Steve Schwarzman's $100m Lunch
Good morning, everyone.
This week’s newsletter includes: Steve Schwarzman’s desperate pitch to keep Blackstone in business, Bill Ackman’s worst trade ever and a summary of my personal meeting with Steve Schwarzman.
One Last Call
In 1985, Stephen A. Schwarzman was one rejection away from failure. But a last desperate pitch turned Blackstone into a $1 Trillion empire…
In the mid 1980’s, Steve Schwarzman and Pete Peterson walked away from Lehman Brothers to start their own firm.
They pooled together $200,000 each, rented a small office in the Seagram Building, and announced the launch of Blackstone. Raising capital should have been easy, as they had decades of dealmaking experience and elite networks across Wall Street. But then - reality hit.
They sent out 600 letters to potential investors, expecting their phones to light up. Instead?
450 straight rejections.
Steve later recalled: “We took our strategic plan, and we mailed it to every large investor…and nobody gave a s**t!”
Most people would have called it quits, but Steve was relentless. He managed to raise $75 million from MetLife and New York Life, but that money was entirely contingent on Blackstone raising $500 million.
Time was running out...
“The setbacks seemed endless…we met people who lied to us or never showed up for appointment. We were out of people to ask,” said Steve.
Finally, after months of failure, Steve secured a meeting with Prudential Financial’s Chief Investment Officer. At the time, Prudential was the number one investor in terms of size and reputation in private equity. If this meeting failed Blackstone would be finished, so Steve pitched like his life depended on it.
And then, the moment he had been waiting for…
“That sounds interesting. Put me down for $100 million” said the Chief Investment Officer.
It was a career defining sentence.
In private equity, investors follow credibility. Prudential’s backing made Blackstone legitimate overnight. One by one, other institutions followed. Soon, Blackstone hit its $1 billion fundraising target, an unheard-of feat for a first-time fund.
Today, Blackstone manages over $1 trillion in assets. Reflecting on those early struggles, Steve said:
“When you believe in what you’re doing you have to keep moving forward - even when the quest feels hopeless.”
Recommendation’s
*NEW* In case you missed it, I published a new video on the most painful period in Bill Ackman’s career. Check it out below.
Awesome video here of Steve giving the honest truth about how to hire great people for your business.
Self plug alert, but I actually managed to land a meeting with Steve last summer after very randomly buying a baseball cap and giving it to him. The full story is here.
The Trade That Nearly Destroyed Bill Ackman
Bill Ackman simultaneously lost $4Billion, divorced his wife and nearly lost his company. Here’s the unbelievable true story of money, power and a phone call…
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Joseph Cass