The Pomp Podcast - #1084 David Rubenstein On How To Make Billions And Then Give It All Away

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now, let's kick this thing off. David Rubenstein is a well-known entrepreneur and investor. He's a co-founder of Carlyle, and he also hosts a very popular show on Bloomberg. In this conversation, David and I talk about a lot of different topics. We go from everything across history to the present day. We talk about entrepreneurs, investors, asset classes, economics, and much, much more. I really enjoyed this conversation with David, and I hope that you enjoyed as well. These conversations allow me to learn from people who have done a ton in their career and also who are willing to sit down and

Starting point is 00:00:47 be so gracious with their time to share their insights with me. I hope that you find them valuable. All right, let's get into this episode with David, and I hope that you learn a ton from this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys, I've got David here with me. David, I thought a great place to start is just being a good decision maker. You obviously have navigated

Starting point is 00:01:27 a multitude of different opportunities and risks throughout your career across a number of different industries. When you think of good decision makers, are there certain qualities that fit into what makes a good decision maker? Sure. And of course, decision making in politics or in business or in investments is somewhat different, but they have some certain common strands. Whenever you make a decision, you have imperfect information. You never know for certain what the outcome is going to be, but you also don't know all the factors that are going to lead to the outcome. It's often said that presidents of the United States, when they make decisions, have imperfect information. But the truth is, everybody has imperfect information.

Starting point is 00:02:06 Who should you marry? What career should you pursue? What school should you go to? You never have all the perfect information you want. So I think in making decisions, you have to recognize this. And then also when you make the decision, try to pursue it and make certain that you are going to try to make that decision a good decision and not look back at all the time that you probably made a mistake. And I have this tendency to look at mistakes I've made and realize I should have done better. I think a better decision maker than me would say, let's move forward and make the decision work and not look back and say, why did you not invest in Amazon or Facebook at the beginning. When you think about decision-making frameworks,

Starting point is 00:02:47 Jeff Bezos famously has the kind of regret minimization framework. Are there things that you use throughout your career that you feel like, hey, this puts me in a better position or is a way that I think about decisions that I know are big decisions? Well, what I try to do is read as much as possible and talk to as many people as possible who have some relevant information. But in the end, you have to use what is often called your gut, your intuition, which is really a set of your experiences and try to recognize that decision you're about to make may not be perfect, but it doesn't have to be perfect for it to be a reasonably good decision. Most of the decisions I've made haven't been perfect, but they've worked out reasonably well. I take chances. You always have

Starting point is 00:03:27 to take some chances and try to do things that people tell you you probably can't do. As a general rule of thumb, whenever you're trying to do something new, people will tell you you can't do that. And that's true with entrepreneurs, investors, and so forth. So I've tried to listen to people that have good experience, but in the end, you have to make the decision yourself and stick with it. One of the things that's unique that I'm personally fascinated with is there's a very big difference in the amount of information someone has access to. So if you go back, you know, a hundred years, obviously today we have much more information than those people had. But even in today's society, there's kind of a bifurcation. Somebody in your position or who runs a very large

Starting point is 00:04:05 corporation, you have a big team, you can say to someone, hey, go do research on this, gather as much data as possible, give me an analysis on these three potential options, and then I'll make a decision. But still, you mentioned making decisions using intuition, using your gut and kind of the totality of your experiences. How do you balance when to use data and when to go with your gut? And is there a way that you've figured out over the years that works for you? Well, of course, there's an inherent bias that generally people want to make certain decisions based on their own experience, and so if you get data that is inconsistent with your experience or your intuition, you might probably discount it a bit. If you get information that goes into accord

Starting point is 00:04:44 with your intuition or gut, you probably are going to accept it. People generally like to have information that goes along with what they already believe. In the end, I think most people make most decisions based on their intuition, and they try to seek information that might be in accord with it, even though realistically, they are probably consciously not going forward to seek information that might be against their intuition or gut. When I think of you, I think of someone who just gathers lots and lots of information. And you do that, obviously, by reading a lot, but also having tons of conversations, both privately and publicly. Let's start with reading. Is there certain ways that you read? Are you somebody who picks up a book and you're going

Starting point is 00:05:26 to finish it no matter what? Do you start reading a book? And if you just don't like it, you put it down and pick up another one? Do you read one book at a time? Do you read multiple books at a time? How do you kind of approach reading and gathering information? Well, I have a force feeding way of doing it. I do a lot of interviews of authors. And so I feel that be appropriately honest with them. I try to read the book and therefore I try to know what I'm talking about when I interview them. Secondly, I like to read multiple books at a time because I, you know, some book may get boring at a point in time. And so you might put it down and pick up another book and then eventually come back to the first book. I try to finish the books because I think it's a

Starting point is 00:06:05 courtesy to the author, but also I think it kind of shows a certain commitment to getting things done. If you're repeatedly reading books and it's not finishing them, you're probably doing other things in life where you're not finishing it. And I think it's generally a good lesson in life to start something and try to finish it within reason. That makes a ton of sense. When you think about reading, is it all nonfiction or do you read fiction as well? Or how do you think about the genres that you read?

Starting point is 00:06:30 Yeah, I wish I could tell you that I was a perfect person. I read fiction and nonfiction and I'm indifferent. The truth is I am a nonfiction reader. I try to juggle three or four books at a time, generally preparing for interviews or things that might be of interest to me. But there's a trick to it. I'm often reading books on subjects

Starting point is 00:06:48 I know something about, so it doesn't take me that long to get through them. If I'm reading a book on physics or chemistry, I'm probably not going to get through that book that quickly. If I'm reading a book on business, politics, history, biographies, I probably know a fair bit of it already. I can get through it relatively quickly. Why don't I read fiction? I guess I have a view that I'm not really looking for great literature and great writing style as much as trying to get facts. And I generally feel you'll get more facts in nonfiction than fiction, though I recognize that many fiction books are heavily researched and they actually have a fair amount of facts in them. But I generally go for nonfiction and that, you know, it's one of my

Starting point is 00:07:26 flaws. I don't really read that many fiction books. I fortunately or unfortunately am very similar and just enjoy the nonfiction, which I think is okay to just know what you like and go and double down on that. You obviously talk to a lot of folks as well, whether you're interviewing them for the shows or just for your everyday activities. And one of the ideas that has stuck with me over the years actually was told to me by my wife. And she said, the quality of conversations are driven by the quality of the questions. I thought that was very kind of illuminating. How do you think about questions to ask? And how do you know that a question is high quality versus maybe a question that won't actually elicit a great response?

Starting point is 00:08:06 Well, I try to prepare for my interviews, as you obviously do. And I try to make sure I know you know, generally what I want to talk about, but it's very important, as you know, to listen to what the person is saying. When I interviewed Oprah once, she said, I'm not a great interviewer, she said about herself, but I'm a great listener, which meant that when she hears what somebody's saying, she can pivot and go to what the person is willing to talk about and seems interested in talking about. So I, I do try to prepare questions in advance when I'm interviewing people, but I always will be prepared to kind of divert. And I also try to use some humor sometimes and try to make the experience for the interviewee acceptable and likable.

Starting point is 00:08:44 And therefore, I don't use a style where I'm trying to embarrass people. I'm not trying to make them make a confession they don't otherwise want to make. There are people that do that. That just isn't what I feel comfortable doing. When you think about these conversations, a lot of the conversations are positioned as peer-to-peer, given that you are a highly successful investor and somebody who's built a very large asset management firm, and many of the people that you are talking with run large corporations or are well-known investors. How is that kind of mechanism or that aspect of the

Starting point is 00:09:15 conversation different than, let's say, if you were interviewing people who weren't nearly as successful or if you yourself wasn't as successful as the people you were interviewing? Well, that's a good question. And when they came up with the name Peer to Peer for the TV show, I didn't think it was a good idea because I didn't want to say I'm a peer to some of the people I'm interviewing who are much more successful and accomplished than me. But I have found by being reasonably successful in business and by having written books or done other things that have made me reasonably well known, when I'm interviewing somebody, I don't feel like I'm a supplicant at the table, basically begging them for morsels of information. Generally, I'm interviewing people

Starting point is 00:09:51 that I know or the people that know of me and I think to some extent respect me. And therefore, it's not like I am begging them for some information. I feel like I'm having a conversation with somebody that more or less is not a peer, but somebody that I can have a conversation with and they don't think they're talking down to me or they're dealing with somebody that's, quote, inferior. You've studied a lot of American history. And in these conversations, we can go all the way back even further than just American history to ancient Rome, all the way up until modern day. And obviously, the conversations in public are an important part of culture. They drive a lot of how society thinks about certain ideas.

Starting point is 00:10:28 What is the role today of some of these conversations, right? You are obviously distributing them on traditional media platforms, but also some of the new media platforms as well. How do you think about the role or importance of these conversations? Well, it's an interesting phenomenon that there are no interviews of George Washington, Abraham Lincoln, other people from more than 50 or 70 years ago. It just wasn't a technique that was used. And if people were interviewed, they weren't recorded. And therefore, people didn't really know what George Washington might think about this or that. Today, we have information overload. Everybody is an interviewer. I feel like there should be a bumper sticker that says, honk if you don't have your own podcast, because everybody is doing interviews of everybody else.

Starting point is 00:11:12 And so you kind of wonder who's left to be interviewed because everybody's interviewing everybody else. But, you know, obviously I'm being facetious, but I do think, you know, people are interested in absorbing information. The theory of life, to some extent, is the more information you have about something, the better decisions you can make and the better life you'll have. So people are interested in learning more about what people have to say because they might learn something that might make their life better. Why are so many people listening to podcasts? Because they want information, because information is the key to success. People who are well-informed generally do better than people who are not well-informed in life. And as a result, people have observed that, and what they want to do is get more information.

Starting point is 00:11:55 And now there's many ways of doing it. In my case, I interview a lot of people. I have an intellectual curiosity. You obviously have that as well, and it makes it easier. If you're not interested in learning what somebody has to say, you probably won't be good at interviewing. It's such a simple but powerful idea of just those who are informed are likely to be more successful than those that are not informed. But it's still important for people to remember that. You've also seemed to learn quite a bit from the stories of people's lives, right?

Starting point is 00:12:21 There's some people who say, hey, I read by going and consuming textbooks. Other people read by going and reading some sort of book written about a topic. But I know that even some of the books that you've written are based on interviews about people's lives. Talk a little bit about why that's so valuable to you. You know, if I thought I was so great, I would say I don't care how anybody else got to where they are because I've done more than they've done. But I don't look at it that way. I came from modest circumstances. I like to see how other people rose up to where they are and compare it to how I did it. And people have a willingness, as you no doubt know, to talk about

Starting point is 00:12:56 their childhood, their young adulthood, and they kind of like to tell their story of how they got where they are. And I think really good people who have a certain amount of humility, and I think good people do have humility, will say, I got lucky here. I had a lucky break here. If somebody tells you how great they are in the interview process and how lucky the world is to have discovered them. I think it's probably not somebody you want to do business with or you want to spend that much time with. Yeah, it makes a lot of sense. When you mentioned that no one interviewed George Washington, or we don't have, you know, podcasts with many of these historical figures. One thing that I've heard you talk about previously is that a number of billionaires,

Starting point is 00:13:33 even just in recent times, were quite reclusive. You have the Daniel Ludwigs and people who almost we're obsessed with privacy and being out of the limelight. Obviously, today, there seems to be a different kind of social scene, if you will. People are going on interviews, they're going on podcasts, they're tweeting, they're putting out all of this information. What are the pros and cons of kind of this shift in the way that people are interacting with information and also with privacy? Right. Well, there's an old saying, if you live by the sword, you die by the sword. And by that, in this context, it means if you want all this, the world to know about you, presumably you want the world to know about you because you think you've done something useful for people to learn about or you think you've done something that people should emulate. But then when you make a mistake and the world is still attentive to what you're saying, you don't look as good.

Starting point is 00:14:21 So people like good publicity. People generally don't like bad publicity. So the downside to seeking publicity or getting to be well known is that when something doesn't go well, people tend to focus on it. There's a German word called schadenfreude, which basically means you take pride, not pride, you take happiness in other people's failures. And so to some extent, we see a lot of that. A lot of people who are very prominent, powerful, when they fall down and make a mistake, people seem to want to read more about that because it says to them, look, this person isn't as

Starting point is 00:14:54 great as they thought they were or I thought they were. They've made human mistakes. And basically, if they can make a mistake, then maybe I can make a mistake as well and not feel bad about the fact that I'm not perfect. When you first started with the interviews or writing the books, what was the goal? Did you think that this was something where you could actually have a learning process and you were able to extract information and use it to improve your own life or improve your own business? Or was it very much like, hey, I want to inform the audience of this information? Most people that start companies are not so egocentric that they think

Starting point is 00:15:27 they're going to start the next Apple or Microsoft or Facebook. They start with the modest ambitions. And I had the same situation in starting my interviewing. I became the president of the Economic Club of Washington. I was supposed to bring the business people in to speak. They came in, but they were boring. So I thought maybe I could liven it up by interviewing them. And people seemed to like it. I used some humor. Bloomberg picked it up. And now I find that people like the way I do it for whatever reason. And so I think it's not something that I thought would be part of my life or career, but I've now find, and you probably have the same experience, although I built a large company, I have, with the help of others, I chair a lot of non-profit

Starting point is 00:16:07 boards and I've been involved in a lot of philanthropic things. When I go around the world, people come up to me and they want a selfie because they've seen my interviews or they've heard my interviews and many people don't know that I do anything else. Many young people, teenagers or young adults, they see me on television and they think this is all I do full time. And I, you know, I don't want to get in an argument with them that this is not the most significant thing I do, but I am surprised at how so many people seem to watch the interviews and so many people seem to enjoy them. I think a huge piece of it is I've seen your conversations on the airplane. Once you've made it onto the airplane, then I think you've got a whole new

Starting point is 00:16:43 demographic, right? Yes. I mean, I was surprised that Bloomberg takes the interviews, I guess they sell them to some airplanes. And I guess if you're on the airplane, you have nothing better to do, you can flip to my channel. Um, you know, I, I've been surprised about it, but honestly, uh, you know, very surprised. Yeah. When you have, uh, young people coming up to you and taking selfies and probably asking questions that have nothing to do with, uh, Carlisle or any of the investment activities, uh, what's your reaction? Like, is this something that you, uh, are still surprised by today? Do you just look at it as you're learning from these people? What is that interaction like? Well, my reaction is I'm, I guess I take some pride in somebody cares about

Starting point is 00:17:23 me or once I have a picture, I never say no, because I, you know, remember, I'm in the same situation myself for much of my life trying to get, you know, get to know people. And so I try to be as polite as possible about it. I am surprised that they have, they have a view that a picture with me is going to make their life happier, or an autograph by me is going to make their life happier. But why don't I don't try to disabuse them? I say, sure, happy to have a a picture and, you know, go from there. So it doesn't upset me. I am surprised sometimes that you get people that get to be famous or well-known and then they don't want any of the attention that comes with being a movie star, a television star. And you kind of say, why did they go in that

Starting point is 00:18:03 business to begin with? Because what do they think they were doing? Yeah, it's a very interesting and unique dynamic. Do you ever feel like being well-known, although it comes with lots of benefits, the downsides may not be worth it. Like, are there things that you've changed in your life because of it? Sure. Um, you, you have lots of downsides. Um, you know, people don't always write a hundred percent, uh, of what you want, or they don't write how great you are. You know, we have some negative articles. I've had negative articles written about me. And I realized if I weren't so prominent in some respect, people wouldn't have bothered to write these articles. So there is downside to it. And then, um, when my mother was alive, um, and there was a negative

Starting point is 00:18:43 article about me, I had to go explain it to her that really, I'm not that bad. I didn't do what they said. And, you know, trying to explain something to your mother is always more challenging. But, you know, now I have children. And when they see a negative article about me, they kind of say, well, why did you do this? And I said, well, it wasn't true. I didn't do that. But, you know, OK, it comes with the territory. When I told people that I was going to do this conversation, I asked a number of folks for questions. I got some very unique ones. And one of the ones that I found surprising, but also I was interested in the answer, is somebody in your position. Do you have like a private group of peers that you go to for advice

Starting point is 00:19:20 or look for to share strategies or anything that you look at as a way to talk to other folks who are going through similar situations? Or is that something that maybe you would do earlier in your career, but over time, those become less important? No, I have lots of people that I talk to who help me on various projects in business or media or philanthropy. And so I ask their advice from time to time. But in the end, you have to make your own decisions. So recently, the New York Post wrote a critical thing about some philanthropic contribution I'd made 10 years ago. And I talk to people about it. They didn't think it was that serious not to worry about it too much. But sometimes you get good advice from people that are close to you. You have to be willing to listen to

Starting point is 00:20:05 bad, listen to the things that you've done bad and try to correct them. And probably the people who are close to you will tell you that more than the people who are not close to you. You've made quite a number of philanthropic contributions. And so obviously somewhere along the line, somebody will have a critical view of one or many of them. How do you think about giving away money? Is there a formula or a framework that you use, or do you just wait until there's opportunities that you find interesting and then you make the decision on a one-off basis? It's the first thing you have to get over the threshold of giving away money. I, for most of my life, I was trying to make money or kind of, you know, have enough

Starting point is 00:20:41 resources to feed the family and all that. Then when I got lucky in business and started making money, you realize you have more money than you need to spend on a reasonable lifestyle. You can always improve your lifestyle or enhance your lifestyle by buying more homes or art or something or another, but I don't think that makes people happy. A lot of the wealthiest people I know are tortured souls. And the happiest people I know are often not people that have a lot of money. So you have to be careful not to let the money distort your views of what it means to be happy. In my case, once I got over the threshold of giving away money I'd worked so hard to make, I decided I had four standards. One, I wanted to start something that otherwise wouldn't get

Starting point is 00:21:20 started. Two, finish something that wouldn't otherwise get finished. Three, do something where I'd have an intellectual engagement with it. So I wouldn't just write a check and go away, but give my time, my energy, my ideas, as well as my money. And fourth, I'd like to see progress in my lifetime. That doesn't mean I'm going to solve all problems with my philanthropy, but I'd like to see some progress. And clearly in some cases, it's difficult to do that. Last night, I hosted an event for Sloan Kettering, which is a cancer hospital in New York at one of my homes. And, you know, I've given money for pancreatic cancer there. And I realized that there's been progress in pancreatic cancer, not necessarily because of my gift, but that I'm not

Starting point is 00:22:00 going to solve pancreatic cancer probably in my lifetime. Still, I want to see some progress being made and progress has been made. How do you check in? So if you give money and you're saying, hey, I want to see progress or I want to see something that would get finished that otherwise wouldn't get finished. Are these folks giving you monthly reports? Are you kind of checking in? Do you have a team? How does that work? I'm probably not as good at that as I should be. I don't have a team. I do it all myself. I kind of know what I want to do. And 95% of my philanthropic things are my ideas. So like most people, I like my ideas better than somebody else's ideas. When people present me with ideas, I sometimes do them and sometimes I don't. But I don't have a big team going around

Starting point is 00:22:40 looking at metrics. Bill Gates is much more sophisticated than I am. He's got elaborate metrics that measure the success of the money he's given away. I generally, if it's a medical research thing, I'll read some things from time to time. You do get reports from people, but the reports that you get generally are going to tell you how great your money has been in solving a problem or something. So I usually try to just make my own observations. If it's a building that I helped to build or something, I would try to visit it or ask other people who visited the building what they think about it. But in the end, once you've given the money, it's kind of gone and you have to decide whether you want to give more

Starting point is 00:23:15 to the same cause or not. And very rarely, the people you give money to say, well, we solved the problem and we don't need any more money. So you're usually gonna get more money requests from the same people you've already given money to. This may seem like an elementary question, but I used to ask folks,

Starting point is 00:23:30 what did you do when you first realized you were a billionaire? But in this case, what would be fascinating, I think for folks to hear, is the very first building that you gave money to and after it was built and you went and saw it, what did you do? Did you look at it and say,

Starting point is 00:23:41 it looks like a nice building, like, let's go to lunch? Or did you walk through it? Like, how did that go when you realized that I made a financial contribution to build the very first building? The first building that I really built was my alma mater, Duke University came to me. And this is before I was on the board, or later became chairman of the board. But I, and so my parents were alive. And I, they asked me for money to help build the building. And I said, okay. And we had a ceremony, Colin Powell came down and spoke and so forth. And I told my mother that they named the building after me. And my mother had never seen something like that, you know,

Starting point is 00:24:14 building named after her son. When we went down for the ceremony, my name wasn't anywhere. And my mother kept looking. She said, well, your name's on the building. I don't see it anywhere. I said, well, you know, maybe they don't put the sign up. And actually, it was a place where they didn't at Duke. They didn't really put your name on the building so much. But I don't know whether my mother ever believed the building was named after me. But recently, I talked about this and the dean of the school then put my name on the building recently. They felt bad that your mom didn't really believe you, so they hooked you up? I don't think she really believed my name was on the building, but anyway.

Starting point is 00:24:46 That's amazing. As you built Carlyle, that story has been, I think, pretty well documented. But one of the things that is interesting, a lot of folks listening to this come from the asset management world, and they usually start off with one single asset class. How did you all at Carlyle think about, okay, we're going to start with a single asset class, and then we're going to move to something that encompasses many more industries and many more investment disciplines. What was kind of the impetus for that? And how did you think about where to expand with the second, third and fourth asset class? Whenever you come up

Starting point is 00:25:17 with a new idea, you kind of do it gingerly for a while. And then the people tell you it's not a good idea. So I didn't want to broadcast. Guess what? We were in the buyout business, but now we're going to get into growth capital, venture capital, real estate. I just had an idea that like Fidelity or T. Rowe Price or Vanguard, we can have many different funds taking advantage of our brand name. And ultimately, if people thought we were good in Area A, they might give us a chance in Area B or then Area C and so forth. So I just came up with this idea of having multiple funds. And I told my partners, I will go determine the area, recruit people, help raise the money, and then they would oversee the investments. And at the time, it didn't seem

Starting point is 00:25:56 like it was discovering a fire or anything like that, but it's something that's obviously taken off. And now firms like Blackstone, KKR, Apollo, and among others have multiple asset classes. And then I decided, as I was doing this, that we'd globalize it by going around the world and building arms in Europe, Asia, so forth. And at the time, it didn't seem like a brilliant idea, but it turned out it changed private equity a bit. When you thought about moving into those other asset classes? What were the conversations with investors like? Did they just say, hey, we're willing to bet on you and your firm? Or did you have to convince them that you actually had some expertise or some unique opportunity set to go after in the new asset classes?

Starting point is 00:26:36 Well, sometimes the areas are very hot. So for example, I made a speech in London in the late 90s saying that there was no internet related fund in Europe and that Carlisle was going to build one. We didn't have any team yet. We really didn't know exactly what we were going to do, but we were inundated with requests to fund it. And so I realized there I had hit an interest level. But generally, what I did is at the beginning, I would say to people, we've made a lot of money for you in buyouts in the US. Give us a chance in buyouts in Europe. We have a same kind of process and approach. And some people say no. Some people say yes. In the fundraising world, as you may know, you don't get 100% of the people you ask money for to give you the money. So you

Starting point is 00:27:17 have to be comfortable with a very low percentage of people are going to give you money, certainly for a first fund. It would be beautiful if 100% of the people you asked said yes, that would change a lot of people's lives. When you think about your business, many people from the outside would label you as an investor, they say, Oh, that's the business that he's in. But you're also an entrepreneur, you had to build Carlisle and obviously scale it. Was there any key ideas on how to actually scale the business or anything that you took away from the entrepreneurship side of building an investment firm? Well, the two entrepreneurial ideas other than starting the company in Washington, D.C., which was somewhat seen as unusual place to start an investment firm

Starting point is 00:27:55 was to have multiple disciplines, many different kinds of investments, and then to globalize it by having funds around the world. And those were entrepreneurial ideas that I had to convince my partners of and also investors and recruiting people. I had to convince them that we would pay attention to what their fund, even though it wasn't our core fund. It takes time and obviously success breeds more success. So those early funds that were global tended to work out and we could build on there. And obviously, other firms have probably done it as well as we have or better in some cases. So it wasn't easy at the beginning. But if you go back and look at entrepreneurship, you'll see that most entrepreneurs have ideas that people make fun of for a while and then

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Starting point is 00:30:56 You've talked to people, both entrepreneurs and investors, that are incredibly successful from various parts of the world. There are other investors like Ray Dalio, who've recently come out with books talking about the changing world order and kind of the shifting ground underneath us. How do you evaluate what's going on? And what do you pay attention to? And what do you think maybe is just noise in the news or some of the recent events? Well, you can't read too much about what's going on around the world because anything going on around the world, the news is likely to affect investments because investments are just a microcosm of what's going on in larger society. So Ray Dalio, I've interviewed him about his books, and they're really well written and well researched. And he's

Starting point is 00:31:35 obviously a very thoughtful person. And I would say that, you know, I've learned a lot from interviewing him. And I try to learn a lot when I interview people. I don't know the answers to every question that I ask somebody. And so I do learn a lot. I read a lot before I do the interview. But I learn a lot more during the interview than before the interview. When you think about this idea of kind of the shifting world and these debt cycles and all of that. Is that something that you ascribe to and you all talk about internally at Carlyle? Or is it something that, you know, it's an interesting theory, but maybe we need more information to know how accurate they actually are? Well, we do internally get information about

Starting point is 00:32:12 what the government's doing or what the Federal Reserve is doing. But I don't think our information is any better than anybody else's information. We, you know, we read the same things. We talk to the same experts. But in the end, you have to figure out what you can do with that information, how you can take advantage of it in an appropriate way to kind of make a good investment decision. And most investment decisions are going to have some mistakes with them. And you have to learn how to deal with the mistakes when you make them. Yeah. And when you start to evaluate, let's say, inside of the United States, obviously, you started out earlier in your career, actually working inside of one of the administrations. And now you're one of the leading investors. How do you think about the U.S.'s rise and all of the economic growth that we've experienced? And then now it seems to be, you know, kind of at a fork in the road, if you will.

Starting point is 00:32:57 Will it continue or will there be some kind of, you know, maybe not demise of the empire, but definitely some retraction in that growth? Well, no civilization or country has ever been the dominant one forever. You know, civilizations become leaders and then ultimately their time comes and goes. So we all know about ancient Egypt, Greece, Rome and so forth. And then in our, you know, last couple hundred years, England was the dominant financial and economic and military power in the world for much of the 19th century. The United States came along and became the biggest economy in the world in the 20th century, the leading military, technological, economic, educational country in the world. How long will that continue? Well, nobody really knows. We have a disadvantage now in that our population is not as large as China's.

Starting point is 00:33:49 And as long as China is trying to do the kind of things we do, they have an advantage over our population. Now, we have other advantages as well that they don't have. But I don't know. I can't tell you that for another 100 or 200 years, the United States is going to be as dominant as we were during the 20th century. That seems unlikely. When you think about demographics, there's plenty of investors who say, hey, just follow

Starting point is 00:34:09 the demographics and that's where opportunity lies. How important are those demographics to your investing philosophy or a lot of the work that you do? Well, demographics are obviously important because, you know, you need to have a reasonably good-sized population to sell products or services, and then you'd want to have a reasonably young population that is going to buy some of these things because younger people tend to buy more than maybe older people do. So, of course, demographics are very important, and I think really good investors take advantage of that and know what the demographic impact is of what's going on in society, because that can shape how you make investment decisions. When we think about demographics, that's obviously something that's much more of a macro trend. It's not something that you or I could wave a magic wand and change, especially in the short term. But what does seem to be kind of opposite of demographics is central banks and central banks can much more have an impact in the short term. they can wave magic wands and change the cost of capital or change quantitative easing, quantitative tightening. How do you think about the roles of central banks,

Starting point is 00:35:12 and especially in environments where they seem to be making many more short-term decisions? Is that something that you all are actively trying to make investment decisions around? Or is it something that you're aware of, but it doesn't necessarily drive the investment decisions? Well, I would say it has an impact. You know, Jay Powell was in our firm for seven or eight years. He left and then got involved in some public policy things and then got appointed the Fed and later chairman of the Fed by President Trump. We're no different than anybody else. We don't have any particular insights about what J-PAL is going to do. We know, you know, to get the same information everybody else does. But there's no doubt that the Federal Reserve and the central banks play a much larger

Starting point is 00:35:51 role in the global economy than they did 50 years ago or 100 years ago, because now everybody knows exactly what they're doing and pretty much why they're doing it. And many central banks around the world are so coordinated with the Federal Reserve that they're likely to follow what the Federal Reserve is doing. So it's a much bigger impact than it was, let's say, 50 years ago in our country. How much of the impact is driven by the actual policy decisions they're making? Like they're just making certain policy decisions that have the impact versus it's more about the way that they communicate. I recently heard somebody talking about the fact that, you know, the Fed used to not really do press conferences. They used to not really go out and say what they

Starting point is 00:36:26 were going to do. Now it seems like that's a huge part of their policy kind of decision-making process is they try to actually signal to the market what to think. How has that played a role in the kind of economic growth or economic strength of the United States? Well, secrecy used to be the coin of the realm for the Federal Reserve. It was not unlike the Supreme Court. We'll tell you what our decision is at some point, or you can figure it out. But basically, what the Federal Reserve didn't do before was tell you what they were going to do in advance, and they didn't explain it after they did it. When Paul Volcker was the chairman of the Fed, they would just one weekend increase interest rates, the federal discount rate, by 200 basis

Starting point is 00:37:06 points. They didn't explain in advance or didn't explain afterwards. You had to figure it out. Today, everybody believes that transparency is a greater virtue than secrecy, and therefore, the Fed telegraphs exactly what it's going to do, and then after it does it, it explains it in great detail. That's much different than it was 50 or 100 years ago. And it does give you information that can guide what you're going to do in your investment process. Do you think that it's a positive on the market? Or do you think that actually it was better off when people were forced to do the work themselves and figure it out? When you had to do the work yourself, only a limited number of people probably had the expertise to figure it out. And therefore,

Starting point is 00:37:41 it was an advantage to those limited number of firms or people that had expertise in that area. Today, the theory is everybody should have equal information and therefore everybody will have equal opportunity to benefit or not benefit from what the Federal Reserve is doing. On the whole, it's hard to be against transparency. So I think it's a good thing and I support what they're doing. I think Jay Powell has done one other thing in addition to explaining and telegraphing what he's doing. He tries to do it in the King's English. In other words, many of the chairman of the Fed used to speak in what's called Fed speak, which is almost incomprehensible to the average person. So you didn't really know in many cases what Alan Greenspan was actually trying to say to you because he talked in the kind of what's called Fed speak. Now, Jay Powell tried to speak in English and therefore it's much more easily understood by the average person. Yeah, one of the things that fascinates me about central banks in general, but the Federal Reserve, obviously, is the one I think most people in America will pay the most attention to, is they are making decisions based on data.

Starting point is 00:38:44 And as I've learned more and more about the data sets they use and the data collection methodology, it feels like there is kind of the way that we've always done things, obviously, with the Bureau of Labor Statistics and a lot of that data collection. but now we have companies like Square or Zillow who have real-time data points and usually much more expansive than maybe the data sets that the Fed is looking at. How do you think about using kind of the old methodology versus some of these new tech companies? And is there a world where you think we'll eventually transition to the new kind of technology data points? Or do you actually think that maybe there's downsides to using that real-time data versus the systems we've been using? Over the years, I've interviewed Ben Bernanke, Janet Yellen, Jay Powell, and I ask that question. I say, it seems like you're gathering information sometimes the same way you did 20 or 30 years ago. You know, you ask people to fill out forms or so forth, and maybe there are people going to fill them out accurately or not. I do wonder at times whether the information gathering process of the federal government

Starting point is 00:39:41 is as good as it is in the private sector. I tend to get the answer from the Federal Reserve that they have very good computers, and despite what I might think, that they really have good access to information. I'll take their word for it. But clearly, if a business person were to go in and run the Federal Reserve, I suspect people today who are business people would probably use different techniques in the Fed is traditionally used to gather information. And for example, some of the statistics, not the Fed, but other parts of the federal government, gather information in ways that what seems somewhat archaic, or they use statistics that seems somewhat archaic. For example, the unemployment rate, which is a much watched statistic, is basically dealing with the

Starting point is 00:40:23 percentage of the workforce that are looking for jobs. So if the workforce shrinks, you can still have a very low unemployment rate because there's fewer people looking for work. And the unemployment rate just measures how many people were looking for work last year out of the people or last month out of the percentage of the workforce that were actively looking, as opposed to it doesn't take into account the people that gave up looking. And so more accurate numbers, probably the percentage of people in the workforce of a certain population. In other words, right now, probably 63 to 64 percent of the adult population is probably in the employment market, whereas it used to be higher than that, maybe 67, 68 percent. Yeah, it's pretty insane when you start to think

Starting point is 00:41:07 about all these little individual ones. But to your point, we also are evaluating the accuracy of the data without actually having access to the systems and the data sets themselves. And so it's a little bit of a nuanced situation. One of the areas that I think people are fascinated with coming out of the last two and a half years of the pandemic and many of the supply chain disruptions is this idea of reshoring. So reshoring manufacturing, reshoring supply chains. I know that you all have both on the private equity side and the venture capital side gone around the world. You're very familiar with kind of these international markets. How do you see this playing out? Is it something where the United States actually can bring back

Starting point is 00:41:46 manufacturing and supply chains and are going to be able to do this with American labor? Or is it something that maybe there's theories that, yes, we can do it, but it's going to have to be driven by robotics because American labor is too expensive compared to international labor. Just talk me through what you're seeing on this front. Well, obviously, the supply chain for manufactured products largely moved out of the United States decades ago. And it did that for economic reasons. It was cheaper to produce things overseas, ship them to the United States, and you could still sell them for less in Walmart than you could if you produced the same product in the United States. When COVID came along, we began to realize that we were so dependent on

Starting point is 00:42:20 let's say, China for health care products, that it made people nervous. And so there's been pressure from the federal government on businesses to re-engineer their supply chains. And you're seeing a lot of that. People who have manufactured products in China, many of the people now are trying to get supplies coming from maybe other Asian countries, but not necessarily China, for which we have some, obviously, geopolitical tensions at times. I think the major businesses in the United States are trying very hard to re-engineer their supply chain so they're not dependent on foreign countries as much, particularly China. It's not that easy to do. And one of the problems with that, and the reason people went to this original system, is that it's inflationary

Starting point is 00:43:05 to bring things back into the United States or potentially inflationary. We produce things in the United States at probably somewhere higher cost than what they do in China, even with the shipping involved. So it's going to take a sustained effort by the U.S. government to push people to change their supply chains, because in the end, you're worried about inflationary pressures. If you push people to come back here and try to produce things at the same cost, they're going to do it in China. That's not realistic at this point. What's unique is that you obviously started building Carlisle right there in Washington, D.C. You have that experience inside of the administration, but you are a capitalist and an entrepreneur and an investor. How do you think

Starting point is 00:43:43 about the role of the government in something like that? How much do you say, hey, the private sector is going to have to pick up the ball and run with this here versus, no, maybe the public sector can actually help support either through legislation, incentives, or just outright kind of effort to actually go ahead and have this happen. Well, Ronald Reagan famously said the most dangerous words in the English language are, I'm here from the federal government, I'm here to help you. You know, and his point was that the federal government tries to do things to help people, but sometimes it doesn't really work. And obviously, bureaucracies are what they are. By being based in Washington, I do know a lot of government officials and I deal with them regularly in terms of interviews or other things like that.

Starting point is 00:44:23 It does give me a sense of what the government is trying to do from time to time. But in the end, given the fact that so many people can get so much information so easily these days, if you live in California, you can probably get almost the same information I'm getting by living in Washington. When you think of other asset classes, are there other areas that you're excited about right now? I know that Carlisle has this internal report that's heavily data-driven. I had a number of investors ask me specifically, hey, what is the data saying now that are the interesting areas of opportunity? You know, what are kind of the things you're most excited about in the moment? What you might be referring to is that over a number of years, we at Carlisle have taken the data that we get on sales or earnings or margins or whatever from our companies and extrapolate that to how the GDP or the global economy is performing. And then after many years of doing this, we can figure out that if one of our companies in given area A is seeing sales decline by 5%, it might show you that, in fact, the GDP is going down by X% or something like that.

Starting point is 00:45:26 So we are looking at that. But again, you have to use your intuition, your gut. You can't rely only on data. The data might not be perfect in the way it was accumulated and so forth. So I don't want to say that we have an undue advantage, but there's probably some advantage that other firms can do as well of taking a look at their own portfolio and figuring out how what is going on in their own portfolio tells you what's likely to be going on in the economy generally. And what about areas that you're most excited about? Well, I say areas that I think are going to be very important in the future are ones that, and remember, as I say in my book, all investing is about predicting the future. That's really what life is all about.

Starting point is 00:46:06 It's what investing is about, predicting the future. In the future, clearly, health care is going to be a major continuing growth area. When I worked in the White House in the late 1970s, the GDP percentage that went into health care was roughly 7% to 8%. Today, it's 21% or 22%. And that's in part because people have higher expectations of what they should get from the health care system. And also, the population is aging.

Starting point is 00:46:31 And the aging population generally needs more health care. So it's changed a bit. I think, therefore, number one, healthcare and healthcare services, telemedicine, all kinds of other things related to healthcare needs. Secondly, fintech. Clearly, there's a revolution going on, and we're probably just ending one or two, of changing the world of financial services from the kind of traditional banks and investment firms to things that are more fintech-oriented, including blockchain and cryptocurrency-related assets. So I think that will be likely to see something that will be attractive. together. Talk a little bit more about Bitcoin and cryptocurrencies and kind of what you see there. What are you excited about? What do you think maybe is overhyped or maybe not as sustainable as people think? I used to say that if you would go to Las Vegas and you like gambling there, it gives you a form of happiness and pleasure knowing that you're going to lose the money in the end if you stay there long enough because the odds are always in favor of the house. Go ahead and do it, but don't lose more money than you can afford to lose. So put one or two

Starting point is 00:47:32 or 3% in. If it gives you pleasure, fine. And I used to say the same about cryptocurrencies. If you want to speculate, you want to read about all the things going on there, you like the thrill of cryptocurrencies, okay, put one or two or 3% in. Today, clearly what I think is going on is that more and more people are doing more than one or two or 3%. And that reason is that people have less confidence in governments generally, and their currency is being devalued. So they think that cryptocurrencies won't be devalued in quite that way. There's a lot of thrill in the secrecy of it, a lot of thrill that nobody knows what you actually own. A lot of Russian oligarchs saw their assets being taken away by Western governments, and many other wealthy people

Starting point is 00:48:13 around the world are probably saying, well, I want to have some assets that nobody can confiscate, nobody knows that I have, and that's what cryptocurrencies do. Cryptocurrencies also have a lot of political appeal in the, I would say, young part of the society and the libertarian in part, probably more Republican than Democratic in some respects. And they have made their views known on Capitol Hill. And therefore, I think it's very unlikely that Capitol Hill will find the political pressure to regulate cryptocurrencies in ways that some academics would like or some regulators would like. I just don't see the pressure coming from Capitol Hill to do that, in part because of the constituency that is really involved in cryptocurrencies.

Starting point is 00:48:51 Francis? What's really interesting is there is a technology aspect. There is this geopolitical aspect. There is a regulation aspect. And then there's a politics aspect. And to me, one of the most interesting developments have been in the political realm. So obviously, we have countries like El Salvador, who at least are verbally saying, hey, we are going to embrace this. People will debate how successful have they been in actually going ahead and adopting the various technologies. But even in the United States, we have seen senators and congressmen come out and say, hey, I own these assets or advocate for a kind of positive legislation of it. In your experience, having been around for a while now and seeing multiple asset classes, whether they

Starting point is 00:49:32 were things like ETFs or other types of vehicles or just new asset classes in general, what is usually the takeaways that people should be looking for from when the politicians get involved? Is it just they provide air cover and it allows something to get built or the other takeaways that you have from your career? Well, remember, when you're trying to sell a product, a new product, what are the words that Madison Avenue finds are the most helpful? There are two. One is new and the second is free. So we're going to give you something for free and it's going to be new. People love things that are new. And so to some extent, that's part of the appeal of crypto. It's new, it's different. And younger people tend to like newer things. Older people, people my age

Starting point is 00:50:11 and older, they tend to say, well, I know what I know from my life experiences. I don't want to try something new because I don't fully understand it. So the people pushing cryptocurrencies and related things are not generally people in their 70s or 80s. They're probably people in their 20s or 30s. I interviewed for my TV show the other day, Sam Bankman-Fried, who you probably know of. He's a 30-year-old who I think had at one point a fortune of about $20-some billion. It's maybe down a little bit now. He built FTX, which is a leading cryptocurrency exchange vehicle. And he's probably typical of many of the people in that generation who are younger, they're willing to try things, they can afford to fail and then pick themselves up because they're so young again

Starting point is 00:50:50 and start life all over again. He hasn't failed. But I think young people are the ones who lead revolutions. Young people are the ones who pursue things like take smartphones or take personal computers. It was young people that kind of pushed that, or social media, young people that kind of pushed that. You rarely see revolutionary companies being started by people in their 70s or 80s. When you interview somebody like Sam Bankman-Fried, who we'll put him in the category of young billionaire successful with new technology, you also have interviewed people who were exactly like him just later in their career. And so whether that's the Jeff Bezos's or the Bill Gates or whoever they are. And I always say that, you know, if the young

Starting point is 00:51:32 challenger lives long enough, they become the incumbent. Right. In some ways, Bill Gates was trying to take on the incumbents and now he has become the incumbent. What are the similarities and differences that you see in some of the young people today versus what you're seeing in the successful billionaires who now are in their 40s, 50s and 60s? Well, in my generation, younger people were not as focused on making fortunes. There were no private equity firms when I graduated from college. There was no, or virtually none. There were no hedge funds or virtually none. And now more and more people in my generation, they were called in public service by President Kennedy, his famous inaugural address and things like that. People wanted to change the war in

Starting point is 00:52:14 Vietnam or things like that. Now people, when they go to college, when they want to do, if they even want to stay and graduate, they want to go out and start a business. They don't want to go change the world necessarily. They want to start a business, make some money. You know, I think the ideal for a lot of people is to become a billionaire when you're 30 and then do whatever you want with the rest of your life. It's not that easy to do, but I do think that more and more younger people are attracted to business and entrepreneurial activities than was the case 20 or 30 or 40 years ago. You wrote a book, The American Experiment, and in it, you talk about a number of topics around the American dream. And one of the things you're highlighting here

Starting point is 00:52:51 is this idea of young people still being highly ambitious, wanting to create wealth, wanting to do that within a country that has democratic principles and has a capitalistic society. How do you evaluate the current state of the American dream? Is it still kind of as shiny and possible as it once was? Do you think it's improved or maybe it's been in decline?

Starting point is 00:53:11 The irony is that the American dream, that's a phrase that was invented in 1936 to kind of describe what happens when very often immigrants, but not always immigrants, rise up and they kind of overcome modest circumstances and hardships, and they become wealthy or successful or famous. And as a result of that, they kind of live the dream. You don't hear the French dream, the Mongolian dream, the English dream, though obviously some people in those societies rise up as well. But it's part of our ethos. And this was perpetuated to some extent by the Horatio Alger series of books that

Starting point is 00:53:45 kind of talked about young people coming from modest circumstances and working their way up. Sadly, sadly, the American dream is today a dream that more people outside of the United States actually believe in than people in the United States. We have now 50 million immigrants in this country. Many people came here because they believe in the American dream. Many people at the bottom of our society born here no longer think because of discrimination or prejudice or whatever reason that they can ever become a part of the top of the totem pole and can actually live to see the American dream. But the American dream lives on to some extent in the ideas and minds of many people who are immigrating into this country, as opposed to people who are born here.

Starting point is 00:54:27 What's fascinating about what you're saying is the internet, I think, in many ways helped to export a lot of these ethos to other places in the world. I recently had someone on that I was talking with about the country of India. And one of the conclusions that we both came to was, look, there's now a kid in India with a keyboard and an internet connection that can go ahead and create a business, can create a product, can go ahead and achieve that social mobility and economic success in a place where maybe that wasn't as easy to do 10, 20, 30, 40 years ago. And so it does feel like there's this exportation of the American dream. But I do wonder, does that mean that people now don't need to necessarily come to the United States and that's like a headwind for the U.S.?

Starting point is 00:55:11 Or do you still see across the board lots and lots of people wanting to come to the U.S. to go ahead and build businesses and kind of achieve that dream? The United States has always valued entrepreneurial activity. And I think people feel they come here, they have a better chance of creating an entrepreneurial venture that succeeds. People don't raise their children in France or Germany and say, I hope you'll grow up to be a billionaire. It's not part of the culture as much or in England. Now it's changed a little bit, but it's not been historically part of the culture. Now, currently, I think it's something like a third of the companies run from Silicon Valley or run in Silicon Valley are being run by people who are immigrants from India. India is a country

Starting point is 00:55:50 that exports a lot of very talented people in the United States. And they were very entrepreneurial and they built a lot of very impressive companies. You have 50 million immigrants in this country. The five countries from which they most come are number one, Mexico, number two, the Philippines, number three, India, number four, China, and number five, Vietnam. That's where the immigrants have largely come from. But India is still increasing its percentage of people coming in the United States. When you talk about other cultures, not necessarily saying, hey, I want my kid to grow up to be a billionaire. One thing that we have seen here in the United States, whether people came from elsewhere or they were born here in the U.S., is there's been a rise

Starting point is 00:56:29 of billionaires who don't necessarily start off as business people or as investors. And so a number of people who jumped to mind immediately are people like Jay-Z or Kanye West and musicians. We've also seen athletes like LeBron James and many other examples of this. How do you think about this kind of new type of business person where they may be an athlete, a musician, a celebrity, or just famous from reality television, and now getting into business and building these kind of large organizations that end up minting them quite a bit of economic success? One of the reasons is that it's a global economy in this sense. If you are LeBron James, your image is known not only in the United States, but all over the world. So people are going to

Starting point is 00:57:11 buy your t-shirts or whatever you might have, your jerseys all over the world, and you become a media figure all over the world. So more and more people are building businesses or building images that are global. So if you are a business person in the United States, you're now really see the whole world as your market. And that's certainly true as well of athletes or people that start the music companies. They are known all over the world because to some extent, America has exported its culture as much as anything else. when you think about uh kind of the business world we usually now think of private equity firms we think of venture capital funded startups it seems like a lot of folks especially young

Starting point is 00:57:51 people went from hey i want to work on wall street at a hedge fund to now i want to start a tech company or be a venture capitalist but i noticed that declaration capital uh which is another firm that you started i believe it actually serves maybe as your family office uh goes ahead and actually acquires family-owned businesses and that seems to be something that was very popular decades ago, today, we don't see as many of those getting started and run. Talk a little bit about that sector of the economy and these family-owned businesses that maybe have kind of gotten lost in the story of entrepreneurship in America. Well, many companies are owned by families, probably more companies are owned by families and are publicly traded for sure. And sometimes

Starting point is 00:58:30 family-owned businesses feel they have a certain culture, which could be destroyed by going public or by being bought by a, quote, private equity firm. And they feel more comfortable if they're bought by a family-owned office or operation because the values might be the same. Whether that's true or not, you know, we can debate. But there's no doubt that I have, through my family office declaration, bought things or affiliated with people that have family businesses because very often there's a simpatico feeling that, you know, one family office has got the same kind of values as another

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Starting point is 01:00:52 to subscribe to receive company updates and financial information, visit their website at Valor.com. That's V-A-L-O-U-R.com. When you think of that family office that you're running, talk a little bit just in terms of how you've thought about structuring it. And you also there are investing across asset classes. And what I think will be interesting for a lot of folks in the audience, there are people who have been quite successful and the ones who are younger are just now hitting the point where they're starting to think about, hey, should I start a family office, right? What was that decision process like? And then also if I do start a family office and try to, in some ways, professionalize it? How should I think about

Starting point is 01:01:28 actually where to invest and how to run that process? Okay. Well, when I was doing Carlisle full-time, I didn't have a family office. And then people kept saying, do you have a family office? And eventually I felt like I had family office envy. I didn't have one. So eventually, when I stepped down as a co-CEO of Carlisle, I decided to build a family office. But family office is an interesting phenomenon. If I tell you I'm from private equity, your eyes might roll because private equity's image isn't so wonderful. If I tell you I'm from a family office, people generally think that's good

Starting point is 01:01:56 because the word family office is a phrase that has no negative connotations. And family office can mean whatever you want. It can be somebody that's managing $5 million. It could be an operation that pays the bills, takes care of trust and estates, deals with intergenerational issues, or it can be just an investment operation.

Starting point is 01:02:14 In my own case, declaration is an investment operation, doing things that don't compete with Carlisle. All the deals have to be approved by Carlisle to make sure there's no, no conflict. What I've tried to do is to build an organization that will survive me. So it's not a typical family office in the sense that it's mine. And then it goes to my children, then their children. It's basically something where I've recruited, I think very good people. And we will, we are raising some outside capital because I want the business to survive well after I'm gone. And it will do so if it's not dependent solely on my money. Initially,

Starting point is 01:02:47 I put up all the money, but now we have some third party money and increasingly more of it. So when you think about hiring those high quality people, what are some of the lessons you've learned over time? If you're going through an interview with somebody, are there certain types of questions you ask or certain specific characteristics that you're looking in for people, especially early in the interview process? Well, when I'm interviewing people, I want to see what makes them tick, where they come from, what kind of background they have, how hungry are they, why do they want to make money, why don't they go into public policy, why do they want to make money, and what do they want to do with it? They want to spend it, they buy a lot of houses, or they want to give it away, try to get a sense of what is important to them, and then I try to see what questions they ask. I am amazed sometimes when I interview young people, I say, do you have any questions? They

Starting point is 01:03:31 have no questions. You know, if you have no questions, that's not good. Always think of some questions. The one question you should not ask is what's the compensation? Because that's really not something you should focus on. Eventually, you know, you'll get taken care of. I have a lot of experience in hiring people. I've made some mistakes. I've hired some people I shouldn't have. And I didn't hire people I should have hired. And I let some really talented people get away. But in the end, that's that's life. You make mistakes. How did you know that you had hired the wrong person? Like in any of those situations where there are certain things that happened or certain frameworks that you've developed over time that to know, hey, we hired

Starting point is 01:04:04 this person, they're actually not the right person, we need to move on? You want people that I think know how to get along with other people. Investing is, to some extent, the way private equity is undertaken. It's a team sport. And you have to get people that get along with other people. And if you get people that don't get along with other people, that's probably not a great thing. If people are not willing to work very hard, that's probably not a great thing. If people don't have certain basic skills in terms of intellectual curiosity, reading, certain skills in terms of math related kind of projects or things that we need to have to do some kind of, you know, discounted cash flows and so forth. I think, you know, you may have made the mistake,

Starting point is 01:04:42 but I, you know, I've made mistakes and I'm sure I'm going to make more hiring mistakes in the future, but generally I try to weed them out relatively early. It's not a good thing to let people stay in an organization where they clearly are not going to thrive and just let them stay there and be in the corner. You should be honest with them and let them know it's not working out and they should do something different. When you think of your network, I'm assuming that references is a huge piece of it. You know a lot of people in a lot of different areas and you're able to get some back channel information. Are there specific things that you look for when you're doing reference checks in the hiring process? Yeah, when I'm doing reference checks,

Starting point is 01:05:18 I want to know why somebody left the previous place. And people are very good at hiding whether somebody was actually fired or not. Then there's a lot of obfuscation of whether somebody was actually pushed out or, or they quit on their own. So you always want to know if they were fired, why, uh, it was a unique circumstances. Uh, secondly, how do other people work with this person? Um, people sometimes don't really want to be that honest when you're doing those kinds of reference checks. Uh, third, you know, what kind of, um, um, academic achievements did they have? Were they reasonably good in school? Were they terrible in school? Not that that means, you know, that's the only thing you should look at. But generally, I like to talk to people

Starting point is 01:05:56 who have some sense of what they want to accomplish with their life, even if they're young. And they obviously are going to say the same things. They want to make the world a better place and all that. But how sincere are they? What type of intellectual curiosity they have? What motivates them? Are they trying to please their parents? Are they trying to please themselves? What do they really want out of life? And you can get that out of an interview, but not perfectly so. So when you look at the motivations, it's a fascinating thing to kind of think through, right? So if somebody comes in and you realize the motivation is that they want to get rich or

Starting point is 01:06:27 their motivation is that they want to impress themselves and prove that they can do something or a motivation is their parent. How do you evaluate? Is there like a right answer there? Or is it just you're trying to understand this person better to realize how they'll fit into the organization? Like when you get a variety of answers to something like motivation, how do you kind of think through what's good or what's not good for the organization?

Starting point is 01:06:48 Well, Austin, you're always trying to get people that are going to get along with the kind of culture you have. You don't want people to destroy your culture. You want people to improve your culture or enhance it. And you're also looking for people that I think are honest in what they're talking about. And you can tell whether they have scripted their answers because they know that's what they want you to, they think you want to hear or whether they really are sincere. You have to ask people questions that they aren't likely to anticipate because everybody's

Starting point is 01:07:13 going to know the answers to questions like, what do you want to do with your life? or, or, you know, what was your background like finding people who, um, um, are willing to be honest is very useful and people that are willing to, uh, you know, go off script and tell you things that they didn't think they were going to tell you. We'll tell you a lot about the kind of person. Yeah. My understanding is, uh, if we go towards kind of your motivations, your life, um, one of the things is you've never had alcohol before. And I'm an individual who, uh, I would put myself in the average alcohol consumer until about two years ago. Uh, and I stopped drinking alcohol, uh, not because of some master plan, but just started with a dry January. And then I said,

Starting point is 01:07:55 Hey, let's keep the momentum going. I feel great. And you know, like not waking up with a hangover and all the benefits of not drinking, but why is it that you never even started or you never even tried alcohol before? Well, I was, when I was a young boy, I was in a youth group in Baltimore and the head of the group was really anti-alcohol, and he kind of said he would get you in trouble, and I didn't want to be getting in trouble, and secondly, I would see New Year's Eve adults gather, and they tended to get drunk, and I saw when people were drunk, they tended to, you know, do things that they maybe would be embarrassed about later, so I generally didn't want to do something that was going to embarrass myself or my parents, and I generally just thought

Starting point is 01:08:36 that the benefits of alcohol weren't so wonderful. And so I stayed away from it. And, you know, I managed to get through college and law school without drinking. When you think of the social pressures in those scenarios, and then later in your professional career, how did you handle the fact that maybe you might be the only person not drinking? And then, you know, does that extrapolate out to other areas where there was social pressure that you said, hey, you know, I'm just going to do things my own way? Well, when I was in college, you know, obviously, drinking is a big thing in college, I went to Duke, But I didn't have enough money to join a fraternity where a lot of the drinking occurred.

Starting point is 01:09:08 So I tended to focus more on, you know, my academic things and that drinking didn't seem to help there. And I wasn't probably the most social figure at Duke. I doubted most people probably knew I was even in the class. When I became chairman of the board, I suspect most people in my class didn't even know I was in the class because I was a relatively quiet library kind of person. So I wasn't really the life of the party. But, you know, it didn't it didn't hurt me that much. I would say alcohol has some real challenges, people. Some people know how to drink. Some people don't know how to drink. But there's always a worry that I had that maybe I would have an alcoholic gene.

Starting point is 01:09:44 And maybe if I started drinking, I would not be able to stop. Yeah. And there's plenty of stories throughout history of that being the case for some people. And it is an unfortunate story, but definitely one that people can go and read about. When you think about this kind of clear-headedness, right? So if you're not drinking, you've got this clear mind. you're able to kind of focus on things you think are most important. Talk to me about some of the most influential things that you've read. You've read a ton of books, and obviously, sometimes it's

Starting point is 01:10:11 for interviews, other times it's because out of personal interest. What are some of the things that you wish that you had read earlier in your career, or for young people today, you say, hey, these are the two or three things that, you know, I think could really help shape your worldview or set you up for success? Well, I would say my advice to people when I give a commencement addresses really things like you can't read too much. You just got to keep reading and not, and basically show some intellectual curiosity. I think learning how to speak publicly is also very useful. Life is to some extent about persuading people to do what you want. And your parents, your spouse, your children, your partners, how do you persuade people to do what you want?

Starting point is 01:10:52 Well, you do it by writing well, like Thomas Jefferson, perhaps, or you speak well, like Martin Luther King or Abraham Lincoln, or you lead by example, which is also a very good way to persuade people. George Washington staying at Valley Forge with his troops, even though he didn't have to. You lead by example. So I tell people to practice communicating. Try to avoid ethical mistakes because it can ruin your reputation forever and you never get your reputation back. I also tell people to try to share the credit. Don't always take the credit for yourself and also take the blame. If something goes wrong, be willing to take the blame for it and own up to it. Those are some of the things I think people should learn how to do.

Starting point is 01:11:34 And then what about influential books on your life? Are there specific ones that stand out? Well, I tend to read a lot of biographies. And so I'm always reading biographies about people I think have done wonderful things. I've read a lot of great biographies about presidents, United States, and obviously my era, I was influenced by books about John Kennedy. And I worked earlier in my career for Ted Sorensen, who was John Kennedy's speechwriter and counsel. And I read his book on Kennedy when I was young. And I read other books about President Kennedy when I was young by Arthur Schlesinger and others. And so I was influenced by a lot of those books. But in the end, what's important is reading, actually reading and finishing a book. Don't just start it and then just drop it. Read it through and then try to read as much as you can.

Starting point is 01:12:21 And books are more important than reading tweets, I think, because it focuses your brain. It teaches you how to be disciplined, to get through something from start to finish and absorb the information. When you talk to somebody like John, who was the speechwriter for Kennedy, tell us a little bit in terms like what do you learn from somebody like that? Obviously, that's somebody who has to have a command of kind of current events, also has to understand the position of the administration, has to be able to clearly communicate ideas, but isn't necessarily the one who's communicating them themselves. They're trying to help somebody else communicate ideas. What are some things you learned? Well, you learn that you have to learn how to get along with people. You have to learn how to pick up signals.

Starting point is 01:12:58 People sometimes don't tell you directly exactly what they think, but they do it indirectly. And so you got to be good at picking up signals. learning how to get along with people is a critical part of success in life and that's true in the white house or any part of the government that you might be working in because nobody in government is that powerful they can't do anything by themselves they need other people to do it and that's true of course in the business world as well but again i think young people can't read too much they can't practice speaking too much they can't practice writing too much i am amazed at how many people graduate from colleges that are very good but when you ask

Starting point is 01:13:34 them to write something, their writing skills are relatively limited. It's because they've been writing too many tweets. They're used to using shorthand. Yeah. So I wonder if William Shakespeare had lived in the era of tweets, would we have all the Shakespeare plays or would he have been diverted by having to write tweets all the time and not actually finish those plays? It's a fantastic question. One of the things that has become popular in the discourse around kind of building companies today is this idea of work-life balance. What was your daily routine like when you first started building Carlyle? And then what is it today? And how has that changed over time? Well, work-life balance, I think, is good. I mean, I would say I'm not

Starting point is 01:14:17 the best at it. When I was young, I was well known for being a workaholic and working around the clock. There are articles written about that when I worked at the White House. At those times, I really wasn't married. I didn't have children. And I didn't think I was talented enough to do things so easily compared to other people. So I had to put more time in to make sure I was prepared and ready to do what I had to do. So I did probably have a great work-life balance early in my career. Later, as I got married, had children, you have to obviously make some adjustments. Today, I still find that I enjoy work and I'm doing nothing now that I think is unpleasurable. I'm doing things that I think is pleasurable, and therefore, I don't regard it as

Starting point is 01:14:56 work. But again, if you have a career and you don't enjoy it, that's work. If you're doing something you really love, it's not work. And therefore, I encourage people to experiment and find something that they really love doing so they don't regard it as work as opposed to pleasure. When you think about that daily routine today, how do you decide what to do? Like, is it just, this sounds like fun, and I want to go ahead and spend some time on it, or do you have some rubric? I try to balance what I'm doing with Carlisle, what I'm doing at Declaration Capital. I have I said I chair seven nonprofit boards and they take time. And then I am on another 20 some nonprofit boards where I'm not the chair.

Starting point is 01:15:35 So I'm not as responsible. And then I have my philanthropic programs. And then I try to do a book a year or so. And then some TV things. I'm always juggling things and trying to figure out how to keep the schedule working. And given that so many entrepreneurs and investors who are listening and watching this, they constantly are struggling with that focus and that prioritization. Are there things you've picked up over the years on how to be better at that? Well, preparation is good. Jim Baker used to say that his father drilled in him, prior preparation prevents poor performance.

Starting point is 01:16:07 And I do try to prepare for the interviews or I'm giving a speech or whatever it might be, try to prepare and give respect to the people you're talking to. So that's an important lesson for me is actually try to be prepared and know what you're doing. Read as much as you can to get prepared. I think that's important as well. But in the end, practice is very important. So I'm much better at giving a speech today than I was 25 years ago because I practiced a lot and I now know how to do it better than I did.

Starting point is 01:16:34 But I encourage younger people to try to practice giving speeches, practice doing interviews or being interviewed, practice writing. because in the end, these skills will come back to help you. One of the themes I think through our conversation today that's fascinating is there are so many podcasts, there are so many tweets, there are so much of this content being created, but it's very different, right?

Starting point is 01:16:56 Speaking on a podcast is very different than giving a speech for 25, 30 minutes. Writing a tweet is very different than sitting down and writing a book or writing a memo, an essay. I do wonder how much of confusion is going on between confusing kind of motion with actual progress and trying to get better at these skills. And I wonder if you've seen even inside of some of your organizations where young people

Starting point is 01:17:21 are assigning, you know, value to things that are motion, but they may not actually be progressing in the way that you think they should be. It's hard to know. I mean, I think sometimes younger people spend time on things they think are going to be valuable, or they may not be that valuable. You know, I do question how much, you know, value is in sending writing tweets all the time or responding to tweets or reading all these tweets. But look, some of the famous people have 200, 300 million Twitter followers. I mean, it's just astounding that that many people are following, you know, one show business personality. But, you know, obviously, each to his own. It's not for me. Yeah. One of the things about Twitter that absolutely cracks me up is you have Elon

Starting point is 01:18:03 Musk, the world's richest man, obviously a fantastic entrepreneur who's built a number of these very large businesses. And he was asked by, I think it was Bloomberg at one point, they said, would you rather be a billionaire or a meme Lord? And, uh, what cracked me up is like, it's easier once he's a billionaire to say, no, I'd rather just do memes on the internet. Uh, but it does feel like there is some, uh, social, uh, change that has occurred where people are using obviously Twitter and the tweets, but just memes and other ways of communicating that it just seemed very different than even 20 or 30 years ago. Sure. The older generation is always, um, the last to catch on to things like memes or tweets and so forth.

Starting point is 01:18:40 So you have to look to younger people about how to communicate. And in the end, life is to some extent about communicating with other people. You can't do anything pretty much by yourself. You know, how many things can you actually do without involving other people? You have to communicate

Starting point is 01:18:55 and the best ways to communicate always change. Though learning how to talk is probably the best way to really communicate in some circles. Obviously, some people may not have the ability to do that, but learning how to write or other ways, communicate with people, I think is a skill set that is really important. Yeah. The last thing that I wanted to ask you about is the importance of critical thinking and the process of critical thinking. It feels like we

Starting point is 01:19:17 live in a society today where there's a lack of critical thinking and critical thinking doesn't necessarily assume that there's only one outcome in that critical thinking process, but it's just the process of sitting down and thinking more deeply about decisions you may make or things going on in the world. Are there certain things that you've done in your life to get better at that critical thinking process or things that people can take away to become better? Well, I think thinking is an important part of life, which sometimes gets lost in the urge to have an instant response to everything or to have a tweet on everything. You know, sometimes sitting around with people having a serious conversation or actually thinking on yourself, read something,

Starting point is 01:19:59 thinking about it is very helpful. And practicing out arguments that you try out on other people. When you're in your college dorm rooms, you're always arguing with people, it seems, in college dorms. And practicing how to think and persuade people to do something, I think, is a useful skill. And I encourage people to, young people particularly, to learn how to make their arguments much more precise and clear about what they really believe in. You mentioned towards the beginning of the conversation, there's a lot of people you know who are wealthy, but they're unhappy. And then there's a lot of people you know that are happy, but might not necessarily have money. How do you define happiness? And how do you evaluate whether you yourself are happy?

Starting point is 01:20:41 Well, Thomas Jefferson famously wrote about the pursuit of happiness in the Declaration of Independence. But in the subsequent 50 years he lived, he never actually defined happiness or told people how to get it. And happiness is the most elusive thing in life. Some people are happy, as you no doubt know people that are happy with their lives, even though they might not be famous or wealthy. And there are a lot of famous and wealthy people that are tortured souls. It's just, it's hard to know how you get happiness. If I knew how to get happiness for everybody, I would give the secret. It's not easy. But I think finding something that you feel is doing, is useful with your life is one of the best ways to get there. And I think people are generally

Starting point is 01:21:17 happier when they are helping other people, as opposed to just aggregating their material assets. David, I've really enjoyed our conversation today. You've wrote many, many books that I think people have learned a ton from. You've got a brand new one that's coming out or is already out, How to Invest. That book is full of interviews with a bunch of very successful entrepreneurs

Starting point is 01:21:38 and also the stories of how they built their wealth. Where can we send folks to check out the book or to find you on the internet? Well, I think you can order it from Amazon and all the bookstores. It's publication date is September 13th. And, you know, I think people will enjoy it because it tells you the insights that the best investors in the United States have had over the years and how they develop their investment expertise. So I'd like to thank you for giving me this much time to talk about it and other subjects that I you and I share mutually an interest in.

Starting point is 01:22:09 I appreciate you. You spend the time as well. And all of your other books have been fantastic. So I'm going to go out on a limb and say that this one will be just as good as the past ones. All right. Thanks a lot. I appreciate it. All right. Bye. Thanks so much for listening to today's episode. I really hope you enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to transition

Starting point is 01:22:31 into a brand new job in the Bitcoin or crypto industry, we've got you covered. Head over to thecryptoacademy.io. My team and I have been working with the top HR teams in the industry to develop an intensive three-week training program with over 50 live events. We teach you exactly what you need to know

Starting point is 01:22:47 to break into the industry, including live interview prep and resume review. Our students have been hired at over 75 of the world's best Bitcoin and crypto companies. Go to thecryptoacademy.io to learn more. Again, that's thecryptoacademy.io. If you enjoyed today's episode, make sure you share it with your friends

Starting point is 01:23:04 and I'll see you all for the next episode.

The Pomp Podcast - #1084 David Rubenstein On How To Make Billions And Then Give It All Away

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