From Doubt to Dominance: How Blackstone’s Founder Built a Private Equity Giant—Lessons for Entrepreneurs
Thinking about building your real estate and/or investments firm? Read this.
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Blackstone is the largest alternative investment firm globally. - Wikipedia
Believe it or not, we all share something in common with Stephen Schwarzman, Founder of Blackstone. And no it’s not our remarkable good looks.
Currently I’m reading, “What It Takes” by Stephen Schwarzman. It is an incredible book. I highly recommend it to those interested in building their business or learning more about the art of dealmaking.
In my free time I’m reading, “What It Takes” by Stephen Schwarzman. It is an incredible book. I highly recommend it to those interested in building their business or learning more about the art of dealmaking.
The most interesting thing, and there are many interesting things, is how he describes feeling unprepared and unsure at each milestone along the way building Blackstone.
Trust me he was prepared, but similar to how most people would feel, he was unsure of himself. As someone building or starting their own company this is refreshing and inspiring to hear.
If you're a person working in a corporate role considering entrepreneurship, remember this:
You’re never “ready” to start your own business.
No matter how much you know or how many “A” players are in your network, you’re not ready.
Every entrepreneurial pursuit is a leap of faith that requires an extraordinary amount of effort, love, patience, and resilience.
Whatever you think you can do or believe you can do, begin it. Action has magic, grace and power in it. - From Johann Wolfgang von Goethe
Most people don’t know that when I started Pugh Management, a real estate investment and development firm, I didn’t know all that much and I didn’t have a meaningful amount of assets.
Yes, I knew how to put together a basic pro forma, design a building, and navigate the project approvals process. That’s what I had learned working at a “big shop”.
And that, for some reason, was enough for me to decide to get started.
Important aspects of the business I didn’t know when I started:
Putting a deal together
Building a waterfall and how it worked
Negotiating an operating agreement.
Acquiring a property for development, etc, etc, etc.
That’s just a shortlist, there is a lot more I didn’t know.
But once I started looking for opportunities, I learned on the job through a combination of self-study and asking others for advice and feedback. I also offered co-investment opportunities to sweeten the pot.
Even today I will contact you if I think you might be able to help our team answer a tough question or overcome a challenge we need help with.
I only do this because I believe in reciprocity and karma. Meaning if anyone reaches out to me for advice or feedback, I am always willing to serve, listen and advise.
These principles have worked out unbelievably well for me and they can for you as well.
Similarly, Stephen Schwarzman emphasizes you learn the key elements of business by actually doing them.
In another great excerpt from the book, he describes his first capital raise money for an investment while he was at Lehman. He went to speak with Harvard’s treasurer, George Putnam, of Putnam Investments. To do this he prepared a pitch book prior to the meeting, so of course when he arrived he opened it up and dove into his pitch.
Quickly Mr. Putnam stopped him and said, “Let’s start this meeting over, Mr. Schwartzman. You say, ‘I’m starting what will be the largest student loan lending business in the United States, and I’ve got you down for $20 million.’ Now say that.” Before the meeting, Mr. Putnam reviewed the pitch and decided he wanted to invest. It was just a matter of how much.
George Putnam taught Mr. Schwarzman a lesson in raising money.
Raise money for deals you believe in,
Present your ideas with confidence
Assume the best of those you are speaking to
If necessary apply a little peer pressure, and
Always grease the skids to make it easy to say, “Yes”.
These are lessons that would stay with Schwarzman through his career.
Investors are always looking for great investments. The easier you make it for them, the better for everyone. - Stephen Schwarzman in his autobiography, “What It Takes”
Remember as you build your business you will learn lessons from those you deal with. If you make sure you are dealing with “A” players and paying attention you will learn a lot.
Beginning a new venture in real estate, investments, and/or private equity is a major undertaking. To succeed you must make a commitment to yourself and your investors to only involve yourself with the best deals and the best people. If you choose the right game, play with integrity, and assemble a team of “A” players I assure you, you will win.
Cheers, John
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