January 27, 2021
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
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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
- David M. Rubenstein (davidrubenstein.com) is co-founder and co-executive chairman of The Carlyle Group, a global investment firm with $230 billion under management.
- Host: Tim Ferriss (@tferriss)
Books Mentioned
- Books by David Rubenstein:
- Financier: The Biography of André Meyer by Cary Reich
- A Promised Land by Barack Obama
- His Very Best: Jimmy Carter, a Life by Jonathan Alter
- A Thousand Days: John F. Kennedy in the White House by Arthur Schlesinger
- Kennedy: The Classic Biography by Ted Sorenson
- Master Of The Senate by Robert Caro
- The Man Who Ran Washington by Peter Baker
- The Power Broker by Robert Caro
- The Years of Lyndon Johnson by Robert Caro
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
- After law school, he decided to go work at a law firm where Ted Sorensen, the former speechwriter for John F. Kennedy, worked at
- 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
- David ended up getting a job in D.C. with the help of Ted Sorensen
- “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
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
- Writing: You need to know how to write well to communicate with other people
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
- 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
- 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
- “If you have a good track record, you can raise an infinite amount of money.” – 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
- 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
- “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
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.”
- 50% of Americans have not bought a new book in the last 5 years
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
- “If you can’t read, you’re not going to get very far in life” – 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
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)
- Therefore, workers had an interest in the spices they carried back from Asia–hence the term carried interest
