If you like to listen to freak animals, radio without ads the place to do that is still premium five dollars a month and you can get a free month trial by going to stick your premium dot com and use a promo code freak. You also get access to all our bonus. Episodes and you'll be supporting our show to that still premium dot com, promo code, freak thanks. I hate this is given that you are about to hear a conversation with David Rubinstein CO, founder of the Carlyle Group on the most storied private equity firms in history. I spoke with Rubinstein in August for our six part Series the sea life of a ceo and now we are releasing as special episodes like this one, our full lightly edited interviews, since we spoke Rubinstein step down as CO ceo of Carlisle, but he still executive chairman. He is pretty remarkable human

you enjoy, the conversation is much as I'd, even donors, that David Rubinstein. It is how, you do so nice to talk to you thanks. I pleasure, I have to say I've been watching a bunch of your tv interviews- yes, I'm so impressed. I either I don't mean to sound surprise, but your questions are good you don't have note, well explain why it on your notes. But I can do at another time go ahead. I want to know. Well, if you have notes, you lose eye contact with the interviewee and they say there's a human tenancy. If you have no in front of you. You would inevitably have your. I look at them for some point, even if you need to and a second you do Will you lose the eye contact with a person you're talking to and you lose the intimacy conversation as opposed to an interview. You ve just described the central conflict.

Which led me to do radio instead of tv set at that hard. But I tried always intersperse some humour in it, because I find that humor keeps people. said, and so I am always looking every three or four questions for something that I can energetic. Somebody might be somewhat humorous and red helps a bit, but ok, I first things. First are you a steamer stein, Rubinstein but I dont care either way. So if we could begin just dumb, literally say your name and what you do Rubinstein. I am the co founder and the cushy ear, the Carla Group, which is a global private equity, firm fragrant. Let's start with a little bit of them. The personal background first just tell us a little bit about growing up in Baltimore your family. your schooling, etc. Your aspirations perhaps etc. I am the only chart of two parents who both dropped out of high school, my

mother dropped out of high school to marry. My father, my father, drop out of high school to go into the Marines. They were twenty in seventeen respectively when they married. I was born the nine months later and I grew up in a blue collar environment. My father worked for entire career in the past stop us never making more than seven thousand dollars a year. There was a very blue collar kind of varmint and it was a very segregated environment in terms of religion in bottom. Or the Jews had the live in one narrow area, Baltimore more or less, and so I they didn't know anybody who wasn't jewish and to us about thirteen cause I, but he lived around me, was jewish and then I went the public high school in Baltimore. Before I went away to college a Duke University, you went to Duke Scholarship sums

yes, I did. It was not a basketball scholarship. I can assure you I was the only person and dukes history who got cut from an intramural basketball team and only for other people were on that, but I did go to Duke ANA Scholarship and my boys and equal opportunity and prior to colleges, whoever gaming, the biggest scholarship. That's where I was going and Duke gave me the biggest scholarship, your mother, I understand desperately want you to become a dentist. That was her dream for you ass. My mother felt that the highest calling of mankind was to be called a doctor, and she thought that the building a dentist was better than being a doctor. Even you can still be called a doctor because you didn't we can't hours and my mother had the consumer of dental services, social thought it was a good thing. I always said What happens if I get arthritis, my fingers, my my career will be gone site, you're. Out of my. I haven't got a dental school now, I'm just curious growing,

in Jewish Baltimore when you watch some of those very Levinson films, what sad experience like is it a warm nostalgic, are bitter sweet they're. Just taught me about that. For a second Baltimore, it's a very family, oriented town that you know, if you are indeed right, families are, you did well. If you were in a lower families, you probably worn treated all that. Well that my family was not in country clubs. My family didn't have the the access of the wealth, so it was ok? And what do you see and bury Levinson's film is largely true. I think there were a lot of elements or truth that was it. You did know any better at the time and member. But when I was growing on bottom, more boredom or was the eighth largest sitting in ice states were population, but nine hundred thirty nine thousand. Now it's not even the top twenty in terms of population size. So it's trunk, Alot related other cities and its hidell. the problems over the years are today has a very high crime problem, very high illiteracy problem very high std problem, so it there

lot of challenges in Baltimore I've been living outside of Baltimore for roughly fifty years. I can't really claim to be a bottom expert anymore. When I grew up like most people grow up in it, farm it. You don't really know any better. You don't know any worse. You think this is what life is and so I accepted what was there and I like most showed? I enjoyed my childhood. I just didn't realize until much later, some of the things I didn't you know have rank after Duke you went to law school. You see the at the at the invitation Chicago became a lawyer forbid. You wound up working in the Jimmy Carter White House, so this is where you met. You are our future way so described that briefly what you were both doing. Ok, I had one I've always wanted to work in the White House because I have been inspired by choice. Kennedys inaugural address. Giving back to the country was six gray when that speech was given and so I always aspired to go back and give service the country. I thought I could do it by working the government. The White House seem very appealing. I worked for TED Sore,

she had written. A great speech were John Kennedy and after I practice law for fears in New York, he helped a job which ought to be led me to the Carter campaign and nineteen six. I join that campaign and Jimmy Carter was thirty. Three points ahead of George, when I joined Carter, one by one point, a corrupt, several publish your contribution, but as you have observed over many many years. People work in White House. They get their jobs because of working the campaign, not because of the merit so much seven I was the deputy domestic policy via the presidency states a job I obviously wasn't qualified for my wife worked at o n B and her job was to. Stop the spending of money as a domestic policy person. I was in fact of spending money, so we can offer had our disputes at the time right now. I've read that you stately your job to make sure that year memos that year, memos run top of the president's briefing pile.

yes Hill. Your future wife found out and got a secret service agent put her memos on top. Is there is any of that? Actually true it, sir, for butter? Worse completely, true what happened was, I did work late at night. I wasn't Mary the time my life was just working, the White House. I couldn't imagine anything more pleasurable, so I just got since the apartment near the White House. I would work around the clock. I loved it it wasn't work. It was fun, but late at night. I would bring a second crew of secretaries to do, take memos or other things and then at the end in day ten o clock eleven clock, twelve have clock. Before I go home I would take, to the presence, private studied my members and of bypass The staff system and put my mammals and top so in the past came in the morning. He would read my memos first as he run top of the inbox and that had the advantage of by yes. He everybody else's comments on my memos, which was a way of meeting the system. When my I have to be found out about it. She beat me one time staying later the me her memo one on top and I was very upset and- and

doctor for several months, because she had beat me and my own game. Do you consider that sort of want to call it subterfuge quite but strategic, positioning, is that the kind of advice you would give to young people trying to get ahead in the world today? It wouldn't be, then I will tell my three children would be a good way to get ahead, but I would say sometimes two things in life that the in hindsight with their wisdom and gray hair. You realize probably don't look so good and we have we probably have some skeletons in their claws. I guess my skull ass. I went around the staff system at the White House and for that I probably won't get to Heaven, but that's the truth. What happened so, unlike most seals. We ve been interviewing who run companies like Facebook or Pepsico or Microsoft. I dare say that most listeners haven't heard of Carlisle Group despite its hundred sixty seven billion dollars assets and additionally The most listeners have no idea how private equity firm, like yours, actually works. So can you

explain it please the essence but is this private equity is a phrase that is used to explain the vesting of money. Typically in a company that is privately owned. I e it's not public and you spend three to five years, improving the company in putting the managers to work harder, do more efficient things and ultimately, after three or five years, so our otherwise liquefied the investment in the reappear, this initial reasonest groan, TAT beats, trillion dollars under management now for around the world, is that this is a business which produces a high rates of return. So to make it simple, if you put your money in the bank, you probably get point one point: two percent interest: if you put your money in a bond, you might get one or two percent interest. If you put your money in a stock market fond, some type you might get three or four or five percent annual rate of return in private equity. You trying to get what or thirty percent analyze rates a return now they ve come down in recent years, but today, probably it's not unusual thing.

The people in my business can yield analyze net returned camper fees of fifteen percent or so per annum. So if you're getting point one or zero point, two percent in a bank account and you're getting fifteen percent from people like me, you're probably going to give us money, and so what we try to do with improved companies, make them more efficient there making economies more efficient. It's now become a business, that's all done all over the world, though it's only about forty years old it also. Dead, its earlier name. The leverage by our business, which seem seen as more, I guess, piratical or barbaric, was that I was at a conscious rebranding. Well, it was sky Just I think in this sense. Initially the business was called bootstrap your boots, trapping yourself. They were caught bootstrap deals, then that was seen as not very tract of name, so people then went to leverage buyouts than the word leverage. Probably seen as odiously went to the word management by us than the word by

casinos odious, so they went to private equity. My suspected some point: people go with another name, but whatever you call it the essence of it is you get people who are highly mode they did because people in this business tend to get twenty percent of the profits on other people's money. They are highly motivated to do a good job and get high rate return for their investors and they get twenty percent of the profits. So it's this, has had a spot large firms like Blackstone, APOLLO chaos. Karla, among others and its so tat I think, is now operate all over the world. One of those there's bain, which had employed Mitt Romney, which had helped which feed help start being capital. I believe that's right right, Mitt Romney helps correct being capital, so it was.

eyes and considered kind of odious during the presidential campaign. When you run against Barack Obama and private equity came to stand for you, no rich investors buying up companies and and killing off jobs in order to make them more efficient. More pro, Double on the other hand, so that's one perception. On the other hand, a friend of mine who happens to be in private equity will argue you guys are the Garden angels of the economy that you'll swoop in with real money to pay for firms it nobody else wants so considering those are the two poles. How do you put it? Why hadn't heard before the guardian angel phrase, but now that I've heard it, I guess I like it. I probably should stop using any other phrase and start using that one I would say, like those things in life it somewhere in between in the early days of private equity, when Mitt Romney was doing what he did and he was accused of fairly are unfairly. There was a much different industry. People tended to focus on getting the highest rate

return. They didn't worry about environmental concerns. They didn't worry about. He s, ear through our raw social governance kinds of things today, the is one where environmental concerns social govern. Concerns tax concern, All these kind of things are much more important so wrongly was accused of things that I think probably somewhat unfair. He didn't respond because at times his polling data showed than a time he mentioned the phrase private equity, his pole Went down even if you defend they, what he did so he ultimately but it may be to a statement today on a private equity people, think that while we're not perhaps guard angels, we are providing a social service in the social services making companies more efficient. But more importantly than that, perhaps the bulk of our pastors or public pension funds? So they are pleesmen firemen teachers and suffer They are the largest investors through the various a person of the world or your comments to the world, and so we think that we're doing good things not only by making

there's more efficient, but the real beneficiaries of people getting eighty percent of profits very often are public pension funds. How many companies as Carlyle on at the moment we are roughly two hundred companies around the world, half of investors are we own them on behalf of investors, about a hundred and her of those in the United States and maybe about ninety them outside the United States, and can you think of any category of good or service, whether its clothing restaurants are consulting or petrochemicals or software or weapons that Carlyle does not own when I set up the firm with my partners, I said I didn't want to do certain things that I found them antithetical to me own beliefs. Perhaps so I didn't invest in tobacco related products, we ve never done that. I didn't want it. Best in firearms guns and we ve never done that, and

may have softened on this in recent years, but we never would have and never wanted to initially invest in anything was alcohol related. I can understand that that some people We disagree with that few. That wine or related other alcoholic products aren't, as before I may have thought at one point, but we haven't Well done those, but those are three things we haven't done. What was your objection? I'll call me one thing that comes to mind. Is you do do a lot of business in the in the Middle EAST, where alcohol, as you know, has a kind of chequered access history? Was it a business decision, personal Well, I don't drink alcohol, so maybe that was the principal thing. I also felt that in ah has its benefits. I suppose I suppose, but I felt that we might be criticized for in that in that area, and I didn't think it was something we needed to do. Probably my partners may but different view wanted- and we haven't really seen enact tractor in an area, so maybe we so in the future, we certainly wouldn't do anything in tobacco. We wouldn't do anything firearms.

maybe other areas that we probably wouldn't do, but the in oh, I thought, for example, in a one time we looked at heal an industry that you would think would be ok, which has to do video in the hotel rooms. You know it's a nice business, but when you lies it it's about ninety eight percent, pornographic least at the time we looked at this particular company may be other things are different because it tends to be that out of things that are least making money that are being broadcasting hotel rooms, tender a vague, let's say ex rating attached to him. So I didn't feel comfortable that we'd pursuit. We did not pursue that transaction. That reminds me of a comment you once made. I believe, speaking two at Harvard Business School. You said you realize you compared private equity to sex. You said you realize

there are certain things you shouldn't do, but the urges there and you can't resist Rhine. You give me an example. Not not the sex example thing. I bet that private equity example of what you shouldn't do but can't resist while sometimes price may get very high. Can you get in a competitive bidding situation and if you ve ever been an auction? You may know that you think, we're up as pay another one percent of european or two percent up in a three percent, and eventually, if you're paying more than you really initially thought you would do so. Sometimes people on private equity tend to you know maybe pay a little bit more than they originally intended to to get the asset, and sometimes it works out. Sometimes it doesn't so that's what I was trying to refer to one in that commented that, rabbinical. My also my view was that if you mentioned section I'm stage students who are probably falling asleep during my speech. I would wake up and sure enough. Many many might people paid attention to that in fact, more people,

that comment than anything else. I set it that's so what you're talking about, especially with auctions, has been canonized in the ECB. thanks literature is that as the winners curse and empirically it turns out the term it it can be a pretty. It can be a pretty bad deal. I'm curious. How, over the nearly thirty years you you in your partners have been doing this. I'm curious how you're thinking has evolved in how you bid how much you'll pay and what kind of things you ve learn from past mistakes, well, we ve made plenty of mistakes as everybody in this business has anybody it's how you have made a mistake, probably really isn't in the business world and being honest, generally pang over MT that more than you want to pay by five percent, even ten percent is endemic. biggest sin? It's me, paying more than fifty percent than what you should a paid it, but generally the most import. Factor is getting a good business which can be improved by the good CEO. So if you buy a tear

we'll business that can't be turned around no seo, could turn around. That's probably a mistake: if you buy a really great business and already has a great ceo, there's, probably not much are you so? What you're? Looking for it's a business, it's ok but can be improved and you ve got a break. See here, who can improve it and then, if you do that and work through this, in four or five years so you're probably get a grip recently good rate of return. So, as I understand it, you don't sleep very much for five hours a night, you don't play golf. As you said, you don't drink I'll call! You don't mark. Is that sort of singular almost whelms, not quite fair to call it? A monastic or slavish devotion, I guess, but it sounds like it too, to the outside from the outside. It kind of devotion necessary to run a company in the modern yours at just year set of personal preferences. I heartily It gets necessary and many people who are wine aficionados, our great running, companies and do much better

then probably I'm doing and many people who plague of two very well when a company so there was own and near the world is made up of many different people in terms of their taste. In my own case, I just never, one of the drink alcohol. I concluded that with respect to Gough I But up when I was nine I quit when I was ten, I realised that it was too frustrating and humiliating at an inn. As an adult, I've concluded the same because I have the view that I have a business meeting with somebody and they think that I'm competent and intelligent. If we're going to go off and horse. I would destroy the illusion, competence and intelligence so, rather than destroy that illusion. I just say that I might play pipe put with them, but nothing out. Yet I'm curious about the outcome. In my experience, many people, if maybe not most but many people who don't drink at all, have had some kind of experience or history in their family, a bad experience or histories at the case, and in

In your case. I wouldn't say that I would say that my parents were not how colic consumers many amount, but I did notice that a new year's eve- oh my father, might come back higher than I'd seen before, but I think it was the matter of discipline. I was in a youth group and the youth group kind of head of the green group has of local. Judging furthermore he was a big believer in not drinking alcohol and I guess I just thought that and so at please his hammer, please my parents, and so I just now, as a consumer, I maybe many things in life by not consuming alcohol. I don't know you and you have that in common with our current President Donald Trump. Yes, not a consumer of alcohol. Well, I hadn't thought about that comparison, but I guess you are correct. I think he, doesn't drink alcohol either. But there are many other people other than President tromp pen other than myself who have done things in life that it might be worth talking about.

haven't tasted. Also we're not the only two. I think right right. So, let's get back to private equity generally for a minute how's business overall, both for your firm and firms like yours, a lot of people are saying the private equity industry, at least for the old school firms like yours, has peaked agree. No, I don't think it has peaked. Buddy is very, very popular right now, because we are pretty good and our industry and getting rates return of, let's say, mid net teen returns, I say, fifteen percent net or something like that on average and the top quartet funds might be doing twenty four and never even higher, and so while we ve been able to do this for good and bad times. Over thirty and forty years, people have now concluded that we are probably a pretty good custodian of money and so we are being given lots of money by vessels from all over the world: sovereign wealth funds, high net worth individuals, Emily Offices, public pension funds and so forth. So it's a pretty good time to raise money, it's expensive to

Sit in terms of prices are not cheap right now, but at some point, prices will probably come down Let me have a fair amount of money to invest. You convulsive, lower prices, you'll, probably be recently. We also, I would say the industry has in pig, but I would also say that for the last twenty years people been saying, the industry's peak them hasn't really peak. So you just don't know when I started Karla with my partners, there were two hundred fifty private equity firms in the entire world, today. There are six thousand five hundred fifty five, so it's obviously been a growth business right and you ve pointed out that America leads the way in private equity, whereas we ve lost the leadership in the mother indices. Why do you think that's the case? Private equity first started in a different view than up then buy outs it private if we really started as venture capital in the early to mid sixties and then another form of private equity cod by outgrew in that late, sixties, early seventies, and these in the United States and because they were public pension funds here which, then the biggest source of capital, it probably became an industry that too,

if the United States and were so much local money for it today. Eighty three percent of all private three dollars invests in the world. Every year are still invested in basically western Europe United States, so it still I dominated. This is damaged by Western Europe, United States, now fifty five percent or so of the global economy The peasant penny, how your measure, GDP or purchase prosperity, but let's say fifty five percent as measured by purchased prosperity, of the world's GDP is in the emerging markets, so called so. If only seventeen Some of the dollar's, investing private equity are now going into the part of the economists. Fifty five percent there will probably cat up at some point, so the emerging markets will get more more money from private equity firms in the future. But today the United States still dominates the business and I of the ten greatest known venture firms in the world and the ten largest private equity firms. they're all Basin United States right correctly

some wrong, but, as I understand it, private equity generally acquires established firms need more money or better management, while VC firms generally fund start ups, if given the chance to again. Would you be more likely to opt for getting it on the start up game just because of the dynamism and excitement or knowing that you had turned out pretty well for you on the p route. Would you choose at one? I don't think I have the skill set in venture capital. I passed on Facebook and marks Burg, was in college, and my now son in law told me about this opportunity to invest in his ES mates company, and I had a chance to be Hurley owner of Amazon and effectively turn it down so I would say I probably didn't have the skill set to monitor these good technologies are going to take off, so the whole. I think I probably made the right decision because it's worked out recently, where

where are the investors Carlisle and for me and my partners, but sure there's this always tempting to think that venture capital is gonna, be producing more face send Google's and dump and companies like that, but it's a tough tough business were in private, on average, obviously some exceptions. Probably ninety, by us will make money, something like that and venture capital. Ninety percent of the deal's will not make money, so it's tougher business in many ways talk for just a minute about running a company and the difference, especially with a start up like a facebook and as it becomes success, maybe goobers a more interesting company and talk about now since they're, going through a lot of leadership upheaval, it's always struck me in a voice heard from people start businesses at the kind of energy and dynamism, and maybe attitude that it takes to start a firm is very different from the energy and dynamism, an attitude of what it takes to try to run an established firm. Can you talk about that from an a sharp?

ninety nine point: nine percent of companies started in the United States fail, so it's very few companies had actually get to be anywhere after one or two years. Most companies don't make now you read about the Silicon Valley successes, but you hear about that. They numbers and companies. Like that, but there's somebody that don't make it so make those companies work. You need a ceo whose striven or founding partners who are driven hormones, echo, who don't want to do anything but eat and sleep and work in the company and therefore have to have a mindset of of walking through walls, and people will tell you when you're starting to her, Google or Microsoft or Facebook. This can't be done. Well. If you accept that then you're gonna fail, you have to be able to nor were people tell you and ignore conventional wisdom and then, if your fortunate, you might get to the very top, but very few get to the top, Running companies is different than getting them off the ground. I think it's much harder to get em off the ground, running not easy, but when you run a company, that's more mature,

you can, you have more people, were willing to support you more people willing to work with you more people willing to give you money getting that company off the ground. The first two or three years is extremely difficult. What about when the start up CEO wants to stay and plainly isn't there a person for the job you're. Obviously, in a position where you deal with that, all the time had you handle that, while there is no easy prescription, if you have, she who started the company and He or she doesn't want to go, but he or she may not have the skills to take the next level. So it can be very complicated. Conversation typically house Investors will may have the majority voting steak or them party, the board by years three or four, and they might have the data way out to sea. Oh, but it's not pleasant, so sometimes you give this YO different responsibilities. In some cases Obviously you see a leaves, and sometimes they still on stake in the company even other, not there, but generally the cup he said, are gonna. Make it with some exceptions, are the companies that

a ceo founder who has driven the company for a first couple years and really driven its success and then maybe after three years, three four five you bring in a ceo whose better at managing in a more mature company than somebody's getting off the ground, some of greatest. Managers of companies in the world are not great entrepreneurs and some great entrepreneurs are not really good at managing company. So it's a rare person like bill gates. was an entrepreneur and also has a very fact of ceo for many many years. That's for relatively rare! Do however, that the high profile nature of those relatively few excellent, founder, CEO Mentor bill gates. You know you could say: Mark Zuckerberg at this point could take Jeff Bezos at this point you can say Steve jobs while he was alive because they're so prominent, do you think they give a if skewed anomalous view of what the ceo should be. In other words, it should be the founder there that, or at least it would be best if it were the founder, ok

wait. They get all the attention and therefore play a role model for people, so it does give people something to aspire to, but probably my companies five years into the formation accompany earned being run by the person who can see the company might have started it just because it's a different skill set and in very few people, have the skill set Jeff, Thasos, exhibitor bill gates exhibited to both be the entrepreneur, the driving force, the beginning and the person can run the cup when relatively mature, it just usually doesn't happen, gimme on a more detail on your passing on Facebook, investment sure my whole distort or went to her the college? She met a young man. There she's now married to him there happily married, I think, to now six or seven years married and at the time. When they were dating for the first year, so this son in law, debate New who I was- and I was in the investment world- and he told me that a classmate up here

Philips Exeter and a classmate of his at Harvard College was dropping out of Harvard destroy new company- and I was gonna- do something relating to bringing people together. It was called Facebook. Any show me some materials, and how is working and essentially the time I thought more or less dating service for pig kids in college and, as at the sky, it was a surprise to me I said: look I don't really think this is gonna get anywhere. I've seen college kind of companies before and I'm pretty experience it that looking this is not going anywhere. So he was trying to ten million dollars today that ten million is probably worth about. thirty billion dollars. I had assumed experience with Jeff Pesos when Jeff Basis was starting his company. He didn't really have very much money. He was gonna sell book over the internet. He needed a bibliography of books. were printed on the internet, one of our companies, Baker and Tailor had the biggest bibliography that was in of books in print and he came to the company and said that he would like to rent that bibliography and he didn't have much care

but he would give one third of his company for the use of the biography our salesman turn down and said: no, we want cash. At one point, I realize that probably wasn't a good idea. I went out to Sea Jeff phases So you know, I think you're companies gonna go public and huge when they are gonna, be worth two hundred or three hundred million dollars. He said, it would be worth that much, but I and I don't really want it. The one third of the company workers, I don't need you as much, but you were helping the beginning so will give you one per cent of the company now not a third and weak, we so that at the ip today s Robbie worth about four and a half billion dollars. Well, do you regret or how much you regret those decisions, or are you not a regretful type? I am a regretful type, one of partners. Never looked back. I always look back, so regret it, because I just realized how stupid I was. I could have maybe even invest Facebook I could have. and a lot of stock in the end in PIN Amazon. So here I looked back just like fishermen

about the ones that get away. I guess I'd like to talk about the deals and got away but on the other hand you know obviously counterfactual are always hard to you know, imagined or at least measure and I'm guessing. There are a lot of times when you did say no. where it turned out to be an incredibly valuable. Now, yeah I mean do you do entertain those inured regret model as well? Sometimes we have I've done deals that we wanted to do. We lost out the other people and it turned out. Those deals did not work out. Yes and sometimes we have done deals we thought we're gonna be great and they didn't work out as great as we thought in all. That's the deal's world and you live with your D. Also, generally, those people who reasonably well our people that in I'll probably make money seven, eight nine times out of ten and and generally we ve pretty good average. In doing that. So that's why we ve been successful. The latest figures- I've seen put Carla

global employees and a little over fifteen hundred set about right. We have about fifteen employees in the core company, but they companies we we own two hundred and ten companies for sale. One hundred two hundred companies are so we owned by two hundred and ten United States. Are they probably employed close to a million people very good? And then I read a recent estimate that car our group assets all in companies it owns, invest. In our about a hundred and sixty two billion is that up to date and or had some out of a hundred seventy billion right now? Something like that. So we were managing assets about a hundred seventy billion dollars, yes gotcha, so if that were If you were a country in that, were your gdp. That would put you around the top sixty globally behind cutter, but ahead of Kuwait. So I'm curious, what kind of opportunities and challenges come with being so big. Clearly, when you're back

you can make enemies and for a while people did parody parity us and for a while, when we had some political people associate with US years ago, former an ambush forty wine or Jim Baker. We were seen as being politically powerful and people attributed, things to us that we didn't have in terms of political power and self worth it clearly, when you get to be wealthy and you get to be big, you you do make some people nervous that maybe you're gonna do something they wouldn't like, so very rare to have wealthy companies he loved by everybody is very rare to have wealthy p. We love by everybody, now clearly some of wealthy people They are very welcome philanthropy and there are more popular than used today, but for while wealth has historically made the average person nervous you personally are have been

an innovator, and I guess maybe a world leader at recruiting rain makers. At least partners who have recently left public office, former cabinet secretaries, the occasional president, it so and talk about it and we know that comes from your you know, having worked in weight at in the White House and indeed see and from what I Your stand, you're the first private equity firm to have kind of married that the concept of private equity with you know the DC status a blue eyes and power. when we were very young, we were modest in size, nineteen. Eighty nine- I think it was Frank Carlucci was giving a secretary the fence under president we were, could him to be a partner firm when George Herbert Walker Bush lost his election in ninety ninety two to two, a bill hunton. Jim Baker joined our. She was departing than as she has a secular state

then subsequently, as an adviser to us, George Herbert Walker, Bush joined us and one point. John Major was an adviser to us, Where then very unknown. By having those people, people got to know us. Nobody would less money. If we didn't know what we're doing, but there's no doubt that they probably would go to a dinner where Jim Baker was going to speak, rather than a dinner were David Reuben Science can speak today as we be. I'm very well known their track records. Pretty robust are for thirty years. We don't really ever recruit people like that anymore, not that those aren't good people, not that they didn't do a very good things for us, but Don't really need to do that, to open doors anymore or to have people pay attention to us. Our track record really speaks for itself, so we did pioneer that, and now fine, interestingly, that other firms are doing it when we don't do it anymore. So some other firms with whom we can t do bring in very senior people. What we d have not done that so much anymore.

so when's. The last time you hired someone who we, who someone like me, I might consider you know politically connected it's been decades because we could have got out of that business. We were heavily criticized for it in part, because is example George Herbert Walker Bush was part of our firm, partisan adviser, I should say His son was pressing I'd states and people thought there was complicated and people thought we were the Bush administration and we weren't so so now we have brought in people from government, but they aren't people who have brand yeah household names, so maybe four years ago, or so we brought in Julius Jenna Caskey, who was chairman of the F c c, to help in our communication of Essen business, but nobody would really think that he's a political force so much as at telecommunication need knowledgeable person and how is it that you as a lifelong damn happened to bring in all these Republicans? Well,

I'm in business, and I dont think that I judge people, whether Democratic Republic and I actually did Workin for in the Bin, it has for present Carter, but I have stayed out I'll take since, and I dont give money to politicians I give away a lot of money, but not a political campaign site completely divorced myself from that and I'm not involved in anybody's campaigns and unsupported candidates. So foresight kind of you myself as a but, of course, because of the non Carla Related thinks I'm involved with it on the chairman of the Candy Centre chairman Smithsonian. I think it's best to be eight so I stay out of politics, but I will would be willing to recruit. People who were there Arconic Republican, I'm not really that focused on their political affiliation. You do give away, lot of money. You do sit on lot of boards by my count. It's a proxy the one million boards that you sit on its not absolutely remarkable them any, and it strikes me that, because of your business,

is an your philanthropy and your personality that you, David Rubinstein, may personally, no more prominent people, at least in business, and maybe in politics, then just about any one else in the world. How right or wrong am I on that? There are many people whose names are much better known than mine and they can get anybody on the phone bill gates cause anybody he's going to get that person to phone Jeff Bezos going to call anybody can get that person. The phone Obama calls anybody's can get their personal phone I'm not anywhere near that level. I do sir, a lot of non profit boards. I have been doing what, doing for thirty years and I've been running around the world meeting investors for some thirty years. I chair a number of boards. I have my own tv talk, show a bit, and so people see that an eye now get involved with a lot of causes that I think are important to the country, but I would

hey there, certainly many many people who are better connected than I am, but I do know many people I am proud to say our friends are minor people that I respect. I've read that your network is a little of two and a half billion dollars that accurate. If you care to confirm or not, you know, I've never calculated it. I see but Forbes says I know it's not up to me to say what it is. It's it's more than I ever dreamed I would have. I have signed the giving pledge. I was one of them forty people to sign it. The only person firstly in private equity and I'm coming to giving away, not half the money has to giving pledge suggested people do, but giving it all away. So whatever it is, I will give it away. You ve since we joined the Harvard Corporation, congratulations on that night yields and extraordinarily historic and influential governing body. I want to ask you a few questions about it and Harvard first row the Harvard Management company which

I rent the endowment has famously underperformed in recent years and underwent a pretty big shake up at four. So I'm just curious is that it is that part of your purview as a corpse members that part of the reason you came we were brought me. I mean Let me ask answered this way. First, I am a graduate of Duke I am humor Chicago Moscow. I didn't go to Harvard an item ass twelve years, I've been on the Duke University bored. I chaired the board for last four years. My term was up and, as my term was up, there was a vacancy, a recreation bored. I did no true Faust. I'd done a number things a Harvard and she asked as with the consent of the others, the board, if I would join the board's, I've only been the one meeting so far, but I don't that was brought on because of financial. Considering because the harbor management companies run separately. It does reports of the harbour corporation, but its. It wasn't I mean? I'm gonna serve on the border, the Harvard Management Company, so I think they pay. What we brought me aren't, perhaps because I have some experience in higher education at Duke and I've losses

border Johns Hopkins and I can't travel abortive, inrush cargoes well and I've been pretty and the Harvard in a number of areas, the candy school in particular. So maybe those are the reasons I chair, the Harvard Global Advisory councils. probably the reason they put me on not so much because of my financial skills, I think I dont to disparage at all year. Your education, education board bona fides, but if I were harvard- and if I were looking at the performance of my endowment investment and I would think, will what kind of person would I most like to have said on the Harvard Corporation Board, who could at least help us get a sense of you know what we should be trying to accomplish here. Where were the most famous and the bigger endowment, Dublin and University in the world- and you know that there has been a period of a couple years here, where the reputation of harboured itself took a big hit because of the endowment performance.

So I'm not asking you to ascribe motivations to them per se, but I would just think that that would make you a valuable addition beyond. You know that national environment while maybe so. I am not sure exactly why they asked me the servant, but I am not when the Harvard Management Company Board there are people from Harvard Corporation, or who have who do serve or have served on that board. I'm this not one of em. I obviously have some investment background, but again the Harvard Management Company. Is spending most of its money, not in the area that I know much most about about them. It was most of them. they invested by Harvard management. Company is probably in fixed income or public equities, and while I prefer percentages in private equity, that's not the bulk of so. If you really want to get somebody was an investment expert. You probably would get somebody that knows much more about non private equity areas

I know you ve known Larry Summers. I gather quite well for quite a while when he was removed as president of Harvard a little over ten years ago. Now that was, I believe, the Harvard Corporation Board that that actually makes that that call tell us with some retrospect, knowing considering the professor summers is still at Harvard tell us what you know what about that situation? Why he was let go the reasons that were publicly stated at the time and perhaps other reasons at it in in retrospect were were in full I was not involved at Harvard at the time I offer she watched it from afar. As many people did, it seemed as if the faculty had lost confidence and Larry and fairly or not. I think he felt at that time. It was probably bested two to go, but he did a lot at Harvard during that period of time. I think his valuable and he remains a university professor at Harvard and still teaches at the Kennedy School other things that he doesn't Harvard, and so

but while it was a tumultuous time, I think there are some things that he did, that that benefited Harvard, and so I do think that the in hindsight that Larry contributed a fair bit the Harvard and obviously he upset some people there. But I think that his successor has solve many problems that Larry identified and she's on a spectacular drop job drew false, has been present for about ten plus years and during that period of time, she's really spectacularly improve. Many things at Harvard and now she of courses announce it shall be stepping down stepping down at the end of this year, a democratic if it had been up to you? Would you have kept Larry Summers in the post? I can't I wasn't on the board. I didn't have all the facts. I just can't possibly comment on that. An intelligent way. coming up after the break? What be

a ceo teaches you about life. Would you to do as a shield is persuade other people to do what you want it. That's what life is also about persuading. People do what you want you back to our conversation. Now David Rubinstein, CO, founder and long time, co C, o of the Carlyle Group, ok, so you- are one of the co ceos of a firm whose business is essentially making sure that the firms you acquire have good see owes which me you must know, a boat load about what make someone a good the eco or a bad one. So I'd like you to tell us everything you know with specific, please

a good ceo is somebody that knows how to be a leader rather than a follower, somebody that has convictions about what he or she wants to do. Somebody who's recently. Intelligent you, don't you be a genius but recently intelligent somebody, it's very hard working, somebody that recognises that they are. They are to make the company valuable. Somebody knows how to motivate people. Somebody that knows how to deal with, farmers as well as employees or something they have skill sets that then the biggest ceos and some people doubt sometimes a smart person in the room. It's not gonna be good seo. Sometimes a person may not be the smartest room, may have the skills, you could see you and it's I won't say it's like potter's towards definition of blogger, for you know when you ship, but when you meet somebody and you talk to them for a while. You can tell whether he or she is likely to be a good sign, I would say most cases in a week. We get that right. Sometimes we get that wrong. If there's one character,

Dick, that's relatively rare in the general population, but fairly common among ceos. What would it be persistence to get something done anywhere? You have to be persistent people always gonna tell you know, and if you take no for an answer or you might be ever nice person. People might like you, but you won't be probably that successful persistence, persistence, pursue since that so much of the game of being a ceo I'd, say hard work is another major factor and the ability to lead to Billy to get people inspired to get people to want to walk through walls. For you and with you, that's what you really need talk a a bit more about that ability to lead. I think we ve all heard a ton of leadership scholarship and I put quotes around scholarship because a lot of it is not very empirical out of this kind of to me. It seems- I know we will talk because for every example its offered about, if you just do this, you will be a good leader there's a counter example of. If you just do that, you'll be

good leader. So what does that mean? Give me some examples of what ability to lead actually looks like and how it can be measured. Well, ah, my way I'd like to talk about it this. There was a man named Richard NEWS that a professor at Harvard who wrote bone, who wrote once wrote a book called the presidential power It was about the presidency of the United States and he was pointing out that the present really have all those powers that you might think that present has there was persuade people the essence of the president's leadership- and that's us extent is the true of Chios, while they have might have some more authority than a present united, its present I'd say it's can't fire people's readily as he or she might think. She owes me we can do so, but would you have to as I see it, is persuade other people to do what you want, and course that's what life is often all about persuading other people do what you want, and I to say that a three way should doing it. One issue persuade people by your oral committee. patients learning how to speak, learning, how to say things had persuade p to do what you want. Second, when he had a right

writing a memo or letters or other kind of written communication, persuading people what you want to do, and the third and most active, is leading by example, an example. Like the site? Not in a ceo context is George Washington, a valley forge. You didn't have to stay with his troops at Valley forged during that winter, that cold winter, but he stayed with his troops and he led them by showing by example, he was going to put up with a code and they and their terrible times just they were, even though I didn't need to- and I think that's kind of inspired his troops and I think what she have to do. to be effective, his lead by example. You say you want. We will work, hard work hard yourself. You say you won't even cuts expenses cut expenses yourself. If you want people to Think of new ideas come up with new ideas yourself? That's what you have to do on those three points you just made. Let's put aside, for a moment, the leading by example on the writing and the persuasion talk about yourself and as a ceo

we're how you ve learned to do those two things. Well, what kind of either guides you ve had men Torres, etc? Ok, talking about talking, I would say that, while I did debating in high school in college, I wouldn't say was an experienced speaker when I work at the White House. I did some speaking on behalf the present, but nobody was probably inspired by nine discussions and therefore Carter did not get reelected, but I found when I went to the business world that I had to make present. patients to investors and one of my jobs Carla, was to raise money, so I would spend in large my time running around the world? Trying to persuade people, and often one of the ways of doing that was making speeches at conferences or other kinds of things and its people began to listen to me. Like what I said, I get more and more imitations and so gradually became a relatively accomplish speaker, I'm not exactly the most accomplished I do make several hundred speeches a year,

as a result of that I'd, probably a more experience of doing that than other people are, and that's probably been skill set that I've developed. In terms of writing. I love writing, though I haven't publish any books or anything, but I loved the right I guess, and by using the memo for more internal communications. I, like two and I'll, put my thoughts out of relatively clear way, and I I would say that that's a very good skill to have. If you can, I think, fighting in tweets in writing in email messages, doesn't really give you the ability to write that. Well, so I tried I dont dude tweeting and I try not to communicate in such a short manner he really can convey a serious, detailed thought. I often one where the english language would be today if William Shakespeare lived in a time of treating what he abandoned. Writing in the format that he did and invent, so the words that he did if he had to listen to the one hundred forty syllable leans, one that I don't

time will tell I understand your speed, reader and red five or six bucks a week in ten newspapers a day that true, I I try to read two books a week and I try to read a hundred bucks a year and now it's easy to say: that's a lot to do, and how do you do that? But the truth is I am often books in subjects. I know something about, so it's not that complicated. If I had to read physics textbooks, or neurosurgery textbooks. I wouldn't be reading to them a week, but I tend to read biographies books about politics and books about business and dumb to make me want to read the book. and maybe to force me to data, because I maybe Anita abroad? I have arranged a number rams where I have to read a book in order to be able to do what I want to do so. For example, I wanted to educate members of Congress more about history, so I started programme at the Library of Congress where only members of Congress can attend. I underwrite a dinner and a cocktail

already were members of Congress, and both parties come in. I interview a great american historians, adores currents, Goodwin David Mccullough people like that in members, you're really loved them. Learn about history side do the interview they are, but I have to read the book. so Emily Principle under Writer- and I guess the co chairman of something called the National Book Festival which the Library of Congress runs every year. You we're having it in labour day. Every year and labour day we typically have two hundred thousand people coming for free and we have a one hundred twenty five authors at the most recent one that's coming up, but but this has brought. Yes, it will have occurred. I will interview bore authors on and one day she had the red for books, and so I read those four books are now prepared to turn to interview them, but- I use these devices as a way of forcing me to read books, maybe just because I know I have to read the book. the interview, the author. I will do it if I didn't have these devices, maybe I wouldn't be a red two books are weaker. I wouldn't read two bucks a week,

Let me ask you just one more thing about these by partisan dinner salon that you run at the Library of Congress Ray it's a library of Congress. You said it is the barber cognisant really hold amazing, Yasmine amazing facility, so those are its four senators and Greece, people, yes in its arrests and its bipartisan, I'm I'm just curious, obviously in full, Lastly, the last fifteen years or so been very partisan in DC. I'm curious if you can point to any actual by partisan comedy having comedy seo MIT, while she D, why coming out of or salon and whether its produced any benefits. I can point to a lot of by partisan comedy see why I don't know about Seo M, I t why. But the answer your question: no, I cannot harm. We ve had the dinners now for about three years and probably about thirty, so or of more these centres. Members of Congress tell me

They enjoy it because they get to sit with people from the opposite party, the opposite house. There's no press! Nobody see what they say and her do and therefore they don't have the kind of scrutiny that maybe they have the press- was there and they were forced to ask certain questions or forced to handle this in a certain way. So I can't tell you anybody's called me up and We wouldn't have passed this legislation without these dinners, but I can tell you that members of Congress are quite pleased with it and I received a letter from maybe it too, So members, a house representatives thanking me for for doing this, So I think who knows what You really make a contribution, anything you do in life, but I think that maybe bringing members together to learn about history, even if they dont eliminate, thereby there their partisan concerns us as a useful thing right? Let's talk about Donald Trump for a minute. First of all, how much into have you had with him over time and since he's become president, I would a modest, relatively speaking. I have ten years My parents were alive when we have a beer.

They party or a celebration for them because they lived in West on each area. Sometimes we it was more a logo, its summit was a member. Would let me use the first but even so I did a couple times itself a sometimes he was there and I would shake his hand, but I was never in just with has to present the economic level caution and before I knew he was gonna run for president. I invite him to come let me interview him. He came down. He liked the interview a great deal. He told me the green room he was gonna run for president. I told him look, I know a lot about power I've been around the city, you have no chance of being elected president, so fortunately, from his point of view, he did listen since he began president. I did go to see him during the transition and said that I thought what thanks, you should try to do is touched. The symbols of our country go visit, the to the unknown soldier. Go visit. Arlington go visit, they decoration and in go visit the Magna Carta GO visit. The the Supreme Court GO visit.

but the most important regimes that he hadn't in his previous life had that much time to thoroughly spent doing and did as the chairman of the Smithsonian with it with the secretary Sonny David Scorn and with Lonnie Bunch who built the museum. I gave him a tour of the african american history and Culture Museum which the Smithsonian has been responsible for, and I did not with him and I've, seen him on a couple other occasions, but I wouldn't say that I'm an intimate with isn't of his I wouldn't say that I have that much influence if any influence with them- and it sounds like you didn't, take your advice too much on visiting all those national monuments, including we should say the Magna Carta. When that you bob it's the copy that you bought and loan as an original archives. Yes, we'll get to it, I think tank Oh, how I'll ask that the pass over question? How is this White House different from all other white houses? In your estimation, this far,

This is a different white house in many respects. I think that many of the people in the White House did not really know the president that well or weren't for the supporters of his that's a bit different. Some people- just really M during the transition. Secondly, I would say that by this time. Many administrations have gotten in oh some of their initial, she legs, I'd I'd, say more stable, I think this administration still has some chance. Just that it needs to deal with, but in every ministration Carter Administration, that than others all have problems in the first year. So getting things organ so where they want to get him organised, Clearly this administration some challenges and in front of it and as American? I hope that they can meet these challenges. Imagine for a moment that some years ago the Carlyle group had acquired the Trump organ.

Nation, would you have kept him on and see you well two privately owned organisations. I don't think he was going to sell it. So it's hard for me to say, but I would say that the in oh he's obviously been a recently successful business man and that I'm sure it wouldn't have one of them he bought by anybody else. She likes his independence and his freedoms. I don't think that was a realistic chance of that ever happening. Let me ask you a question that you asked pets go see. You'll enjoy on your tv show. Is it harder to you see yo now than it was ten years ago, and if so, why? I think it's much harder today, because today you have much more scrutiny of what you're doing it used to be the case that activists in years were not taken that seriously by boards now and activists can, with one percent or two percent of stock really change through the ceo might be or change the direction of the company. I think the scrutiny in terms of

everybody in social media, watching what every companies doing all the time is much greater than it used to be. The rewards can be greater, but the penalties me greater, so I think it's much tougher in the nineteen Fifty's She owes. Basically they got the job and they could they until they're ready, retire and the challenge to them. Just didn't exist activists, investors didn't really exist, heads constant really exist, so it was a much your environment, then for the shit you I'd like to get your taken with called the glass cliff phenomenon on a few. heard or read anything about that? It's it's the notion that females are often appointed as sea. Was when of four only when a fur. Especially when a firm is in trouble and they are the ones that get pushed off the cliff shoved off I'm curious on your take for your taken women in leadership generally see egos and

kind of where we stand now, where we're moving. Well, if we take the fortune, five hundred companies relatively few of those companies are run by women, certainly not anywhere close. The proportion of the population, so I'd say of the fortune. Five hundred throbbing a less than twenty probably have female. She goes something like that- maybe twenty five, but probably less than that so proportions are popular there should be more. dont know if it says the Ets that then, when the women they get, those jobs are not probably getting them in maybe the best the times as you suggest they re often they be getting them in the worst of times, but there are some women he also done spectacular jobs and the organ patients that they have run so Phoebe Nova Kovac, for example, on a terrific job internal Dynamics Maryland uses than a spectacular job Lockheed. I think gum Maghreb has done a very good job at Hewlett Packard,

say that they are some that I had come to mind that have done really spectacular jobs and course ingenuity sent a great job. Pepsi known her for quite awanting she's got a spectacular they're, so the women that have been given chances. I think I've done good, good jobs, women when they don't do the job probably I get more attention than when men don't do a good job in Germany. Men don't do wonderful jobs. I'm curious if you or Carlyle have had any interactions or history with goober other than perhaps some using. Service. I wish I had more interaction with an eye member, a friend of mine, David Bondwoman, whose from Texas Pacific Group told me that he was investing in the company. I think teepee g invested and I think that David person invested when the key, we had a better three billion dollar mark a cap, and I said David in our, sure that companies really viable any suitable to me said it's growing at four percent a month, it's gonna. Do

Also. I wish I know tat. We have a pattern here. I have to say with you and my own floor investment Brian. I wish I was better at these. Things are not that good at. It might think that goober today, it's late round was seventy billion dollars? Maybe it's where seventy billion, maybe a little bit less. Now I don't know for sure, but clearly it so, most valuable, privately owned. company right now that in terms of start up company and at some day, I sure that that value will be look if I, but I can't say that I'm an intimate with the company we ve looked at sometimes investing some of its foreign affiliates, but we did. We chose not to do so so talk for a minute about its sea, YO trouble recently. It finally settled on a pic to replace its founders, Yo Travis Clinic it was a public and rather stormy. Sir It was a publican rather stormy. Last several months of Travis is tenure. If Goober

where are your company to some degree? I'm curious how you would have thought about dumb, replacing him at sea. I assume we would have replaced Missy. I just talked me about that for a second, why what on the board, so I dont know other dynamic. So what happened, but he did stepped down so to stepped down all the questions, who's gonna be. The best person replace him and say, as announced become public, there were three. candidates in the end Jeff him out whose retarget Gee MEG women who is currently the ceo of HP or formerly Hewlett Packard, and then the person who did get the job, who is the currency of expedient In the end, they all seem to be very attractive nowadays, I didn't have the insights about who might be the best for that particular set of circumstances, but I think that board enormous amount of money at stake, because the people in the border, often the largest investors

and a company with a seventy billion dollar mark a compositions got a big responsibility to investors so think they weighed the choices very carefully. I suspect that the they made a good decision, but I'm not on the inside. I really can't say: let's talk about carried interest for a moment for those who don't know much about it. Let me ask it it too: offer, maybe a quick primer on is how it works and why you have defended it and then we'll talk about efforts to end to change the deduction. Ok, let me explain what it is. right now, when people invest in the private he world or invest in venture capital world, that the general partner, Carl, our Blackstone or Kleiner Perkins is basically getting to investors money. They give you your money back and they give you eighty percent of your profits back and twenty percent of the profits earned. If you

on your money back in your feedback typically, and you can't eighty percent of the profits back. Twenty percent stays with the general partner and its caught a carried interest. where the phrase come from well. In the middle ages, venetian opponents would send their ships to Asia and the people working on the ships. The workers would carry back. The spices carry back the silks and for carrying back these products back to the of in Venice. They would you have an interest in the profits and that carried interests, as it turns out. Fortuitously was twenty percent, so this carried interest is twenty percent and its earned. after the vessels, get a fairly good amount of money back already, so that Should that has arisen is what is the appropriate way to tax that twenty percent is it to be taxed at the ordinary income? Tax rates were should be taxed, that capital gains rates and there's a difference in our country but in ordinary capital gains. The IRS is determined from the very beginning of this issue that, with respect to

gee real estate, venture capital and private equity. The general partners, taking a risk making this investment and in on behalf investors and putting a lot of time, and energy and into it, and it's not really compensate- in the traditional salary, since it's really a risk type of capital and undertaking and for that reason is to be taxed at capital gains rates many people in Congress and many people around the country who dare to care to comment on this have said the where we really is more like a fee that you're getting not really a type of risk capital and therefore should be taxed error rates, congresses, considering presumably weather, addressed. This issue are not in the tax reform bill that what will be considered? It's been consider for some ten years now and Congress has concluded to date that the risk being taken by the general

partners is really more analogous to pay investment that bears a capital gain type of tax rate than an ordinary. Five tax rate- and so that's the issue now Carlyle and other private equity firms have banded together to fight against a change in this tax law, which I understand it's it's in your self interest to do so you can, understand. Plainly, however, the other side, yes, including the argument that there's a lot of tax money, where the government being left on the table, you you you'd said it in two thousand. Thirteen integrates with forum carried interest really what the business our business has historically been about? Producing distributions for your investors from good sales and appeals and getting twenty percent the profits for yourself. The how we really grown our business, it's obviously an essential component of what you do, but play devil that get against yourself for a moment and

and make the argument for why it might be good to especially at a time when tax revenues are now as high as they may ought to be, especially with entitlements and so on being what they are being The white might not be a bad idea to consider changing that role. Well, it's hard for me to that argument, because a salute a theme, arguments relating to revenue, there's not much revenue involve so in the grand scheme of things The numbers are very a bit if you were to change the capital gains rule with respect to carried interest over a ten year. Period of time pick up for the Treasury of United States may be Something like sixty ten billion dollars over ten years. So these are the numbers of people that want to change carried interests. in the grand scheme, of something when you're talking about true in the dollars it doesn't pick up that much revenue, the risk you have as this private equity, as I mentioned, is headquartered really United States. It's been wonderful thing for the pension funds. United States been a wonderful thing for the

esters in these funds. Venture capitalists, headquarter united It has been a wonderful thing for the investors. Companies in these companies. So why Would you want to change? A formula seems to be working to pick up a actively modest amount of revenue that isn't going to change anybody's the income or really going to make this. The government have enormous amount of money. Now, if you were to pick up a trillion dollars, that's one thing, but you're gonna pick up, maybe eight to ten billion dollars it's a relatively small amount of talking about the money you pick up. If you were to change it with respect to private equity and venture capital rang, and I should point out that the bulk of the money that is collected or that would- Be collected in terms of this really is the real estate industry, probably fifty to sixty percent of carried interests, taxation It relates to the real estate industry, not their private equity and venture capital industry, but even if you would take him altogether, I dont think it its pro. worth hurting these industries, which are so important to our economy. So that's what the argument actually make for not

king, a change, and I think I understand the other argument and I, I would say that you know everybody can eight how they want to debate it and Congress will consider it in the course of the tax reform bill. I guess in your case pity Really one could argue that with all the money you ve spent philanthropic Leon, national monuments in museums and historic documents that year, who are kind of repatriating your earnings from the carried interest loophole right back into the federal budget such when you buy a document and put on public display, and then you get the added tax breaks the philanthropic donation. Now I don't know no, no, no, no! No one! Second, I'd I'd, never taken I've, never taken a tax deduction for anything like that. That rate how come, for displaying documents was my give documents. I'm just putting them on, splay, and I still owe them somehow take a tax deduction for that. But if I know, if I that money to repair the washing of mine, Washington monument. Let's say I can get tax reduction for that and, yes, I guess

Now you can say that I I I give away more money than I can take tax deductions, for you can take. You can deduct about. Fifty percent of your income channel that auctions and I give away far more than fifty percent every year. So I dont get the benefit every year of money to give away so I'm not giving away for the tax purpose on giving away. As I think I know something of the kind that's what I'm trying to do with my money. I understand- and I don't mean to be particularly peevish here, but I'm just looking at them. the circle of these dollars that I earned and taken home with the carried interest rate, and you could look at it as a sort of this gonna sound, much, and I mean it, but it kind of high brown money laundering, where you're getting extra money because of the tax code and then

donating a lot of it back to actual you know not the federal budget quite but to national monument. So how is it could have had a better any? For example, everybody. The United States, has a deduction that relates to the health insurance. Your employer, for example, gives you health insurance. I presume, and you do not take that cost into your in If you really want to pick up money, you would say, let's eliminate that what I could call a loophole and makes everybody who gets health insurance, they get to pay income tax on the month, benefit being given to them. That would pick up one point: three trillion dollars over ten years, or you can argue that everybody who gives away money is in effect doing this you think they're just taking a deduction and as a result or not not paying tax on something that they're getting a benefit from and they're kind of making China with adoption later for the money that their saving show. Everybody who get some deduction is,

at benefit homework, its interested auction or or their or other kinds of deduction. So you can you can play that kind of view for virtually every deduction and I think it's unfair to pick out. the private equity people who actually done a very good job for United States in building this business from scratch. Over many other industries, which I think I run less good things United States, but anyway, that's might well. If you Also the case, as you mentioned earlier, that being wealthy and successful, especially, is invested generally when you many fans among the public. That's just the way. It's just the historically army generally wealthy people throughout the course of the last thousand or two thousand years have not been generally the most popular. people in any society and it's only in recent years four years or so that philanthropy has become something of significance and people have been able to change the image think many people were very wealthy where unpopular gianduja, developing, the classic person. Then he said

giving away money and he and his family, which became very large philanthropist change the image of the Rockefeller family, and I think there is no doubt that there is some its benefit, I guess, by giving away money people oh give a dramatically mouth large amounts of money, probably interested in more than image, because at some point your image, Cancun. much better than it might already be. U whirling really will do something good for the countryside. Always attack people's motives and nobody's perfect, and nobody in always is subject to not being criticized. but I would say on the main point that you may get made I'd say in my case. I am give back money to my country, because I came from very modest circumstances. My PA some have any money they didn't have any education. I rose up. Lastly, MIKE Rubinstein to be able to do what I did, and I do feel that I owe this country has I think I could have done this in other countries and I'm giving it back in this way and into education, and medical research, and if you can, you can Hey that's money I wouldn't have had to give a tax rules were different, but I think that really

an unfair way to look at it. I could actually say I'm not gonna get back any money and in oh that's just not the way. I look at it that the dynamic he just described with your opportunity as an American. It makes me wonder if I think I mention this before, but I know it's a fact that America itself and Americans are kind of freakish Lee Philanthropic much more than any other people in history and an end, even current, the word world leaders do you think that is why it's kind of em, a kind of stuff order, given that Americans tend to give his, the notion that there is the opportunity to make it when our country, first started. There was no money here and so libraries, universities, hospitals, had to be funded by the private sector because it wasn't a rich government putting up this Europe. By contrast, many these services were paid by the government, so Europe didn't really

the tradition of people giving money are their own pocket to support these kind of public causes. America's always had this tradition. In fact, When did Tocqueville came here and unnoticed famous book in America, he pointed out that there were so many voluntary associations. Everybody was part of them, because people- giving back. So we ve had this tradition in our country, which is extraordinary. In fact, today of the people trying to giving pledge about a hundred seventy million three hundred seventy people around the world, have signed it. I would say about eighty five percent apart from the United States and that reflects the greater for land, we. Then Americans are used to in many countries. If you go to countries very well, countries and say: would you give away fifty percent of Europe that worth philanthropy? They look like you're, crazy and so that there has been modest success that effort. So Americans, I think, have more philanthropic Bentham than many other people and to some extent the people who are the biggest donors are not People have inherited wealth, they give away for amount of money, but it's a people who he did on their own who realise how He they were, as I feel I am, and how

Did they aren t this country for making it possible to that's. Why I give away my money, because I want to thank the country for my good fortune, excellent. Ok, I'm going to ask you a series of a sort of lightning round quick questions that require only short answers and will do them till we read I times at Seneca in roughly sixty seconds David describe what you actually do in a given day on a given nay I try to meet with dusters. I try to make a couple speeches about, either investing our history or or philanthropy? I Do an interview for one of the projects I have. I will try to meet with one or more of my colleagues and my firm I will try to talk to my children. I will try to look at new philanthropic pride, I shall probably be in some investment committee meetings I'll be in some philanthropic presentations and I might

a board meeting of one of the organizations, I'm involved with exhausted. Listening to its impressive name, a couple things about being ceo that you had no idea about until you became a yeah. Why didn't realize private home? time. I had to spend dealing with the EU, The holders or weakness shareholders become unit holders in our firm and that's a very important factor, but I had been used to running time with investors in our funds, but- I realize I have a whole new constituency, people that by our stock, so that's been something has taken a fair amount of time and how much regulatory and, Appliance matters from now involve so it used to be the case that if you went public you far with the acc, but today we have a large compliant operation are firm as everybody does. You have a large Sarbanes, Oxley kind of compliance Russian as well. So you have so many different things you have to comply with in order to make certain at you

Following all the rules and Laws United States being a public company is not for people that are the faint hearted. You really have to put a lot of time into dealing with compliance, regulatory matters and and public shareholder related issues. I think a lot of people from the outside look Company, ceo and imagine all the perks, but tell me, is it lonely at the top on some dimension I wouldn't say lonely, because people always want to get a piece of yourselves, not only us before we for something it's the other way round its hard together, get away from everything. It's hard, to be lonely, because it's hard to get away from people want to call you and so forth in the Today's I'd say the nineteen fifty or sixty when no emails existed when there are no tweets Then, when you can have as much opportunity communicate with people it, I have been a lot easier to be the ceo today, it's very hard to get away into escape because your emailing people all the time and I know I find sometimes when I d

I done I'm busy and something I'm not gonna respond to emails for two or three hours I get emails time saying? What's wrong? You don't like me anymore responding to humans and our before I responded. Perhaps people want immediate responses, and and and so forth, and I get my myself upset. Sometimes if I send an email somebody- and I don't get a response for four or five- I think, maybe they love any more. So there is no doubt that really be alone anymore, Eager Europe so connected, and does wonder that when my time comes- and I am put underground- sweet under whether I won't, they'll be getting emails in my home. Gonna respond to him. I don't know how my how long people await before they realize really alive the responding more. Maybe I should have to make the responding and say well he's heed. This is what he would have said in your life. I can see an app for that, actually what you could probably be involved in the creation of better look out of your time. Let me ask you this call.

Should not about yourself as ceo, but a ceo of other firms. How much does the ceo really matter to the firm and how can you tell, I believe, if a ceo matters a lot more than I probably thought before, because in all the countries I was invested in. I think the ceo has made the most amount of difference. I think the price paid is probably second most. Quality of a company we invested in reforming the third most she owes can make it. magic out of difference. Now I wouldn't say the greatest ceo in the western world. So I wouldn't say that I'd made that much of a difference I have hosty or a car alone. I think he's done a spectacular job and probably done a much better job than I have done. I think she owes can make a difference, and I think you know if you told me you had recently good company a terrible see. I would investigate be told me, you had a reasonably good company a great sea. I certainly would invest in it what free you has been the best way

Learn about the way the world actually works. Is it reading is talking to people's it thinking big thoughts on a mountain top. My greatest interest in life is in keeping my brain active, and so I love reading. I love reading. Newspapers Also in that regard I love become going to bookstores and the books reading them by holding the books reluctance. talking to people and interviewing people like learn in, I wanna keep My grey matter as active as possible have a theory that if you retire, you you're downhill quickly, and I have a theory that if you relax too much you're him, system relaxes germs, come in and see a relaxing immune system they attack, and all of us, you're in trouble, so I dont know like the slow down, I don't wanna relax too much because I'm afraid that they had things will happen. So love. What I'm doing my biggest concern as I now sixty eight years old and actuarial tables being what they are? unlikely to live another sixty eight years.

Be not even another thirty eight years and who knows how many more years I live. So I wish I had all the the resource they have the access the willingness to try to do the kind of things do any Billy due account things I do when I was thirty seven, I would give away all the money I have today. Every penny. If I could be five years younger just five years, really that's quota an arbitrary. Ah, yes, bill gates. That issue. Would you give away all your money if you could be of your sugar. Any said I don't know. Maybe could I do ten years, so we negotiating bit, but the are clearly in a while would anybody not give way all their money to be able to live five years longer. Life is so pleasurable, even if you're not the euro. Money doesn't ass if they make you happy there, some of those them people now, where the wealthiest people I know, and some of the poorest people, I welcome the happiest people. I know you know. Thomas Jefferson said life is about the pursuit of happiness, but didn't tell us how to actually get happiness and its them,

elusive thing in life is personal happiness. Very few people achieve it. I think I'm personally happy, but you know I You think I was happy what, for I was wealthy, so I don't know the wealth is may be happier related to the time question if you had a time machine. When would you travel to end? Why? What would you do there? Well, if I could go anywhere, I'm back in time. I course like to go back to the Revolutionary war period of time and meet the the founding fathers and see what they were really like? Maybe they would be disappointing when I got the nome going back to the to the beginning several millennium and being at the time of that that Jesus Christ was born and for that period of time and end up. That would be pretty pretty interesting as well. By going to the future in a clearly

love to see what life would be like a hundred years from our two hundred year from our thousand years from now. I can't possibly imagine it be like, but that would be worth a great deal of of of of pleasure to me. Do you think much about the future and the future of labour that big conversation, obviously with automation and a I and the future of them. You know whether whether people will need to work and how we pay, for things clearly will be different. Nobody could have dissipated a hundred years ago, the kind of things we have today even ten years ago, people could have anticipated the kind of things we now have. So I sure in the future, work will be much different. Maybe people will get compensated differently, maybe but will not have the work forty hours a week, if that's a traditional measurement of how much work you put in, but clearly I think humans have a desire to to do things and not just sit around and an end lounge around, so I suspect the work will change and how people work will be will be viewed differently, but

and I wish I could be around a hundred years or twenty years years from now see it. What do you collect and why I have not historically been a collector, because I Think I had the time to really do it and maybe the patience, and maybe the exacting nature a personality gonna do it, but when I bought the Magna Carta I then realize that that was an unusual thing to own and then other historic documents like that, the immense patient proclamation or rare copy of the declaration of dependence of the 13Th Amendment came to me, and so I would buy them where I bought the the first book ever printed United States right the first map ever Prince United States, things that relate America I bought that I do have a collection of historic american books and I, on a large number of very important of historic books that my ultimate to a major library- and I have some other things that may I collect in the art world a little bit, but basically on my main collection are historic.

documents, american historical documents. What was the first book ever printed in the United States? It's called the base arms book printed in sixteen forty four, printing press was brought here in one thousand six hundred and thirty eight. This was the first book printed there about seven copies. One was auctioned off a couple years ago and I want it and I I paid the highest price ever Rebecca Mature, I'm happy to brag about that, but it it's now on display, I think it's about to be put on display at the Smithsonian, has been displayed, the library Congress in it Rarebit Library, a Duke Universe. but he and it will be displayed other places as well. Well, where do you get your hair cut and how much do you spend? I get my hair cut, which requires me to do so less than I do when I was younger, because I was here than I did when I was younger, but I get it neighbourhood, barber shop and die, the prices, fifteen dollars and a five dollar Tipp so twenty dollars and now out relatively inexpensive. I

seems like their undervaluing their services. But you know I can't tell em to charge more. You ve been very first with your time and have already capua longs I'll. Ask you one one and a half more questions: here's the one real one, what something David Rubinstein that you believed for a long time to be true until you found out that you were wrong. While I thought it all, early on that I was extremely handsome, and then I found that I was wrong. I thought I was great athlete than I realized. I was not very good at that. I thought that women were really attracted to me, and I realized that was not the case. I thought it was a great parent and then I probably realize I wasn't as great as I thought I was so The things I aspire to be- and I turned out not to be- is as great as I would have wanted to be. The whole, though I'm pretty happy with where I not to be I'm not that handsome. Not nor does I wanna be of greater parent, probably is unlike to be but homer

once given where I started, I'm recently happy with where I am today, I just wish I was younger and dumb able to be on your show more times than just once and your problem. The EU may have downgraded yourself and all those categories, but your humbler obvious, it, then it might have turned our right if you really thought nobody's essay as important virtue. I am not a personal likes arrogance. I think humility get you a lot further than arrogance, but in my case it's not ultimately, because I actually realized I'm not that answer then smart and not that great an athlete are the only the thing about my ethnic skills is this: when I was younger a lot of my friends were very good. I think they became all american athletes particular across and promote a mortal across a big sport. Now they have artificials. they have artificial hips. I didn't we my body out, and so now, when I play tennis, see swarm all Americans. I can run them off the court because I have my body is still intact. So that's one of the great pleasures, my athletic life exe.

when at last he had just one asked. If there's anything, we left out of the conversation that you'd really liked her like to say Anything you would have liked to have been asked or anything like to add. While I would say that the my favorite book of the last twenty years his reaganomics. Now I don't know who wrote that book, but so great book and fairer the author that book I'd like to meet that person. I let him know independent. It was just a play, there. I learned a lot, and I know I am. I know our audience will love it too. So thank you so much. Thank you my pleasure. Next week's special episode. You'll hear my full conversation with such an Adela ceo of Microsoft. Here an engineer by training and learning how to manage people didn't come. Naturally, at whatever

twenty five widows interviewing and somebody says what would you do if you do? You see a baby on the street crying and after having fallen down? I answered with thinking this is some trip question. Maybe there's some algorithm that are missing and said I'll, call nine. When we're done only to have that manager wait, we cannot get up and walk me out of the room. Saying you know: that's the absent should answer, and if you see a baby falling down, you pick them up and hugged them

and I was devastated because I remember thinking about it, and this is how could I not get that? Also? Please keep your ears out for our regular freak anomalous, radio episodes which hit your podcast stream promptly at eleven p M eastern time on Wednesday, thanks listening for economic radio is produced by W and my c studios end up your productions. Our staff includes Allison Hockenberry Gregg results, be Stephanie. Tam MAX Miller, Merit Jacob Bureau, Carruthers Harry Huggins and bring good years the music you hear throughout our episodes, was composed by we scare up. You can subscribe to for economics, radio on Apple podcast or any number of podcast portals. You should also check out our archive at four nah mix, dot com, where you can stream or download every episode with ever made. You can also read the transcripts find link. The underlying research, our Shokhin,

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