hi everybody I'm niola tangan the CEO of the Norwegian Sovereign wealth fund and today I'm here with John Gray.

now John Gray Co Blackstone previously the head of real estate hair and Incredibly under his leadership blackstone's real estate division has become the biggest in the world you grew it from some 5 billion to more than 300 billion.

and you are known for some of the best deals in real estate the world has ever seen such as the Hilton hotel which you took off market and I'm back on the market.

and and uh wow well done.

great to be here with you Nikolai and you're taking off the tie today.

I took off the tie because I watched your stuff and I didn't want to be overdressed.

that's great.

now in short why has Blackstone been successful?

I think we've been successful uh for a couple of reasons the main one is we've never forgotten what our mission is which is delivering for our customers.

and that means delivering premium returns if you invest in private markets instead of liquid markets we have to deliver a premium.

and because we focus intensely on that across all our different business units doesn't mean we've always gotten it right but that focus on returns has been so important to our success over time.

and how much money do you need to make for your clients for them to be happy?

it depends on the risk return strategy so if you're in things like private Equity or real estate private Equity then you need to produce meaningful premiums because you're taking on larger risk the the capital's tied up for a long period of time.

you might have to you want to produce 500 basis points of excess return let's say but if you're talking about investment grade private credit then maybe it's 150 or 200 basis points.

but you definitely have to produce a premium.

the other thing I'd say which means that instead of putting money in the bank at 3% you need to deliver 5%.

yes that's what you need to do.

and for higher returning equities instead of producing 10 maybe you need to produce 15 net to the customers.

the other thing I'd say to Our Success this is really a credit to Steve schwarzman who you know it's been the push to be entrepreneurial and find new geographies to invest new products to deliver to customers new customers.

it's a constant sort of energy restlessness in this place that we can do more we can serve our customers better.

and the combination of delivering great returns and this sort of dynamism That's What's led to this place today that has over a trillion one of capital and north of a $200 billion market cap.

I joined a firm 33 years ago that managed less than a billion dollars here so it's been a dramatic difference.

but again we've never lost sight of what's mattered and I would add to that of course the people I mean if you know it in the investment business it's who you've got in the building that makes all the difference.

you said that you needed to be entrepreneurial I think Steph said that uh you can't teach entrepreneurialism so would you hire people who entrepreneurs then?

you know I would say I think it's a little bit of both I don't think think you can really teach people who are extreme entrepreneurs somebody like Steve where it's sort of born into his DNA.

but if you bring people into a culture and you encourage this yeah and you say to them hey get on that plane find that new customer think about a new way of investing capital a new market then it sort of breeds this it's encouraged.

and that's what I feel like's in the water here there's a desire to not only succeed at what we're doing but thinking about how we can expand it and that as we EXP anded it brings more benefit to the original business we started with.

I think you've said that um um Cycles are inevitable uh but you want to find the gray companies and and own them for the long term so in your mind what's a good business what what are the characteristics characteristics of a good business?

um it's in a large Market that's growing as opposed to the little nichy market.

it's a business that has some mode around it either a physical moat or something that makes it special a brand and as a result you have higher margin generally higher margin businesses.

say something about a company it's a business generally with less Capital intensity.

sometimes there are highly Capital intense businesses that are great but you love businesses that are capital light.

you love businesses that have recurring revenues as opposed to having to start over every year they're not exposed to one client or the government stroke of a PR pen risk um.

and there's a potential to do things adjacent to the business.

well I've been the chairman of Hilton Hotels you brought it up at the beginning uh for 17 years and it's Global Travel is an enormous growth business but it's capital in sensive it's not the way they do it.

so the way the business used to be they used to own the hotels and lease it today what a company like Hilton is is a management company and a franchise or.

so the physical real estate is owned by Third parties investors and they just get paid as a percentage of revenues maybe a percentage of the bottom line and that allows them to grow without a lot of capital.

Blackstone similarly and of course the power of the brand there's a network effect once you become a frequent traveler with Hilton you're going to stay at a Double Tree or a waldorf or a Hampton in around the world.

and then other owners of hotels are going to build and want to affiliate with the system.

and I'd say similarly with Blackstone it's a capital business it's based on brand and it's able to grow into a very fast growing Alternatives private Capital Market.

so I like businesses that don't use a lot of capital and have a really great brand and of course deliver to their customer in the case of Hilton or in the case of Blackstone that's core to what you do.

I suspect if you've been on a board there for 17 years you spent a fair amount of time in Hilton Hotels.

I do that is absolutely true but the credit there goes with CEO Chris Netta.

yeah now how has the investment philosophy changed over time for Blackstone or it the same kind of things you look for?

well I would say this the rigor of the process has stayed.

so when I joined this place way back when we had you know pre-investment committees and and sometimes heads up memos and rigorous debates in the investment committee that has stayed.

and that in some ways has gotten even more folsome over time and it's gotten better because we're not just doing one or two things we get this big much broader lens.

so I would say the process is saved what has probably changed is at the beginning we were probably more classic value investors.

you could sort of invest in anything project out a series of cash flows and you know value this.

and I think where we've moved is more to being a little more High conviction what are the areas of the world that we believe are going to get better what's a good neighborhood you know phys physical goods are moving from retail the way we traditionally think about it to online so let's really lean into Global Logistics where we become the largest investor in the world.

physical goods are moving from retail the way we traditionally think about it to online so let's really lean into Global Logistics where we become the largest investor in the world.

what's happening in Ai and Cloud migration is leading to enormous demand for data centers and so let's lean in there let's lean into the power that's going to support that.

it's the same thing in life sciences what we're seeing there with genomics and Ai and Big Data precision medicine and so let's own the buildings let's own the companies that run trials let's run let's invest in the phase three drugs themselves.

and so I'd say the the basic rigor the focus on doing tons of due diligence we just had one this morning on a large public company we're looking at buying in private equity.

and the debate sounds remarkably similar we have more tools at our disposal more people who can add value.

but I'd say what we become more aware of is trying to buy better businesses in better places.

I'd love to drill down on the investment committees which I think it's uh which I suspect you do a bit differently than other people so for instance how many investment committees do you sit on?

a lot like how many uh double digit number of investment committees but I'm I sit across pretty much all the firm's investment committees.

I spend my weekends most people do other things I spend my weekends reading investment committee memos that's what I do.

so you are let's say you are on what are you 15?

15 committees 10 12 10 12 committees.

okay 12 committees and how often do they meet?

most of them not all of them meet weekly at least every two weeks so it's a if you looked at my calendar there's a lot of time spent on those.

and even sometimes when I'm traveling I can't join I will read the memos I'll send in my comments if I have a very strong view or send my question so um.

and it can range from a Japanese pharmaceutical company to a European Energy company.

how long are these memos?

we try to limit them we're getting better at trying to keep them shorter we try to keep the text up front to sort of three pages or less and then try to keep the overall memo less than 20 Pages.

it can be a lot of graphs and charts I'd say we've come to realize more and more in the investment committee process that that it's less about page 58 in the footnote and more about those first couple paragraphs.

yeah that neighborhood we're investing in the quality of the underlying business and then what are the big factors around technological disintermediation risks on labor costs risks on government regulation.

in some ways forcing people to really focus on the big stuff.

yeah yeah so now you're are you coming to an investment meeting?

yes.

how many Investments are you discussing discussing?

depends on the group in credit it'll be a higher volume because you're doing more volume so those you might do three or four.

for private Equity or real estate private Equity those might be one maybe two but it tends to be a smaller number um.

and and the good news is remember in our investment committee there are the partners generally who are working on the transaction they're the senior Partners in that group and then a handful of us.

and it's not always the same people who are sitting across these we have a coci function we have some cios within business units so we're trying to get the best of all worlds.

so how many people would you be in the room?

oh it depends on the group it could range from 10 to 25 people often times we want the deal teams to speak up.

we we'll go around in many of these committees and ask the most Junior people in the room hey what do you think because we want them to articulate why they have conviction.

so now I'm I'm 25 right spright out of business school you know very lucky being hired by you and I'm presenting my investment case to you know the Big John Gray so I'm pretty nervous right it's scary scary I've been working for three months gee have I done spreadsheets yeah.

and so I come here and then do I start the meeting and tell you why you should buite well does it work?

yeah the way it would work is we're not the most patient group of people so often times maybe the young person will start.

it's probably the the youngest person may not be the one talking it may the principal somebody let's say early 30s but the young people will be sitting there next to him.

and often they'll start talking but the way it tends to work is the memo will have come out and there'll be a series of questions people are really Drilling in on.

you know this company it looks good overall but it's you know it's been helped by an acquisition and what we're seeing is the capital intensity the working capital and the capex are going up.

and so there've been a flurry of questions and so often times because people will have read the materials they'll immediately go to the heart of the issue.

so hopefully people and what we we try to do is make sure a lot of please and thank yous and be appreciative to the group but there's a really sort of a truth-telling exercise.

we also have you know we have the teams do business quality scorecards on each of the things we're investing in and sometimes we may push back and say you gave that a green that really feels like a yellow or red.

but scorecard is like a tick list so as if you were a pilot and take off a plane and you have to remember to turn on the fuel and that kind of stuff?

I'd say it's a little more of the margin the capital intensity the quality of management um what are the weak weaknesses.

and the investment committee's job is generally to find you know what is not right about this or what should we be concerned about is the structure wrong is the alignment wrong is there something wrong with the business.

or you could come in and say hey I think we're being too conservative this is going to be a more competitive auction are we leaning in enough?

and what I love about our firm is there's a really healthy balance between sort of the entrepreneurial Spirit of the people identifying opportunities and sectors and the control mechanism of the investment process.

so what percent of the cases you bring up actually go through to positive decision?

the way I think about it is it's an evolution as opposed to you know once every couple months a deal comes up and then you're like this.

typically within the business unit the people who are the leaders of those businesses will get these early on or the heads of Acquisitions they'll do screening and they'll kick out a bunch of stuff and they may make modifications.

and say look we're not willing to do this under this structure or we have you know we have to Own 100% or we can't buy this division.

it may go to a pre-investment committee again with more people than in the group other senior investors in the group.

and generally when I'm seeing this is more towards the end of the process so there the percentage is higher because you've already it's like you're going through this Quality Control process.

so when you're would you say 50/50 or more than would go through?

well I would say when it's getting to me it's a higher percentage but remember it can still be hey this doesn't work for us for non-economic reason.

I'm concerned about the um you know legal or or press ramifications is this I think we do a good job of this but sometimes there are those maybe pricing.

do you have to have a thumbs up for it to pass?

we try to do it in a consensus way.

I mean I know but if you don't like it then it does not.

I I I I try to do that rarely because I I think you want to have this group sense.

every once in a while there may be something that I'm just like hey from my standpoint what I'm trying to do is signal things that I like like don't like because generally within a fund or strategy that one deal is not going to be determinative of the future.

but if it's a type of business that I don't love then I'm signaling hey let's try to do some other stuff.

but again if you had this team uh who've been working for months day and night because here they work around the clock right this poor they work very hard very hard.

so they've been spending uh you know a lot of time on this and then you come in and you just don't think it works does it make you feel bad bad or good or badly?

I mean I what I'd say is again the process is more iterative if it's a regular way deal in a sector we have high conviction we've done a lot in this geography you know or we've done a lot in this particular area of software we've had a ton of great success in it you know the odds are it's going through.

and if we're in an auction we're debating price that sort of thing.

yeah what the teams have I think really do well is when you find something that's off the run and you realize it's got a feature to it that me or other senior investment folks are going to say uh then they'll pre-screen that earlier oftentimes.

so it's not nearly as much like you're up on some chair and you go up and you go this or that it's a much more iterative process.

and again if you're within a business unit and the deal team's supportive and the senior Partners in the business are supportive my view is unless I've got a really strong reason I don't think I should be saying you you know no.

I can be highlighting things I view this as a consensus driven process.

and if the other nice thing is in a number of these deals we have multiple investment committees so we just did as I mentioned one this morning and we had a ton of questions.

so we just said to them like go back these four areas you really got to dig in on this and come back to us and we'll have another meeting.

but um consensus deals are they really the best I mean do you really let's say now Mark zuberg had come here you know yeah from his Harvard dorm room and hey John uh do you want to invest in this company I'm connecting some people here and there and you click and you like it do you really think you would have said yes I bet you would have said no.

yeah well it's it's it's difficult to get consensus for the best deals.

what I would say is in our business that's particularly hard in early stage VC because it is much more of a gut thing.

so much of what we do there are cash flows there are histories we do have views about what's happening in many most sectors.

I found that the deals when I say consensus the driver of the deal is not there's somebody who's the champion who really believes in that yeah.

and it's their job to convince the people who are skeptical and we've had people do that.

I mean the how did we become the biggest investor in data centers we had some people who championed a large data center transaction three and a half years ago and it turned out to be a brilliant decision to do that and they were able to make the case for this.

so um I think we as a as a firm do a good job evaluating risk we don't always get it right and it is harder when you're going earlier stages.

but it feels to me like most of the time we're we're getting it right and what we're trying to do is avoid really big mistakes something that's structurally flawed or if we think a business just doesn't meet sort of that quality standard.

what what kind of decision maker are you are you a pattern recognition SL gutfield kind of guy or analytical or how do you shift between the?

I think you've got to be both right because the data tells you something right.

I mean certainly you can look at a business um you could say you know over the last 20 years every year the the revenue of this business has grown 4% that tells you something sounds more like a long-term infrastructure asset.

um and you want to look at what's happening under under the hood you want to read the memo and look at the numbers.

on the other hand the past doesn't tell you the future the past wouldn't tell you that data center demand would go up 20 fold in two and a half years.

the past wouldn't tell you that power usage which in the United States has been flat for 20 years is all of a sudden going to go up by 4% a year going forward because of the electrification.

so I think you need to have both a quantitative side to you but then an instinctual side that says look this really feels good.

and by the way the other area where it's really hard to put on a piece of paper is management teams abely.

because if you look in so many Industries right there are five players in the industry and one has grown to enormous size three have treaded water one went out of business and they all had the exact same conditions.

we've seen the same in the Alternatives business so that is by definition instinctual.

and so you've got to really try to understand do we have the right horse or it's a great business and you need to change horses and the potential is a lot greater than you expect.

I actually uh uh for the sake of f disclosure here I did a master um thesis on decision-making and interviewed the 20 best investors in Europe to see what did they say.

well uh so the best ones move between analysis and gutfield now nobody wants to admit when it's called gutfield but when you call it pattern recognition they all think is much better.

uh you you need to be pretty senior to use it because uh you need to be in a position where you actually can trust your gutfield where you don't have to back it up with a Lo of analysis.

and of course nobody else nobody trusts anybody else's gutfield but it's it's it's a fascinating thing.

I I do think if you think of investing boil it down it is pattern recognition it's connecting dots.

so our competitive Advantage is 230 companies 13,000 pieces of real estate and so we're getting all this data.

so if you can connect that data in a way and then transmit that into investment then you have an advantage in using your gut.

let's move on to that how do you connect all these dots right you you own all these companies you own all these properties do you have a systematic way of organizing the signals and the information you get from this?

I'd love to say we have some Whopper supercomputer that gives us all the answers um we don't.

but I'd say we're getting better and better so what we're doing now is trying to pull the kpis the key performance indicators from lots of businesses particularly the larger sized ones the infrastructure some of the real estate portfolio companies some of our biggest private Equity businesses.

that give you data about what's happening in wages what's happening in inflation and then you try to share that um as broadly as you can subject to limitations some things have to be anonymous and so forth across Chinese walls.

so capture that data on a regular basis and share it we do surveys on a quarterly BAS basis of our companies where we'll ask do the CEOs what are they seeing in terms of Trends costs revenues do they think a recessions coming in the third quarter?

we asked you know do you see a recession only 16% of us CEOs see that what do they see now they see a pretty good economy.

I would say now our European CEOs see a much tougher environment but our us cosos this is even pre-election saw pretty good environment.

they generally see inflation coming down and so for most of them they feel pretty good.

there is weakness on the consumer side a little bit some of that was there was some covid boomed and a lot of price and some of that's reversing.

but I'd say most of them see a decent pretty decent business environment and declining inflation which has been helpful for their margins.

are there any advantages of being as big as you are?

I'd say the I mean look scale has been our calling card so one it's I've got all this information and allows us to see things in a differentiated way.

we certainly saw inflation across our rental housing portfolio or the biggest ports business in the United States so definitely the information.

it allows us to have resources both at the firm and at our companies so we can have 50 plus data scientists we can have people on talent management.

we have enormous scale on purchasing and we can bring those to bear at the companies we buy.

yeah but you don't need you don't need a trillion dollars to afford that.

no but definitely helps.

but is is it is it more difficult to generate returns?

I don't believe so because in private markets it's an advantage.

the other thing and what I'd say on that is if you think about a liquid Market something you know a lot about if you want to buy a million dollars a stock and I want to buy a billion you've got the advantage because I'm going to move the stock price.

yeah it's the exact opposite in private markets so when air trunk the biggest data center company in Asia was up for sale that we bought this summer for $16 billion that because we could write the check ourselves was a competitive Advantage.

when we're writing a check for a three billion doll loan and we can do that by ourselves that's a competitive Advantage.

same thing in secondaries all our different activities so for us being able to do big transactions is a competitive Advantage.

having all the information all the resources a competitive advantage.

and then the other thing I'd say is we become increasingly sort of a fullservice capital solution provider.

so if you come to us and say I want senior investment grade debt we can give you that from our insurance companies I we can do Mez we can do preferred Equity we can do minority Stakes we can do control the whole range of things.

and so it allows us to have much more robust discussions with corporates and other alternative firms so we're finding scale as an advantage.

the risk is that you lose the entrepreneurial Spirit yeah that what you end up with is a very bureaucratic investment process people who stop innovating and we just can't allow that to happen.

we've got to make sure people wake up here every day with a ton of energy ton of dynamism and that we're rewarding them in a real meritocracy for finding new opportunities for taking risk for generating great returns.

but if you can harness the scale and keep that dry to me that's a special sauce.

you have mentioned data centers a couple of times and um it's been one of your themes right?

yes.

and data centers is where the big uh hyperscalers uh you know have all their computers to put it simply now uh massive demand but also massive Supply coming on are you worried about the outlook for that?

I'm not in the near term the the reason why one is obviously the demand is enormous right the the compute power putting those Nvidia gpus together um what's happening Cloud migration and now ai it's just enormous.

and when you read the earnings called and I read a summary and you listen to the biggest tech companies they are all in and they see the potential so demand I see.

but your point Nikolai which is totally right is we saw it with railroads back in the 19th century we saw it with the build out of cell what tends to happen is people overbuild.

yeah and at some stage for sure it will happen here.

yes the difference when when do you think it will happen?

there are two limiting factors which have made this much less prone to the bubble risk that you would expect.

one is you do not go out and build a$2 billion speculative data center nobody can make those Economics work.

so you actually need a long-term lease in place to do this so that's limiting.

the second thing is because you need power and power around the world is increasingly insured Supply yeah the negotiation with the tenant is much more balanced than you'd expect.

so if you've got a site that is approved you have the knowhow how to build and you have access to power you can sign a long-term lease with the biggest and and you know fastest growing companies in the world today.

so that has protected it but to your point we have to constantly ask ourselves this is a good neighborhood is it getting you know over invested in?

because my great neighborhoods are valuable but if you pay way too high a price or you buy a bad business in a good neighborhood you could still lose money.

today I would say if you have a scale player and we have the biggest in the US the biggest in Asia with the biggest powered Land Bank in Europe and you have the knowhow and the confidence of the major tech companies and you've gone out there and arranged to get power I think you're in a pretty interesting spot.

so we're still leaning in but we're also playing it on a bunch of derivative ways power generation power transmission all sorts of backup power we're helping companies like cor weave we're doing financings we're financing other people's data centers.

it's this good neighborhood flood the Zone Theory we feel like this has a long way to run.

you've avoided Office Buildings and shopping centers for a little while now do you think it's time to go back in?

I think it is interesting um we announced uh yesterday a small shopping center deal small by our stand standards.

grocery anchored not big Regional malls but think convenience retail.

because we thought it represented good value and no one's building shopping centers these days and that to us means the lack of new Supply even as e-commerce happens I think there's an opportunity.

we like grocery anchored harder to move online less capex.

and then on Office Buildings I would say um you want to focus on the best quality Office Buildings.

I mean the values have fallen very very significantly we left Office Buildings for the most part a while ago because we were worried about the capital intensity.

we didn't know covid was coming people were going to stop coming to the office but you need to own the very best quality buildings.

and I would say buying those buildings at a significant discount is interesting but we'll do that selectively.

you're also in private equity and you built this up to be a very very big business some people in my part of the world are a bit skeptic skeptical when it comes to private Equity what what are they right are they wrong what?

what what are they right are they wrong what?

well obviously as the biggest private Equity investor we don't think they're right.

I I'd say I think let's let's start the other way what are the what are the reasons to be skeptical to private Equity?

the reasons to be skeptical or why the business or how the business started right if you went back in time it was in the 80s there was a lot of Leverage used.

you were often buying divisions of bigger public companies they were were industrial companies so leverage I they took on a lot of loans.

lot of loans for money in the bank they were the the return often came from taking out maybe some cost firing workers you weren't enhancing the business that much you didn't have much operational expertise it was mostly Financial Arbitrage.

if you flash ahead to what the business is today it's very different.

and you look at the two biggest deals we did this year uh smart sheet which is a workl flow uh software business or um we did a large business Tropical Smoothie in the fast food franchising business.

these are fast growing businesses the amount of Leverage we use is a fraction of what was done in the past.

the returns are going to come by enhancing growth bringing in our resources to help these companies grow faster and that's how you're going to generate excess returns.

so you hire so these companies will hire people?

well they will hire people you'll give them more resources to grow you might expand them internationally.

and what kind of expertise do you help them with how you?

often times it could be things like their go to market strategy it could be how they organize themselves to to sell it could be their quality control it could be their marketing.

you're bringing all these tools to Bear of scale to the company and so what I think we're the business started which was a financial exercise and it's become a much more operational growth oriented business.

and and if you look I mentioned Hilton before what Hilton was when we bought it versus what it is today is night and day.

and it's not just it's done a great job for its employees for its investors but it's also probably the leading company on sustainability on diversity they've done a terrific job as a business.

and so so I think people have in their minds that I think sometimes the Press because there's been a lot of money made in private Equity those stories are not great and they're rarely telling the stories of how somebody has taken a business and really grown it and created opportunity and created jobs.

and so I think the nature of what we do you know we have a career Pathways program where we try to hire people from underserved communities at our companies.

um we have a program where we share some of the rewards at some of our largest companies.

I think what private Equity was and what it is today are very different and so that's part of the reason why I think the returns and the return premium is enduring.

now um you also into private credit which is lending money to companies kind of in a you know going into the market of of banks right and that's been exploding as well why why has that gone up so much that market?

so I I'd say a couple of things first that has grown to be our largest business by AUM it's 430 billion doll um.

and we do it a little differently than some of the other players we're just a third party manager so we haven't become an insurance company been like a bank where you borrow money and then make a premium.

we're just doing it like we do in private Equity or real estate as a third party manager the reason the business is exploding I'd give you three reasons.

one is you're essentially bringing the investor pension fund endowments individual investors Sovereign wealth fund right up to the borrower and you're taking out a lot of origination securitization financing costs.

it's basically a farmtable model and that ends up with the investor getting a higher return they trade away a bit of liquidity for that but they get a better experience.

so if you're in the hold to maturity business you get a higher return.

the second thing I'd say is from the borrower standpoint because banks are often in the distribution business they'll say to the borrower the price is 300 over on your loan but if I can't sell it at this level I can Flex you to 400 over.

and because we're running a storage business not a moving business you're giving more certainty to the borrowers.

the final thing which is really helpful for the financial system is we're duration matching.

so if you think about First Republic which went bust here in the US they had a $70 billion super Prime Mortgage book that had almost no defaults at all.

but they went bust because the 20-year mortgages were against 20 22 deposits.

yeah if they had been held by a life insurance company those mortgage loans there wouldn't have been an issue.

do you think private credit will be more regulated going forward?

well I I think if the private credit it's what we're doing which is simply taking loans and directly putting them on insurance company balance sheets like they've done with mortgage loans for a long time I think people will may look more.

but I think that is different now as private credit players become more and more insurance companies take on more annuities issue more debt they probably will be more focused.

now I would say our competitors are doing that I think are doing a very good job and they are they do have a longer duration balance sheet than a bank.

and if you really think about it the the mistakes in financing blow up come from too much leverage yeah and mismatch duration.

do you think these things will be available for private clients for retail clients so far it's like big Institution who have had access to private equity and priv private credit?

well we actually non-investment gr private credit what we do in our bdcs lending to private Equity managers that we do for individual investors.

we have we have a product that today has 60 billion of total AUM it's the largest player in that space.

we also have uh public BDC that you can buy Blackstone secured lending so individuals can access it for higher yielding um.

and we've done very well having these products for the last four years I think they'll grow over time.

on the investment grade side I think it'll be some time before individuals get access but I think they will as well there there just won't be the same kind of liquidity.

you joined this firm straight off the school right?

yes.

we happen to go uh to the same school pretty much at the same time I think even I think we may have been at the same time did you graduate 92?

yeah yeah.

but uh I don't know whether you were in the library and I was not or the other way around uh perhaps you were more in the library than me I'm not sure.

saw you there actually.

no I don't I don't know if it was in the library I I'm probably a bit of Library bit of the fraternity house I was fortunate I met my wife there so she was also a class.

she looked off to you.

yes.

now um when you joined it was a small firm right uh now it's huge um how is the corer culture different?

you know I think that's the thing that's probably kept the firm and kept it so successful is that there is still sort of a small firm mentality when I joined it it was something like 75 people um.

but we still stay remarkably connected obviously it's bigger there's more process but we try hard to keep sort of this one firm one culture idea.

every Monday we do something called Blackstone TV which is an internal Zoom call where we talk about what we see in markets where we're investing Capital what what's happening in the economy.

and then we have a photo contest so.

but also do you do you record it or is everybody on is it a live Zoom call?

it's live we just started recording it because the people in Australia in California rightfully said this is a little crazy um.

but we basically are trying to encourage everybody to tune in.

and how long is it for?

it's for 45 minutes.

can everybody speak?

no we have guest speakers so it's we're we're talking to the world but we bring guests in from different parts of the firm talking about it.

and it's it's designed for people to understand what we're doing understand the mission and have a sense of you know why the firm's succeeding how it's dealing with challenges talk about some of the things we do to give back in communities.

What proportion of um the people here actually watch it?

pretty high percentage of the professionals we don't really make it it's not so optional it's really designed to be a way so that everybody feels a collective sense of mission here.

yeah well so we do exactly the same we have a Monday meeting we do half an hour everybody you know we have more than more than half of the people in the v tunes into that.

yeah I think it's a cool thing I mean you it focuses in on why we're there.

and if you think about going back to some of these ideas about good neighborhoods or when you see things if we see things in our in inflation data or economic data what's the best way to communicated its scale than to get on there and say we see this and this is influencing how we're seeing things?

its scale than to get on there and say we see this and this is influencing how we're seeing things?

you know we think inflation's coming down we think the FED will thus you know lower rates things we started saying 18 months ago.

let's invest before the all clear sign and what's the best sort of bullhorn way to do that well an all firm Zoom call with all your professionals tuned in.

but again it's back to this cultural idea of having people say like oh there are nice people who work at this place they care about others they care about communities.

it's it's um you're trying to give people a sense that they're part of a broader purpose.

obviously you're managing the the wealth of a country and I'm sure the folks who work for you not alone with a big team yes but but everybody has a sense of mission.

and so that's what I think you're trying to inculcate Shared values and how you're seeing the world.

yeah what kind of people do you hire?

we try to hire people who are obviously smart hire people who are driven um.

I think if you ask me one quality that's the most important one you said it this is not a 9 to five five day a week job most of the people here work very hard and you need somebody who really cares.

how do you use how do you screen for drive?

you know obviously you're you're finding out where they used to work or what they do sometimes there are telltale signs.

you know people who are in athletics getting up at 5: in the morning people who've you know came here as their parents were immigrants and to get to some elite school they had to do extraordinary things to to get to where they have.

I don't know you're trying to get a sense of somebody who just really cares a lot about what people who do.

people who put in the longest hours do they do the best ha?

I don't think it's the longest hours it's really about caring.

so I I would say you you really care about what you're doing and nobody's checking where you at your Cube at 8:32 a.m. but do you really care about the quality of the presentations the quality of your investment committee materials?

you there's something about you that makes you want to get it right.

but then I would add to this we want people who believe in team play because investing in private markets somebody's got to raise the money do the Investments run the models.

somebody's got to do the finance the legal deal with the exit we need people who believe in team play we need people who are nice.

and you also need people with EQ because you're not just trading on a screen right?

you you're dealing almost all our functions with people on the outside or internally and so you're just trying to get like really driven great people who care a ton who have good judgment and are nice and if you can find that that's amazing.

are you nice?

I hope to be I try to be.

but I I would say this Nikolai that but your job is not to be nice right?

I mean no I think my job is to to want the best for the firm to be demanding but it doesn't mean you can't treat people well everybody up and down.

and I would say this I think as Leaders of businesses the most important signal is who you hire who you fire who you promote.

so if you give a big job to the brilliant jerk who puts points on the board but treats everybody terribly that sends a very powerful signal.

and so I I think trying to get people who are um nicer better quality human beings who also happen to be great at what they do I think that helps you build a wonderful culture.

and if you don't it's hard to get people to State cuz it's not just about financial rewards people who are successful they want to be around people they genuinely like.

I believe you initially wanted to become a journalist do you think it would have been a good one?

I don't know um.

I don't know I think I think I fell in love with this investing thing so I I.

I mean I I so the thing is that it has a lot in common right you need to be really curious search for some kind of truth.

I think there's a lot of similarity cuz I have a daughter who who's in the media business and does podcasting and a lot of what she does is she's writing a story she's talking to a lot of people she's reading a bunch she's trying to get the facts and then she's telling a narrative and drawing a conclusion.

and to your point there's a lot of similarity and if you said to me what do I love the most about the investing business it's this intellectual excitement to try to figure out where the world's going.

yeah and to analyze something and come to a conclusion and you see the world somehow slightly differently than other people M.

and as a result you express a view and unlike most other jobs you literally know afterwards I put $100 in that did I lose it did I get back a hundred or did I get back 300?

yeah I just think it's the most interesting thing you could do.

you know it's like everything you eat and drive and wear is made by somebody it's about psychology it's about management it's about greed and fair macro geopolitics uh.

you know everything changes you're doing it around the world and so you know next week I'll be in the middle least the following week I'll be in Asia.

you're learning you're talking to people you're just trying to take in as much information and you're trying to transform that into actionable Investments.

talking about being around the world and action so you are a runner you run all over the world and you post on LinkedIn.

yes tell me about it.

I it's very funny so when I travel I I often would send my family uh my wife and daughters you know a clip saying oh here I am am I'm in some around the world you may forget who I am and whatever.

and I got on LinkedIn about a year ago I thought you know I did sort of the corporatist stuff at the beginning and it wasn't that interesting to me.

and I was in Sydney jogging by the opera house and I was like wow this is amazing I love being here we have a big business here A bunch of people clients.

so I literally just took the camera and said I'm in Sydney this and that and I put it I sent it to our people and they put it on LinkedIn and all all of a sudden the thing sort of goes viral.

so you don't have to be that smart it's like oh there's demand for Last Mile Logistics let's buy more Last Mile Logistics.

in this case there is demand for you know these LinkedIn sort of human videos showing you jogging I do that.

and so you do it in se you do it in California and what's the what's the coolest place you run?

the coolest place I run you know I I would say I always love Washington DC when I jog up to seps to the Lincoln Memorial it has this sort of profound feeling to me.

um I love in Japan there's a 5k jog around sort of the Imperial Gardens where the Emperor's Palace is obviously the cities in Europe all have great runs along the water.

you're supposed to say Oslo.

I should say Oslo is great CU that Main Street in Oslo what is that up to the parliament at the top is a great is a great run too.

but it you know when you travel one of the things you know is it's just hard on your body.

yeah so if you can get up and go out and it doesn't you don't need to run a marathon you could run two or three miles and all of a sudden you feel a little better about the day ahead.

and um this has been fun but I've sort of created a monster and I've joked at some point I'll jump the shark but for now I keep going.

absolutely Joan what is your advice to young people?

I think it goes back to some of the earlier stuff which is you got to really work hard you got to care a ton about what you're doing.

and I think that ties to the passion I think one of the reasons we're having success at what we do is because we like it right?

and if you don't feel this genuine passion for what you're doing I think it's hard and you should find another career.

the other advice I would say is don't be afraid to speak up I think one of the challenges often times particularly people show up at businesses and they sit quietly.

and you know once you start to get a sense of what makes this business you're working at tick could be a nonprofit organiz whatever it is you want to be an agent for Change.

and almost every company Blackstone included can do things better you can serve your customers better you can shorten some of the paperwork you can find a new market a new opportunity.

if you think of yourself as an entrepreneur and an agent of change in whatever you're doing it makes your job more fun the people you work with really appreciate it you get more out of it.

and then the final thing I'd say is wherever you work you want to be feel intellectually challenged you're still learning.

I think I mean I think the best part of the job is this constant learning that's why I've never looked for another job because I'm always like wow I'm learning something new.

so if you go to a place and you feel like you're continually moving up in terms of what you're learning what the challenge is finding that kind of opportunity again gives you a lot of psychological Rewards.

well John you for sure have passion and working very hard and if you are looking for another jail I'm show we can fit you in somewhere.

I will I will not be looking but I love seeing you here Nikolai thank you so much thank you.