Co-Founder of The Carlyle Group, on Lessons Learned, Jeff Bezos, Raising Billions of Dollars, Advising Presidents, and Sprinting to the End | David Rubenstein on The Tim Ferriss Show

 Check out The Tim Ferriss Show Episode Page & Show Notes

Key Takeaways

  • Personal decisions that improved David Rubenstein’s life:
    • He doesn’t drink alcohol or do drugs
    • He prefers to work hard instead of taking it easy
    • David has tried to perfect 3 skills: writing, talking, and reading
  • “I realized if you don’t love what you’re doing, you can never be great at it. Nobody ever won a Nobel Prize hating what they do.”David Rubenstein
  •  Advice for raising money:
    • If you want people to give you money, you need to give them a good reason for doing so
    • You should know what you’re talking about and be well-informed on the topic
    • You should always be polite, give people time to think about their decision, give them a follow-up note after the meeting, and keep them informed about how the investment is doing even if they didn’t invest
    • If the investment isn’t doing well, be transparent about it and give bad news upfront 
  • In Washington, D.C. people care more about power than money:
    • “Washington is a place where power really is the ultimate card that means something to people…Money isn’t as important in Washington” – David Rubenstein
  • “I care about books because it opened a new world for me and that’s why I love reading because I can learn so much. Wherever I got in life I got through education and by education, I mean learning continuously.” David Rubenstein
  • Advice to New Parents Who Are Financially Successful: 
    • Don’t give your kids too much money and don’t buy them everything they want
    • Make them do well in school
    • Don’t flash your wealth in front of your kids or other people 
    • Give your kids money to donate so that they get a taste of philanthropy 

Intro

Books Mentioned

David’s Early Career

  • As a young adult, David felt a calling to enter politics, possibly as a speechwriter. He knew he would have to learn how to read and write well to be a good speechwriter, so he decided to go to law school.
    • After law school, he decided to go work at a law firm where Ted Sorensen, the former speechwriter for John F. Kennedy, worked at
      • Most speechwriters are young (late 20s, early 30s) because the job isn’t highly paid and it requires around the clock dedication to writing 
  • David realized pretty soon he was an okay lawyer but didn’t have the personality nor the ambition to be a great one
    • “I didn’t think the life of a lawyer was all that great…I was really interested in Washington and getting involved in politics.” – David Rubenstein
      • David ended up getting a job in D.C. with the help of Ted Sorensen
        • Soon after, he landed a job as Deputy Assistant to the President for Domestic Policy during the Carter administration

Personal Decisions That Improved David’s Life

  • David made the decision early on in his life to not drink alcohol or do drugs:
    • “I just adopted that rule and I saved a lot of time and didn’t get into any trouble” – David Rubenstein
  • Deciding to work hard instead of taking it easy in your career
    • “I generally had the view that if you worked hard it was better than if you didn’t work hard” – David Rubenstein
  • David has tried to perfect 3 skills: writing, talking, and reading
    • Writing: You need to know how to write well to communicate with other people
      • To get better, write often and ask for feedback on punctuation, style, etc.
    • Talking: David took a lot of speaking classes to learn how to better talk with people
      • To get better, say yes to more speaking opportunities or sign up for a speaking class
    • Reading: David reads everything he can get his hands on from books to newspapers to magazine articles
      • To get better, spend more time reading every day

David’s Second Career: Business

  • In 1980, Ronald Reagan defeated Jimmy Carter in the presidential election and David found himself out of a job. He ended up going back to a law firm but realized he didn’t like the work he was doing.
    • “I realized if you don’t love what you’re doing, you can never be great at it. Nobody ever won a Nobel Prize hating what they do.”David Rubenstein
  • Once David started to have a family and kids, he started to care a lot more about money and decided to start his own business (a buyout firm in D.C.)
    • A buyout firm buys existing businesses, improves them, and then either sells them or takes them public. Today, we call buyout firms, private equity firms.
  • In the ‘70s and ‘80s, you could buy a company with 5% cash and 95% leverage. However, since then new regulations have been put in place to make the business more stable and some deals today happen with 40-50% cash and 50-60% leverage.
    • When David started his buyout firm The Carlyle Group, there were about 250 buyout firms in the world. Today, there are about 7,000 similar firms.
  • One innovation that helped drive the success of the Carlyle Group: Institualizing the business
    • David created a buyout, venture, and real estate fund all under one brand but institutionalized the business by centralizing the fundraising, accounting, taxing, and everything else in one place
      • “The theory is, if you liked us in buyouts, give us a chance in venture capital…That more or less worked and we built out an institutional business” – David Rubenstein
  • Since the Carlyle Group was based in Washington, D.C., they hired a lot of ex-government officials which helped achieve better brand recognition and gain access to more deals
    • However, having so many ex-government employees backfired around 2006 when the firm was being blamed for involvement in the Iraq War and David had to ask many of them to retire 

Advice On Fundraising 

  • There are 3 types of fundraising:
    • Political
    • Philthropical
    • Business
      • Business is the easiest type of fundraising because you’re offering people a rate of return
  • The better your track record, the easier it becomes to raise money:
    • “If you have a good track record, you can raise an infinite amount of money.” – David Rubenstein
      • A good track record is 2-4x returns on investment
  • Advice for raising money:
    • If you want people to give you money, you need to give them a good reason for doing so
    • You should know what you’re talking about and be well-informed on the topic
    • You should always be polite, give people time to think about their decision, give them a follow-up note after the meeting, and keep them informed about how the investment is doing even if they didn’t invest
    • If the investment isn’t doing well, be transparent about it and give bad news upfront 
    • Start by raising money from friends and relatives, then people you might know in your city, then your state, then your country, then around the globe
      • If you’re more willing to travel around the world and meet more people, chances are you’ll be more successful at fundraising than firms that don’t

Life Lessons From Jeff Bezos

  • Get 8 hours of sleep every night
  • Don’t make any big decisions before 10 AM or too late in the evening
  • Have confidence in yourself and have a good sense of humor 
  • You can’t always rely on reason, most of the time you have to go with your gut

In D.C.: Power > Money

  • In Washington, D.C. people care more about power than money:
    • “Washington is a place where power really is the ultimate card that means something to people…Money isn’t as important in Washington” – David Rubenstein
      • Even a billionaire businessman can have trouble getting a meeting with a senator 

How David Reads Books

  • David reads about 100 books a year
    • If he’s reading a book that isn’t that good, he’ll skip to the chapters that interest him
    • If he’s going to interview an author for his show, he’ll force read the book even if he doesn’t love it as a courtesy to them
  • David doesn’t read much fiction because he prefers to read non-fiction so that he has more information about the world
  • Before diving into a book, David will read the book cover to learn more about it and also read book reviews to see what other people are saying about the book
  • “I care about books because it opened a new world for me and that’s why I love reading because I can learn so much. Wherever I got in life I got through education and by education, I mean learning continuously.” David Rubenstein
  • 30% of Americans who graduate from college never read another book in their life
    • 50% of Americans have not bought a new book in the last 5 years
      •  “That’s called aliteracy, you can read but you choose not to.” – David Rubenstein
      • “And I think reading books is better than reading newspaper articles or magazine articles…Books focus the mind. You take many hours to get through a book and therefore has a certain concentration skill which is useful.”  

Tackling The Problem of Illiteracy

  • 14% of Americans are functionally illiterate and can’t read past a 4th grade level
    • 80% of the people in the juvenile delinquency system are functionally illerate
    • 66% of the people in the federal prison system are  functionally illerate
      • “If you can’t read, you’re not going to get very far in life” – David Rubenstein
        • To help tackle this problem, David created the Library of Congress Literacy Awards which honors nonprofit organizations that have made outstanding contributions to increasing literacy in the United States or abroad

Advice to New Parents Who Are Financially Successful 

  • Don’t give your kids too much money and don’t buy them everything they want
  • Make them do well in school
  • Don’t flash your wealth in front of your kids or other people 
  • Give your kids money to donate so that they get a taste of philanthropy 

The Origin Story of Carried Interest

  • In the middle ages, Venetian ship owners used to send empty ships to Asia to bring back spices and the people that worked on the ships would get a piece of the profits.
    • Therefore, workers had an interest in the spices they carried back from Asia–hence the term carried interest
      • The share of the profits was 20 percent (and is still the standard for most investments today)
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Notes By Alex Wiec

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