1 00:00:02,560 --> 00:00:11,879 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in 2 00:00:11,960 --> 00:00:15,640 Speaker 1: Business with Barry Ritholts on Bloomberg Radio. 3 00:00:16,079 --> 00:00:19,720 Speaker 2: I'm Barry Ridtolts. You're listening to Masters in Business on 4 00:00:19,800 --> 00:00:24,320 Speaker 2: Bloomberg Radio. We have a bonus Masters in Business for you. 5 00:00:24,880 --> 00:00:29,560 Speaker 2: Live from future Proof Citywide, Miami. I sit down with 6 00:00:29,960 --> 00:00:33,720 Speaker 2: Harvey Schwartz, the CEO of the Carlisle Group. He has 7 00:00:33,760 --> 00:00:38,880 Speaker 2: a really fascinating and somewhat unconventional path to Wall Street. 8 00:00:38,920 --> 00:00:42,400 Speaker 2: We talk about he's just a news Jersey kid who 9 00:00:43,120 --> 00:00:45,600 Speaker 2: didn't know what he wanted to do and had a 10 00:00:45,640 --> 00:00:49,760 Speaker 2: hard time figuring out his life goals. And you know, 11 00:00:49,920 --> 00:00:52,560 Speaker 2: thanks to people who took an interest in him and 12 00:00:53,040 --> 00:00:55,120 Speaker 2: a couple of good breaks, plus a whole lot of 13 00:00:55,160 --> 00:00:59,240 Speaker 2: smarts and hard work, he ended up really creating a 14 00:00:59,280 --> 00:01:02,800 Speaker 2: career from ELF, not only at firms like Goldman Sachs, 15 00:01:02,800 --> 00:01:08,119 Speaker 2: but eventually getting tapped to become CEO at Carlisle. I 16 00:01:08,160 --> 00:01:12,040 Speaker 2: find Harvey to be an absolutely fascinating guy. He is 17 00:01:12,160 --> 00:01:18,280 Speaker 2: a no holds barred, blunt speaker, truth teller, really really 18 00:01:18,400 --> 00:01:21,880 Speaker 2: interesting person. I thought this conversation was great. You can 19 00:01:21,880 --> 00:01:25,400 Speaker 2: tell I'm having a lot of fun with no further 20 00:01:25,480 --> 00:01:32,560 Speaker 2: ado our special bonus Masters in Business Live with Harvey Schwartz, 21 00:01:32,959 --> 00:01:36,479 Speaker 2: CEO of the Carlisle Group. I am just so thrilled 22 00:01:36,959 --> 00:01:41,200 Speaker 2: to introduce you all to somebody that not only are 23 00:01:41,200 --> 00:01:43,240 Speaker 2: you gonna know more about in the coming years, but 24 00:01:43,319 --> 00:01:45,880 Speaker 2: it's been my pleasure to get to know over the 25 00:01:45,920 --> 00:01:50,440 Speaker 2: past couple of months. Harvey Schwartz is CEO of Carlile. 26 00:01:51,000 --> 00:01:55,280 Speaker 2: He comes to finance in a rather unusual way, and 27 00:01:55,320 --> 00:01:59,520 Speaker 2: I'm gonna let Harvey tell's story. Let's start right there. 28 00:01:59,640 --> 00:02:03,559 Speaker 2: You have a really unconventional Well before we go there, 29 00:02:04,000 --> 00:02:07,560 Speaker 2: Carlisle Private Equity, private credit, been doing this for a 30 00:02:07,600 --> 00:02:12,040 Speaker 2: long time. Chairman is David Rubinstein. Tell us a little 31 00:02:12,040 --> 00:02:15,320 Speaker 2: bit about Carlisle First, what do you guys do? How 32 00:02:15,400 --> 00:02:20,239 Speaker 2: much do you manage? Just give us the thirty second version. 33 00:02:20,320 --> 00:02:23,000 Speaker 3: Sure. Well, first of all, Barry, thanks for doing this. 34 00:02:23,120 --> 00:02:25,720 Speaker 3: Great to see you again, everyone, Fantastic to be here. 35 00:02:25,800 --> 00:02:29,440 Speaker 3: This is such an amazing venue. So Carlisle today is 36 00:02:29,480 --> 00:02:32,359 Speaker 3: about four to fifty billion of assets spread across private equity, 37 00:02:32,400 --> 00:02:37,560 Speaker 3: real estate, infrastructure, credit, insurance and secondaries and co invest. 38 00:02:38,280 --> 00:02:41,160 Speaker 3: For all of you in the audience, there are a 39 00:02:41,280 --> 00:02:44,880 Speaker 3: number of solutions you can show your clients see tech 40 00:02:44,919 --> 00:02:47,079 Speaker 3: which is the best of credit cap them. I'm sure 41 00:02:47,080 --> 00:02:49,600 Speaker 3: we'll get into some of this which is our secondary's 42 00:02:50,240 --> 00:02:52,600 Speaker 3: co in best business, and towards the end of the 43 00:02:52,680 --> 00:02:58,240 Speaker 3: year we'll be launching our private equity solution. But I 44 00:02:58,240 --> 00:03:01,280 Speaker 3: would say, you know, for me, been Carlo for two 45 00:03:01,360 --> 00:03:04,480 Speaker 3: years has been an incredible privilege. The firm was founded 46 00:03:04,520 --> 00:03:09,160 Speaker 3: in nineteen eighty seven by David Bill and Dan who 47 00:03:09,840 --> 00:03:13,760 Speaker 3: really have created a culture which is extraordinary in terms 48 00:03:13,760 --> 00:03:18,240 Speaker 3: of the people. We're twenty three hundred people today. Zach Foreman, 49 00:03:18,240 --> 00:03:20,359 Speaker 3: I don't know if Zach Forman is in the crowd anywhere. Zach, 50 00:03:20,400 --> 00:03:24,400 Speaker 3: can you stand up? Zach leads our effort down here, 51 00:03:24,440 --> 00:03:27,840 Speaker 3: so everybody should go to Zach afterwards, and then we 52 00:03:27,919 --> 00:03:29,440 Speaker 3: have a boot. So hey, that's I'm done with my 53 00:03:29,480 --> 00:03:32,440 Speaker 3: advertising for the day. But I feel like I've accomplished. 54 00:03:32,520 --> 00:03:35,000 Speaker 2: So let's talk a little bit about your background. You know, 55 00:03:35,040 --> 00:03:38,360 Speaker 2: when I look out at the world of finance and 56 00:03:38,400 --> 00:03:43,000 Speaker 2: see who are CEOs of companies that are two hundred billion, 57 00:03:43,120 --> 00:03:46,120 Speaker 2: half a trillion, a trillion plus, I don't want to 58 00:03:46,160 --> 00:03:48,720 Speaker 2: say they're all alike, because they're not. But there's a 59 00:03:48,720 --> 00:03:51,720 Speaker 2: certain background that you tend to see a certain type 60 00:03:51,760 --> 00:03:56,680 Speaker 2: of college and business school and career path. You're just 61 00:03:56,720 --> 00:03:59,360 Speaker 2: a guy from Jersey. How did you sort of full 62 00:03:59,520 --> 00:04:01,680 Speaker 2: ask bawards into finance? 63 00:04:02,600 --> 00:04:05,040 Speaker 3: Well, I mean there are other successful people from New Jersey. 64 00:04:05,240 --> 00:04:07,600 Speaker 2: Barry John Stewart. 65 00:04:07,480 --> 00:04:12,480 Speaker 3: Yeah, no, Bruce Springsteen. Now there's a couple. But you 66 00:04:12,480 --> 00:04:15,400 Speaker 3: know what Barry's getting at, is it a little bit unconventional. 67 00:04:15,440 --> 00:04:17,880 Speaker 3: I mean, everybody has the complexity of their life story. 68 00:04:17,920 --> 00:04:20,599 Speaker 3: But for me, uh, I did. Grew up in New Jersey, 69 00:04:20,600 --> 00:04:24,839 Speaker 3: I too, uh parents who were quite educated, but tragically 70 00:04:25,360 --> 00:04:29,320 Speaker 3: they suffered from severe mental illness. My mother suffered from 71 00:04:29,320 --> 00:04:31,240 Speaker 3: what we would call today by polar disorder, and my 72 00:04:31,279 --> 00:04:35,719 Speaker 3: father suffered really quite tragic schizophrenia which sort of over 73 00:04:35,760 --> 00:04:39,279 Speaker 3: time really just completely consumed him. And this is, you know, 74 00:04:39,760 --> 00:04:45,160 Speaker 3: many decades ago, and so treatment wasn't as good, an 75 00:04:45,240 --> 00:04:49,760 Speaker 3: understanding wasn't as good. The stigma of mental health related 76 00:04:49,760 --> 00:04:52,720 Speaker 3: issues and severe mental health is still an extraordinary problem 77 00:04:52,760 --> 00:04:55,400 Speaker 3: everywhere in the world, certainly in our country, but back 78 00:04:55,440 --> 00:04:59,680 Speaker 3: then it was even much worse. And so my mother 79 00:04:59,720 --> 00:05:01,600 Speaker 3: passed when I was fourteen. I don't want you all 80 00:05:01,600 --> 00:05:02,760 Speaker 3: to feel like you have to go to therapy with 81 00:05:02,800 --> 00:05:05,840 Speaker 3: me and Barry. By the way, but my mother passed 82 00:05:06,240 --> 00:05:09,760 Speaker 3: when I was fourteen, and then it was me and 83 00:05:09,760 --> 00:05:12,000 Speaker 3: my father, and it wasn't a particularly healthy environment, and 84 00:05:12,040 --> 00:05:15,720 Speaker 3: so I basically ended up doing really, really badly in 85 00:05:15,800 --> 00:05:20,479 Speaker 3: high school. I didn't I barely graduated by the time 86 00:05:20,480 --> 00:05:24,040 Speaker 3: I was a senior. I think it was like right 87 00:05:24,080 --> 00:05:25,840 Speaker 3: around Christmas. When I was a senior in high school 88 00:05:25,880 --> 00:05:28,520 Speaker 3: in New Jersey, I'd missed twenty seven days of school, which, 89 00:05:28,560 --> 00:05:29,760 Speaker 3: by the way, if you actually do the math, is 90 00:05:29,760 --> 00:05:34,280 Speaker 3: super hard to do. And so there was a good 91 00:05:34,320 --> 00:05:35,920 Speaker 3: chance I wasn't going to graduate. I didn't apply to 92 00:05:35,960 --> 00:05:40,479 Speaker 3: any colleges, but I got super fortunate. And you know, 93 00:05:41,560 --> 00:05:44,400 Speaker 3: Chris was really generous when she introduced me. She referred 94 00:05:44,400 --> 00:05:45,520 Speaker 3: to as a mentor, and I think you do have 95 00:05:45,560 --> 00:05:48,480 Speaker 3: mentors for hopefully everyone here as mentors in your life. 96 00:05:49,000 --> 00:05:51,440 Speaker 3: I had people that were more like angels that really 97 00:05:51,440 --> 00:05:55,279 Speaker 3: like intervened for whatever reason they did to help me 98 00:05:55,320 --> 00:05:58,440 Speaker 3: at certain crazy pivotal times in my life. And one 99 00:05:58,480 --> 00:06:00,760 Speaker 3: was a woman named Linda. I had plot. She encouraged 100 00:06:00,760 --> 00:06:03,679 Speaker 3: me to apply to Rutgers. I wasn't going to college. 101 00:06:04,040 --> 00:06:07,279 Speaker 3: I applied, I didn't get in Linda, who's like not 102 00:06:07,320 --> 00:06:08,120 Speaker 3: an influential person. 103 00:06:08,279 --> 00:06:10,280 Speaker 2: Let me, let me stop you. There wasn't there a 104 00:06:10,320 --> 00:06:13,599 Speaker 2: brief sojourn to California post high school. 105 00:06:13,720 --> 00:06:16,520 Speaker 3: Yeah, well that was like one of the early earlier angels. 106 00:06:16,520 --> 00:06:20,480 Speaker 3: So when I never really talked this much about this publicly, 107 00:06:20,520 --> 00:06:23,800 Speaker 3: So I apologize if anybody finds it not interesting. But 108 00:06:23,880 --> 00:06:26,520 Speaker 3: when I when I realized I had missed so many 109 00:06:26,560 --> 00:06:28,839 Speaker 3: days of school, there was a chance I wasn't going 110 00:06:28,920 --> 00:06:32,520 Speaker 3: to graduate. Certainly, my grades were not doing well. My 111 00:06:32,560 --> 00:06:35,080 Speaker 3: father and I were deteriorating pretty quickly. And when I 112 00:06:35,120 --> 00:06:38,680 Speaker 3: turned eighteen in March of that year, it was my 113 00:06:38,720 --> 00:06:41,880 Speaker 3: birthday last week, by the way, In March of that year, 114 00:06:41,920 --> 00:06:44,320 Speaker 3: I signed myself out of high school and I had 115 00:06:44,360 --> 00:06:46,320 Speaker 3: called some friends in California. I asked if they were 116 00:06:46,400 --> 00:06:48,039 Speaker 3: let me come live with them, and so I moved 117 00:06:48,040 --> 00:06:50,480 Speaker 3: to California. I actually graduated high school out there. Those 118 00:06:50,520 --> 00:06:52,479 Speaker 3: were like there were a lot of angels, but that 119 00:06:52,520 --> 00:06:55,800 Speaker 3: family was an extraordinary angel. They took me in, but 120 00:06:55,800 --> 00:06:59,040 Speaker 3: I didn't apply to any colleges and then and then 121 00:06:59,040 --> 00:07:01,920 Speaker 3: eventually Linda came up long and encouraged me to apply 122 00:07:01,960 --> 00:07:02,440 Speaker 3: to Rutgers. 123 00:07:02,480 --> 00:07:04,279 Speaker 2: That was the next time that that was back in 124 00:07:04,320 --> 00:07:04,920 Speaker 2: New Jersey. 125 00:07:05,120 --> 00:07:07,440 Speaker 3: Yeah, so I come back and by the way, full. 126 00:07:07,279 --> 00:07:11,800 Speaker 2: Disclosure, I mac on New Jersey. I grew up in Teaneck, 127 00:07:11,840 --> 00:07:14,400 Speaker 2: New Jersey. So I feel like I'm allowed to make 128 00:07:14,440 --> 00:07:15,200 Speaker 2: fun of the Styeah. 129 00:07:15,240 --> 00:07:18,280 Speaker 3: No, of course, and yet another successful person from New 130 00:07:18,360 --> 00:07:23,240 Speaker 3: Jersey right here live the so now it was. It 131 00:07:23,320 --> 00:07:26,400 Speaker 3: was a complicated, confusing time I had to come back. 132 00:07:26,560 --> 00:07:29,880 Speaker 3: I lived with my father. That wasn't great. I was working, 133 00:07:29,920 --> 00:07:35,080 Speaker 3: as for those year old enough, a health instructor at 134 00:07:35,080 --> 00:07:38,200 Speaker 3: a squash club in Chatham, New Jersey for the New 135 00:07:38,280 --> 00:07:42,200 Speaker 3: Jersey and there was a thing called Nautilus. I was 136 00:07:42,240 --> 00:07:43,800 Speaker 3: the person that trained people in the gym, which is 137 00:07:43,840 --> 00:07:46,040 Speaker 3: a sort of hard feed to imagine looking at me today. 138 00:07:46,400 --> 00:07:51,600 Speaker 3: But I had hair, thinner, better, more fit and but anyway, 139 00:07:51,760 --> 00:07:54,880 Speaker 3: uh Lynda and her husband used to come through and 140 00:07:55,400 --> 00:07:58,080 Speaker 3: I just got to know them, and she said she 141 00:07:58,280 --> 00:08:00,680 Speaker 3: was a Rutgers graduate, but she wasn't an influential person 142 00:08:00,760 --> 00:08:05,520 Speaker 3: like you berry, and she encouraged me to apply. I 143 00:08:05,560 --> 00:08:08,960 Speaker 3: didn't get in because of my track record in high school. 144 00:08:09,280 --> 00:08:12,760 Speaker 3: And she was so incensed by this that she called 145 00:08:12,760 --> 00:08:18,200 Speaker 3: the university and basically convinced them to interview me and 146 00:08:18,240 --> 00:08:20,600 Speaker 3: write an essay about why I was such a screw 147 00:08:20,680 --> 00:08:23,760 Speaker 3: up in high school and Rutgers, which is an incredible institution, 148 00:08:24,320 --> 00:08:29,720 Speaker 3: changed their selection allowed me to go to school. And 149 00:08:29,760 --> 00:08:31,680 Speaker 3: that's why you know, Linda's an angel and the more 150 00:08:31,800 --> 00:08:34,360 Speaker 3: family's an angel, and these people like really intervened in 151 00:08:34,360 --> 00:08:36,640 Speaker 3: my life, I think in ways that are kind of 152 00:08:36,679 --> 00:08:39,640 Speaker 3: hard to conceive. And Rutgers today, I think the stats 153 00:08:39,679 --> 00:08:43,040 Speaker 3: are well over half the students still get financial aid, 154 00:08:43,440 --> 00:08:45,800 Speaker 3: sort of one in three or first ever go to 155 00:08:46,800 --> 00:08:49,480 Speaker 3: college and their family. It's an amazing institution and for 156 00:08:49,520 --> 00:08:53,520 Speaker 3: someone like me gave me all the opportunity in the world. 157 00:08:54,040 --> 00:08:54,560 Speaker 3: That's great. 158 00:08:54,600 --> 00:08:57,360 Speaker 2: By the way, don't take the lesson that if your 159 00:08:57,480 --> 00:09:00,760 Speaker 2: kid doesn't get into Princeton all up and yell at 160 00:09:00,760 --> 00:09:03,520 Speaker 2: the emissions department. That's not the lesson we want you 161 00:09:03,600 --> 00:09:07,240 Speaker 2: to take from this. So sore, you're now coming out 162 00:09:07,280 --> 00:09:10,720 Speaker 2: of Rutgers. You don't have the traditional Ivy League business 163 00:09:10,720 --> 00:09:13,200 Speaker 2: school background. How do you find your way into the 164 00:09:13,200 --> 00:09:14,120 Speaker 2: world of finance? 165 00:09:16,200 --> 00:09:22,360 Speaker 3: Very clumsily. I didn't know Rutgers, certainly back then, much 166 00:09:22,360 --> 00:09:24,920 Speaker 3: better now. I didn't know there were JP Morgan's in 167 00:09:24,960 --> 00:09:28,400 Speaker 3: the World or Morgan Stanley's or Goldman Sachs I had. 168 00:09:30,000 --> 00:09:32,079 Speaker 3: I didn't even know where Wall Street was. I'd never 169 00:09:32,120 --> 00:09:34,240 Speaker 3: been to Wall Street. First time I went, I was 170 00:09:34,280 --> 00:09:35,960 Speaker 3: surprised it was such a little street. I just make 171 00:09:36,000 --> 00:09:38,280 Speaker 3: sure a much bigger street. So it's pretty naive, about 172 00:09:38,320 --> 00:09:42,880 Speaker 3: as naive as you could get. And then through a friend, 173 00:09:43,720 --> 00:09:46,280 Speaker 3: I took a job at a firm called JB. Hanour 174 00:09:46,559 --> 00:09:48,440 Speaker 3: For those of you're old enough, it was a municipal 175 00:09:48,480 --> 00:09:51,400 Speaker 3: bond firm back in the day. This is nineteen eighty seven, 176 00:09:51,880 --> 00:09:54,360 Speaker 3: and just show a hand. So how many people know 177 00:09:54,360 --> 00:09:58,280 Speaker 3: what it means to work on a draw? Yeah? So 178 00:09:58,520 --> 00:10:01,800 Speaker 3: I worked on a draw, which means you got paid 179 00:10:01,800 --> 00:10:04,880 Speaker 3: one thousand dollars a month, but effectively it was alone 180 00:10:04,880 --> 00:10:07,520 Speaker 3: and you owed it back, and you cold called, and 181 00:10:07,600 --> 00:10:11,600 Speaker 3: you tried to build your book of business. And I 182 00:10:11,679 --> 00:10:15,240 Speaker 3: proved to be uniquely bad at this. Yeah, uniquely bad 183 00:10:15,280 --> 00:10:18,440 Speaker 3: at this. Yeah, maybe a little bit was timing. My 184 00:10:18,520 --> 00:10:21,960 Speaker 3: first day coming out of the training program was the 185 00:10:22,040 --> 00:10:27,160 Speaker 3: day the stock market fell. Yeah, October nineteenth, down five 186 00:10:27,240 --> 00:10:30,040 Speaker 3: hundred eight points. There I was like naively cold calling people. 187 00:10:30,240 --> 00:10:32,240 Speaker 3: By the way, back then there were like real phones. 188 00:10:32,280 --> 00:10:34,120 Speaker 3: You had to actually push buttons and stuff, and I 189 00:10:34,160 --> 00:10:36,400 Speaker 3: had this little cushion thing you would keep your head 190 00:10:36,440 --> 00:10:39,480 Speaker 3: like this, and you were mostly crippled by the end 191 00:10:39,520 --> 00:10:42,040 Speaker 3: of the day. But so, yeah, it was a bad 192 00:10:42,080 --> 00:10:45,360 Speaker 3: time to try, and I didn't do very well at it. 193 00:10:45,559 --> 00:10:48,440 Speaker 3: I had no money. I owed everybody in the world money. 194 00:10:48,720 --> 00:10:51,760 Speaker 3: I had borrowed a lot of money to go to school, friends, 195 00:10:52,080 --> 00:10:57,640 Speaker 3: anyone I could find, And you know, it was pretty stressful. 196 00:10:57,360 --> 00:11:01,720 Speaker 2: So how do you make your way from cold calling 197 00:11:02,400 --> 00:11:07,280 Speaker 2: into either asset management or firm white management. You've run 198 00:11:07,280 --> 00:11:10,240 Speaker 2: your way through a lot of different departments. How do 199 00:11:10,280 --> 00:11:12,760 Speaker 2: you go from just being a smiler and dialer to 200 00:11:12,840 --> 00:11:15,000 Speaker 2: somebody larger in charge. 201 00:11:16,440 --> 00:11:21,840 Speaker 3: Well, I got really fortunate. I was. I was at 202 00:11:21,840 --> 00:11:26,760 Speaker 3: a tough point. My daughter was one year old, and 203 00:11:26,800 --> 00:11:29,319 Speaker 3: I was kind of really running out of money. At 204 00:11:29,320 --> 00:11:32,080 Speaker 3: one point, I thought, jeez, I might have to file 205 00:11:32,120 --> 00:11:34,280 Speaker 3: for personal bankruptcy. But I didn't really know what that meant, 206 00:11:34,360 --> 00:11:35,559 Speaker 3: but I knew it was a thing you did when 207 00:11:35,559 --> 00:11:40,360 Speaker 3: you ran out of money. And again, a friend to 208 00:11:40,360 --> 00:11:43,160 Speaker 3: me a huge favor and got me a position in 209 00:11:43,240 --> 00:11:45,760 Speaker 3: the what they referred to as the back office at 210 00:11:45,800 --> 00:11:49,760 Speaker 3: City Bank. In nineteen eighty nine, and that was really 211 00:11:49,800 --> 00:11:55,400 Speaker 3: the first time I'd say I was on a track 212 00:11:55,720 --> 00:11:59,480 Speaker 3: that would begin to look more conventional, although obviously starting 213 00:11:59,679 --> 00:12:02,120 Speaker 3: in these I was hard as a temp I eventually 214 00:12:02,160 --> 00:12:04,680 Speaker 3: became a full time employee, and then I went into 215 00:12:04,679 --> 00:12:08,280 Speaker 3: the credit training program at City Bank. But I will 216 00:12:08,280 --> 00:12:13,840 Speaker 3: say right around that period I asked someone I worked 217 00:12:13,840 --> 00:12:17,160 Speaker 3: with them at City Bank, and I was so impressed 218 00:12:17,400 --> 00:12:19,440 Speaker 3: with how intelligent they were. And this will give you 219 00:12:19,440 --> 00:12:22,200 Speaker 3: a sense of how clumsy I was still And we 220 00:12:22,240 --> 00:12:24,600 Speaker 3: went out one night and I said something the effect 221 00:12:24,640 --> 00:12:28,880 Speaker 3: of Jees, you're so smart. I would have thought you 222 00:12:28,880 --> 00:12:32,160 Speaker 3: would have accomplished more by now in your life, which 223 00:12:32,200 --> 00:12:36,280 Speaker 3: is a horrible, cringeworthy thing to say to someone. But 224 00:12:36,320 --> 00:12:38,480 Speaker 3: he was so gracious taught me a lot in that 225 00:12:38,559 --> 00:12:41,160 Speaker 3: moment because he was gracious about it, didn't get offended. 226 00:12:41,520 --> 00:12:44,000 Speaker 3: And he said, you know, Harvey, you'll learn in your 227 00:12:44,040 --> 00:12:49,240 Speaker 3: life careers are fifty percent luck, fifty percent skill. And 228 00:12:49,240 --> 00:12:51,120 Speaker 3: that always stuck with me, buried because I don't know 229 00:12:51,160 --> 00:12:53,319 Speaker 3: that it's fifty percent luck. But for me, I got 230 00:12:53,360 --> 00:12:55,600 Speaker 3: to say, like, there are days it feels mostly ninety 231 00:12:55,600 --> 00:12:58,320 Speaker 3: ten or ninety nine to one that it's luck. And 232 00:12:58,360 --> 00:13:03,959 Speaker 3: I think along the way people, every time you're given responsibility, 233 00:13:04,000 --> 00:13:06,559 Speaker 3: somebody's making a leap of faith giving you that responsibility. 234 00:13:07,200 --> 00:13:09,319 Speaker 3: And along the way people did, whether it was at 235 00:13:09,320 --> 00:13:12,320 Speaker 3: City Bank. Then I went to Goldman Sachs. I had 236 00:13:12,360 --> 00:13:19,560 Speaker 3: some incredibly uh, some incredible experiences of Goman Sacks. I 237 00:13:19,640 --> 00:13:23,199 Speaker 3: moved around quite a bit after leaving Goman Sacks in 238 00:13:23,200 --> 00:13:28,480 Speaker 3: twenty eighteen. Ultimately, Carlisle called Carlisle calling, is luck? Right? 239 00:13:28,520 --> 00:13:30,199 Speaker 3: It's just a random thing that I end up sitting 240 00:13:30,200 --> 00:13:32,800 Speaker 3: here with you, and so I think that it's really. 241 00:13:32,600 --> 00:13:34,400 Speaker 2: Hard to I'm going to pull out the yellow card 242 00:13:34,559 --> 00:13:38,920 Speaker 2: and call on that, because lots of luck up to 243 00:13:39,000 --> 00:13:41,640 Speaker 2: this point. But you're a Goldman for a while, and 244 00:13:41,679 --> 00:13:46,920 Speaker 2: you're developing a reputation, you're improving what's already a very 245 00:13:47,760 --> 00:13:51,640 Speaker 2: well oiled machine. When Carlile called you, it wasn't let's 246 00:13:51,720 --> 00:13:54,120 Speaker 2: randomly call somebody and see if we can find a 247 00:13:54,160 --> 00:13:56,400 Speaker 2: new CEO. They knew who you were. 248 00:13:57,320 --> 00:14:03,079 Speaker 3: Yeah, that's true. I don't want to overweight the luck. 249 00:14:03,160 --> 00:14:03,319 Speaker 2: Thing. 250 00:14:03,600 --> 00:14:05,120 Speaker 3: People would say to me when I say that, Well, 251 00:14:05,160 --> 00:14:07,560 Speaker 3: you can make your own look, and that's true to 252 00:14:07,600 --> 00:14:09,720 Speaker 3: some extent. You can influence your luck through hard work. 253 00:14:09,840 --> 00:14:14,520 Speaker 3: But okay, everybody in this room just by being here. 254 00:14:14,720 --> 00:14:19,320 Speaker 3: You everyone here, there's prerequisites, right, you're all smart. Everybody's 255 00:14:19,360 --> 00:14:23,120 Speaker 3: hard working, because that's like prerequisites, that's just table stake stuff. 256 00:14:24,960 --> 00:14:27,240 Speaker 3: I do think luck and randomness play a lot in life. 257 00:14:27,840 --> 00:14:29,960 Speaker 3: You know, I'm sixty one. I was born in nineteen 258 00:14:30,000 --> 00:14:34,400 Speaker 3: sixty four. In my life, that's a really good time 259 00:14:34,440 --> 00:14:36,280 Speaker 3: to be born. Like, I don't think you can not 260 00:14:36,400 --> 00:14:40,000 Speaker 3: acknowledge some of these things. And so, but I will 261 00:14:40,040 --> 00:14:48,280 Speaker 3: say my early experiences, if anything, I would say I 262 00:14:48,320 --> 00:14:52,440 Speaker 3: was so insecure because I didn't get into college and 263 00:14:52,480 --> 00:14:55,360 Speaker 3: I barely got out of high school. I think it 264 00:14:55,600 --> 00:15:03,000 Speaker 3: just motivated fear, scared, insecure, and I think all that 265 00:15:03,120 --> 00:15:06,920 Speaker 3: kind of compounded into feeling like, wow, I am alongside 266 00:15:06,920 --> 00:15:09,560 Speaker 3: all these people who went to these extraordinary schools, and 267 00:15:09,560 --> 00:15:11,400 Speaker 3: the only way I could compete, I kind of felt 268 00:15:11,480 --> 00:15:15,440 Speaker 3: was to just work a lot. I always felt like 269 00:15:15,480 --> 00:15:20,440 Speaker 3: that was my thing, and to this day, that's kind 270 00:15:20,440 --> 00:15:22,560 Speaker 3: of what I think, although obviously I've had a set 271 00:15:22,600 --> 00:15:24,360 Speaker 3: of experiences now which give me more confidence. 272 00:15:24,440 --> 00:15:29,040 Speaker 2: So Rutgers to City to Goldman. The next question is 273 00:15:29,160 --> 00:15:32,600 Speaker 2: what draws you to the private side of the markets. 274 00:15:32,680 --> 00:15:35,080 Speaker 2: You could have done public fixed income, you could have 275 00:15:35,080 --> 00:15:37,480 Speaker 2: done equities for the rest of the career. You made 276 00:15:37,480 --> 00:15:42,000 Speaker 2: a hard pivot to private markets. Tell us about why 277 00:15:42,200 --> 00:15:44,120 Speaker 2: and what that experience has been like. 278 00:15:45,160 --> 00:15:47,400 Speaker 3: Well, after leaving Goldman, I was in a really unique 279 00:15:47,400 --> 00:15:49,760 Speaker 3: position in my life because I was so fortunate that 280 00:15:49,760 --> 00:15:53,000 Speaker 3: I didn't have to work right away, but because as 281 00:15:53,040 --> 00:15:55,360 Speaker 3: you said, I had a nice resume, people knew with me, 282 00:15:55,400 --> 00:15:58,240 Speaker 3: I got a lot of opportunities. None of them were 283 00:15:58,280 --> 00:16:01,920 Speaker 3: compelling until Carlisle came. And Carlile was compelling for very 284 00:16:02,000 --> 00:16:05,640 Speaker 3: very simple reasons. One, I knew the firm. They had 285 00:16:05,640 --> 00:16:08,560 Speaker 3: been my client when I was at Golmen Sachs. We 286 00:16:08,600 --> 00:16:11,720 Speaker 3: committed a lot of capital to all those big firms, 287 00:16:12,080 --> 00:16:13,920 Speaker 3: So I knew the firm. I spent a lot of 288 00:16:13,960 --> 00:16:16,840 Speaker 3: time with the founders. They're incredible people, David, Bill and Dan, 289 00:16:17,240 --> 00:16:21,680 Speaker 3: both as professionals and as also just generous human beings 290 00:16:21,760 --> 00:16:27,320 Speaker 3: and leaders. And then I knew the industry and the 291 00:16:27,440 --> 00:16:32,200 Speaker 3: secular trends and cyclical trends in this industry in private 292 00:16:32,200 --> 00:16:36,720 Speaker 3: capital are extraordinary, and they've been this way for well 293 00:16:36,720 --> 00:16:40,840 Speaker 3: over twenty years. And so I knew the industry I 294 00:16:40,880 --> 00:16:44,640 Speaker 3: knew Carlisle's rolling it and it was really too much 295 00:16:44,640 --> 00:16:45,200 Speaker 3: to pass up. 296 00:16:45,600 --> 00:16:48,880 Speaker 2: So I know David a little bit. I don't know 297 00:16:48,960 --> 00:16:52,160 Speaker 2: the other co founders, and he is legitimately one of 298 00:16:52,200 --> 00:16:56,400 Speaker 2: the most amazing people I ever met my entire life. 299 00:16:56,440 --> 00:16:59,520 Speaker 2: And I've done, you know, five hundred and fifty of these. 300 00:17:00,080 --> 00:17:02,840 Speaker 2: But let's bring this back to the private equity side. 301 00:17:02,880 --> 00:17:05,240 Speaker 3: So that would be your favorite, this would be your second. 302 00:17:06,000 --> 00:17:09,400 Speaker 2: I didn't say my favorite. I just remember leaving that 303 00:17:09,440 --> 00:17:15,200 Speaker 2: conversation and saying, Jesus Christ, this guy every space he's in. 304 00:17:15,640 --> 00:17:20,879 Speaker 2: He moves the needle in Congress, in markets, in philanthropy 305 00:17:21,000 --> 00:17:25,080 Speaker 2: and sports, like he doesn't touch something and not leave 306 00:17:25,119 --> 00:17:27,720 Speaker 2: it better than how he found it. Yeah, it's really 307 00:17:27,880 --> 00:17:29,960 Speaker 2: it's inspirational, and I don't want to be I don't 308 00:17:29,960 --> 00:17:30,960 Speaker 2: want to make this about David. 309 00:17:31,000 --> 00:17:31,600 Speaker 3: It's about you. 310 00:17:31,640 --> 00:17:33,639 Speaker 2: But you get to work with him. 311 00:17:33,800 --> 00:17:35,320 Speaker 3: Yeah, every day. 312 00:17:35,080 --> 00:17:40,359 Speaker 2: So you mentioned the private market side. We have interest 313 00:17:40,440 --> 00:17:43,280 Speaker 2: rates that crash to zero in the early two thousands, 314 00:17:43,680 --> 00:17:48,360 Speaker 2: then following the financial crisis, we get ZIRP for almost 315 00:17:48,400 --> 00:17:54,480 Speaker 2: fifteen years. How does that environment lead to Carlisle, which 316 00:17:54,480 --> 00:17:58,360 Speaker 2: hasn't always been almost half a trillion dollars. It started 317 00:17:58,400 --> 00:18:02,320 Speaker 2: out at a much more modest size. How does the 318 00:18:02,359 --> 00:18:07,199 Speaker 2: past twenty year market environment lead to Carlisle really becoming 319 00:18:07,880 --> 00:18:10,320 Speaker 2: the eight hundred pound gorilla in the room. 320 00:18:10,680 --> 00:18:15,080 Speaker 3: Yeah, so I think you mentioned some really key factors 321 00:18:15,280 --> 00:18:18,040 Speaker 3: which I think are contributing. It's always going to be 322 00:18:18,040 --> 00:18:21,879 Speaker 3: the case that whatever the market environment is, wherever interest 323 00:18:21,960 --> 00:18:24,520 Speaker 3: rates are, it's going to be the case that that's 324 00:18:24,520 --> 00:18:28,080 Speaker 3: a contributing factor to how markets evolve. I don't think 325 00:18:28,080 --> 00:18:31,639 Speaker 3: that's the key driver. If you go back to two thousand, 326 00:18:31,720 --> 00:18:33,159 Speaker 3: I'll get these numbers slightly wrong. I think there was 327 00:18:33,160 --> 00:18:36,120 Speaker 3: something like sixty two hundred public companies. Now that number 328 00:18:36,160 --> 00:18:40,959 Speaker 3: is closer to three thousand. This trend of public companies 329 00:18:43,000 --> 00:18:46,879 Speaker 3: shrinking and private companies staying private for longer, this has 330 00:18:46,920 --> 00:18:49,439 Speaker 3: been in place for decades. If you think about the 331 00:18:49,480 --> 00:18:53,720 Speaker 3: evolution of capital broadly, and you go back to the 332 00:18:53,720 --> 00:18:55,880 Speaker 3: fact that Carlisle was founded by David Bill and Dan 333 00:18:56,480 --> 00:18:59,720 Speaker 3: They were literally driving past the Carlisle Hotel and decided 334 00:18:59,720 --> 00:19:02,880 Speaker 3: to name at Carlisle in nineteen eighty seven. There really 335 00:19:03,000 --> 00:19:07,119 Speaker 3: was the birth of private equity, which they were part of. 336 00:19:07,480 --> 00:19:10,840 Speaker 3: And you had venture capital, so you had buyouts, and 337 00:19:10,880 --> 00:19:15,560 Speaker 3: you had seed opportunities. What systematically has happened over the 338 00:19:15,600 --> 00:19:18,600 Speaker 3: thirty plus year period and certainly from two thousand when 339 00:19:18,640 --> 00:19:22,920 Speaker 3: you now have companies staying private, is the capital available 340 00:19:23,440 --> 00:19:26,879 Speaker 3: has just continued to grow. So, whether it's direct lending, 341 00:19:27,000 --> 00:19:32,280 Speaker 3: asset based finance, integration with insurance, the opportunity set and 342 00:19:32,320 --> 00:19:35,360 Speaker 3: the capital providers have just continued to expand, whether it's 343 00:19:35,359 --> 00:19:39,640 Speaker 3: pension funds now all of you participating in wealth. It's 344 00:19:39,680 --> 00:19:42,399 Speaker 3: the capital that is creating the opportunity for companies to 345 00:19:42,400 --> 00:19:44,760 Speaker 3: stay private. It's not as though companies woke up one 346 00:19:44,800 --> 00:19:46,639 Speaker 3: day and said, geez, I wish there was private capital. 347 00:19:46,640 --> 00:19:49,240 Speaker 3: I'd like to stay private. And so this evolution of 348 00:19:49,280 --> 00:19:51,600 Speaker 3: the capital markets, I think is just part of a 349 00:19:51,600 --> 00:19:55,320 Speaker 3: broader evolution. We didn't have ETFs back in the of 350 00:19:55,400 --> 00:19:57,840 Speaker 3: such significance. If you went all the way back to 351 00:19:58,640 --> 00:20:00,920 Speaker 3: nineteen eighty seven, I can remember two thousand, I think 352 00:20:01,119 --> 00:20:02,919 Speaker 3: it costs you five cents or so to trade a 353 00:20:02,960 --> 00:20:05,600 Speaker 3: share a stock. So this is all part of the 354 00:20:05,640 --> 00:20:09,840 Speaker 3: evolution of the capital markets, and the trend to staying 355 00:20:09,920 --> 00:20:13,520 Speaker 3: private is substantial. Now. Having said that, we took at 356 00:20:13,520 --> 00:20:16,240 Speaker 3: Carlisle in the past six months, we took three companies public. 357 00:20:16,280 --> 00:20:18,320 Speaker 3: We took Standard a Republic in the United States, which 358 00:20:18,359 --> 00:20:22,720 Speaker 3: is an aerospace defense MRO, and that was the third 359 00:20:22,760 --> 00:20:25,639 Speaker 3: largest IPO of the year. We did the largest private 360 00:20:25,640 --> 00:20:29,720 Speaker 3: equity held IPO in India a few weeks ago, Hexaware, 361 00:20:31,400 --> 00:20:35,360 Speaker 3: and then we did the largest ever privately held company 362 00:20:35,400 --> 00:20:38,679 Speaker 3: IPO in Japan last year with Goaku. So the public 363 00:20:38,680 --> 00:20:42,320 Speaker 3: markets are still a fantastic opportunity to provide capital, but 364 00:20:42,440 --> 00:20:45,800 Speaker 3: the option to stay private for longer exists. But the 365 00:20:45,880 --> 00:20:49,320 Speaker 3: capital that's coming in is creating the opportunity. Obviously, then 366 00:20:49,359 --> 00:20:50,560 Speaker 3: you get this flywhee effect. 367 00:20:51,040 --> 00:20:53,680 Speaker 2: And to put some numbers on at the famous Wilshire 368 00:20:53,760 --> 00:20:57,440 Speaker 2: five thousand is about thirty four hundred stocks, right, Yeah, 369 00:20:57,240 --> 00:21:01,600 Speaker 2: So let's talk about the different areas of opportunity. You 370 00:21:01,680 --> 00:21:05,199 Speaker 2: guys are active in growth equity and private credit and 371 00:21:05,280 --> 00:21:08,679 Speaker 2: private debt, of which there is a slight difference, and 372 00:21:08,760 --> 00:21:12,040 Speaker 2: of course private equity. Tell us about the big growth 373 00:21:12,080 --> 00:21:16,560 Speaker 2: areas that Carlisle sees as an opportunity, and tell the 374 00:21:16,640 --> 00:21:21,160 Speaker 2: advisor sitting in the audience what the sort of outlook 375 00:21:21,280 --> 00:21:24,560 Speaker 2: is for this space relative to what we've been seeing 376 00:21:24,800 --> 00:21:28,240 Speaker 2: in certainly in public credit, and if you want to 377 00:21:28,240 --> 00:21:31,440 Speaker 2: talk about public markets, you can. That's the cherry on top. 378 00:21:31,840 --> 00:21:34,840 Speaker 3: Yeah. So I think again for everybody here, for the 379 00:21:34,880 --> 00:21:38,440 Speaker 3: wealth advisors here, I don't do what you do. And 380 00:21:38,560 --> 00:21:41,360 Speaker 3: as I said earlier, I was kind of uniquely bad 381 00:21:41,359 --> 00:21:43,359 Speaker 3: at it back in nineteen eighty seven, and not that 382 00:21:43,359 --> 00:21:46,080 Speaker 3: that was the same thing. But if you can't sell 383 00:21:46,160 --> 00:21:48,760 Speaker 3: tax free municipal bonds at twelve percent tax free, you're 384 00:21:48,760 --> 00:21:50,040 Speaker 3: pretty uniquely bad at something. 385 00:21:50,280 --> 00:21:52,720 Speaker 2: Let me let me interrupt you. I have this vision 386 00:21:52,800 --> 00:21:56,040 Speaker 2: of you cold calling people. Hey, it's Harvey Schwartz. Market's 387 00:21:56,080 --> 00:21:59,119 Speaker 2: down twenty two percent today, great entry point. Can I 388 00:21:59,160 --> 00:21:59,960 Speaker 2: buy you some stuff? 389 00:22:00,560 --> 00:22:03,800 Speaker 3: Yeah, you did what you had to do. I think 390 00:22:03,840 --> 00:22:05,520 Speaker 3: the most the most dials I ever made was five 391 00:22:05,560 --> 00:22:09,480 Speaker 3: hundred and eight uh in a day with not a 392 00:22:09,520 --> 00:22:15,520 Speaker 3: lot of yield. But I would say that just like 393 00:22:15,760 --> 00:22:17,919 Speaker 3: certain stocks are not great for every client on the 394 00:22:17,920 --> 00:22:21,560 Speaker 3: well side, and certain other forms of investment are not 395 00:22:21,600 --> 00:22:24,919 Speaker 3: great for your your wealth clients, I think you have 396 00:22:24,960 --> 00:22:26,800 Speaker 3: to first make a determination about whether or not this 397 00:22:26,880 --> 00:22:28,400 Speaker 3: is appropriate for your client and where does it fit 398 00:22:28,440 --> 00:22:33,679 Speaker 3: into your toolkit. I think that there is a really 399 00:22:33,760 --> 00:22:37,760 Speaker 3: unique role, whether it's in asset based finance, which is 400 00:22:37,760 --> 00:22:41,960 Speaker 3: a very fast growing section of the marketplace. We did 401 00:22:42,000 --> 00:22:46,679 Speaker 3: the largest transaction last year discover Card, which is an 402 00:22:46,680 --> 00:22:50,199 Speaker 3: asset based finance transaction. Whether it's that part of the market, 403 00:22:50,440 --> 00:22:53,800 Speaker 3: or how insurance companies are coming into the marketplace, or 404 00:22:53,840 --> 00:22:56,560 Speaker 3: whether your clients have an interest in getting access to 405 00:22:56,640 --> 00:23:01,080 Speaker 3: Japan where we raised the fund last year, or if 406 00:23:01,119 --> 00:23:05,520 Speaker 3: your interest, for example, is shifting to defense. One of 407 00:23:05,560 --> 00:23:08,399 Speaker 3: the first transactions Carver did Carlo Ever did in nineteen 408 00:23:08,480 --> 00:23:11,560 Speaker 3: ninety was in the defense sector. We've been doing this 409 00:23:11,600 --> 00:23:15,800 Speaker 3: for over thirty years. You wouldn't have necessarily said five 410 00:23:15,880 --> 00:23:18,399 Speaker 3: years ago this would be the topic around the world 411 00:23:18,680 --> 00:23:22,159 Speaker 3: given what's happening geopolitically, Europe now committing to spend a 412 00:23:22,240 --> 00:23:25,440 Speaker 3: trillion dollars. What does this mean the US has to 413 00:23:25,520 --> 00:23:30,040 Speaker 3: replace their supplies, our supplies. And so I do think 414 00:23:30,119 --> 00:23:34,040 Speaker 3: that the capital demand is so high. And while we 415 00:23:34,160 --> 00:23:37,760 Speaker 3: tend to focus a lot on wealth in the United States, 416 00:23:38,520 --> 00:23:40,040 Speaker 3: because I do think the United States has been the 417 00:23:40,160 --> 00:23:43,120 Speaker 3: leader in terms of private market adoption, I can tell 418 00:23:43,119 --> 00:23:47,160 Speaker 3: you everyone in the world I go wealth is focused 419 00:23:47,200 --> 00:23:49,280 Speaker 3: on this space. Half of all the assets in the 420 00:23:49,320 --> 00:23:52,920 Speaker 3: world are controlled by wealth, the other half by institutions. 421 00:23:53,000 --> 00:23:55,960 Speaker 3: Institutions have been participating in private capital for as long 422 00:23:55,960 --> 00:24:00,000 Speaker 3: as we can remember, and so this shift feels quite now. 423 00:24:00,720 --> 00:24:02,720 Speaker 3: I just think as an industry we have to be really, 424 00:24:02,760 --> 00:24:06,000 Speaker 3: really thoughtful about making sure that your clients in the 425 00:24:06,119 --> 00:24:09,479 Speaker 3: end they that we all on our side and are 426 00:24:09,520 --> 00:24:12,080 Speaker 3: part of the industry. What we say we do, we 427 00:24:12,200 --> 00:24:14,320 Speaker 3: delivered to you. So you delivered to your clients. Because 428 00:24:14,320 --> 00:24:16,040 Speaker 3: I do think this is we're in the early days 429 00:24:16,080 --> 00:24:17,840 Speaker 3: of a transformative capital shift. 430 00:24:18,560 --> 00:24:21,520 Speaker 2: So let's talk a little bit about private credit, which 431 00:24:21,520 --> 00:24:25,719 Speaker 2: has been one of the key growth drivers of Carlisle 432 00:24:25,800 --> 00:24:27,879 Speaker 2: as well as the whole private side. What are you 433 00:24:27,920 --> 00:24:31,080 Speaker 2: seeing there, what's the future look like in terms of 434 00:24:31,200 --> 00:24:34,480 Speaker 2: the business, and I'm not asking you for a rate forecast. 435 00:24:34,800 --> 00:24:38,560 Speaker 2: How do you see that business developing? And what can 436 00:24:38,720 --> 00:24:40,480 Speaker 2: our clients do to participate? 437 00:24:40,920 --> 00:24:44,280 Speaker 3: So I would say, well, first of all, the Carlisle 438 00:24:45,200 --> 00:24:47,639 Speaker 3: Carlisle Insurance credit platform is the largest part of the 439 00:24:47,640 --> 00:24:50,240 Speaker 3: business today, which most people are surprised by because of 440 00:24:50,240 --> 00:24:53,240 Speaker 3: the history and private equity. That's the largest portion of 441 00:24:53,240 --> 00:24:55,920 Speaker 3: our business almost two hundred billion in assets. We're the 442 00:24:56,000 --> 00:25:01,159 Speaker 3: largest COLO Manager super proud of the team. They just 443 00:25:01,200 --> 00:25:03,520 Speaker 3: were awarded COLO Manager of the year, it's about fifty 444 00:25:03,520 --> 00:25:06,000 Speaker 3: billion of assets. So we've been in this business for 445 00:25:06,040 --> 00:25:11,080 Speaker 3: quite a long time. I would say that first, I 446 00:25:11,080 --> 00:25:13,640 Speaker 3: think we should dismiss what I think are some misunderstandings 447 00:25:13,760 --> 00:25:17,239 Speaker 3: about private credit. There's a lot of discussion about the 448 00:25:17,280 --> 00:25:23,159 Speaker 3: growth of private credit being potentially systemically risky. I actually 449 00:25:23,160 --> 00:25:26,560 Speaker 3: think the distribution of capital across private credit banks and 450 00:25:26,600 --> 00:25:30,720 Speaker 3: other providers of capital actually is systemically reducing, not increasing. 451 00:25:31,800 --> 00:25:33,680 Speaker 3: But I think that debate is kind of that discussion 452 00:25:33,680 --> 00:25:37,080 Speaker 3: has kind of been tested. Right. We went through Silicon 453 00:25:37,160 --> 00:25:39,640 Speaker 3: Valley Bank. We went through nearly five hundred basis points 454 00:25:39,640 --> 00:25:43,040 Speaker 3: of raised in interest rates and increases by the FED, 455 00:25:43,400 --> 00:25:46,280 Speaker 3: and private credit has been quite durable. I think when 456 00:25:46,280 --> 00:25:47,920 Speaker 3: you have a lot of capital going into a space, 457 00:25:47,960 --> 00:25:50,399 Speaker 3: you have to ask yourself, are the people who are 458 00:25:50,440 --> 00:25:55,439 Speaker 3: storing that capital making the marginal capital commitment thoughtfully or 459 00:25:55,480 --> 00:25:57,520 Speaker 3: is there too much capital? But I think that's about 460 00:25:57,560 --> 00:26:01,840 Speaker 3: a performance question, not as systemically risky question. And so 461 00:26:02,560 --> 00:26:06,480 Speaker 3: I think that again, if you think about the trajectory 462 00:26:06,520 --> 00:26:10,960 Speaker 3: of how capital evolves, it really evolves over decades. Barry. Now, 463 00:26:11,000 --> 00:26:16,560 Speaker 3: there's a lot of excitement in alternatives, and particularly for 464 00:26:16,720 --> 00:26:20,320 Speaker 3: the largest firms like ourselves because it's a growth area. 465 00:26:20,600 --> 00:26:24,240 Speaker 3: Having a global footprint allows you those opportunities. But our 466 00:26:24,240 --> 00:26:26,760 Speaker 3: team is seeing opportunities all around the world to deploy credit, 467 00:26:27,280 --> 00:26:32,000 Speaker 3: and actually, even before this sort of potential stimulus resurgence 468 00:26:32,000 --> 00:26:35,120 Speaker 3: in Europe, we were already seeing I would say, at 469 00:26:35,119 --> 00:26:38,000 Speaker 3: the margin, more opportunities to deploy credit in Europe than 470 00:26:38,040 --> 00:26:40,919 Speaker 3: in the US. Now at Carlisle you can all avail 471 00:26:40,960 --> 00:26:44,480 Speaker 3: yourself of c Tech, which is basically the best of 472 00:26:44,560 --> 00:26:49,399 Speaker 3: credit at Carlisle across a spectrum. And again Zach can 473 00:26:49,400 --> 00:26:52,800 Speaker 3: give you all the details after the show. But I'm 474 00:26:52,840 --> 00:26:55,840 Speaker 3: a customer. I on Sea Tech and I keep adding 475 00:26:55,840 --> 00:27:01,520 Speaker 3: to it, and so I think the opportunities are extensive. 476 00:27:02,119 --> 00:27:06,560 Speaker 3: I do think for again, generically for the audience, I 477 00:27:06,600 --> 00:27:09,679 Speaker 3: think picking vintages is not necessarily the smartest thing, just 478 00:27:09,720 --> 00:27:12,199 Speaker 3: like I don't think actually picking heis and lows in 479 00:27:12,200 --> 00:27:13,680 Speaker 3: the stock market is the easiest thing to do. And 480 00:27:13,720 --> 00:27:15,480 Speaker 3: I think if you're going to be a participant, you 481 00:27:15,520 --> 00:27:16,920 Speaker 3: want to be a participant over time. 482 00:27:17,720 --> 00:27:21,439 Speaker 2: So I'm glad you brought up the FED raising interest 483 00:27:21,520 --> 00:27:25,080 Speaker 2: rates five hundred basis points in a year really being 484 00:27:25,240 --> 00:27:29,320 Speaker 2: a disruption. You have a unique perch to look out 485 00:27:29,760 --> 00:27:35,159 Speaker 2: over public equity, private equity, public credit, private credit. I 486 00:27:35,200 --> 00:27:39,960 Speaker 2: got to ask, it seems like everybody misinterpreted what the 487 00:27:40,000 --> 00:27:42,560 Speaker 2: Fed was doing, how they were going to do. There 488 00:27:42,600 --> 00:27:45,280 Speaker 2: was just an endless parade of forecasts. One of them 489 00:27:45,440 --> 00:27:48,880 Speaker 2: was one hundred percent chance of recession in twenty twenty three. 490 00:27:51,000 --> 00:27:53,520 Speaker 2: Why do you think so many people got what the 491 00:27:53,560 --> 00:27:57,080 Speaker 2: Fed did wrong? And how much or how little do 492 00:27:57,160 --> 00:28:02,480 Speaker 2: you care about short term shifts in federal reserve rates? 493 00:28:02,720 --> 00:28:05,560 Speaker 3: Okay, so a lot in that question, So let me 494 00:28:05,720 --> 00:28:10,359 Speaker 3: unpack it a bit. So first, for those who don't know, 495 00:28:10,400 --> 00:28:14,919 Speaker 3: there's some incredible content that comes out of Carlisle based 496 00:28:14,920 --> 00:28:18,399 Speaker 3: on our unique portfolio. So up until recently we just 497 00:28:18,440 --> 00:28:20,240 Speaker 3: sold a couple of companies. We had close to a 498 00:28:20,280 --> 00:28:23,439 Speaker 3: million employees in our portfolio companies around the world, and 499 00:28:23,480 --> 00:28:25,159 Speaker 3: we roll up all that data. So it gives us 500 00:28:25,200 --> 00:28:28,600 Speaker 3: a very very unique perch into looking at what is 501 00:28:28,640 --> 00:28:31,800 Speaker 3: happening in the economy. And this is across all industries globally. 502 00:28:32,040 --> 00:28:33,639 Speaker 3: So I'm going to come back to that in a second. 503 00:28:33,640 --> 00:28:35,480 Speaker 3: But as a result, we're able to put out some 504 00:28:35,520 --> 00:28:38,360 Speaker 3: amazing content. You know, you mentioned, David, for those of 505 00:28:38,360 --> 00:28:40,880 Speaker 3: you arenor on it. David puts out something called from 506 00:28:40,960 --> 00:28:45,240 Speaker 3: David's Desk. He wrote this amazing document recently about pandas. 507 00:28:45,560 --> 00:28:47,840 Speaker 3: I know that seems a little far field, but all 508 00:28:47,880 --> 00:28:50,160 Speaker 3: your clients would love it. It's extraordinary. Did you know 509 00:28:50,200 --> 00:28:52,280 Speaker 3: that are panda's like the side when it's born is 510 00:28:52,360 --> 00:28:54,040 Speaker 3: the size of a stick of butter? If you read 511 00:28:54,080 --> 00:28:56,520 Speaker 3: David's piece on pandas. By the way, he's sponsored all 512 00:28:56,520 --> 00:28:58,800 Speaker 3: the pandas to your point that have come in from 513 00:28:58,880 --> 00:29:00,920 Speaker 3: China over the past I think decade. He pays for 514 00:29:00,960 --> 00:29:03,080 Speaker 3: the he pays the fees for the pandas to come 515 00:29:03,120 --> 00:29:08,040 Speaker 3: to America. Jason Thomas is our lead economist and strategist. 516 00:29:08,640 --> 00:29:11,719 Speaker 3: Jason puts out Carlisle Compass and I'm going to come 517 00:29:11,720 --> 00:29:13,280 Speaker 3: back to Jason in a second. And then we have 518 00:29:14,400 --> 00:29:17,200 Speaker 3: Admiral stap Ridez who does all the geopolitical work and 519 00:29:17,240 --> 00:29:20,800 Speaker 3: has a leadership series that he puts out, and he's 520 00:29:20,840 --> 00:29:23,280 Speaker 3: a partner at the firm. Why do I mention Jason? 521 00:29:23,680 --> 00:29:25,840 Speaker 3: Jason rolls up all these KPIs. And if you've been 522 00:29:25,840 --> 00:29:28,080 Speaker 3: reading Jason's material since I showed up at Carlisle two 523 00:29:28,120 --> 00:29:30,040 Speaker 3: years ago, he was one of the few, if not 524 00:29:30,080 --> 00:29:32,440 Speaker 3: the only one barrier that was saying, the FED is 525 00:29:32,440 --> 00:29:34,920 Speaker 3: going to keep rates where they are, and he has 526 00:29:35,040 --> 00:29:38,080 Speaker 3: nailed it. Now, he's nailed it because he's brilliant. I'm 527 00:29:38,120 --> 00:29:40,920 Speaker 3: honored that he's my partner. But he also has all 528 00:29:40,960 --> 00:29:43,760 Speaker 3: this data, and so when we roll up the data, 529 00:29:44,240 --> 00:29:46,640 Speaker 3: we get the look inside what's happening in terms of 530 00:29:48,560 --> 00:29:52,880 Speaker 3: portfolio company behavior, what's happening with input prices. So we 531 00:29:52,920 --> 00:29:55,600 Speaker 3: could see months in advance, if there was like a 532 00:29:55,640 --> 00:29:59,160 Speaker 3: one dollar input item when it was the supply chain problem, 533 00:29:59,280 --> 00:30:02,360 Speaker 3: if that went to two dollars in many cases it did. Right, 534 00:30:02,360 --> 00:30:05,000 Speaker 3: so we all see headline inflation when it was seven 535 00:30:05,040 --> 00:30:07,320 Speaker 3: eight nine percent, but there were input prices that were 536 00:30:07,320 --> 00:30:09,880 Speaker 3: going up fifty sixty eighty percent, and then we could 537 00:30:09,880 --> 00:30:12,800 Speaker 3: see that come off. So now to cut to your question, 538 00:30:14,000 --> 00:30:17,200 Speaker 3: coming into the beginning of this year, all the signals 539 00:30:17,240 --> 00:30:21,480 Speaker 3: were quite positive. We had EBITDAH growth across all the 540 00:30:21,480 --> 00:30:24,040 Speaker 3: portfolio companies in the US. It was up something like 541 00:30:24,080 --> 00:30:28,680 Speaker 3: fifteen percent. Last year. Our portfolio values went up by 542 00:30:28,840 --> 00:30:32,520 Speaker 3: billions because the global economy and the economy in the 543 00:30:32,600 --> 00:30:36,400 Speaker 3: US was so strong, and we were still saying rates 544 00:30:36,400 --> 00:30:39,600 Speaker 3: wouldn't come down. Now the market's caught up to that, okay. 545 00:30:39,920 --> 00:30:42,800 Speaker 3: I would say, now it's a question of with the 546 00:30:42,840 --> 00:30:46,880 Speaker 3: new administration, how do the policies ultimately take effect. I 547 00:30:46,880 --> 00:30:49,400 Speaker 3: think it's more difficult to say at this exact stage 548 00:30:49,400 --> 00:30:52,160 Speaker 3: what FED behavior will mean. I also would say, like 549 00:30:52,160 --> 00:30:54,440 Speaker 3: for example, in the January February data, what we're seeing 550 00:30:54,480 --> 00:30:57,320 Speaker 3: is what you'd expect we would see. We saw, for example, 551 00:30:57,680 --> 00:31:01,920 Speaker 3: a lot of immediate purchasing in advance of potential tariffs. 552 00:31:02,360 --> 00:31:04,480 Speaker 3: If you look at the Purchasing Managers index, I think 553 00:31:04,760 --> 00:31:09,160 Speaker 3: the component of inventories was up four percent. That's all 554 00:31:09,400 --> 00:31:12,280 Speaker 3: managers doing, all businesses doing what you think they would do. 555 00:31:12,440 --> 00:31:14,080 Speaker 3: They're basically saying, hey, prices are going to go in 556 00:31:14,120 --> 00:31:15,880 Speaker 3: the future, I'm going to buy now, which of course 557 00:31:15,920 --> 00:31:21,320 Speaker 3: brings price acceleration into the present. But right now we're 558 00:31:21,360 --> 00:31:26,160 Speaker 3: not seeing any marginal demand destruction. The data still looks 559 00:31:26,240 --> 00:31:29,240 Speaker 3: quite positive, and so we would believe that rates should 560 00:31:29,240 --> 00:31:32,760 Speaker 3: stay stable higher. But we really have to see ultimately 561 00:31:32,760 --> 00:31:38,000 Speaker 3: how the combination of tax policy, deregulation, tariffs, how all 562 00:31:38,080 --> 00:31:42,280 Speaker 3: this comes together. And I would say we're just at 563 00:31:42,280 --> 00:31:46,320 Speaker 3: an environment now with much more increased uncertainty and I 564 00:31:46,320 --> 00:31:48,640 Speaker 3: think when we came in the new administration, I think 565 00:31:48,640 --> 00:31:51,280 Speaker 3: there was this real sense of, hey, we have certainty. 566 00:31:51,920 --> 00:31:55,080 Speaker 3: We got through an election with certainty. Then we had okay, 567 00:31:55,080 --> 00:31:58,160 Speaker 3: we're going to get tax policy, deregulation, very pro business agenda. 568 00:31:58,800 --> 00:32:02,000 Speaker 3: And now it's sort of the conversation been consumed by 569 00:32:02,040 --> 00:32:05,520 Speaker 3: Tariff's uncertainty and obviously a lot of geopolitical uncertainty still. 570 00:32:05,560 --> 00:32:07,800 Speaker 3: And so I just think uncertainty is dominating the dialogue 571 00:32:07,840 --> 00:32:10,120 Speaker 3: right now, but we're not seeing it in the portfolio companies. 572 00:32:10,680 --> 00:32:14,719 Speaker 2: Makes a lot of sense. Last question, on the private side, 573 00:32:15,400 --> 00:32:19,719 Speaker 2: the expectations are that private equity, private credit as an 574 00:32:19,760 --> 00:32:23,680 Speaker 2: asset class. End of the decade, you can choose your 575 00:32:24,080 --> 00:32:28,760 Speaker 2: preferred estimate two point seventy five trillion, three trillion. I've 576 00:32:28,800 --> 00:32:32,640 Speaker 2: even seen above that. How do you see the space 577 00:32:32,680 --> 00:32:35,400 Speaker 2: that the waters that you guys ply in, How do 578 00:32:35,440 --> 00:32:39,720 Speaker 2: you see the growth continuing? Are we getting close to 579 00:32:39,720 --> 00:32:42,160 Speaker 2: topping out or is this still early innings? 580 00:32:43,240 --> 00:32:45,520 Speaker 3: No? Well, I think for the industry again, and we're 581 00:32:45,520 --> 00:32:49,880 Speaker 3: talking about an industry that's been around for forty years, 582 00:32:50,240 --> 00:32:53,320 Speaker 3: so in the scheme of economic history and business development, 583 00:32:53,840 --> 00:32:58,640 Speaker 3: it's quite short. And of course private credit. That's a 584 00:32:58,880 --> 00:33:02,920 Speaker 3: fifteen a teen, twenty year phenomenon. Even a shorter period. 585 00:33:03,400 --> 00:33:06,040 Speaker 3: Asset based finance becoming a big part of the industry 586 00:33:06,200 --> 00:33:11,000 Speaker 3: is an even more a newer phenomenon. I think a 587 00:33:11,040 --> 00:33:15,040 Speaker 3: lot of it will depend on really what does happen 588 00:33:15,080 --> 00:33:17,960 Speaker 3: with wealth. That is the pool of capital that's now 589 00:33:18,000 --> 00:33:21,760 Speaker 3: coming in, and I think it will continue to drive opportunities. 590 00:33:22,440 --> 00:33:26,160 Speaker 3: It will be super efficient the more capital is available 591 00:33:26,160 --> 00:33:29,280 Speaker 3: to the market, and companies will continue to take advantage 592 00:33:29,280 --> 00:33:32,080 Speaker 3: of it. So again, companies don't decide to stay private 593 00:33:32,360 --> 00:33:34,600 Speaker 3: because they just love being private. They decide to stay 594 00:33:34,600 --> 00:33:37,080 Speaker 3: private because they may like being private, but also because 595 00:33:37,120 --> 00:33:38,720 Speaker 3: it's the most efficient way for them to grow and 596 00:33:38,760 --> 00:33:41,640 Speaker 3: the most efficient way for them to source capital. This audience, 597 00:33:42,360 --> 00:33:45,200 Speaker 3: if any of these numbers come true, I've seen numbers 598 00:33:45,200 --> 00:33:47,240 Speaker 3: as big as ten trillion over the next ten years 599 00:33:47,400 --> 00:33:50,480 Speaker 3: ten percent. If any of those numbers are even remotely accurate, 600 00:33:51,200 --> 00:33:53,200 Speaker 3: the space will continue to grow. Now you're going to 601 00:33:53,320 --> 00:33:57,920 Speaker 3: need scale, sourcing, opportunity, reputation. We have to deliver on 602 00:33:57,960 --> 00:34:00,640 Speaker 3: what we say we're going to do. Technology we haven't 603 00:34:00,640 --> 00:34:02,280 Speaker 3: even talked about. We could do a whole session on 604 00:34:02,320 --> 00:34:05,320 Speaker 3: that technology. You have to be able to deploy technology 605 00:34:05,360 --> 00:34:08,279 Speaker 3: in very unique ways, especially with AI. So I think 606 00:34:08,320 --> 00:34:11,720 Speaker 3: this is going to continue to grow. It won't always 607 00:34:11,760 --> 00:34:14,920 Speaker 3: be perfect, but I do think again this audience at 608 00:34:14,960 --> 00:34:17,799 Speaker 3: the margin will shape the nature of private capital for 609 00:34:17,800 --> 00:34:18,680 Speaker 3: the next decade. 610 00:34:18,800 --> 00:34:22,160 Speaker 2: That was my conversation with Harvey Schwartz, CEO of the 611 00:34:22,200 --> 00:34:25,600 Speaker 2: Carlisle Group. We're going to bring him into the studio 612 00:34:26,600 --> 00:34:29,880 Speaker 2: for a full treatment for the full masters and business 613 00:34:29,960 --> 00:34:33,320 Speaker 2: conversation where we're not fighting the sun and the winds. 614 00:34:33,960 --> 00:34:36,640 Speaker 2: It was really fun chatting with him. I learned a 615 00:34:36,680 --> 00:34:39,919 Speaker 2: lot about him and about Carlisle. There are a whole 616 00:34:40,000 --> 00:34:43,520 Speaker 2: bunch more questions I'm really excited to ask him. Special 617 00:34:43,600 --> 00:34:48,399 Speaker 2: thanks to Matt Middleton of Advisor Circle for helping put 618 00:34:48,440 --> 00:34:52,200 Speaker 2: this together. It really was a blast. If you enjoy 619 00:34:52,280 --> 00:34:54,400 Speaker 2: this conversation, well, be sure and check out any of 620 00:34:54,400 --> 00:34:57,400 Speaker 2: the previous five hundred or so we've done over the 621 00:34:57,440 --> 00:35:02,760 Speaker 2: past ten years. You can find those that Bloomberg, iTunes, Spotify, YouTube, 622 00:35:02,800 --> 00:35:06,560 Speaker 2: wherever you get your favorite podcasts. Be sure and check 623 00:35:06,600 --> 00:35:10,040 Speaker 2: out my new book, How Not to Invest The ideas, 624 00:35:10,160 --> 00:35:14,000 Speaker 2: numbers and behaviors that destroy wealth and how to avoid them. 625 00:35:14,320 --> 00:35:18,200 Speaker 2: I'm Barry Radhaults. You're listening to Masters of business on 626 00:35:18,400 --> 00:35:19,400 Speaker 2: Bloomberg Radio.