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Steve Schwarzman Maps an Arc From Mowing Lawns to Advising Trump

Steve Schwarzman Maps an Arc From Mowing Lawns to Advising Trump

(Bloomberg) -- Angela Merkel once asked Steve Schwarzman to explain private equity.

It was 2006, and a debate was raging across Germany after her vice chancellor called such investors “locusts.”

“But I’m a good locust,” Schwarzman, the billionaire chairman and co-founder of Blackstone Group, told her.

Steve Schwarzman Maps an Arc From Mowing Lawns to Advising Trump

It’s one of the defining lines of his new book, which arrives just as Schwarzman’s critics are growing more vocal in questioning his ties to President Donald Trump, increasing wealth and mega-philanthropy at MIT, Oxford and Yale.

Democrat Elizabeth Warren calls private equity firms “vampires” and wants people like him to pay a wealth tax. Blackstone has been blamed for contributing to, and profiting from, the deforestation of the Amazon. Even in as familiar a place as his 50th Yale reunion, classmate Jim Sleeper heckled Schwarzman for displacing people from their homes, a reference to Blackstone’s buying foreclosed properties after the financial crisis.

So a book answering critics would be timely. Schwarzman, 72, defends his firm’s work to Merkel in four paragraphs. The chapters on building and expanding Blackstone, which make up more than half the book, can be seen as an extension of his argument.

But on other scores he has chosen not to engage. He doesn’t address the resistance some of his philanthropic projects have met. He avoids mentioning the spoils of his success -- the parties he has thrown, the houses, the vacations in the South of France. Not that he promised to dish: The book is called “What It Takes,” not “What I Got.”

As for Trump, he may be upset that his name doesn’t appear in the narrative until page 307 of 354. There, Schwarzman describes the call that brought him to Trump Tower in November 2016, and how he has served the president, for example by helping to arrange Xi Jinping’s visit to Mar-a-Lago in April 2017. But Schwarzman leaves out that two months earlier, Ivanka Trump, Jared Kushner and Steven Mnuchin were guests at his 70th birthday party. Nor does he mention that he stood next to the president in Riyadh to announce Saudi Arabia’s investment of as much as $20 billion in Blackstone’s first infrastructure fund.

Schwarzman does go in depth on his appointment to lead a White House policy and strategy forum, and its disbanding when Trump’s remarks on the riots in Charlottesville sparked “fury” and put members of the forum “under pressure.”

“Even if we were acting with the best, nonpartisan and patriotic intentions, associating with this president was intolerable to many,” writes Schwarzman, whose net worth is $17.7 billion, according to the Bloomberg Billionaires Index.

Apparently, it hasn’t been intolerable to him. As he puts it, “I had learned not only to manage through crises, but also to create them for ourselves and our clients in order to provoke a change in the status quo that creates opportunity.”

Explaining Trump

Though he lost his position when the White House forum disbanded, he has continued to serve the country informally. He describes his role in negotiating a revision of Nafta and in trade talks with China. He also fielded calls from people asking for help understanding Trump. Perhaps it was reading Freud while working in the engine room of a ship one summer that gives him the edge.

The book is being published by Simon & Schuster, which handled Ray Dalio’s “Principles,” and was written by Philip Delves Broughton with the close oversight of Blackstone’s public relations head and Schwarzman himself going through it line by line. They have produced a self-portrait that casts Schwarzman as pragmatic, not ideological; sensible, not volatile; an entrepreneur through and through -- a risk-taker and a creative thinker; and a man capable of prioritizing family, as when he left Blackstone’s IPO roadshow to go to the hospital where his daughter Zibby had just given birth to twins.

The book isn’t about responding to his critics and was in the works for more than 10 years, Schwarzman said in an interview.

“What I was trying to do is write things down, so that other people could learn, whether they’re in for-profit or not-for-profit environments, how to do things in a more effective way,” he said. He wants to teach readers “how to grow organizations, and do positive things, and how to help their own careers, how to overall have a more positive society.”

The goal, he said, is to transfer knowledge to help people “have an easier run than I had.”

25 Lessons

He likes distilling information into advice. Some of his eight tips for interviewing are obvious enough -- “Be on time... Be curious... Avoid discussing divisive political issues unless you are asked” -- but his list of 25 lessons for work and life is a great summary of how he approaches the world. Among his maxims: “Believe in something greater than yourself.” “Never deviate from your sense of right and wrong.” “Make decisions when you are ready, not under pressure.” Given how he describes getting surprised by the rain, he might have added, “Always carry an umbrella.”

Thankfully for us, he has a keen sense for the little details that make the book fun to read.

He recounts how Merkel raised her hands to imitate a locust and how he did the same. He tells of earning the nickname “Farmer Blackstone” in China, because he promised that the company’s stock price was like a seed that would grow in time. We learn he’s a fan of “Law & Order,” curry for dinner and Tina Turner, whom he met at the Kennedy Center when he was its chairman.

There are photos, too -- more than 60 of them -- that show Schwarzman running a 440-yard relay in 1963, in army training in 1970, on the red carpet of the Met Gala, and with Barack Obama, George W. Bush, Jimmy Lee and Trump (twice). Sadly, we don’t get to see him with Bailey, Piper and Domino -- his three Jack Russell terriers mentioned on the book’s jacket.

Dry-Goods Store

The thrills hinge on going into the rooms where Schwarzman did his first deals, made key hires like Larry Fink and Tony James, and got on the phone with Hank Paulson and Dick Fuld around September 2008, trying to save Lehman Brothers and global markets.

It all began in Philadelphia where his dad inherited and ran a curtains and linens store, and his mom found ways to advance the family, like sailing lessons and moving them to the suburbs.

One of Schwarzman’s first ventures was a lawn-mowing business -- with his younger twin brothers doing the actual mowing. It helped give him the money to buy a pair of Adidas spikes for a less-well-off track teammate. “It was a gesture of friendship, but also more than that: Bobby running in a great pair of spikes made all of us look good.”

His attention to appearances and status has provided constant motivation. He figured out how to get into Skull and Bones, and how to meet people like Felix Rohatyn and Averell Harriman. He’s so appreciative of the people that have helped him along the way, his acknowledgments section is a whopping 14 pages.

Eye for Design

The important people he knows hopefully will not distract from the book’s important story for our time: Schwarzman’s journey from a middle-class Jewish boy to the Andrew Carnegie of the second Gilded Age. While the toughness he gained from running track in high school and the values instilled by his parents were formative, true to his later investments in higher education, his ascent really started at Yale.

His father told him it was a world he knew nothing about, that his son was on his own. It was not an easy transition. Schwarzman didn’t feel he belonged and was unprepared academically. An English professor offered to teach him how to write papers, a kindness he never forgets.

From his own experiences, including a stint in Army training where the food and barracks weren’t quite as nice as Yale, Schwarzman understands that being in the right environment can be critical to success. He has taken this lesson to heart many times, quite literally, with his attention to design.

When he became a partner at Lehman, he redecorated his office. “I wanted it to be a cocoon against all the psychological stresses of my work, cozy, like a beautiful sitting room or library in an English house. I had the walls painted partly in reddish-maroon, the rest covered in the kind of grass cloth I’d seen at Lee Eastman’s place. I installed a chocolate carpet, chintz chairs and a partners’ desk from the 1890s. It was exquisite. No one else at the firm had ever done this.”

When Blackstone bought Claridge’s in London, he put together a panel of society women to vet English decorators for the storied hotel. They rejected the candidates, but one of the ladies proposed a Frenchman. Schwarzman interviewed and hired Thierry Despont himself.

Business Cards

He can obsess over getting everything right. When he learned that the Chinese builders of Schwarzman College at Tsinghua University wanted to use fake wood and fake bricks, he insisted that local craftsmen make the bricks and the floors exactly to Robert A.M. Stern’s specifications.

And of course he’s been involved in the design of Blackstone’s offices, logo and, in 1985, when he and Pete Peterson were just getting started, its business card.

“The design we chose is the one we still have: simple, black and white, clean and respectable.”

Sounds a lot like the book he just gave us. After all, a book is the ultimate calling card.

To contact the reporter on this story: Amanda Gordon in New York at agordon01@bloomberg.net

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, David Scheer, Peter Eichenbaum

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