India growing fast, has tremendous potential, says Blackstone co-founder

Stephen A Schwarzman on why he is still bullish on India, how loss makes for the deepest learning's, and how corporate culture is the difference between winning and losing

Blackstone's co-founder Stephen a Schwarzman has recently published his first book, What It Takes: Lessons In the Pursuit of Excellence, where he shares takeaways on how he helped build the world's largest private equity firm. He tells Pavan Lall why he is still bullish on India, how loss makes for the deepest learnings, and the reason corporate culture is the difference between winning and losing. Edited excerpts:

In your book, you mention how Tuhin Parikh’s (senior managing director, Blackstone India) comments on India's booming realty prices as a turning point grabbed your attention during a morning call. Given the scene now, have those wild swings in prices changed the way you see India’s real estate market? 

Anywhere in the world, sudden jumps in prices are signs to be cautious of. However, our business model isn't as sensitive to market fluctuations. We're more concerned with finding high conviction, long-term opportunities. India is one of the fastest-growing economies, with tremendous potential. 

With developments such as the introduction of the goods and services tax (GST), the boom in e-commerce, and a rising young population, we feel it’s an opportune time to strengthen our portfolio here. 

We’re now the largest commercial landlord in India, with a portfolio of more than 115 million square feet. We have also recently launched Asia’s largest and India’s first REIT with our local partner, the Embassy Group. We’re proud of our work in India over the last decade.

Please explain the consistent focus and support on education that you fund globally (Yale University, Oxford University, and institutions in China)? And, will you be looking to set up something in India soon?

I believe that education is the passport to a better life. We have a responsibility to not only preserve the knowledge that has been passed down to us, but to develop it and make it more relevant for future generations. I'm hopeful that my contributions in education — from building a first-of-its-kind student and cultural centre at Yale, to working with global academic institutions to study the implications of artificial intelligence, to establishing a scholarship program bridging China and the world — will help future generations maximise their full potential. 

I approach my philanthropy and pursuits outside of Blackstone with the same principles I apply at the firm: Identify and address complex challenges by developing creative and thoughtful solutions, whether in India or elsewhere.

India’s largest corporate entities are seeing tectonic shifts as they near cross roads at multiple levels. Do you find Blackstone challenged in that regard?

Blackstone has become what it is today because of our culture. Our core founding values — meritocracy, excellence, openness, and integrity — are still at the heart of our firm today. We place heavy importance on hiring only those who share our beliefs and fit into the culture we have carefully built over the years.

As we enter a new decade, this will not change. We’ll continue to look for people who have exceptional talent, are intellectually curious and are considerate of others. We remain committed to passing our culture on to each new generation of employees, finding inventive methods to communicate our shared customs and policies. It is a mistake to assume that new joiners will automatically inherit a culture.

In reference to the buying of Edgcomb Steel, which then didn’t perform later, you say you came close to tears when taken to task by your partners. You say you still remember the humiliation and go on to exemplify the incident as a hyperbolic example of losing investor money. Why did it hurt so much?

What happened with Edgcomb was one of the toughest moments in my career, but also an important learning experience. I had been responsible for signing off on a deal that resulted in millions of dollars in losses for our investors and I still vividly remember how helpless I felt. It was also a moment where I came face-to-face with the reality that our decision-making processes were flawed. For all our entrepreneurial strengths, our drive, our ambition, our skills, and our work ethics, we still weren’t building Blackstone into a great organisation. This incident became an important catalyst that led us to completely revamp our processes. We put in place a rigorous system to evaluate all deals, which is the foundation of much of our success today. You must not bury your failures — they can often be the best teachers.
 

Where do you get the drive to do what you do, decade after decade?

I don’t regard what I do as work. Each new investment we consider or business we launch at the firm is a unique challenge and an intellectually stimulating experience. I love learning and finding creative solutions to issues alongside the talented teams we have at Blackstone. This constant pursuit is what keeps me going. I don’t feel a day over 38 years, the age I was when I started this firm. I still sleep the same five hours 

I always have.

In the book you say, “I like having a hand in creating beautiful things.” Kindly explain…

I’m passionate about both the design and function of spaces, and put tremendous care into creating them whenever I have the opportunity. Whether it is Blackstone’s own offices, Schwarzman College in Beijing — the home of the Schwarzman Scholars program, the renovation of the New York Public Library, or the new student center at Yale, it’s inspiring to see beautiful spaces come to life to serve great institutions. It is similar to the process of “building” new things at Blackstone.