindset of someone who’s helped shape a trillion-dollar investing firm.Whether you’re new to investing or a seasoned pro, this conversation will sharpen how you think.

It's a challenging time to invest with so much uncertainty. How does one of the world's savviest investors see the world now? Where is he investing? And what's the most common mistake that he sees investors making? Hi, everyone. I'm Lynn Toman, and this is Three Takeaways. On Three Takeaways, I talk with some of the world's best thinkers, business leaders, writers, politicians, newsmakers and scientists.

Each episode ends with three key takeaways to help us understand the world and maybe even ourselves a little better. Today I'm excited to be with John Gray. John is the president and chief operating officer of Blackstone Group, a New York-based asset management firm that is one of the largest and most respected financial firms. He joined the firm right out of college, rising to become head

of Blackstone's real estate group, and then president, helping grow the firm to one of Blackstone's real estate group, and then president, helping grow the firm to one of the world's largest asset management firms. John is also the chairman of Hilton Worldwide. Welcome, John, and thanks so much for joining Three Takeaways today. Lynn, it is great to be with you. Wonderful to be with you. John, graduation speeches are usually filled with platitudes and deadly boring. But you gave one of the most memorable graduation speeches

I've ever heard at our children's high school graduation. Can you talk about radical amazement? Wow, thank you. The quote comes from Abraham Heschel. And it's, in my mind, this idea that we have to have a sense of appreciation about life, and not just the big things, but the little things.

You know, life has all its hardships. We're all going to face setbacks. Things are going to face setbacks. Things are going to go badly. But if you remind yourself constantly about the good things, it could be a cup of coffee this morning or a vista you see on a run you take, and you appreciate where you are on this journey, it makes all the difference. And for me, even when I'm frustrated about, God, it's a hard day

of work or we had this crisis or I've got a zillion emails, but just like, wow, this is incredible. I can't believe I'm in Tokyo jogging around the gardens or whatever it is. And so I try to have that sense of appreciation. And I found that in the tough parts of life, it allows you to get through it. So I'm thinking, how can I feel this sense of radical amazement, this appreciation? And as I said, it's a very valuable tool in life. And I was trying to convey that to the young people as they start on their next step in the journey.

I love that. John, Blackstone is all about delivering great returns to investors. What has accounted for Blackstone's growth from under a billion dollars assets under management when you joined the firm to over a trillion dollars today? We never forgot what matters. And I point to a few things. First, you mentioned it, which is returns. If you think about our business a little bit like a pizza shop, the store can look great, you can be super nice

to the customers, all that stuff is really important. But if your pizza tastes badly, it doesn't really matter. And in our business, it's about the net returns. We've got to deliver for customers. And so we're relentlessly focused on trying to find the next place to invest, how to deliver returns, how to add value to companies, because we know that's so important. And that's really been the core foundation. The other things I'd say,

we're a place that is constantly innovating. Steve Schwarzman, our co-founder, CEO, has this energy and this idea that we have to be entrepreneurs. We cannot sit still on what we're doing. We're always thinking about, again, the new geography, what's a new product, what's a new area of investment, and a firm that brings that kind of creative energy, that dynamism, can continue to grow even as it scales up. I think the final thing is the people. A great firm is able to not only attract but retain really talented people, but also having a culture where people enjoy working

together. They're working hard but they like one another, they feel like they're on a shared mission, they're proud of the firm. There's still, as you can tell, a lot of passion for what we do. And all of that, I think, is the reason why we've been so successful. John, I know that you love investing and you even spend your weekends reading

and reading about everything, including potential investments. How do you invest? What do you look for in a business? Well, I guess I'd start with the big picture, which is, I often say, what neighborhood is this business in? Because you could buy the best department store chain or landline phone company.

But if you're investing in what are older, what you may call buggy whip type of business is, it's very hard. And so is this an area of the economy that is going to continue to grow? Obviously, things like technology or energy and power, some of these areas that have enormous tailwinds, but it could be things like global travel. That is a long term growth business. So start with, is this a good neighborhood that this business sits in? And then the business itself,

does it have an excellent management team? You can still buy businesses without, but then you have to make changes. But it is great to buy businesses where they're terrific, dynamic, thoughtful, driven leaders. Does the business have high margins versus low margins? Does the business use a lot of capital? There are some businesses that are good that have a lot of capital, but a great business,

I think about our firm or you mentioned Hilton Hotels, they use very little capital and yet they can still grow. So you love businesses like that. You love businesses with lots of customers as opposed to one customer. You love businesses that aren't as suspect to stroke or the pen. The government changes one law and the business disappears. Is it built on terra firma? Does the business have recurring revenues?

And then of course, what's the price you're paying? Because even a really great business, as we've seen back in 2000 or 2021 in bubbly periods, you can pay too much. But in general, you're trying to find as many of these boxes as you can tick as possible. And if you find a bunch of tick and the price is reasonable, maybe you have to pay a little extra to buy the really great business. But we found over time that pays off. And so it doesn't really matter if it's a Japanese pharmaceutical company or it's a piece of real estate in Los Angeles.

A lot of the tools, a lot of the things you're looking for are remarkably similar. You talked about the neighborhood. Can you talk more about the neighborhoods or what you call thematic investing? If you believe that there are powerful trends that are happening, wouldn't it be nice to sort of go to that neighborhood and go to a river where the flow is at your back, as opposed to swimming upstream? And so you try to identify big trends. So what are big trends?

They will obviously our lives are migrating online and AI is going to change so many things that all of us do. So you say to yourself, okay, that's an interesting area. Maybe I'm not best positioned to figure out which large language model is going to win. But maybe I can become the biggest data center investor in the world because this migration online and AI is going to require enormous data center capacity. And then there are all sorts of services in and around that. And then adjacent to that, well, because of data centers and because of autonomous vehicles and ultimately robotics, the demand for electricity is gonna go up dramatically. So then maybe I should own utilities, I should own companies building new renewables, I should own transmission lines,

I should own utility services, electrical equipment manufacturers. And then there are geographic areas. India, we've been the biggest foreign investor in real estate and private equity because we've been long-term believers in where India's heading. The government there is pro-growth

and building physical infrastructure, legal capital markets. And so we're doing a bunch there. As a firm, we're thinking about where is that next good neighborhood? And when we find it, can we express it in private equity, in real estate, in credit, in infrastructure, in growth, and then capture the benefit of all the insights we have? John, how do you invest in uncertain times?

Well, it always feels like it's uncertain times. Today, it feels particularly uncertain. If you think about it almost like the difference between sort of a microscope and then the wider view. I think too often as investors, we get so caught up in the thing that's right in front of us and some of these big trends get lost. Recently, obviously, the tariffs have created a lot of noise and investors get very cautious. And I've spent a lot of time on the phone and traveling around the globe with investors just saying, hey, take a deep breath. This too shall pass.

All sides have an objective to get this thing settled. And when you close your eyes 12 months from now, will we still be talking about tariffs in the same way? And if we're not, then maybe this is not the most important thing. Now, if you have a business that sources goods from a country that's directly impacted in a material way, yes, you can't say, oh, that's not a big deal. But in general, as investors, we tend to react to the near term things in a very big and profound way.

And what we want to do is take them into account, obviously incorporate them into how we're thinking about investing, but think about these longer term trends, the migration of our lives online, use of this technology, robotics, energy needs, where people are moving and so forth. Think about these big powerful trends and think about volatility in a way as your friend

as opposed to your enemy. Because what tends to happen is people are super enthusiastic investing in 2000 or 2007, 2021 when actually their risk is the greatest. And they're like, wow, it's great. Everybody's going into this party. I'm gonna go whatever. And they're like, wow, it's great. Everybody's going into this party. I'm going to go, whatever. And they lose sight of price and whatever.

When price is correct, that's actually when the risk has gone down and people are looking at the world with the glass half empty. That's when you want to be thinking about, what can I now do? Because many of these long-term trends are going to continue. And now I have the opportunity to invest in a much more favorable basis. So don't get so caught up in the heat of the day, the news headline of the day.

And if you do that and take the long term view, you'll be a much better investor over time. What does the long term mean to you? What kind of time horizon do you like to invest over? Well, for us, it depends on the vehicles we're investing in. But most of it is private investing. So it's got a five to eight year time horizon. As you're building portfolios, individual investors,

institutional investors should, I think, be thinking in decades, 10, 20, 30 years. Owning things that have the benefit of compounding, I think is powerful. One of the great things about private assets is it makes it hard for investors to pull the panic button at the bottom, which is the natural inclination.

So in some ways, just tying the act of tying your capital up is helpful because it doesn't give you the opportunity to pull it back at the wrong moment. And you get that benefit of long term compounding, assuming you're investing again in good businesses and good sectors over time. So long term approach can vary, but it's definitely measured more in years than it is in minutes or days.

John, can you summarize what makes a good investor and what are the most common mistakes that you see investors making? I think a great investor is a passionate learner. If you think about people who have had incredible track records over time, Warren Buffett and Charlie Munger, I mean, these people are reading constantly. They're thinking about the world. I think you have to be because the world changes because what's a great investment today? You could have bought a taxi medallion in New York City because there was basically

a fixed number of taxi medallions for 80 years. More people visited New York, the city grew, and they went up every year for 80 years. Uber came along, and in a year or two, they lost 90% of their value. A student of the game, somebody who's reading and watching, is seeing what's happening and trying to adjust. And it's almost like a building in an earthquake. If it's just static, it'll fall down. You've got to have the ability to move. And the way you move is by being a learner, by reading a ton.

I find traveling super helpful, being in different countries, different cities, understanding what's on the ground, what's happening, reading actual annual reports or the earnings calls, and going a level deeper than most people. So I'd start there. I'd also say it requires some independence of thought because if you always want to be with the crowd, it's hard to outperform because by definition,

you're going to get what the market gets. And so being a little bit of an iconoclast, I think is important and being comfortable saying, look, everybody says today, commercial real estate's terrible. I think it's actually cheap. Therefore, I'm going to invest. And then, of course, I think you've got to be willing to work.

And I think you also then just translate all that work, that learning, that independence of thought into being a high conviction investor. Real outperformance comes from having this conviction. And I would say the hardest part of it, Lynn, is that in the dark moments to not lose that sort of will and not panic, because you can get yourself pretty dark when things go down and your investors are calling you and saying, hey, you've lost a bunch of money or this. And having that courage of your convictions, that to me is so important through good and bad times.

John, we started out talking about radical amazement. What career advice can you offer? My career advice would be to work harder and care more than other people. People often say like, how did so and so get so successful? They show up earlier, they double check their work. They really care about what they're doing. They enjoy it. I would say related to that being passionate

about what you do, because it's really hard to work harder and care more if you don't love it. And you probably get a sense, I love the intellectual challenge of investing. I love traveling, I love people. And that makes me able to give 110% of what I do. So finding something you're passionate.

And then I would say, think of yourself as an entrepreneur. That whatever your role is, and it certainly applies to Blackstone, not just to investors, but to fundraising, to finance, to technology, to legal. And what I mean by being an entrepreneur is, hey, I can be an agent for change. We've been producing this report this way for 15 years, but half the people don't read this stuff. It's way too long. Here are the things people need. Or there's a way to do this using technology as opposed to just having a bunch of human beings do it.

So if you think of yourself as an entrepreneur, as an agent of change, then your job becomes, I think, more fun. And so you work really hard, you care a ton, you're passionate about what you do. It doesn't mean you don't have bad days. And then you're an entrepreneur and not agent of change. If you can put that together, then I think you'll have a fulfilling career. Doesn't mean every day is good. But when you look at it and sort of step back

and say collectively, wow, I'm learning a ton and I really enjoy this and I'm pouring my heart into it, then I just keep going. That is wonderful. John, what are the three takeaways you'd like to leave the audience with today? One, that I think you really want to be a high conviction investor, that you want to find

the things you truly believe in, be it an industry, a geography, a sector, and then sort of go all in, put more chips on that. Maybe not 100% of your chips, but this idea of you having conviction, domain expertise in an area, that to me would be clearly as an investor. That's my top advice. For Blackstone, we just really love what we do. We're really proud of what we do. And I

still think this alternatives industry we're in is still in the early stages, even though it's grown a lot. And what it's going to look like over five or 10 years will be significantly larger. And then the final thing I guess I'd say is that optimism is a very powerful force. And I think if you bring to life this level of optimism, appreciation, hey, I can get through this, then whatever life throws at you, and we're all going to face incredibly hard challenges, you're going to find a way to get through it. Sean, thank you. This has been wonderful. Lynn, thank you. This has been wonderful.

Lynn, thank you. Thanks so much for your time. If you're enjoying the podcast and I really hope you are, please review us on Apple podcasts or Spotify or wherever you get your podcasts. It really helps get the word out. If you're interested, you can also sign up for the Three Takeaways newsletter at three takeaways.com where you can also listen to previous episodes. You can also follow us on LinkedIn, X, Instagram and Facebook. I'm Lynn Toman and this is Three Takeaways. Thanks for listening.