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With an estimated net worth of $23.5 billion, numerous appearances on Bloomberg’s most influential people of the year lists, private equity titan Steve Schwarzman is the last guy you’d expect to be the son of a ‘dry goods’ salesman.
As it turns out, the CEO and co-founder of Blackstone has plenty of stories worth sharing about his climb into the private equity stratosphere. And not all of them are about his humble beginnings.
Here are Steve Schwarzman’s top three mistakes, what they taught him, and what we can learn from each one:
1. Botching an early interview with Pan-Am because he had a good idea
Job interviews make just about everyone anxious. In one of his very first interviews, Steve Schwartzman found out firsthand what our worst interview fears can look like: getting ‘fired’ before finishing the interview.
While giving a commencement address at Quinnipiac, Schwartzman recalled speaking to a recruiter from the now-defunct Pan-American Airlines (an American luxury airline service that ran through the ’90s), and managing to get kicked out of the interview.
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He was ushered out because of a suggestion he made in response to a classic interview question. When asked why he wanted a job with Pan-Am, Schwartzman replied, “I think Pan-Am is a wonderful company and has some important additional opportunities to haul freight.”
His response ended the interview on the spot. According to Schwartzman, the interviewer was too stuck on the view of Pan-Am as an elite brand that would never stoop to shipping freight. They didn’t even pause to consider that Schwartzman had suggested a brilliant idea.
“It turns out that Pan-Am was terminated, a number of years later,” the investment mogul mused, “It went bankrupt and was liquidated. Maybe they should have gone into the freight business.” A few minutes later he added, “UPS and Fedex? They’re doing just fine… so maintain your confidence in your ideas when you think they’re right.”
2. Not asking for help when starting a new job
One of Steve Schwarzman’s most common pieces of advice is to ask for help when you enter new territory. He says it in interviews, in seminars, and echoes the sentiment on Blackstone’s corporate website. Whether it’s a new career, relationship, or hobby, the best move is doing the same thing you’d do in an unfamiliar neighborhood: ask for directions.
Schwarzman admits that he started his career in finance by doing the exact opposite. In his first job with the investment bank ‘Donaldson, Lufkin, & Jenrette,’ the billionaire described being “utterly untrained. No one was helping me. They just left me in an office… and I was too embarrassed to ask for help.”
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Too often new MBAs make the same mistake over and over again: they waste valuable time in their first jobs trying to ‘reinvent the wheel,’ instead of asking for advice from more senior co-workers. At Blackstone, Schwarzman found that reinforcing the idea of finance as an ‘apprenticeship’ worked wonders towards making new recruits more effective long-term.
This realization helped lead to the development of Blackstone’s somewhat horizontal management structure which, while not industry standard, has yielded unquestionable results. Blackstone currently holds the most real estate assets of any non-governmental institution in the world. It’s not a bad gig being America’s landlord, but you don’t get there by doing everything right the first time.
3. Approaching friendly investors without preparation
When he set out to found Blackstone with Peter G. Peterson, Schwarzman made what he called, “the mistake of every entrepreneur” and it nearly cost him his business. They had just begun courting investors for an initial private equity fund, and started by doing what they thought would be best: they approached investors they knew the best.
The logic was simple: If they knew these guys, they’d be more likely to trust them. The problem was Schwarzman and his partner didn’t really understand all of the potential critiques that could be thrown at their approach and how to combat them.
Instead of entering every pitch meeting prepared to counter any and all objections, Schwarzman and Peterson flubbed every pitch. They were blindsided and unprepared because they hadn’t practiced. They figured they wouldn’t have to in front of investors they already knew.
It wasn’t until Schwarzman got a particularly lucky break (involving a tuna sandwich and a $100 million injection of capital,) that Schwarzman was able to create the financial empire he sits atop today.
Never give up, never surrender
Whether talking about his unassuming upbringing or the warm, self-managed culture at Blackstone, Steve Schwarzman is always quick to hammer home the points that brought him where he is today.
Sometimes it’s the Pan-Am interview debacle. Sometimes it’s being too nervous to ask for help. Sometimes it’s even getting rejected by all of his closest investors. But no matter which story it is, Schwarzman’s tales are filled with examples of taking a beating and standing straight regardless.
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All too often we think of success as boolean: something that can be turned ‘on’ or ‘off.’ But if Schwarzman’s stories teach us nothing else, it’s that the road to success is paved with micro-failures and sort-of-successes. The best thing we can do is try to learn something along the way.
Speaking at EY Strategic Growth, Schwarzman finished up by saying a few words on failure and success that we all could take to heart. “It’s like…being an athlete. It is the ability to take pain…you can never, ever, ever, ever, give up.”