WEBVTT - Joan Solotar on Private Equity Funds (Podcast) 0:00:02.080 --> 0:00:07.200 This is Mesters in Business with Very Results on Bluebird Radio. 0:00:09.400 --> 0:00:12.520 This week, on the podcast, I have an extra special guest, 0:00:12.760 --> 0:00:16.720 Joan Solitar. She's the global head of Private Wealth Solutions 0:00:17.280 --> 0:00:21.360 at private investment giant black Stone. They run about six 0:00:22.120 --> 0:00:25.880 four billion dollars in assets. The Private Wealth Solution Group 0:00:26.040 --> 0:00:29.800 runs over a hundred billion dollars and man, this is 0:00:30.680 --> 0:00:34.600 name it. If you're interested in any sort of alternative investment, 0:00:34.680 --> 0:00:38.680 from private equity to real estate, to non traded rates 0:00:39.159 --> 0:00:42.720 to debt and credit, you're gonna find this to be 0:00:43.120 --> 0:00:47.760 absolutely fascinating. Joan has had really an amazing career from 0:00:47.760 --> 0:00:52.680 from research uh to she helped bring black Stone public. 0:00:53.080 --> 0:00:57.440 She's just got a tremendous background and is incredibly knowledgeable 0:00:57.440 --> 0:01:01.840 about the space. I only suggests listening to this twice 0:01:02.320 --> 0:01:04.640 because a lot of stuff goes by quickly with no 0:01:04.760 --> 0:01:11.800 further ado. My conversation with Joan Solotar. This is Master's 0:01:11.840 --> 0:01:18.640 in Business with Very Renaults on Bloomberg Radio. My special 0:01:18.640 --> 0:01:23.080 guest this week is Joan Solotar. She is Blackstone's global 0:01:23.160 --> 0:01:26.720 head of Private Wealth Solutions. She has been named one 0:01:26.760 --> 0:01:30.759 of the hundred most Influential Women in Finance several years running. 0:01:31.280 --> 0:01:35.039 Black Stone is the world's largest alternative asset manager, with 0:01:35.200 --> 0:01:40.720 six four billion in assets. Jones Department, the Private Wealth 0:01:40.880 --> 0:01:45.440 Solution manages over a hundred billion dollars in assets. Before 0:01:45.560 --> 0:01:48.520 joining black Stone in two thousand and seven, Miss Solotar 0:01:48.680 --> 0:01:53.160 was head of equity research at Bank America Securities and 0:01:53.240 --> 0:01:58.480 a highly ranked institutional investor All Star. Joan Solotar, Welcome 0:01:58.680 --> 0:02:02.440 to Bloomberg. Thank you, thanks for having me my pleasure. So, 0:02:02.440 --> 0:02:04.640 so let's talk a little bit about your career. You 0:02:05.000 --> 0:02:09.200 were at Credit Swiss and uh D l J as 0:02:09.200 --> 0:02:11.800 a highly ranked analyst. What what did you cover? What 0:02:11.880 --> 0:02:16.239 was your space? I covered financial services pretty much anything 0:02:16.400 --> 0:02:21.360 non bank uh so started in insurance and then wound 0:02:21.400 --> 0:02:27.360 my way to you know, mortgage insurance companies. Eventually really 0:02:27.360 --> 0:02:31.520 focused on the brokerage industry and asset management. Very interesting. 0:02:31.600 --> 0:02:35.760 And then you end up at a Bank America Maryland Securities. 0:02:35.760 --> 0:02:38.600 You were head of research there, correct that I know 0:02:38.760 --> 0:02:41.919 lots and lots of folks from old Mother Meryl were 0:02:42.560 --> 0:02:46.080 either strategists or in the research department. How did you 0:02:46.200 --> 0:02:49.839 leap from there to Blackstone? So? When I was at 0:02:50.040 --> 0:02:53.440 D l J, I worked on the firm's public offering. 0:02:53.480 --> 0:02:58.040 We were spun out of Equitable and Tony James was 0:02:59.120 --> 0:03:02.160 president of d LJ Very Senior credit Suites, and then 0:03:02.440 --> 0:03:06.360 he went over to become president of Blackstone and called 0:03:06.400 --> 0:03:08.919 me when they filed to go public to see if 0:03:08.960 --> 0:03:12.400 I would join to help them with that process and 0:03:12.520 --> 0:03:16.880 run sharehold relations and strategy, which is what I did initially. So, 0:03:16.880 --> 0:03:20.920 so how do you transition from shareholder relations to private 0:03:20.919 --> 0:03:25.320 wealth solutions? So I I've held a few different roles 0:03:25.360 --> 0:03:31.000 at Blackstone. I'd say the common theme among them is 0:03:31.040 --> 0:03:35.640 that I've always worked across the entire firm and in 0:03:35.800 --> 0:03:39.560 private wealth. I was asked to move in and and 0:03:39.600 --> 0:03:45.240 really create a scale, global business, and so I took 0:03:45.280 --> 0:03:49.480 the skill set that I had around uh, being a 0:03:49.480 --> 0:03:53.600 strategic thinker and being able to manage teams of people, 0:03:53.640 --> 0:03:57.680 which I did at UM at b of A, and 0:03:58.040 --> 0:04:02.880 really applied that here the last six years. So you 0:04:02.960 --> 0:04:08.760 were there pre I p O, two weeks pre IPO. Okay, 0:04:08.760 --> 0:04:10.680 so that counts a little bit a little. I was 0:04:10.720 --> 0:04:14.360 going to ask you what the difference was working at 0:04:14.360 --> 0:04:16.520 a private company versus a public company, but I don't 0:04:16.520 --> 0:04:19.960 know how much that would apply you've mostly been at 0:04:20.200 --> 0:04:23.440 public companies your whole career. Yes, well, d l J 0:04:24.360 --> 0:04:29.040 was subsidiary of Equitable, which was a subsidiary of Access, 0:04:29.080 --> 0:04:32.960 So until it yourself went public, didn't feel like that. 0:04:33.480 --> 0:04:37.440 It felt very much UM in a lot of similar 0:04:37.480 --> 0:04:42.240 ways to Blackstone, like a partnership, and even Blackstone when 0:04:42.279 --> 0:04:45.520 I first joined, you know, fewer than a thousand employees, 0:04:45.600 --> 0:04:49.280 it was, it felt like a partnership, still small, and 0:04:50.200 --> 0:04:54.880 now it's considerably larger than than a thousand employees, isn't 0:04:54.880 --> 0:04:58.000 it correct? So probably not as big as many think, 0:04:58.200 --> 0:05:01.600 But we're about a little more than three thousand employees globally. 0:05:01.880 --> 0:05:05.200 That's that's quite a chunk. So black Stone has made 0:05:05.240 --> 0:05:09.400 a very large bet on the individual, focusing on one 0:05:09.520 --> 0:05:15.480 to five million dollar clients through investment advisors. Tell us 0:05:15.480 --> 0:05:18.640 a little bit about the thinking behind that move, because 0:05:18.680 --> 0:05:21.240 I think when most people think of of black Stone, 0:05:21.960 --> 0:05:26.359 they think big institutions, not individuals. So you have to 0:05:26.440 --> 0:05:28.920 really go back in time, and I'll put my strategy 0:05:29.040 --> 0:05:33.240 pat back on UM. During the financial crisis, we were 0:05:33.279 --> 0:05:38.599 thinking a lot about where money was coming from for 0:05:38.839 --> 0:05:44.839 our funds, and we were very heavily dependent upon us 0:05:44.960 --> 0:05:49.359 pension funds, who are still quite an important set of 0:05:49.440 --> 0:05:53.000 clients for the firm, And at that time we made 0:05:53.000 --> 0:05:58.960 the decision to expand internationally, both Europe and Asia, and 0:05:59.000 --> 0:06:02.120 then also start to think about how we would approach 0:06:02.960 --> 0:06:09.800 private wealth. Uh So we started distributing through the big 0:06:09.839 --> 0:06:14.680 wire houses initially and really focused on qualified purchasers. Uh 0:06:14.720 --> 0:06:17.479 so those five million and above who could invest in 0:06:17.520 --> 0:06:22.520 the traditional private equity funds UM. But more and more 0:06:22.560 --> 0:06:25.800 we were getting inquiries, well, how do we give access 0:06:26.400 --> 0:06:31.880 to good products, good service to more people. And for that, 0:06:32.720 --> 0:06:37.680 uh we began creating bespoke funds to address that market. 0:06:38.480 --> 0:06:43.440 And these are accredited investors or not, and somewhat more 0:06:43.480 --> 0:06:48.520 sophisticated than UM the average investor. When I was preparing 0:06:49.000 --> 0:06:54.240 for this, I came across a Business Insider column that 0:06:54.400 --> 0:06:58.839 described what you you said was your AHA moment that 0:06:59.040 --> 0:07:02.960 totally changed your career. Tell us what was that moment 0:07:03.960 --> 0:07:08.400 I believe you're referring to. When I was at d 0:07:08.640 --> 0:07:13.240 l J and one of the we call them principles 0:07:13.280 --> 0:07:16.800 like partners came into my office and said, Hey, you know, 0:07:16.880 --> 0:07:20.840 I'm going to this dinner tonight for Principles and and 0:07:21.080 --> 0:07:24.320 you really should be there, but you need to tell 0:07:24.440 --> 0:07:28.280 people that becoming a principle is important to you. And 0:07:28.600 --> 0:07:30.840 that just never occurred to me. I just thought, like, 0:07:30.960 --> 0:07:32.840 you put your head down, you do a job, and 0:07:32.880 --> 0:07:35.720 someone's like, oh, let's make let's make her a principle. 0:07:36.000 --> 0:07:38.240 And I'm sure that often is the case, but it 0:07:38.320 --> 0:07:41.840 certainly isn't always the case. And so I went into 0:07:41.840 --> 0:07:44.320 the office of the head of research and just said, 0:07:45.000 --> 0:07:48.000 I think I deserved to be principal for the following reasons. 0:07:48.520 --> 0:07:51.400 It is something that's very important to me. And I 0:07:51.480 --> 0:07:54.360 was named a principle that year. So let's talk a 0:07:54.400 --> 0:07:59.000 little bit about black Stone. They've created a tremendous amount 0:07:59.040 --> 0:08:02.520 of wealth with their limited partners and employees as well 0:08:02.560 --> 0:08:05.800 as their shareholders. What do you have to do to 0:08:05.880 --> 0:08:09.240 stay ahead of the pack? This is a hyper competitive 0:08:09.280 --> 0:08:13.000 space with billions and billions of dollars looking for an edge. 0:08:13.400 --> 0:08:15.360 What does Blacks don't have to do to keep its 0:08:15.440 --> 0:08:19.360 leadership role. I think it's a great question. Uh. Steve 0:08:19.400 --> 0:08:26.200 Schwarzman often says that there's nothing patentable in finance, meaning 0:08:26.200 --> 0:08:28.080 everyone in the world can see what you're doing and 0:08:28.120 --> 0:08:31.120 they're app to copy it. If it's successful, so you 0:08:31.200 --> 0:08:36.200 have to keep moving and for our firm, that means 0:08:36.240 --> 0:08:41.880 continuing to find new areas where we see great investment 0:08:41.880 --> 0:08:48.040 opportunities where others aren't as competitive, and that might mean 0:08:48.679 --> 0:08:51.000 you know, we are, for example, the biggest real estate 0:08:51.040 --> 0:08:54.600 investor in the world, so from a scale perspective, there 0:08:54.600 --> 0:08:58.160 are transactions we can do that no one else can do. 0:08:58.720 --> 0:09:02.720 And building that kind of scale in life sciences, in 0:09:02.880 --> 0:09:08.280 direct lending, in private equity, which is a bit more competitive, 0:09:08.280 --> 0:09:11.240 but again not at the scale that we're at, that's 0:09:11.280 --> 0:09:15.920 been a huge advantage for us, especially in this environment. 0:09:17.600 --> 0:09:20.760 Huh So, so you're running the Global Private Wealth Group, 0:09:21.200 --> 0:09:25.280 tell us about that role and what your responsibilities include. 0:09:26.080 --> 0:09:30.160 So it's been just terrific to be involved in the 0:09:30.200 --> 0:09:34.640 building of this business. So essentially we are running Private 0:09:34.640 --> 0:09:38.160 Wealth as an end to end business rather than a 0:09:38.200 --> 0:09:42.280 sales organization. And what does that mean. It means everything 0:09:42.520 --> 0:09:47.840 from product development on the front end, to providing education 0:09:48.160 --> 0:09:55.160 for advisors and marketing material, using data analytics to better 0:09:55.200 --> 0:10:00.840 focus our salespeople, and having a robust investors erviss team 0:10:00.960 --> 0:10:05.880 on the back end and doing that globally, so serving 0:10:06.280 --> 0:10:12.480 your clients. Uh In Japan with folks who are on 0:10:12.559 --> 0:10:18.080 the ground speaking Japanese and having websites in native language, 0:10:18.080 --> 0:10:22.520 which may sound obvious, but takes a lot of people, 0:10:22.640 --> 0:10:26.640 a lot of effort, and we've been able to continue 0:10:26.679 --> 0:10:32.160 to vault ahead of the competition. So you mentioned investors 0:10:32.160 --> 0:10:34.920 and clients, who are the clients tell us about a 0:10:34.920 --> 0:10:40.360 typical PWS investor. So I'll divide the clients into really 0:10:40.440 --> 0:10:47.880 three buckets. At the wealthiest end our family offices which 0:10:47.960 --> 0:10:53.520 are often run like institutions with the chief investment officer, cetera, 0:10:53.640 --> 0:10:56.520 but really want a single point of contact into all 0:10:56.520 --> 0:11:02.319 the Blackstone offers. The next tronche would be qualified purchasers, 0:11:02.400 --> 0:11:06.640 so folks also very wealthy individuals with five million dollars 0:11:06.920 --> 0:11:11.600 or more, and they really are by SEC standards allowed 0:11:11.640 --> 0:11:15.080 to invest in anything. A big part of the market. 0:11:15.320 --> 0:11:17.760 It's what we call accredited in the US. It has 0:11:17.800 --> 0:11:21.959 different names all over the world, but essentially investors with 0:11:22.240 --> 0:11:25.640 one to five million dollars who want and historically have 0:11:25.760 --> 0:11:30.520 not had access to great product. And we also do 0:11:30.679 --> 0:11:36.480 serve investors who are below the million dollar level, but 0:11:37.000 --> 0:11:40.840 not with that many products that are suitable for them, 0:11:41.280 --> 0:11:44.839 and and so one to five five plus. I tend 0:11:44.920 --> 0:11:48.120 to think of family offices as fifty plus, but I 0:11:48.200 --> 0:11:51.760 know that number some people say, some people say hundred. 0:11:51.960 --> 0:11:54.640 How do you look at family offices? Typically we really 0:11:54.679 --> 0:11:59.040 haven't defined it that way, but I think you're fifty 0:11:59.200 --> 0:12:04.040 million is probably a good place. So now an investor 0:12:04.120 --> 0:12:07.319 has five or ten million dollars in a total portfolio, 0:12:08.360 --> 0:12:11.840 and I'm just spit bowling here. They have a million immunis, 0:12:12.040 --> 0:12:16.880 they have another six seven million in traditional, active and 0:12:16.960 --> 0:12:20.680 passive funds, and they have a couple of million dollars 0:12:21.000 --> 0:12:25.400 lying around that. They're looking for a little more non correlated, 0:12:25.559 --> 0:12:29.520 maybe a little alpha. How do you fill that gap 0:12:29.600 --> 0:12:33.160 for that client? Are you selling that through O I 0:12:33.320 --> 0:12:35.360 A S or you're selling it direct? Tell us a 0:12:35.400 --> 0:12:39.200 little bit about what that um slug in that portfolio 0:12:39.280 --> 0:12:43.160 looks like. So we are absolutely partnering with R A 0:12:43.360 --> 0:12:47.960 S and with advisers again around the world, whether they're 0:12:47.960 --> 0:12:54.120 in global banks, private banks, big wire houses, or independence. Uh. 0:12:54.160 --> 0:12:56.320 And you know, to you to your question about where 0:12:56.320 --> 0:12:58.839 people are invested now and what they're looking for at 0:12:58.840 --> 0:13:04.160 the moment, historically you would say, oh, you know, our 0:13:04.240 --> 0:13:08.280 clients are are really looking at portfolio that's sixty forty 0:13:08.520 --> 0:13:12.439 something like that the traditional mix. And I would say today, 0:13:12.800 --> 0:13:16.800 given the search for yield, which is very hard to 0:13:16.840 --> 0:13:21.240 find everywhere in the world, the need for private credit 0:13:21.440 --> 0:13:27.520 is greater. Uh, given where market valuations are, private investing 0:13:27.600 --> 0:13:31.000 is more attractive because you have more control over the asset, 0:13:31.040 --> 0:13:33.599 you're not subject to the whims, and we're not investing 0:13:33.640 --> 0:13:36.959 in the market per se. We're choosing the neighborhoods we 0:13:37.160 --> 0:13:40.800 want to be in. So you know, I'm fortunate in 0:13:40.880 --> 0:13:45.880 that the performance of Blackstone funds across all the alternative 0:13:46.000 --> 0:13:50.040 asset classes has been good over a long period of time, 0:13:50.120 --> 0:13:52.080 So we have a lot of material to work with, 0:13:52.640 --> 0:13:55.640 and then we meet the individual needs. So it could 0:13:55.720 --> 0:13:59.960 be that your client, as an advisor, you know, want 0:14:00.160 --> 0:14:05.120 to put of her or his assets into alternatives and 0:14:05.160 --> 0:14:10.280 they want a diversified portfolio. We have a product that 0:14:10.440 --> 0:14:15.480 matches that. Or they're earning you know, x percent three 0:14:16.360 --> 0:14:21.040 on the municipal Bomb portfolio. And we have other funds 0:14:21.120 --> 0:14:24.880 in real estate and credit that can return much more 0:14:25.480 --> 0:14:30.440 that are also floating rate, which gives them better inflation protection. 0:14:30.840 --> 0:14:34.160 So some of what you're doing is a non correlated 0:14:34.200 --> 0:14:40.240 substitute for traditional equity, Hey, equity prices are let's call 0:14:40.320 --> 0:14:45.160 it fully valued. Some people think it's gone beyond that um, 0:14:45.200 --> 0:14:48.080 although we seem to be having delightful earnings this quarter, 0:14:48.640 --> 0:14:51.760 so maybe this market can grow into its valuation. But 0:14:51.920 --> 0:14:58.400 that's one alternative. You reference yield and and what what 0:14:58.440 --> 0:15:03.120 investors are looking for. If someone says, hey, I want 0:15:03.200 --> 0:15:06.400 a higher return, I'm willing to take a little more risk, 0:15:06.480 --> 0:15:08.560 but not I don't want to run into the same 0:15:08.600 --> 0:15:12.920 problem we run into with subprime What sort of products 0:15:12.920 --> 0:15:16.280 do you have for I'm gonna ap peel some of 0:15:16.320 --> 0:15:19.880 my forty off to to something that is going to 0:15:20.000 --> 0:15:22.760 do better than one point two percent that I'm getting 0:15:23.320 --> 0:15:26.440 on on my treasuries? What do those fixed income like 0:15:26.600 --> 0:15:30.280 products look like? Are they structured notes? Are they real estate? 0:15:30.320 --> 0:15:33.200 Tell us a little bit about that, sure. Uh so. 0:15:33.680 --> 0:15:39.040 For example, one fund right now that has a lot 0:15:39.080 --> 0:15:44.600 of traction is our non traded read, which invests in 0:15:44.960 --> 0:15:50.880 high quality US real estate. Again, the same themes that 0:15:50.960 --> 0:15:56.680 we're investing in for the institutional fund and the same team. Importantly, 0:15:57.240 --> 0:16:01.200 so areas like multi family housing where there's a supply 0:16:02.040 --> 0:16:07.520 demand mismatch or logistics playing on a very long term 0:16:07.600 --> 0:16:12.760 theme around e commerce, which is only accelerated during COVID. 0:16:13.200 --> 0:16:15.880 Tell us a little bit about the credit side you mentioned. So, 0:16:16.120 --> 0:16:19.240 there's a secular trend in private credit that really started 0:16:19.240 --> 0:16:23.440 in the financial crisis where banks no longer wanted to 0:16:23.480 --> 0:16:29.360 hold onto risk and we're syndicating out. And it also 0:16:30.240 --> 0:16:33.760 at that time became clear that they were less willing 0:16:33.880 --> 0:16:37.640 to lend to middle market companies. So originally what began 0:16:37.720 --> 0:16:42.560 as a middle market industry in private credit emerged, and 0:16:42.600 --> 0:16:46.000 we were certainly one of the leaders in that. But 0:16:46.080 --> 0:16:49.320 I would say today, because of the scale that we have, 0:16:49.760 --> 0:16:54.080 we're actually able to lend to much larger companies. So 0:16:54.680 --> 0:16:58.440 it's an industry that has real secular tail winds in 0:16:58.560 --> 0:17:01.800 terms of the demand for private credit, and we're able 0:17:01.840 --> 0:17:07.120 to deal with you know, large companies, complex transactions, unitron 0:17:07.200 --> 0:17:10.840 to take the whole deal, uh, And we've been able 0:17:10.880 --> 0:17:16.800 to create funds around that for individuals that deliver good returns. 0:17:17.200 --> 0:17:21.679 And importantly, we've been able to create structures that also 0:17:21.800 --> 0:17:25.840 work outside of the US. And so both of these areas, 0:17:25.960 --> 0:17:31.640 whether it's private real estate or private credit, have appeal 0:17:32.080 --> 0:17:35.400 right now in the US, in Europe, in Latin America 0:17:35.760 --> 0:17:39.600 in Asia. Uh. And you know we're able to service 0:17:39.640 --> 0:17:42.560 those folks because our businesses of scale on the private 0:17:42.560 --> 0:17:45.840 wealth side and also of scale in terms of how 0:17:45.960 --> 0:17:50.640 much we can invest. That's quite quite intriguing. Let's talk 0:17:50.680 --> 0:17:53.440 a little bit about E. S. G. Blackstone has said, 0:17:53.480 --> 0:17:57.200 as the world's largest alternative asset manager, we are uniquely 0:17:57.280 --> 0:18:00.880 positioned to make a positive impact through our investments. Tell 0:18:00.960 --> 0:18:04.040 us a little bit about how you approach environmental, social, 0:18:04.040 --> 0:18:10.600 and governance impact investing. So we've really taken a holistic approach, 0:18:11.400 --> 0:18:16.760 both for our own company as well as the companies 0:18:17.040 --> 0:18:22.120 that we own inside our various funds. And to start 0:18:22.280 --> 0:18:26.560 with the environmental even going back, you know, many years now, 0:18:27.040 --> 0:18:33.000 we looked at efficiency around energy and water, etcetera. So 0:18:33.080 --> 0:18:36.040 for example, if you own hotels, thinking about what kind 0:18:36.080 --> 0:18:38.960 of light bulbs, where do you set the temperature? Things 0:18:39.000 --> 0:18:43.080 of that nature. Flushers on toilet's probably a little less sexy, 0:18:43.119 --> 0:18:48.280 but actually important. And today we've made a commitment that 0:18:48.359 --> 0:18:51.720 for any property or a company that we control, we 0:18:51.760 --> 0:18:57.960 will reduce emissions by at least fifteen percent um. You know, 0:18:58.040 --> 0:18:59.640 we we I don't know if you know, in one 0:18:59.640 --> 0:19:02.880 of the folios we actually own uh Sty Town here 0:19:02.880 --> 0:19:07.919 in New York, and we created the largest solar farm 0:19:08.560 --> 0:19:13.480 on any multi family housing development in the US. There, 0:19:13.720 --> 0:19:17.040 that's one example, uh And I would say around the 0:19:17.080 --> 0:19:23.360 other areas when it comes to UM governance, and by 0:19:23.400 --> 0:19:27.720 that I assume you mean diversity on board director C 0:19:28.960 --> 0:19:32.879 we have likewise a commitment there for at least thirty 0:19:32.960 --> 0:19:40.239 percent representation by women underrepresented groups, and again for our 0:19:40.320 --> 0:19:44.880 own company as well as for our portfolio companies. So 0:19:45.040 --> 0:19:49.480 let's talk a little bit about PWS as it's called. Internally. 0:19:49.680 --> 0:19:53.359 Your group runs over a hundred billion dollars. Tell us 0:19:53.400 --> 0:19:59.320 about some of the attractive places that you're deploying capital today. Sure, 0:20:00.280 --> 0:20:06.320 so we tend to be very thematic at Blackstones. A 0:20:06.359 --> 0:20:11.440 lot of research comes into play upfront. We figure out 0:20:11.520 --> 0:20:15.199 where we have the most conviction, and then we're not 0:20:15.320 --> 0:20:20.480 afraid to go all in. And importantly, if you think 0:20:20.520 --> 0:20:25.360 about investing as pattern recognition, and you think about everything 0:20:25.359 --> 0:20:29.080 we own real estate companies, all different types all over 0:20:29.119 --> 0:20:32.200 the world. It's just a lot of information flow that 0:20:32.240 --> 0:20:37.960 comes into play. So today areas off of themes, like 0:20:38.720 --> 0:20:42.800 you know, the digitization of everything. So if you think 0:20:42.840 --> 0:20:48.360 about our investment in Bumble or Ancestry was on that 0:20:49.119 --> 0:20:52.119 in e commerce. This has been a long running theme 0:20:52.720 --> 0:20:55.960 through the firm over the last ten years. So that 0:20:56.000 --> 0:20:59.000 informs not just what you invest in, but what you avoid. 0:20:59.080 --> 0:21:02.000 So we we have not been investing in closed malls, 0:21:02.640 --> 0:21:06.919 but we have been buying up warehouse assets, especially first 0:21:07.000 --> 0:21:11.960 mile those that are closest to clients. Again, everywhere around 0:21:12.000 --> 0:21:17.720 the world housing there's a housing shortage, uh really in 0:21:17.760 --> 0:21:20.560 a lot of different regions, and and what just meaning 0:21:20.600 --> 0:21:23.600 that there hasn't been enough supply. And when you think 0:21:23.680 --> 0:21:29.280 about all of the delays caused by shutdowns due to COVID, 0:21:29.320 --> 0:21:34.200 it's just exasperated those or exaggerated those trends even more so. 0:21:34.920 --> 0:21:38.680 And um, when you have supply demand and balances, that's 0:21:38.720 --> 0:21:43.680 usually pretty good for appreciation. We coming through the financial crisis, 0:21:43.720 --> 0:21:46.840 had created the largest single family housing you know, owned 0:21:46.840 --> 0:21:50.480 to rent company, and we're continuing to invest in those 0:21:50.520 --> 0:21:55.280 types of assets. We really like life sciences. You mentioned uncorrelated. 0:21:55.400 --> 0:21:59.199 That's an area that is uncorrelated, and we partner with 0:21:59.520 --> 0:22:04.240 major pharmaceutical companies. We invest in their Phase three trials 0:22:04.280 --> 0:22:09.879 which have very good high percentage UH chance of success. 0:22:10.800 --> 0:22:13.919 Cloud computing, and there's a lot of different neighborhoods that 0:22:13.960 --> 0:22:17.159 we like. And then I would say, also we like 0:22:17.280 --> 0:22:20.800 the industries that serve those. So once we find a 0:22:20.960 --> 0:22:26.320 theme something like life sciences, were also then interested in 0:22:26.600 --> 0:22:30.959 owning the real estate that's catering to life sciences companies. 0:22:31.320 --> 0:22:34.880 So the intellectual capital really moves through the firm, and 0:22:34.960 --> 0:22:39.639 we're able to whether it's growth equity, private equity, real estate, 0:22:39.880 --> 0:22:43.960 life sciences credit, run that all the way through. And 0:22:44.320 --> 0:22:48.120 so you would find over the firm's history and continuing today, 0:22:48.760 --> 0:22:52.200 our various different businesses may invest in a different part 0:22:52.200 --> 0:22:57.680 of the capital structure. Uh, they may invest in different companies, 0:22:58.240 --> 0:23:04.560 but they're all focused on this idea of good neighborhoods. Huh. 0:23:04.600 --> 0:23:09.440 So that that's very intriguing. I always have a hard 0:23:09.440 --> 0:23:14.120 time drawing a bright line between what sounds a lot 0:23:14.200 --> 0:23:18.440 like private equity but looks a little bit like late 0:23:18.480 --> 0:23:22.320 stage venture capital. I hear cloud and life sciences and 0:23:22.400 --> 0:23:27.320 bumble and ancestry dot com. How does that distinction make 0:23:27.359 --> 0:23:30.320 any difference to you, guys? Is it really just an 0:23:30.359 --> 0:23:34.639 academic distinction or clearly you're not doing seed investing. We 0:23:34.760 --> 0:23:38.800 understand that, but what is the difference between black Stone 0:23:39.080 --> 0:23:44.280 private equity and very late stage venture investing. So, by 0:23:44.320 --> 0:23:50.320 and large, we have not been venture investors in the 0:23:50.359 --> 0:23:57.040 way that you're thinking about, in part because the outcomes 0:23:57.680 --> 0:24:03.639 are binary, and when we're making an investment, we always 0:24:03.720 --> 0:24:07.560 try to think about protecting on the downside, and that's 0:24:07.640 --> 0:24:11.320 quite difficult to do in a venture deal. So I'm 0:24:11.320 --> 0:24:17.960 distinguishing that from growth equity because these are larger companies 0:24:18.600 --> 0:24:24.760 where the entrepreneur doesn't want to seed control but is 0:24:24.800 --> 0:24:29.080 attracted to what we can bring in helping her him 0:24:29.400 --> 0:24:32.520 really scale the business. So again I'll go back to 0:24:33.440 --> 0:24:37.440 UH company like you know, Bumble or where we made 0:24:37.480 --> 0:24:40.760 an investment in Totally and what is it we bring. 0:24:41.160 --> 0:24:45.600 We have this massive portfolio of companies and properties that 0:24:45.680 --> 0:24:49.320 we can introduce them to. We have a data science 0:24:49.400 --> 0:24:54.520 team of more than thirty people that we then deploy 0:24:54.760 --> 0:24:58.520 right onto these companies. We have a suite of highly 0:24:58.640 --> 0:25:06.040 talented former CEOs executives who partner with UH. Those CEOs, 0:25:06.080 --> 0:25:09.960 who again are are often entrepreneurs who may have not 0:25:10.160 --> 0:25:13.600 usually have not taken their company and built it into 0:25:13.680 --> 0:25:17.600 some major global institutions. So I would distinguish it in 0:25:17.640 --> 0:25:20.960 a lot of Uh, those aspects were coming in much later. 0:25:21.760 --> 0:25:26.560 We're not saying this technology works or doesn't. It's already proven, 0:25:27.200 --> 0:25:30.760 and then we're bringing something to much greater scale. Right. 0:25:30.800 --> 0:25:34.399 I like the concept of Hey, if it's truly binary, 0:25:34.520 --> 0:25:38.360 then that's much more like UM venture capital. If there's 0:25:38.359 --> 0:25:41.520 a range of potential outcomes with a very very low 0:25:41.520 --> 0:25:44.440 possibility that the whole thing goes to zero, that's more 0:25:44.440 --> 0:25:47.479 private equity that that. That's a really good framework for 0:25:47.520 --> 0:25:51.240 that UM. So let's let's stick with you mentioned the 0:25:51.280 --> 0:25:55.479 intellectual capital that moves around the firm. UM. We're kind 0:25:55.480 --> 0:26:00.320 of sort of reopening people little nervous around delta UM. 0:26:00.359 --> 0:26:03.560 How did you guys operate during the pandemic. I assume 0:26:03.600 --> 0:26:07.280 everyone was working from home, and what are your plans 0:26:07.280 --> 0:26:09.480 going forward? How are you going to manage? Yeah, it 0:26:09.600 --> 0:26:17.280 was certainly turbulent times. We acted very quickly. So one 0:26:17.359 --> 0:26:22.160 thing that UM launched literally the week that we shut 0:26:22.200 --> 0:26:27.919 down in the US is John Gray, our president and CEO, 0:26:28.160 --> 0:26:33.120 launched a global call for all employees, which still happens 0:26:33.160 --> 0:26:39.520 every single week. And during that meeting, we hear about 0:26:39.800 --> 0:26:44.480 macro government, what's happening in some of the portfolio companies, 0:26:44.600 --> 0:26:48.840 new investments, and the basic trends. It was also just 0:26:48.960 --> 0:26:53.080 the best mechanism for everyone at the firm UH to 0:26:53.160 --> 0:26:56.120 know what was going on, talk about COVID and really 0:26:56.160 --> 0:27:00.640 around the world, and we do that on Zoom so 0:27:00.720 --> 0:27:04.560 that you're present. And again this has now been going 0:27:04.600 --> 0:27:10.000 on since mid March of with my own team, I 0:27:10.119 --> 0:27:14.280 made great efforts to stay connected. Again, we were all 0:27:14.320 --> 0:27:17.439 on Zoom, not telephone, so you can actually see people. 0:27:18.160 --> 0:27:22.719 I personally added many more meetings than I had previously, 0:27:22.960 --> 0:27:27.600 regularly scheduled meetings with my sub teams, with the leaders 0:27:27.640 --> 0:27:31.680 of my business to make sure we were connected. And 0:27:31.880 --> 0:27:36.960 we also added in a lot of virtual events, you know, 0:27:36.960 --> 0:27:41.240 whether they were virtual cocktail hours or lunches or breakfast 0:27:41.680 --> 0:27:45.040 we did hold. I my my children make fun of 0:27:45.040 --> 0:27:47.600 me because I did the same cooking class like five 0:27:47.640 --> 0:27:50.480 different times, so I can now make an excellent you know, 0:27:50.600 --> 0:27:54.720 pasta sauce um. But I think it was important not 0:27:54.840 --> 0:27:57.800 just to get the business done, to prosecute the business, 0:27:57.880 --> 0:28:01.280 of course, that's important, and serve your clients, but equally 0:28:01.320 --> 0:28:05.639 important was to keep the team together, have everyone with 0:28:05.720 --> 0:28:10.560 full information feel connected, even though we weren't physically in 0:28:10.640 --> 0:28:13.960 the same place, and then I didn't mention, but as 0:28:14.000 --> 0:28:18.800 importantly was staying connected with our clients, and so we 0:28:19.040 --> 0:28:25.360 immediately launched webinars conference calls about what we were seeing 0:28:25.760 --> 0:28:30.840 from a macro level in our portfolio. Companies very transparent 0:28:30.880 --> 0:28:34.480 about what was happening in the funds and just providing 0:28:34.680 --> 0:28:40.160 advisors and clients with the most up to date information 0:28:40.480 --> 0:28:45.720 that we had, and I think they appreciated that. Huh. 0:28:46.280 --> 0:28:50.479 Quite quite interesting. So so within financial services, people like 0:28:50.600 --> 0:28:55.240 Jamie Diamond at JP Morgan Chase Morgan, Stanley Goldman, Sachs 0:28:55.280 --> 0:28:58.720 a roll calling staff back to work. Other places are 0:28:58.720 --> 0:29:01.720 talking about a hybrid all going forward. You're in a 0:29:01.760 --> 0:29:03.760 couple of days a week, but it's not Monday to 0:29:03.800 --> 0:29:06.440 Friday nine to five. Have you, guys thought about what 0:29:06.480 --> 0:29:08.440 you want to do and have have you come out 0:29:08.480 --> 0:29:14.280