Intro (00:01:43):
You are listening to The Investor’s Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected.

Trey Lockerbie (00:02:03):
Welcome to The Investor’s Podcast. I’m your host, Trey Lockerbie. Today, we are honored to have on our show with us, Mr. David Rubenstein. David, welcome to the show.

David Rubenstein (00:02:14):
Thank you for having me. My pleasure to be here.

Trey Lockerbie (00:02:17):
Well, I’ve been following you for a long time. I mostly see you on places like CNBC. I’ve always loved your takes on what’s going on in the market, so I figured we’d start there, and talk about some of the bigger headlines that everyone’s been hearing about. The most recent of which, I would say, is this choke hold on European energy that Russia seems to have, and they’re now making more money than ever, it would seem. The Russian government has announced they’ll be halting gas exports to Europe through this Nord Stream 1 pipeline, allegedly due to maintenance, but last year this pipeline was 35% of Europe’s total Russian gas imports, and winter’s coming, right? Energy might be more and more in demand. I’m wanting to get a sense of how you think this issue might resolve itself, and how it might continue to affect inflation and markets.

David Rubenstein (00:03:06):
That’s a complicated question, and I would premise, or preface, my statement by saying that when you get predictions by anybody in Washington D.C. about what’s going to happen six months down the road, you got to be very cautious, because nobody can predict that well. Earlier this morning, I interviewed, for my own TV show, Jake Sullivan, who is the National Security Advisor, and I asked him largely the same question about how Europeans are likely to hold up in terms of fighting for Ukraine. Now, nobody really knows, but here’s what I can say, at least in my view.

David Rubenstein (00:03:37):
I think the West probably underestimated Mr. Putin’s resilience. Probably people thought that the sanctions and all the equipment we were giving to the Ukrainians would, among other things, at least produce by this time a truce, if not enough peace agreement. That doesn’t appear to be the case. Most people now think this could go on for at least another six months, because as you suggest, Mr. Putin is now doing pretty well. He’s getting a billion dollars a day coming in, in oil and gas revenues. That’s in part because the prices, if not doubled, close to doubled from what it was before, so while he may not be selling as much, he’s selling it at much higher prices what he is selling.

David Rubenstein (00:04:12):
I would say the concern in Europe is whether the Germans are willing to, let’s say, have colder weather in their houses versus supporting the Ukrainians, because at some point, Germans might say, “Well, we like the Ukrainians, but we also like to be warm in the wintertime.” Nobody really knows what’s going to happen. I think it’d be embarrassing for the West if the Germans were to capitulate and basically say, “We’re not going to impose sanctions any longer, and we really need this energy.”

David Rubenstein (00:04:40):
I suspect that probably will not happen, but I do think the United States, among other countries, has to provide more energy into Germany in the form of liquified natural gas or other kinds of means to help heat the houses and other facilities in Germany. The bottom line is, it’s too early to really know, but I think that the cutting off parts of the Nord Stream pipeline is not going to be helpful to Germany, obviously, and I suspect it will probably reduce some of the revenues that would otherwise come into Russia.

Trey Lockerbie (00:05:10):
Yeah, it seems like there was some demand destruction happening with energy prices going as high as they did. A lot of the markets shorted it, and then this pipeline scenario happened, and now we get a lot of margin calls, and a whole mess is going on. Something around $1.5 trillion of margin calls is what we’re seeing, and I’m wanting to know what you think the impact of that might look like as far as getting these… maybe the money printers going again. You were just recently on CBC saying that Britain might be in a different position if Brexit hadn’t happened, so I’m curious to know what you mean by that and how that plays in here.

David Rubenstein (00:05:44):
What I meant by that is that the British economy is not in great shape. As we see, the pound is getting close to parody with the U.S. dollar, which is the first time that’s happened in quite some time. Nobody who voted for Brexit last time, apparently is willing to say that they made a mistake, and none of the people who were against Brexit are now changing their mind, generally. When I asked people repeatedly about what people have as their views on whether Brexit is a mistake or not, people say that if the vote were to occur again today, the vote would be roughly the same as it was.

David Rubenstein (00:06:14):
In other words, there was a small majority probably in favor of Brexit, but I don’t think that it’s actually helped the British economy as much as people thought. Many more complications than were realized, and I think the British economy has been hurt by Brexit, at least that’s my own view. In terms of the European economy, it’s probably in softer shape than the U.S. economy. The U.S. economy is actually growing. I think in the third quarter, the numbers are going to show positive growth compared to the first two quarters. I’m not clear that’s going to be the case in Europe. I think Europe is slower, based on the numbers that I’ve seen, than the United States, and I do think that the energy situation is hurting much more in Europe than it is in the United States, of course.

Trey Lockerbie (00:06:50):
Is the monetary debasement of any concern of yours, because as a result of the energy shortages, Germany just announced they’re planning to create €65 billion to fighting inflation? I’m just curious what knock-on effects of that are for all of these nations that are currently involved in the shortage.

David Rubenstein (00:07:08):
Well, for all of the nations that are facing an energy shortage, it’s going to cost them more money. They’re going to have to supplement the incomes of lower income individuals. It will no doubt devalue the currency a bit. The euro is also close to parody through the U.S. dollar, and therefore the euro has been knocked hard as well. Ironically, while the United States is not in the strongest economic position in the world, compared to Europe, we’re in pretty good shape. Compared to England, we’re in pretty good shape. As you know, when you increase interest rates as much as you do, and we are in the United States, it tends to increase the value of the dollar, so we’re now seeing an appreciation of the value of the dollar, which is obviously complicated. It doesn’t help with our exports, but it certainly helps when Americans go abroad and they want to buy things abroad.

Trey Lockerbie (00:07:50):
Going into crypto a little bit, Russia was just saying that they may or may not be accepting crypto for payments of their energy fairly soon, therefore sidestepping the U.S. monetary system we have currently, and the sanctions, I guess, we’ve been putting on them, that seemed to be ineffective. I’m curious, what would happen if Russia began pricing their energy in something like Bitcoin, or even just using the network to process payments?

David Rubenstein (00:08:15):
I think Russia is interested in having the most money that it possibly can come into its coffers. I think if they were to price their energy in Bitcoin or other cryptocurrencies, or even a basket of cryptocurrencies, I think they wouldn’t get exactly as much money as they would prefer. I suspect they’ll probably find some way to have something that’s dollar-based but maybe doesn’t pay homage to the dollar. I think basing all of… billions of dollars a day in energy in Bitcoin or crypto, would probably inflate the value of crypto and Bitcoin as people would try to buy it, and to be able to take advantage of its current usage and buying energy or paying for energy. I think it’s unlikely that that will happen. I can’t imagine billions, if not tens of billions of dollars of commerce every day in energy going into cryptocurrency format.

Trey Lockerbie (00:09:07):
I know that you don’t personally or directly invest in something like Bitcoin, but you have positions in crypto FinTech such as Paxos. Is your philosophy sort of the, during a gold rush sell shovels, or do you have fundamental concerns about the asset class because there’s a historical precedent of banning things like gold in the Roosevelt era?

David Rubenstein (00:09:28):
Well, remember, I’m not a young person. Younger people tend to be more adventure [inaudible 00:09:32]. The people that are buying cryptocurrencies, I suspect a large percentage of them are under the age of 30, if not under the age of 35. I doubt that the many people over the age of 70 are buying cryptocurrencies, because trends like this just don’t usually start with people in their sixties or seventies. It usually start with people younger. I would say that I have not been a big fan of trying to figure out which of the cryptocurrencies is the most likely one to do well.

David Rubenstein (00:09:57):
Clearly, had I bought Bitcoin when it was at 25 cents, as some people I’ve interviewed, I’d be happy, but I didn’t have that foresight. Now, what I think is the best thing for me is to find companies that are going to benefit if crypto takes off, in whichever currency takes off, or a basket takes off, but not try to pick one or two, as opposed to the whole panoply of currencies that are going to benefit from things like Paxos or other companies that engage in the use of blockchain technology.

Trey Lockerbie (00:10:29):
As a long time student of history, when you see what’s happening on the global stage right now, is there a particular time that it’s reminding you of that you could compare to what we’re experiencing today?

David Rubenstein (00:10:41):
Well, the most dangerous words are, in the investment language, it is said by Sir John Templeton, “This time is different.” What he meant by that is, if you say this time has never… We’ve never seen anything like this before, you’re probably wrong, because there’s always been something that’s probably been similar to this before. I can’t say it’s perfectly identical, but in the late 1970s, when I worked in the White House, we had inflation that was 15% or higher. We had a slow economic growth, we had high energy prices, and we had a bit of what we’re having now, and that was a different situation. The U.S. economy was much more insular then, it was much more unionized. It wasn’t as global economy, China was not a factor in the global economy, but I do think we’re seeing some elements that we’ve seen before, which is, say, high inflation, low growth, and disarray in the energy markets.

Trey Lockerbie (00:11:25):
I’m curious about that point there, because when you were working in the Carter administration, I’ve heard you’d muse that the inflation was, at your fault, so to speak, and I’m paraphrasing a little bit, I know it’s a joke, but what did you mean by that exactly, and how does it look to… compared to today?

David Rubenstein (00:11:39):
Well, what I meant was, obviously, I wasn’t completely responsible for inflation being high, and actually, and inflation was high in the Ford administration before Carter came in. In fact, it was Ford that actually began the WIN program, Whip Inflation Now, there were puns in those days, but Carter didn’t really invent inflation, but it accelerated during the Carter administration, and for a lot of reasons we had to impose very high interest rates. As a result, the economy went into a recession more or less towards the end of the Carter administration and beginning of the Reagan administration. What I mean when I say that is just, I was a junior White House aid, so it’s obviously a bit of a joke to say a junior White House aid is responsible for inflation being at 15%, but it’s like kind of a self-deprecating bit of humor, I guess. Maybe not so self-deprecating in some cases, but anyway.

Trey Lockerbie (00:12:26):
I was just curious about the context happening there. I am curious about your opinions. Paul Volker jacking up interest rates when he did. I mean, our debt was so much less back then. I think the debt to GDP ratio was in the 30s, now we’re in the 130s, right? We’ve got 30 trillion in debt at the moment, so do you think that tool set is still applicable? That raising interest rates like they’re trying to do now?

David Rubenstein (00:12:47):
It used to be the case that the Federal Reserve took actions at its FOMC meetings, it’s Federal Open Market Committee meetings, and it didn’t tell you what it did. You had to figure it out by seeing what was going on in the market. They didn’t have press conferences explaining it, and they didn’t tip you off on what they were going to do in the future. For example, Paul Volker, one weekend, increased interest rates at a federal discount rate by 200 basis points, and he didn’t tell anybody he was going to do that, and they didn’t really explain it that much afterwards. Today, the Federal Reserve, in part because Jay Powell is much better at this than other people, is willing to say, “Here’s what we think we’re going to do. Here’s how we might change our mind, but here’s what we think we’re going to do.” Then, after they do it, they explain it right away.

David Rubenstein (00:13:28):
That’s designed to give you much more transparency about what the federal government’s doing. Paul Volker was unafraid of any political pushback or anything like that, and he knew what he had to do, and he did it, and Carter more or less wasn’t thrilled with it, but he supported it because he thought that was the right thing to do economically.

Trey Lockerbie (00:13:45):
In your new book, which we’re going to talk a lot about now, it’s called How to Invest. I have it right here. I really enjoyed it. It includes this interview with John Paulson in which he says that if he finds a good opportunity, he would contact you. In addition, he stated that there could be high returns in the volatility markets surrounding bonds if inflation doesn’t subside. This is about a year ago. My question is, has he called you?

David Rubenstein (00:14:10):
I’ve seen him many times since then, but John, as I think he said in the interview, doesn’t like to give investment tips because basically, that’s not his business. It used to be that he managed money for third parties, now he’s only managing his own money. I think when you’re in the investment tip business of, say, legal information that you’re giving out, you’re really telling somebody something you think today is true, but then if somebody acts on it and you don’t follow up with him and tell him you changed your mind, the tip could not be that productive. John, I see him from time to time, and I’m pretty friendly with him, but I haven’t gotten any pro tips from him about what he’s doing, but I think he doesn’t probably traffic in trying to persuade people like me what to do. He does it now with his own money and doesn’t feel a need to tell anybody else what he is doing.

Trey Lockerbie (00:14:55):
Certainly a great interview in the book. With rising interest rates and the tightening fed policies, VCs believe that this is basically, I’m hearing, the worst time ever to raise capital, both for VCs and therefore entrepreneurs. Considering the current uncertainty, do you find that Carlyle, and maybe even your family office, are less likely to make deals?

David Rubenstein (00:15:16):
Well, I wouldn’t say less likely. Deals are getting done, Carlyle’s announcing deals all the time, my family office is, but there’s no doubt that there’s a bigger gap between seller expectations and prices that buyers are willing to pay, than it was the case two years ago. Or even a year ago. Before we had the meltdown of the markets, to some extent, in May of 2022 when there was a tech meltdown and the crypto meltdown had began going into June and July and so forth, sellers were willing to sell companies and they were expecting to get in EBITDA multiples of 13 or 14 times in a buyout context. Venture people were pricing things very, very highly on companies that had no revenue. They had basically nothing except a good idea and a good plan and maybe a good CEO. Those days were behind us for the time being.

David Rubenstein (00:16:02):
Buyouts are being done at, now, to the extent they’re getting done, at a, I’d say, high single digit multiple, EBITDA multiple. Maybe low double digit in some cases for very good companies. The growth capital market and the venture capital market are not frozen, but things have to really have revenue and earnings, and I think people are willing to pass on deals that they would’ve done a year ago, or even nine months ago.

David Rubenstein (00:16:25):
A good example is CARNA. CARNA is a case where my family office was offered a chance to invest in the company at a valuation of… I forget whether it was maybe $18 billion, or maybe even higher than that, and I was told that in order to go into the deal, you had to put in at least a $100 million of your own money in order to get the CEO to be willing to talk to you. If you’re willing to put in less than 100 million, they wouldn’t, at the time, even talk to you. Now, as you know, CARNA has gone down to roughly a $6 billion valuation and they scrambled to raise money in the latest round. The world’s changed, and it probably will continue changing for a while.

Trey Lockerbie (00:17:01):
Thinking on that for a moment, I’m curious, what areas of investment do you focus on through your family office and the VC as well?

David Rubenstein (00:17:09):
Well, in my family office I’m not directly involved in the investments, because I have some legal constraints in what I can do. Basically, I’ve given my family office money and the professionals there make the decisions, but what they’re doing is a lot in the healthcare area. Healthcare is now 21, 22% of the GDP of the United States compared to seven or 8% when I work in the White House in the late ’70s. Financial services, FinTech kind of things, which include blockchain and crypto related things are something we’re actively looking at as well.

David Rubenstein (00:17:39):
I would say also things in some novel areas like CRISPR technology, quantum computing technology, things that are probably five years down the road before you’re likely to see some real revenue and earnings in some of these younger companies. Carlyle tends to be more of a buyout firm in the United States, and we don’t tend to do as many early stage things. I’ve also done in the, what I call platform deals, which is to say somebody will come along and say, “Back me to build a company in this area, or back me to build several companies in this area,” and I’ve done that in a number of cases and they’ve worked out reasonably well.

Trey Lockerbie (00:18:15):
On platform deals, you mentioned something recently about sports teams coming together and going public in… on platform structure. How far away is that? Do you see discussions like that happening currently?

David Rubenstein (00:18:27):
I do believe that will happen in the not too distant future. I think what you’re going to see is baseball teams buying basketball teams buying hockey teams buying British soccer teams and ultimately, you’ll have a diversified revenue stream, which is very appealing to publicly traded investors. I suspect you’ll be seeing these companies also have public pension funds, United States and even sovereign wealth funds investing in some of these areas, because below a certain level I suspect the leagues will let them do that. I think you’re going to see more money coming into this area, and that’s in part because sports is extremely popular right now.

David Rubenstein (00:19:03):
If you take a look at the top 50 shows in television last year, I think about 45 of them where sports shows of one type or another. It’s just, people really like live entertainment, and what’s more live than sports? Because betting has also become a phenomenon, more and more people are involved with betting and other kinds of things associated with sports, I think it’s made it even more popular.

Trey Lockerbie (00:19:24):
You mentioned healthcare. I’m curious about your outlook for that, because when you have people, friends of yours even, Warren Buffet, Jamie Diamond, Jeff Bezos, retreating away… Coming together saying, “Hey, we’re going to crack this code,” and now retreating away, what does that say for the future of the industry and what makes you so bullish on your impact?

David Rubenstein (00:19:43):
Well, when you say retreating away, they tried, as you say, to start a company. I think it was Amazon, JP Morgan and Berkshire Hathaway. They failed in their judgment to be able to create a way that was going to cut costs and provide better healthcare services, but that’s not to say that their employees don’t have healthcare services. They just have it at more expensive prices than maybe these companies thought would be the case. Right now, what you find as a general rule of thumb anywhere in the world, when people begin to get wealthy, they say, “I’m happier wealthy, generally, than not being wealthy.” And, “I’m happier, I want to live longer, and when I want to live longer, I need to be healthier. How do I live healthier? Well, I exercise more. I go to the doctor’s more. I eat healthier food.”

David Rubenstein (00:20:24):
I think there’s a trend in the United States and around the world to live longer and be healthier while you live longer. Therefore, that’s going to produce more money going into the medical section of our economy, as people think that doctors or other medical professionals can help them live longer. Like in your case, you look like a very young guy, and the last thing you’re probably worried about is how long you’re going to live, but when people get to be in their fifties, sixties and seventies, they think about it a lot more and they’re willing to spend a lot of money to try to live longer.

Trey Lockerbie (00:20:52):
Going back to fundraising, does the current environment remind you at all of when you were just starting Carlyle, and if so, is there any advice you’d give to people out there right now trying to fundraise?

David Rubenstein (00:21:02):
Fundraising is very difficult at the moment, because what happened in last year is that people were… Well, let me step back. It used to be that, for the buyout funds and maybe venture funds, it was like a presidential campaign. You were really, really nice to people for every four year period of time. You go out, you raise money and you were… you talk your voters and then you get into office, or you get the money, and then four years later you’re ready for a new fund or you’re ready for a new election. What happened is, because money was so readily available and so many deals seemed attractive to those people who were having the money, they’ve invested more quickly than people… than they had historically done. As a result, they had to go back and raise more money more rapidly, so instead of waiting for four years to come back, they’d come back in three years, or two years, or year and a half.

David Rubenstein (00:21:46):
As a result, the people who liked the investment performance of those funds had to re-up in those funds if they wanted to stay able to invest with these people. That meant there’s less and less money available to people that are coming back every four years, because people are coming back more readily. Then there’s a denominator effect, which is to say that, and when the stock market began its meltdown, it’s now down with 20 some percent from the peak, the denominator produced less money on the behalf of that… of the sovereign wealth funds and the pension funds, so they had less money to give out. People are coming back more frequently, there’s less money to give out, and so it makes it harder to raise money than it was before. Therefore, people really obsessed over going into top quartile funds or funds that really could dramatically beat the market averages. It’s become much tougher to raise money, for those reasons.

Trey Lockerbie (00:22:31):
You seem to have this natural superpower when it comes to fundraising, and when you guys were starting Carlyle you were really starting from scratch, and you’ve now gone on to build this, pushing $400 billion behemoth, and your first check was for $5 million into the fund in 1987, which is roughly $13 million or so in today’s dollars. Who wrote the first check into Carlyle, and what did it feel like to get the first funds into the firm for you?

David Rubenstein (00:22:57):
When we started the firm we had nothing, of course, until we got four investors that put up a total of $5 million, and then we had to raise money deal by deal. Which is complicated, because it’s hard to tell somebody you’re going to give them money and invest in a company when you got to go out and raise the money, so it was a little complicated. Obviously, when you build anything from scratch, it makes you feel good, and anytime you get something done what people tell you it couldn’t be done, and everybody told you you can’t build a private equity firm in a city like Washington, DC., particularly my mother told me that, she said it was ridiculous. When you can prove that people were definitely wrong about something like that, I mean, you can actually make it successful and it makes you feel good, but if you sit on your laurels and say, “Look how great I am. Look what I did and nobody else did,” then you’re going to be overtaken by other people.

Trey Lockerbie (00:23:40):
I’m curious, I think you just answered it there perhaps, but when you were raising funds for Carlyle in the early days, given that you had just come off of being deputy domestic policy advisor for Carter, did it give you any advantages, actually being in Washington, that maybe people didn’t realize at the time?

David Rubenstein (00:23:57):
Well, there’s an old statement that Everett Dirksen used to give. He was the senate minority leader in the 1960s, Republican leader, and he said, “When you’re getting kicked out of town, get out in front and pretend you’re leading a parade.” What does that mean? That means take advantage of the situation you find yourself in. I don’t have a lot of experience, out of my partners that have a lot of experience, but we’re living in Washington, so if we move to New York to set up a private equity firm, people would laugh at us. Here, we could see… people might not laugh so much at the beginning, but we could say to people around the world, “We understand companies heavily affected by the federal government.”

David Rubenstein (00:24:30):
Now obviously, a lot of companies are heavily affected by the federal government, but things like aerospace defense or healthcare or telecommunications are dramatically affected by the federal government. The spending in that area comes from federal spending, so by being able to be in Washington, we could explain what the government was doing to our investors maybe more so than people in New York could do.

Trey Lockerbie (00:24:49):
You’ve had an interest in politics from a very early age. What was the initial spark that led you to wanting to work in the White House?

David Rubenstein (00:24:58):
Well, when I was a young boy, I didn’t have any money. My parents didn’t have any money, as a blue-collar family, but I admired somebody who was running for president named John Kennedy. When he gave his famous inaugural address on November 20th, 1961, I was inspired like other people to want to get into government and get into public service. I realized at the time that I didn’t have the looks, the charm, the money, the power to get on… be an office holder, so I thought maybe I would try to be an advisor to an office holder.

David Rubenstein (00:25:26):
I looked up less to John Kennedy than I did to his advisor, Ted Sorenson, who was the brilliant speech writer that helped to write profiles, encouraged the inaugural address, so many great speeches that President Kennedy gave. I did go to practice law at his firm after I graduated from law school, and I guess it was a feeling that I wasn’t really going to be a candidate, but I could be an advisor, and that would be something that would be very appealing to me. It wasn’t making money. I had no interest in money at the time.

Trey Lockerbie (00:25:51):
I’ve kind of experienced something like this in a different capacity, so I’m curious, if achieving this aspirational goal like you did in your late twenties, and being six feet from stardom, if you will, from the president of the United States, did it give you a new perspective on what working in politics really meant, and did that ultimately lead you to explore private equity instead?

David Rubenstein (00:26:12):
Well, when you work in the White House, you see the pluses and minuses of our system of government. You obviously realize that a lot of things are done not on the merits, but are done on the politics of it. You also recognize that it’s very difficult to get things done. It’s much easier to get something done by starting a company, than getting something done in passing a bill through Congress, but I was forced to leave. Had Carter been reelected and I had become, let’s say, a senior domestic advisor to Carter, I probably would’ve stayed for another four years and then probably would’ve gone into a Washington law firm and so forth, but that choice wasn’t available to me. We lost when I was only 31 years old. Nobody was offering me a partnership at a law firm, so I had to go back and remake myself.

David Rubenstein (00:26:50):
As I did it as a mid-level lawyer in a midsize firm, I didn’t find it that appealing and that interesting, and so I ultimately decided to find something else, and in the end, it seemed to be something novel and starting a business was more appealing. I read around that time that entrepreneurs started their first companies between the ages of 28 and 37, and if by the time of 37 you haven’t started a company, you’re probably not going to be an entrepreneur or ever build a company. I read that when I was 37, so I said, “I better do something now,” and I didn’t think that the political world was so wonderful that if I went back into another White House, I’d be all that much happier than I had been just working in one White House.

Trey Lockerbie (00:27:27):
Have you thought about running for president along the way? If not, I’m curious about the incentives involved there, because you’re a master at incentives, and what is driving people or lack of drive for people to… like yourself to become president?

David Rubenstein (00:27:41):
Clearly, when you’re in the political world, as many people have been who’ve run for office, the top of the pile is being president of the United States. It is said that every senator who looks in the mirror sees the president of United States, and that’s probably true of every governor who looks in the mirror. In my case I, now, in a situation where I’ve made a lot of money, people who’ve made a lot of money, will be heavily criticized. You always have to worry about your children. My children have their own independent lives now, but I don’t want them to be disrupted by something that somebody attacking me for something. I’ve been attacked for some things that seemed crazy to me recently, and I’m not even a candidate for anything. No, I think also I’m probably too young to be president. I’m only 73, and I’m just not sure anybody with that inexperience is really ready to be president yet.

Trey Lockerbie (00:28:25):
I love it. Carlyle now has nearly 1800 employees. I think it’s north actually, of 1850 at the moment. It’s across 26 offices on six different continents. Considering that Carlyle was one of only a few hundred firms, when you were just starting out in the late ’80s, early ’90s, what drove you specifically to want to globalize the company so early on?

David Rubenstein (00:28:48):
Well, maybe it was inexperience and naivete. I had the view that T. Rowe Price, which was one of our early investors, had a global… had brand in the United States, and they had multiple funds. If you invested with T. Rowe Price, or with Fidelity, or Vanguard, you could go into product A or product B and product C. At that time in the private equity world, the buyout firms only had one buyout fund, and they did that and they went out and raised it every four years, as I’ve said. I said, “Why can’t the private equity people do the same thing that the mutual fund people do? Have a buyout fund, a growth capital fund, a venture fund, a real estate fund and so forth, and take advantage of their brand name?” It didn’t seem like it was that brilliant of an idea, but no one else was quite doing it then.

David Rubenstein (00:29:27):
Then I said, “Why not do the same thing around the world and globalize it?” I came up with the idea of institutionalizing Carlyle by having multiple funds, and then centralizing fundraising, accounting tax and so forth, and then globalizing it. Obviously, a lot of other firms have done the same thing. Blackstone, Apollo, KKR are on the same path, and in some cases have done it much better than we have done it, but I guess it was just a feeling that we should keep growing and we should do other things. I can’t say that I had an idea that popped in my head one day and said, “I’m going to change the face of the private equity world by doing this.” It evolved.

Trey Lockerbie (00:30:00):
You mentioned just a minute ago about being attacked. There was this New York Times article that was reporting on Carlyle, I would say, in somewhat of an unfavorable light. It was talking about the departure of Kewsong Lee, and the article’s claim is that private equity firms like Carlyle are still functioning as a quote/unquote “first generation firm.” What was your take on that angle, and what are your thoughts on the article as a whole?

David Rubenstein (00:30:26):
All the major private equity firms have now transitioned to a next generation of management. Carlyle may have been the first to do that in a very formalized way. We had some bumps in the road, and we’re now… it’ll continue to transition. There’ll be new leadership in the not too distant future, but I would say the person we had was a very talented person. Brilliant, and a great investor, but for a number of reasons we decided that we’re going to make a change, and so I think the firm is in excellent shape. Our investment returns are doing quite well. I think the firm is so well-known and so institutionalized and has so many dedicated investors and professionals, that I don’t think there’s going to be any blip in our performance.

Trey Lockerbie (00:31:05):
You wrote a book actually, on American leaders. What leadership traits will you be looking for when Carlyle starts looking for this… the new hire for the CEO?

David Rubenstein (00:31:14):
Well, I said in the book that leaders tend to have these traits. They tend to be hardworking. Generally probably come from middle class to lower middle class blue-collar backgrounds. They tend to read a great deal. They tend to be willing to take the blame for mistakes. They tend to share credit. They know how to rise to the occasion when something bad happens. They really do things that they otherwise might not have been thought possible to do. We would never have heard of Abraham Lincoln if there hadn’t been a Civil War. Probably been another mundane president, but he rose to the occasion. Also, I sense that there’s certain humility in great leaders. Obviously, there are leaders who are not that humble, but the ones I most admire have a fair amount of humility. The search committee at Carlyle will be, and which the search committee of the board is in charge of that, and we expect to resolve that in the not too distant future.

Trey Lockerbie (00:32:01):
Based on the private equity changes since the founding of Carlyle, what’s your current outlook for the future of the industry?

David Rubenstein (00:32:09):
Well, for the last 40 years, 30 years, 20 years, 10 years, people have been saying there’s too much money in private equity. The returns can’t hold up. The industry’s going to implode. They’ve been wrong every time. I think because of the economic incentives in private equity, and because of the talented people that tends to draw, I think it’s likely that the private equity performance will outperform public market averages over extended period of time. As long as we outperform the public market, I think it’s likely the industry will continue to grow. Whether it’s at the same exponential rate we’ve seen from 1980 to now, I don’t know, but probably it’ll slow down, but still, I think it’s going to be a fair amount of growth.

Trey Lockerbie (00:32:46):
There’s a inspirational stat in the book about how half of the Carlyle executives are female, and you highlight one of them in the book. I’d like to understand what type of impact Sandra Horbach had on the company.

David Rubenstein (00:32:59):
For those who don’t know, Sandra Horbach is a graduate of Wellesley and Stanford Business School, spent two years in Morgan Stanley in between, and then she joined a firm called Forstmann Little, which was a leading, but small, buyout firm in the 1980s when buyout firms were tiny little organizations. She became a star there, and then when the founder of that firm decided to slow down the growth of the firm and he would… had some medical problems, and ultimately died from a brain tumor, she looked around at other opportunities.

David Rubenstein (00:33:25):
Many firms were interested in her. We were fortunate at Carlyle to get her to join our firm. She’s now the co-head of our US Buyout effort, and I’d say she’s the most senior woman in the entire buyout world. More experience in doing buyout than any other woman. The firm takes a lot of pride in having very senior people who are women, or people of color, in senior positions of the firm, and that’s just part of the culture of the firm.

Trey Lockerbie (00:33:48):
In your new book you interview 23 different masters, and you have this very vast network and long career. How long was the original list, and what factors led to the inclusion of the investors you feature in the book?

David Rubenstein (00:34:02):
Well, I had probably 50 people that I was targeting, and some people said, “I don’t want to do an interview,” and sometimes people were people that I couldn’t get this thing scheduled, or along my schedule and their schedule was complicated, and sometimes I thought I needed to have more diversity than just having a whole bunch of white males. Some of the people I couldn’t put in the book, so I put in the audio version of the book. In other words, there’s an audio version of the book, and the publisher didn’t want me to have the book more than, I think, whatever it is, 400 pages or something. I have about, I think, five interviews that are just the audio version, and the audio version of the book is the actual interviews. It’s not somebody reading a transcript, it’s the actual interview that occurred between me and the other person.

David Rubenstein (00:34:40):
What I was looking to do is to have different sectors. I could have had all venture firm people are all buyout firm people, but I was trying to have something in all the major investment categories. I called it mainstream, like stocks and bonds. Or alternatives, buyouts, growth capital, venture capital. Or what I call cutting edge crypto, or ESG, or specs and things like that. I could easily have filled a book with another 20 some people who are just as talented, but just couldn’t put everybody in a book.

Trey Lockerbie (00:35:08):
The book doesn’t so much focus on practical takeaways as much as more philosophical takes, I would think. You mentioned there’s a lot of different types of investors in the book. You’re not really going into discount cash flow models, or the math of investments, necessarily. What were you finding when you were interviewing all of these investors across all of these different crafts, and what were some of the common traits?

David Rubenstein (00:35:32):
Well, the common traits were that they tended to come from, I would say, middle class families, by and large. Maybe some blue-collar. They tended to be pretty well-educated. College degrees and graduate degrees. They tended to be pretty good with math. They tended to be willing to share credit. They tended to be willing to take the blame. They tended to be willing to go on, pass the deal that might go south and just get rid of it out of their mind and go to the next thing. In other words, cut their losses and go onto the next thing.

David Rubenstein (00:35:59):
They tended to be willing to go against conventional wisdom. They tend to have a strong enough character to say, “Well, everybody says you can’t do that. I’m going to do that.” A lot of them benefited from being willing to go against conventional wisdom. They also tend to be fairly philanthropic. All of them, pretty much, not everyone, but a lot of them have made a lot of money, and they’re in the process of giving a large amount of that away. That’s what they had… tend to have in common.

Trey Lockerbie (00:36:21):
Is there a particular interviewee who’s made a huge lasting impression on you? Both maybe for the book, but also for the TV shows that… where you’ve interviewed people as well?

David Rubenstein (00:36:31):
I know a lot of these people, and so I’ve known a lot of them for a long time. Generally, when you meet somebody for the first time, you might be wowed by them or unimpressed by them, depending on the situation, but if I… you’ve known these people for a while, it tends not to have such a strong impact. That said, I had never really spent that much time with Stan Druckenmiller. We’re on an investment committee together, and I thought his interview was extremely interesting, and his philosophy of how he looks at things, and also how he came into the business, which was not something he really intended to do.

David Rubenstein (00:37:01):
I think talking about Michael Moritz, a brilliant person who helped build Sequoia into probably the leading venture firm in the world, and he really came from a journalist background, which was quite interesting. I think a lot of people in the book have immigrant backgrounds, and as you know, immigrants tend to add a lot to our country, and a lot of the people who are in this book are people who are immigrants, including [inaudible 00:37:21], who was the leading infrastructure investor in the United States.

Trey Lockerbie (00:37:26):
I appreciated that you shined light on Bruce Karsh, the CIO of Oak Tree. We’ve had Howard on this show multiple times, and I’ve always enjoyed talking with him, but I learned a lot from Bruce’s interview. During the conversation. He made this kind of eerie statement, I would say, about distressed debt markets becoming more attractive if interest rates increase, economic growth slows, and easy money policies are reversed. Is now a good time to maybe get some exposure to distressed debt?

David Rubenstein (00:37:54):
Well, I think it’s probably a better time than it’s been the last couple of years. Bruce, for those who don’t know, was one of the co-founders of Oak Tree. He’s Mr. Inside. Howard’s more Mr. Outside. Bruce had never really done an interview, but I’d served with him for about a decade on the Duke University board, and we both went to college there. He was willing to do the interview, and people who had never really seen him give an interview before were quite interested to see it. I would say distress debt is probably coming back into favor in the next year or two or three, because obviously some tech deals haven’t worked out. There’s more distressed debt now, or debt trading below par, than there’s been for many years, so I suspect it is coming back, in terms of favor.

Trey Lockerbie (00:38:33):
Based on the learnings from these interviews, what advice would you give retail investors who may be aspiring to manage their own savings outside of their normal day jobs?

David Rubenstein (00:38:42):
Well, the book is designed for people who are not professional investors. People that might want to be professional investors, people that might want to do deals themselves, or really, as you suggest, people are going to buy funds and go into funds. For people who are going to go into funds, my advice was that you should make sure you read about what you’re going to do, know what you’re doing, learn how to calculate whether the… what the fees are, make sure that you know who other investors are in it. My most important advice is, don’t put all your eggs in one basket, which is not novel, but also make sure you really know what you’re doing, and put a lot of time and attention into the effort. Don’t just do it because somebody told you it’s a good idea, or because you have a whim one night. Really read up, make sure you know what you’re doing, and look at the track record of the people you’re investing with.

Trey Lockerbie (00:39:27):
You mentioned a lot of these investors shared higher education, and I’m curious about that, and in education in general. It was just announced actually, that Gautam Adani, who’s a college dropout, just became the third wealthiest man in the world. Bill Gates obviously dropped out of Harvard. There’s a number of others. Zuckerberg, et cetera. I’m curious, when you’re hiring or funding a certain venture, how much do you weigh in higher education?

David Rubenstein (00:39:52):
Well, the people you just cited, the three individuals, are all people that built companies and made their fortunes that way, as opposed to people that made it as investors. [inaudible 00:40:01] investors. Generally, investors are people that are pretty well-educated and then did get their degrees. Now of course, there are traders on Wall Street who are famously probably maybe not graduate degree holders and so forth, or maybe not even college degree holders, but generally people that are investing tend to have a pretty good academic pedigree, and tend to value academic pedigrees. I wouldn’t say it’s essential, but just like anything in life you can say, how did Willie Mays become Willie Mays? Or Mickey Mantle become Mickey Mantle? Neither of whom had college degrees, by the way. Sometimes the circumstances, in fact, come together and they produce somebody that’s a rare talent, and it might be the case that you are a rare talent, but I think it’s better to go with the odds.

David Rubenstein (00:40:43):
For example, when young people ask me should they get an MBA or not, if you’re interested in business, I say, “Well, it depends on how good you are at what you’re doing now. You may be one of the two or three or 4% of people that don’t need an MBA, and that just have such a knack for what you’re doing, that it’s an opportunity cost, going to business school, that’s not worth it.” For most people, and my three children, for example, they all have MBAs from good business schools. They, I think, correctly concluded that they were not so talented that without an MBA they could do what… anything in business world that they would like to do, and then an MBA really helped them. I generally think that’s true for most people.

Trey Lockerbie (00:41:17):
Given the increase in tuition costs for a lot of these higher educational institutions, there’s a lot of skepticism around the value, the ROI, of that. You serve on a number of boards for these institutions, Duke, Harvard, and others, what has been of your inside scoop of how universities continue to add value? Are you, I guess, bullish on their impact?

David Rubenstein (00:41:39):
I don’t think you can spend too much money on education. In the end, as a general rule of thumb, people who are highly educated tend to be more professionally successful, and to lead more exciting lives. That’s another point that I also think that people overlook. You can’t look at just how much earning power you might have if you go to college or graduate school, you should view it that you’re getting an education which makes you a more valuable member of society, and will make life more interesting for you. You can’t just look at the dollar and cents and what it would cost to go to Harvard Business School versus going to getting a plumbing degree or electrician degree, because that’s the false comparison.

David Rubenstein (00:42:16):
If you go to a great school and you’re going to hang out with great people who are going to be successful in their lives and are going to expose you to new ideas, that’s worth a lot of money, and you can’t just measure your success by how much money you might make in your career. It’s the exposure to ideas that I think makes people a better humans than would otherwise be. That’s why I encourage people to get as much education as they really can.

Trey Lockerbie (00:42:38):
Beyond your business success, I want to talk about your media success as well, because you’ve had this prolific career as an author now, but also as a TV personality. Are there any heroes in media that you look up to, or who you try and emulate?

David Rubenstein (00:42:53):
Well, I’m not really a media hero. What I have is, I do some interviews and they’re picked up on Bloomberg and PBS and some other things that pick them up, let’s say like YouTube. I basically stumbled into the interview business. I was elected the president of the Economic Club of Washington, supposed to get business people to come in to speak. I found that they were kind of boring, and I decided that just on a whim I would interview them. Maybe make it a little more humorous or… if I could, and people liked it. Bloomberg picked it up, and people seem to like the way I do it, and I do. I just did one this morning of Jake Sullivan. I will probably do a few more soon of different kinds of people. Some athletes I’ve been talking to recently, and others. I try to do it by making it interesting and entertaining with some humor in it, but I can’t say… I don’t make money by doing it, I just do it as a kind of a hobby.

Trey Lockerbie (00:43:40):
You do incorporate a substantial amount of humor, and also humility, in the appearances and interviews. Where does your sense of humor come from?

David Rubenstein (00:43:48):
Well, if you go back and look at people who are humorous and have a sense of humor, they’re often people that come from more modest backgrounds. They’re people that can make fun of themselves, or make fun of society, [inaudible 00:44:00]. Humor is, to some extent, a defense mechanism, and maybe by growing up, I didn’t think I was handsome, smart, talented, a great athlete or whatever it might be, and so I developed that defense mechanism of deflecting questions or dealing with things by developing that sense of humor. I’ve been surprised, as I’ve been an interviewer, that people notice it a bit, because it’s always been part of my personality, but I guess now people are watching it more.

David Rubenstein (00:44:23):
I also find that self-deprecating humor generally works the best, and making fun of other people, maybe it’s funny in some cases, that’s not my style. My style is generally to be more self-deprecating, and I have a lot of things I can be self-deprecating about because I have a lot of things that I haven’t done that well. Generally, I think when you’re self-deprecating it takes a certain amount of security in your personal being, and I have a fair amount of that now. Maybe when I was younger I didn’t have as much, but now I can make fun of myself and don’t think it’s going to be the end of the earth, or feel like I have to go hide away because I have certain lacking of talents or so forth.

Trey Lockerbie (00:45:00):
It’s always intimidating to interview folks like you, because you’re not only a titan in your field, but you’re also a great interviewer. Are there skills, or is there somewhat of a craft to interviewing, much there is to investing, that you’ve discovered along the way?

David Rubenstein (00:45:16):
Yeah, I’ve thought about writing a book on how to interview. I have a style. It’s not perfect, but it’s a style I use, but I don’t know how big an audience there is. When you think about it-

Trey Lockerbie (00:45:23):
I’d read it.

David Rubenstein (00:45:25):[inaudible 00:45:25]. There should be a bumper sticker that says, “Honk if you don’t have your own podcast,” because today, everybody’s an interviewer. As you may have heard me say, it’s an interesting format. It probably began as a form of entertainment in the late 1950s, early 1950s on The Tonight Show, and then began… and then talk show in the afternoons with Oprah and so forth, but we don’t have interviews of people 100 years ago, 200 years ago, 300 years ago. We don’t have any interview transcripts of Abraham Lincoln, George Washington, Charlemagne, Shakespeare. It’d be wonderful if we had those interviews, so we could see what they were like in that interview context. People seem to like interviews if they’re done in a lively way with some humor, they’re not too tedious, they’re not too boring in some ways, and people seem to like it, in part because you can read the interview and come back to it.

David Rubenstein (00:46:09):
You don’t have to start at the beginning. You could start in the middle, you could start at the end, and so people seem to be interested in it. I’m surprised at how many people actually watch my interviews, and come up around the world when I go around the world and people come up to me and they like the interviews. Many people think I do nothing else in… with my life but interview people. They think I’m a full-time interviewer, and I try to say, “Well, I do have another life. This is not my whole life.” Anyway, the power of media is staggering. Like on your own podcast, no doubt, your people come up to you from time to time and they ask you questions, and they… you’re probably surprised at how many people listen to what you’re saying, or listen to people you’re interviewing, and the power of media is just incredible.

Trey Lockerbie (00:46:46):
Well, I hope you do write that book. I’m curious what prompted you to begin writing books at the age of 70.

David Rubenstein (00:46:54):
Yes, I’m interested myself, and I’m thinking, “Why is it that so many people started writing books in their twenties, thirties, forties, fifties, sixties?” I guess it was, I didn’t really think I had much to say that people would be interested in. Probably wasn’t secure enough to think that one of my ideas would be useful to people. I just began doing a lot of interviews. I thought I could do a backdoor way into book writing by taking my interviews, editing them down and then summarizing a bit. It’s a different kind of style than you normally see, and I thought I could do it differently than other people would do it. I tried it, and the first one worked, and the second one and third one. Now it’s the fourth one. I enjoy it, but I’m racing to get more done, because I know at some point my brain will collapse and I won’t be able to do this, and I… When you reach your seventies, you know that you’re living on borrowed time, to some extent.

Trey Lockerbie (00:47:41):
I’d like to shift gears and talk a little bit about your philanthropy, because you’ve done a considerable amount of philanthropy. You’re one of the original signers of the Giving Pledge. What are some of your core principles when you’re determining a philanthropic contribution?

David Rubenstein (00:47:56):
I don’t have a staff because I don’t really want my staff to come to me with ideas and I have to say no and make them feel bad, and so forth. 95% of what I do is an idea that I might have had. Now, most people and I’m no different than others, like their own ideas better than they like other people’s ideas, so I… Most of the stuff is something I thought up and I can convince somebody that… to maybe take my money. I have four principles, they’re not brilliant, but they are, one, start something that otherwise wouldn’t get started. Two, finish something that otherwise wouldn’t get finished. Three, have an intellectual interest in it such that I’ll be involved with more than just writing a check, so I’ll go on the board or I’ll spend time on it. And four, and maybe most importantly, I’d like to see some progress in my lifetime.

David Rubenstein (00:48:36):
There are many projects that people come to me with where it’s going to take 50 years or 100 years to see any progress, and that might be nice, but I just prefer to see something happen a little bit sooner than that. Those are my four guiding principles, and generally I tend to do things in subject areas I’m interested in. Educating people about American history. What I’ve called patriotic philanthropy, buying historic documents or fixing historic buildings is one area that I’m probably known for, but most of my money probably goes to higher education and medical research, actually.

Trey Lockerbie (00:49:07):
On the historical documents side, you spent 25 million on the copy of the Magna Carta. Why was that document, in particular, of importance for you?

David Rubenstein (00:49:16):
Well, there’s 17 extant copies of the Magna Carta. This was the only one in private hands, and therefore the only chance any citizen could have the buy a Magna Carta. In this case, it was owned by Ross Perot. He was selling it and using the proceeds to give to medical relief for Iraqi veterans. I wanted to keep it in the United States. I would talk to the curator who was selling it the next day in… at Sotheby’s, and they said that likely buyers were three people. One was from Russia, one was from Saudi Arabia and one was from South Africa. All countries that are not ones that I would say it would be a tragedy if somebody in that country owned the Magna Carta, but the Magna Carta was the inspiration for the Declaration of Independence.

David Rubenstein (00:49:57):
The Magna Carta has actually had more impact on this country than it did actually in England. In fact, when our charters were drawn up, or the charters were drawn up in England to create colonies in this country, the people drafting the charters tend to be legal scholars. They also tended to put in there that you’ll have the rights of Englishmen, which is to say the rights of the Magna Carta. It was an inspiration for people in this country, and therefore I thought it was important to keep at least one copy in this country.

Trey Lockerbie (00:50:21):
So far, what contribution has given you the most satisfaction or pride?

David Rubenstein (00:50:29):
I’m not sure. Scholarships, generally. I mean, I give scholarships away to lots of people in universities I’ve been associated with, or I have a program to give scholarships to the best 50 high school students each year in the DC public school system. When you can see people who could go to college or afford to go to college because of what you’ve done, that gives you a lot of pride. I am surprised at how many people come up to me and thank me for doing what I call patriotic philanthropy. Fixing the Washington Monument, Lincoln Memorial and so forth. I guess it’s because not that many people are doing that.

David Rubenstein (00:51:01):
A lot of people give money, as I do, to medical research or to cultural institutions, or to education. I do all of that, but not as many people are doing things like I’m doing in the patriotic philanthropy area, and so it tends to get more attention. More than it probably deserve. When people come up to you and say, “Well, you’re a great American, you’re doing something to help the country,” obviously that makes you feel good. When my mother was alive and somebody would come up to me and say, “Your son is doing something to help the country,” obviously that makes you feel good, because your mother’s there.

Trey Lockerbie (00:51:29):
I’m curious, your father was a Marine, I believe, and-

David Rubenstein (00:51:33):
Correct.

Trey Lockerbie (00:51:33):
… did that give you some early patriotism in the household early on that’s made this kind of impact, or given you that kind of drive around the philanthropic efforts?

David Rubenstein (00:51:41):
My father dropped out of high school to go into World War II, when he joined the Marines. I asked him once why, he said, “Well, a next door neighbor had joined the Marines and he loved the uniform,” but I don’t think he was that familiar with what the Marines did when he joined. I wouldn’t say it was any different than any other family, but I did in his honor restore the Iwo Jima memorial, which is a Marine memorial for Marines who died in combat, which he obviously did not do, but I guess… I don’t want to say I’m more patriotic than the average person, but I did probably appreciate the value of serving your country. I did not serve in the military when I was growing up. The Vietnam War was prevalent, and I was never drafted and I never did anything to avoid the draft. I just never drafted, and so I did not go into service, but I did certainly respect what my father and his generation did.

Trey Lockerbie (00:52:25):
Well, beyond the educational boards you serve on, you serve on almost… nearly a dozen boards, I believe, in total, and not all of them are universities. In the book you interview a lot of people it seems like you’ve actually served on the boards or committees with, one of which stood out to me. You serve on the World Economic Forum, and that might be of interest to our listeners. With an organization like the World Economic Forum, what is the mission exactly, and how do you define success?

David Rubenstein (00:52:53):
The World Economic Forum was started more than 50 years ago by Klaus Schwab, a man who’s lived in Switzerland for most of that time. A German by birth. He’s an economist, and he basically came up with the idea of bringing people together in Davos once a year. It’s obviously become a gigantic event now, with thousands of people there. What the mission is of the World Economic Forum, is to bring people together to just talk about global problems, but also in the corporate context, he was a leader in developing the concept of stakeholder capitalism, which is to say, companies shouldn’t worry only about their shareholders, but they should worry about their employees, the [inaudible 00:53:30] and neighborhoods they live in.

David Rubenstein (00:53:31):
Worry as well about their customers, and not just worry about the shareholders, and that’s a concept that is taken off and now I think is pretty well accepted that you should worry more than just about your shareholders. It’s a very good forum for people from all walks of life and all countries to come together once a year, so I think it does serve a valuable purpose.

Trey Lockerbie (00:53:51):
What you described there falls, I believe, into the ESG category, which is getting a lot of speculation, I guess, or slack. Mainly because you’re seeing impacts of certain efforts. A lot of people are saying that Sri Lanka went into chaos because the fertilizer what needed to be organic, and it caused a lot of uprising and food shortages. A lot of these ESG impacts are obviously good-hearted, and hopefully we’ll see more and more of them, but do you feel like there’s a different timeline that we’re working on, or more realistic something or other that… Is that part of the idea of what you guys are discussing at these? How to impact, but also do it in a way that’s not disruptive, I guess?

David Rubenstein (00:54:29):
For those who may not be that familiar with the concept, ESG stands for Environmental, Social, and Governance, and what it really means is that companies should focus on more than just making profits. They should focus on the environmental impact, the social impact, and the way that their company is governed. Is there diversity and inclusion and so forth in the company? There’s a view now that maybe people have overdosed in… on ESG and maybe we’re too politically correct and too worried about ESG, and a good example of that in the mind of some people is that, right now, people are so worried about ESG concerns with respect to the environment that oil drilling is down in many parts of the world and there’s an oil… an energy shortage in Europe, in part because Europe was probably caught flatfooted by what happened in Ukraine.

David Rubenstein (00:55:17):
There’s a view now that maybe people shouldn’t be so ESG-focused, and worry about more mundane things like getting enough energy to have ability to heat your house. I’m not sure I subscribe to that view, but there is no doubt that there is a revulsion against some ESG feelings. Maybe that ESG was too politically correct. I think good… there’s a good balance in there somewhere, and I do think the ESG is very, very important. My own firm, Carlyle, is a leader in that, and I’m very proud of that.

Trey Lockerbie (00:55:44):
Well, when you get a bunch of wealthy people together, there’s bound to be skepticism, and a lot of your peers and colleagues are now immensely wealthy. I believe you touched on this in the book, you often hear that money cannot buy happiness. Can you tell me about the lessons you’ve learned from wealth around you, and how you manage your own pursuit of happiness?

David Rubenstein (00:56:05):
Well, obviously wealth doesn’t buy happiness. The richest people in the country are not the happiest. Some of the most tortured souls or very wealthy people, and there are many people who are not very wealthy at all, but seem to lead very happy lives because they just don’t have the expectations of being wealthy, and they just put it out of their consciousness. In my own case, I would say I’m a pretty happy person. I mean, I don’t run around clicking my heels all the time and tap dancing to work, as Warren Buffet probably does, but I feel I’ve accomplished a reasonable amount in a modest period of time, and I’m reasonably happy with where I am in life. Again, happiness is something that is very elusive. It’s probably the most elusive thing in life, which is have personal happiness. There’s no perfect formula for how do you get it, and so I can’t tell people how to be personally happy any more than Thomas Jefferson could when he wrote about the pursuit of happiness.

Trey Lockerbie (00:56:51):
I don’t know if I’d be so modest. You said reasonable accomplishments. I think if you look up accomplishments in the dictionary, your photo’s probably one of the picture… I was blown away by the research, when I was reading up about you, and I’m curious as to how you manage all of that. Just kept sticking with me. What does your typical day look like? Do you have routines?

David Rubenstein (00:57:12):
I don’t play golf, which saves a lot of time. I don’t drink alcohol, which saves a lot of time. I don’t go to a lot of movies, probably that saves some time, and I don’t binge watch television, which probably saves some time. I may be the only person that doesn’t subscribe to Netflix, that I know of, so I save time that way. To be very serious, I have a number of people that help me with the schedule, and I struggle very hard over the events today and every day about whether I should do this event or that event, and I’m fortunate to be invited to do a number of events. For example, tonight I had to choose between having a dinner with a justice of the Supreme Court, a very well-respected justice who I do know, or doing an interview of the artist that painted the portraits of President Obama and Mrs. Obama.

David Rubenstein (00:58:00):
I have a lot of those fortunate choices to be able to make, but I’m tightly scheduled, and I don’t tend to take weekends off, and I don’t tend to just lounge around. I guess that’s how I do it. Now, clearly I have schedule conflicts, and my rule is if I’m chairman of a nonprofit board, I will always attend the board meeting, and as the chair you have to, I think, but I have some nonprofit boards where I have conflicts, and if I’m not the chairman I may skip some of those meetings.

Trey Lockerbie (00:58:25):
The alcohol thing really stood out to me. As I understand it, you’re a lifelong teetotaler, if you will. Never had a sip, which is just mind boggling, especially given where you operate in the world, right? You came up in business, there’s a lot of networking involved there. You’re in Washington, there’s a lot of soirees and all kinds of things that revolve around that social lubricant of alcohol. How and why did that come about?

David Rubenstein (00:58:47):
When I was young, I was in a youth group in Baltimore, and the head of the youth group was really trying to keep the young teenagers from drinking alcohol. I mean, they talked a lot about it. I also observed a number of people who would get drunk from time to time, and I thought it was unseemly. I guess I liked not losing my control of what I was doing, and I thought if you drank a lot of alcohol you’d get drunk inevitably, and then you can embarrass yourself or your family. Rather than do that, I just didn’t do it. A number of people are teetotalers, maybe some are Mormons and I’m not a Mormon, but I haven’t missed anything. Whether alcohol helps you through life or not, I don’t really know, but I’m pretty happy with drinking tea or things like that. It’s okay.

Trey Lockerbie (00:59:34):
Well, it certainly hasn’t stifled you. I mean, I just find it very impressive. Is it one of those things that just built on itself after a certain amount of time? You’re like, “Well, I’ve made it this far. Why start now?”

David Rubenstein (00:59:44):
I’m not sure that I have observed a lot of great things that have come out of people who drink a lot of alcohol. Now you can sip it, I guess, and I do realize a lot of my friends enjoy wine and so forth, and I realize some of the greatest writers in the world have written some of their best things when they were probably half drunk. I’ve decided that I can’t do everything, and one of the things I can avoid doing is taking time to learn the best wines or also to spend time drinking it. It’s not a big loss, because it’s nothing I’ve really ever had.

Trey Lockerbie (01:00:14):
You mentioned your mom being proud of you when you were being philanthropic. When you’re doing an interview of an individual of any industry, I’ve noticed that you often ask them if their parents were around to witness their success. In addition to asking you the same question, I’d like to get an idea of why this is such an important question for you.

David Rubenstein (01:00:33):
Well, what is life all about, but trying to have a successful, enjoyable life? One of the things that life seems to give as the greatest pleasure is seeing your children grow up to be successful, happy, and healthy. Not that easy to do. As you probably heard me say, it’s one of the hardest things in life to do, is to raise children. I think one of the greatest forces in the world is the force of pride that a parent has in seeing a child do something successful. I like to ask people that because it also, it shows their humanity and people generally open up.

David Rubenstein (01:01:06):
They might be very tightlipped in the interview, and I ask them if their parents saw their success, and all of a sudden they light up and say, “Well, yes, my parents said they were proud of me.” Or some of them speaking about regrets that their parents died young and they never had the pleasure of having their parents take pride of them. It’s just something that I’m always interested in. My parents, they never had high aspirations for me. They were very modest blue-collar workers, so as I began to give away money and became better known, I think they did take some pride in it, and I’m glad that my parents lived to see what I did.

Trey Lockerbie (01:01:36):
Well, David, I want to be mindful of your time. I greatly appreciate you coming on our show and sharing everything you did today. It was one of the more exciting interviews for me, because there’s so much to cover with you and so many different aspects. We covered a lot of them, hopefully we’ll have you back to cover some more.

David Rubenstein (01:01:50):
Thank you. Bye.

Trey Lockerbie (01:01:52):
All right, everybody. That’s all we had for you this week. If you’re loving the show, don’t forget to follow us on your favorite podcast app, and if you’d be so kind, please leave us a review. It really helps the show. If you want to reach out directly, you can find me on Twitter @TreyLockerbie, and don’t forget to check out all of the amazing resources we’ve built for you at theinvestorspodcast.com. You can also simply Google TIP Finance, and it should pop right up. And with that, we’ll see you again next time.

Outro (01:02:15):
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