1 00:00:02,200 --> 00:00:06,800 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. 2 00:00:07,280 --> 00:00:10,200 Speaker 1: This week on the podcast, I really have an extra 3 00:00:10,240 --> 00:00:14,080 Speaker 1: special guest. Henry Cornell is a rock star in the 4 00:00:14,120 --> 00:00:18,320 Speaker 1: world of merchant banking and private equity. He currently runs 5 00:00:18,360 --> 00:00:21,279 Speaker 1: about three billion dollars at Cornell Capital. He is the 6 00:00:21,320 --> 00:00:25,760 Speaker 1: guy who effectively built out Goldman Sachs merchant banking division 7 00:00:26,160 --> 00:00:29,880 Speaker 1: both in Asia and the US. He's got an incredible 8 00:00:30,320 --> 00:00:33,599 Speaker 1: history of being a successful investor in a number of 9 00:00:33,600 --> 00:00:39,440 Speaker 1: different areas, incredibly knowledgeable about the sort of private equity 10 00:00:39,479 --> 00:00:43,200 Speaker 1: that has generated really solid returns without taking a lot 11 00:00:43,200 --> 00:00:45,519 Speaker 1: of risk. I know, when we think about private equity, 12 00:00:45,560 --> 00:00:47,360 Speaker 1: we sort of have a tendency to think about the 13 00:00:47,400 --> 00:00:50,600 Speaker 1: wacky l b o s where we just saddle a 14 00:00:50,680 --> 00:00:52,279 Speaker 1: company with a lot of debt and then let him 15 00:00:52,280 --> 00:00:55,680 Speaker 1: eventually die. This is not that sort of merchant banking. 16 00:00:55,720 --> 00:00:58,160 Speaker 1: This is not that sort of private equity. This is 17 00:00:58,240 --> 00:01:02,200 Speaker 1: building a portfolio of companies, getting them capital and taking 18 00:01:02,880 --> 00:01:07,360 Speaker 1: already solid working companies and making them that much better. 19 00:01:07,760 --> 00:01:09,360 Speaker 1: And when you hear some of the names he's been 20 00:01:09,400 --> 00:01:12,160 Speaker 1: involved with, you will really understand this. If you are 21 00:01:12,200 --> 00:01:17,640 Speaker 1: at all interested in private equity in finance in global investing. 22 00:01:18,200 --> 00:01:21,480 Speaker 1: You're going to find this conversation to be absolutely fascinating. So, 23 00:01:21,520 --> 00:01:26,520 Speaker 1: with no further ado, my conversation with Henry Cornell. This 24 00:01:27,000 --> 00:01:31,080 Speaker 1: is Masters in Business with Barry Ridholts on Bloomberg Radio. 25 00:01:31,520 --> 00:01:34,560 Speaker 1: My extra special guest this week is Henry Cornell. He 26 00:01:34,680 --> 00:01:37,440 Speaker 1: is the founder of Cornell Capital. Previously, he was one 27 00:01:37,440 --> 00:01:42,000 Speaker 1: of the original architects of Goldman Sachs Merchant Banking Division. 28 00:01:42,480 --> 00:01:45,680 Speaker 1: He is a trustee for the Navy Seal Foundation as 29 00:01:45,760 --> 00:01:48,680 Speaker 1: well as a trustee for the Whitney Museum of Art 30 00:01:49,160 --> 00:01:52,800 Speaker 1: and the Age of Society. Previously, he was chairman of 31 00:01:52,840 --> 00:01:56,440 Speaker 1: the Citizens Committee of New York City. Henry Cornell, Welcome 32 00:01:56,680 --> 00:01:59,640 Speaker 1: to Bloomberg. Thank you, Barry, very nice to be here. 33 00:01:59,800 --> 00:02:03,040 Speaker 1: I'm intrigued by your background somewhat I too, am an 34 00:02:03,080 --> 00:02:07,520 Speaker 1: attorney who uh is now reformed and working in finance. 35 00:02:08,120 --> 00:02:12,160 Speaker 1: You were at Davis Polk before joining Goldman Sachs. How 36 00:02:12,200 --> 00:02:17,880 Speaker 1: did that transition from attorney to investment banker? Come about? Well? 37 00:02:18,240 --> 00:02:21,520 Speaker 1: I thought, frankly, the hand of God had come down 38 00:02:21,560 --> 00:02:24,200 Speaker 1: and touched me. When I got the job at Davis Polk. 39 00:02:24,560 --> 00:02:27,160 Speaker 1: I went to a small law school and I was 40 00:02:27,200 --> 00:02:29,320 Speaker 1: the first one that ever got there, and I couldn't 41 00:02:29,320 --> 00:02:32,280 Speaker 1: believe my good fortune. They were kind and sent me 42 00:02:32,320 --> 00:02:34,520 Speaker 1: to London for a while and had me doing lots 43 00:02:34,520 --> 00:02:37,720 Speaker 1: of stuff in New York. But my last review there 44 00:02:37,760 --> 00:02:40,320 Speaker 1: they said, you know, you're the lawyer, not the banker 45 00:02:40,440 --> 00:02:42,880 Speaker 1: on the deal, and that set off the bell in 46 00:02:42,960 --> 00:02:47,320 Speaker 1: my head. And I interviewed around the street and liked 47 00:02:47,560 --> 00:02:51,320 Speaker 1: the ethos at Goldman Sachs, which was not as concerned 48 00:02:51,320 --> 00:02:53,840 Speaker 1: about where your parents came from or what college you 49 00:02:53,840 --> 00:02:56,400 Speaker 1: went to, but what you could add to the team. 50 00:02:56,680 --> 00:02:59,840 Speaker 1: And so I was fortunate to get that job in 51 00:03:00,040 --> 00:03:03,680 Speaker 1: the spring of four and it was difficult, frankly. The 52 00:03:03,720 --> 00:03:06,480 Speaker 1: first year or two. I went to a shall we say, 53 00:03:06,520 --> 00:03:10,600 Speaker 1: progressive college where you got to choose your own curriculum, 54 00:03:10,600 --> 00:03:13,240 Speaker 1: which is dangerous for an eighteen year old. So I 55 00:03:13,280 --> 00:03:15,480 Speaker 1: hadn't taken a math course in college, and all of 56 00:03:15,520 --> 00:03:17,880 Speaker 1: a sudden I knee deep in financial terms. So it 57 00:03:17,919 --> 00:03:22,360 Speaker 1: took me a while to get up to speed. But then, um, 58 00:03:22,520 --> 00:03:25,400 Speaker 1: then it finally made sense to me. So you you 59 00:03:25,480 --> 00:03:30,560 Speaker 1: moved to Tokyo in to work on building out Goldman 60 00:03:30,600 --> 00:03:33,239 Speaker 1: Sachs real estate efforts in Asia, and then on to 61 00:03:33,400 --> 00:03:37,320 Speaker 1: Hong Kong. And two, what was your experience like in 62 00:03:37,360 --> 00:03:41,200 Speaker 1: Asia in the late eighties when their market peaked and 63 00:03:41,240 --> 00:03:46,040 Speaker 1: then in the early nineties, well coming to Tokyo and was, 64 00:03:46,160 --> 00:03:49,440 Speaker 1: without a doubt, the hottest city on the planet. I 65 00:03:49,560 --> 00:03:52,680 Speaker 1: was fortunate to have worked on a lot of Japanese 66 00:03:52,720 --> 00:03:54,800 Speaker 1: deals while I was in the States, and my boss 67 00:03:54,800 --> 00:03:56,560 Speaker 1: asked me if I would go and see if I 68 00:03:56,600 --> 00:04:00,320 Speaker 1: could build relationships in Japan. So at age third too, 69 00:04:00,360 --> 00:04:02,960 Speaker 1: I kissed my mother goodbye, hopped on a plane and 70 00:04:03,200 --> 00:04:06,280 Speaker 1: it was crazy. I mean, if you recall at the 71 00:04:06,360 --> 00:04:09,520 Speaker 1: time there was a book a week being published saying 72 00:04:09,600 --> 00:04:12,240 Speaker 1: Japan was going to take over the world. The real 73 00:04:12,360 --> 00:04:15,320 Speaker 1: estate value of the Imperial Palace was more than the 74 00:04:15,360 --> 00:04:20,200 Speaker 1: state of California on paper, and Hamburger costs fifty bucks. 75 00:04:20,240 --> 00:04:22,840 Speaker 1: So it was like the best party you ever went 76 00:04:22,920 --> 00:04:27,280 Speaker 1: to in college. But it was like the worst hangover 77 00:04:27,360 --> 00:04:30,680 Speaker 1: you had in college. People were talking to themselves walking 78 00:04:30,720 --> 00:04:34,200 Speaker 1: down the street. And at that time, Bob Ruben, who 79 00:04:34,240 --> 00:04:38,120 Speaker 1: was the chairman of Goldman, authorized the creation of GS 80 00:04:38,240 --> 00:04:42,800 Speaker 1: Capital Partners, and Hank Paulson was ultimately the boss on that. 81 00:04:42,960 --> 00:04:44,839 Speaker 1: And Hank said, how would you like to go to 82 00:04:45,880 --> 00:04:48,719 Speaker 1: Hong Kong and open up Asia for us. And I said, Hank, 83 00:04:48,760 --> 00:04:51,840 Speaker 1: don't want to really run investment banking anymore. I really 84 00:04:51,839 --> 00:04:55,240 Speaker 1: want to get involved in this investment effort. And his comment, 85 00:04:55,279 --> 00:04:57,600 Speaker 1: you don't really know anything about investing, and I said, well, 86 00:04:57,600 --> 00:04:59,320 Speaker 1: you've got no one else who wants to go. So 87 00:04:59,360 --> 00:05:03,400 Speaker 1: it was a mute ul mutual agreement went down. And 88 00:05:03,480 --> 00:05:05,440 Speaker 1: you know, we had about ten people at the time, 89 00:05:05,520 --> 00:05:08,000 Speaker 1: and you know when I left in two thousand, were 90 00:05:08,040 --> 00:05:11,120 Speaker 1: well over a thousand. So it was extraordinary to have 91 00:05:11,200 --> 00:05:16,000 Speaker 1: been in Japan as it rose and then watched that crash, 92 00:05:16,120 --> 00:05:18,960 Speaker 1: and then get to China as Dung Chao Ping opened 93 00:05:19,040 --> 00:05:23,440 Speaker 1: up the country, and people forget we still are far 94 00:05:23,520 --> 00:05:28,760 Speaker 1: far below that peak in Japan, which was six times 95 00:05:29,160 --> 00:05:35,839 Speaker 1: the valuation of our dot com peak. So the hangover continues. 96 00:05:36,839 --> 00:05:40,520 Speaker 1: You really have been at You're almost like Zeleg from 97 00:05:40,520 --> 00:05:44,000 Speaker 1: the Woody Allen movie at these crucial moments in history. 98 00:05:44,080 --> 00:05:46,360 Speaker 1: So you you leave the peak of Japan in the 99 00:05:46,640 --> 00:05:49,720 Speaker 1: early days of the crash to go to the opening 100 00:05:49,720 --> 00:05:53,240 Speaker 1: of Hong Kong. What was that experience? Like? That had 101 00:05:53,240 --> 00:05:57,800 Speaker 1: have been madness? Also, well, it was frankly extraordinary luck 102 00:05:57,839 --> 00:06:00,960 Speaker 1: to be present at the creation of history. I was 103 00:06:01,040 --> 00:06:05,240 Speaker 1: fortunate literally to watch China go from mouth suits to 104 00:06:05,400 --> 00:06:10,800 Speaker 1: blue suits, bicycles to cars, and the greatest explosion of 105 00:06:10,880 --> 00:06:15,240 Speaker 1: human creativity, human wealth creation, I think in history, because 106 00:06:15,279 --> 00:06:20,520 Speaker 1: it was just unleashed and the appetite for knowledge, the 107 00:06:20,720 --> 00:06:24,560 Speaker 1: desire to build was extraordinary. And to be in a 108 00:06:24,640 --> 00:06:28,200 Speaker 1: position where I had a checkbook and could be the 109 00:06:28,240 --> 00:06:32,680 Speaker 1: financial partner in building out and up the country was 110 00:06:32,760 --> 00:06:35,560 Speaker 1: an extraordinary experience. And even when I moved back to 111 00:06:35,600 --> 00:06:37,880 Speaker 1: the States, I still continued to run Asia and it's 112 00:06:37,920 --> 00:06:41,440 Speaker 1: an important part of my firm strategy today. So it's 113 00:06:41,480 --> 00:06:44,760 Speaker 1: a lifelong it was a lifelong gift. Frankly. So you 114 00:06:44,800 --> 00:06:46,720 Speaker 1: mentioned even when you go back to the States, you 115 00:06:47,080 --> 00:06:50,600 Speaker 1: come back to the US and now suddenly you go 116 00:06:50,880 --> 00:06:54,840 Speaker 1: from investing in real estate to private equity. What was 117 00:06:54,880 --> 00:06:58,640 Speaker 1: that transition like? Well, actually, when I moved to Hong 118 00:06:58,720 --> 00:07:01,760 Speaker 1: Kong and nine two, I ran both the real estate 119 00:07:01,880 --> 00:07:05,000 Speaker 1: private equity group as well as the corporate equity group. 120 00:07:05,240 --> 00:07:07,720 Speaker 1: And when I moved back to the States, I just 121 00:07:07,839 --> 00:07:11,480 Speaker 1: focused on corporate corporate equity. And you may recall at 122 00:07:11,480 --> 00:07:15,280 Speaker 1: the time everybody was doing dot coms and Frankly, there 123 00:07:15,280 --> 00:07:19,400 Speaker 1: were so many investments. I'm not sure anyone really knew 124 00:07:19,480 --> 00:07:21,800 Speaker 1: what the right hand was doing to the left hand. 125 00:07:22,080 --> 00:07:26,480 Speaker 1: And again I went to Hank and said, it's really 126 00:07:26,600 --> 00:07:28,840 Speaker 1: a little crazy, and I would like to get back 127 00:07:28,880 --> 00:07:34,640 Speaker 1: to basics, focus on traditional merchant banking and consumer industrial strategy. 128 00:07:34,920 --> 00:07:38,840 Speaker 1: We had strong presence in financial institution investing. I helped 129 00:07:38,840 --> 00:07:42,120 Speaker 1: to create the energy investing platform. So we went back 130 00:07:42,160 --> 00:07:44,960 Speaker 1: to you know, back to the future, so to speak, 131 00:07:45,160 --> 00:07:47,840 Speaker 1: and did not do what we didn't know, but did 132 00:07:47,880 --> 00:07:50,880 Speaker 1: what we did know. And so turn that around in 133 00:07:51,080 --> 00:07:53,520 Speaker 1: two thousand and o one and o two, and at 134 00:07:53,560 --> 00:07:57,360 Speaker 1: the time merchant banking and private equity was a pretty 135 00:07:57,360 --> 00:08:02,520 Speaker 1: small portion of Gold and Sacks revenue stream. Today not 136 00:08:02,640 --> 00:08:06,000 Speaker 1: so much. It's become pretty substantial, hasn't it. Well in 137 00:08:06,080 --> 00:08:09,320 Speaker 1: the time, I would say from two thousand up until 138 00:08:10,080 --> 00:08:12,280 Speaker 1: two thousand and ten, So as the you know, we 139 00:08:12,400 --> 00:08:15,640 Speaker 1: got through the financial crisis, it was a small group, 140 00:08:15,760 --> 00:08:18,920 Speaker 1: but on a per pound basis, we're definitely punching way 141 00:08:18,960 --> 00:08:23,280 Speaker 1: above our weight. The firm supported the effort and was 142 00:08:23,400 --> 00:08:27,520 Speaker 1: roughly the capital. So when and then you had partners 143 00:08:27,520 --> 00:08:30,840 Speaker 1: and employees also co investing, so roughly thirty cents of 144 00:08:30,920 --> 00:08:34,240 Speaker 1: every dollar was family money, so to speak. So when 145 00:08:34,240 --> 00:08:37,480 Speaker 1: you went to talk to other folks to join you, 146 00:08:37,760 --> 00:08:41,960 Speaker 1: it was effectively investing with Goldman Sachs and that was 147 00:08:42,000 --> 00:08:45,880 Speaker 1: a very powerful fundraising tool and we were frankly, very 148 00:08:45,920 --> 00:08:49,400 Speaker 1: profitable for quite some time, and it worked out for 149 00:08:49,440 --> 00:08:52,760 Speaker 1: our investors and certainly worked out for the firm. Fascinating 150 00:08:53,160 --> 00:08:56,520 Speaker 1: before we get into some of the details of that space, 151 00:08:56,880 --> 00:08:58,440 Speaker 1: can you help me out a little bit with the 152 00:08:58,559 --> 00:09:03,160 Speaker 1: terminology I of people using private equity and merchant banking 153 00:09:03,800 --> 00:09:08,880 Speaker 1: and occasionally forms of commercial banking interchangeably. What what's the 154 00:09:08,960 --> 00:09:13,640 Speaker 1: difference between merchant banking and private equity if any? In 155 00:09:13,679 --> 00:09:19,480 Speaker 1: my dictionary, virtually none. It's really making investments to go 156 00:09:19,520 --> 00:09:23,880 Speaker 1: out and support growth, support businesses, you know. I think 157 00:09:24,000 --> 00:09:28,440 Speaker 1: merchant banking has a historic precedent in British terminology of 158 00:09:28,440 --> 00:09:32,480 Speaker 1: the nineteenth century, and private equity is something that was 159 00:09:32,520 --> 00:09:35,000 Speaker 1: developed in the last thirty years. I remember the first 160 00:09:35,040 --> 00:09:38,559 Speaker 1: time I was in Beijing and saw p I A 161 00:09:38,840 --> 00:09:41,280 Speaker 1: on the back of an airplane. I was like, wait 162 00:09:41,320 --> 00:09:45,559 Speaker 1: a minute. The principal investment area no Pakistani international airways, 163 00:09:45,600 --> 00:09:48,360 Speaker 1: So you know, you have to keep your terms straight. 164 00:09:48,720 --> 00:09:52,000 Speaker 1: I'm glad, I asked that. So, so, what sort of 165 00:09:52,040 --> 00:09:55,120 Speaker 1: deals were you doing when you were building the merchant 166 00:09:55,120 --> 00:09:58,000 Speaker 1: bank division at Goldman Sachs. How did these look? If 167 00:09:58,040 --> 00:10:00,360 Speaker 1: I go back to when we were building it in China, 168 00:10:00,880 --> 00:10:06,120 Speaker 1: what was very apparent is that the consumer sector was 169 00:10:06,160 --> 00:10:11,400 Speaker 1: going to take off, and we invested in a bicycle 170 00:10:11,480 --> 00:10:14,679 Speaker 1: business partnered with Giant Bicycle out of Taiwan when they 171 00:10:14,720 --> 00:10:18,200 Speaker 1: were building factories in China. We owned an interest in 172 00:10:18,240 --> 00:10:23,480 Speaker 1: the largest pork company in China, and Apple Juice Company, 173 00:10:23,760 --> 00:10:28,959 Speaker 1: the world's largest manufacture of sneakers for Nike, Reebok, and Adidas. 174 00:10:29,640 --> 00:10:32,840 Speaker 1: And one of my mentors, Steve Friedman, called me and 175 00:10:32,880 --> 00:10:35,439 Speaker 1: he said, you know, insurance is a very good proxy 176 00:10:35,559 --> 00:10:39,040 Speaker 1: for wealth creation in a country. So I studied hard 177 00:10:39,360 --> 00:10:42,000 Speaker 1: and then we wound up making an investment with the 178 00:10:42,080 --> 00:10:47,719 Speaker 1: ping On Insurance Company in at a very low valuation 179 00:10:47,760 --> 00:10:50,720 Speaker 1: and just watched the company explode in growth over the 180 00:10:50,800 --> 00:10:53,760 Speaker 1: next decade. And when I came back to the States, 181 00:10:54,240 --> 00:10:57,400 Speaker 1: continued investing in insurance. That was a very good lesson. 182 00:10:57,640 --> 00:11:01,880 Speaker 1: Started a couple of insurance companies from Scribe and that 183 00:11:02,000 --> 00:11:05,840 Speaker 1: worked out pretty well. Started investing in the energy sector, 184 00:11:05,920 --> 00:11:10,800 Speaker 1: both upstream prospecting deep sea oil drilling in the Gulf 185 00:11:10,800 --> 00:11:14,240 Speaker 1: of Mexico and off the coast of Africa, as well 186 00:11:14,280 --> 00:11:17,959 Speaker 1: as continuing this consumer industrial focus because the States is 187 00:11:18,000 --> 00:11:22,240 Speaker 1: consumer paradise, and it was if you pick your spots appropriately, 188 00:11:22,840 --> 00:11:25,240 Speaker 1: you can back companies that can go out and grow 189 00:11:25,920 --> 00:11:30,439 Speaker 1: grow an access of GDP. So fast forward to after 190 00:11:30,559 --> 00:11:33,600 Speaker 1: a good long run of what is that almost three 191 00:11:33,600 --> 00:11:38,000 Speaker 1: decades at Goldman, you say I'm gonna launch my own shop, 192 00:11:38,280 --> 00:11:42,240 Speaker 1: and that was what were you thinking in terms of 193 00:11:42,440 --> 00:11:46,800 Speaker 1: advantages of a smaller merchant bank versus a big shop 194 00:11:46,880 --> 00:11:49,160 Speaker 1: with a lot of moving parts like Goldman. Well, after 195 00:11:49,240 --> 00:11:53,480 Speaker 1: thirty years at Goldman, it was a wonderful run. Some 196 00:11:53,600 --> 00:11:56,240 Speaker 1: of my best friends, I met my wife at Goldman 197 00:11:56,760 --> 00:12:00,360 Speaker 1: life experiences I'll treasure forever, but it was time to 198 00:12:00,400 --> 00:12:02,960 Speaker 1: hand the baton to a new generation. And one thing 199 00:12:03,040 --> 00:12:06,640 Speaker 1: I had noticed is when you're in your fifties, people 200 00:12:06,720 --> 00:12:08,600 Speaker 1: think you're at the very top of your game and 201 00:12:08,640 --> 00:12:10,720 Speaker 1: you've still got a lot of energy and all that 202 00:12:10,800 --> 00:12:14,560 Speaker 1: wonderful experience. And when you're in your seventies, they tend 203 00:12:14,600 --> 00:12:17,280 Speaker 1: to say, you know, would you join my board? And 204 00:12:17,320 --> 00:12:19,280 Speaker 1: I was like, I realized I had a window of 205 00:12:19,320 --> 00:12:22,319 Speaker 1: about a decade plus, and so I wanted to form 206 00:12:22,480 --> 00:12:25,679 Speaker 1: chapter two. I got married a little later in life 207 00:12:25,720 --> 00:12:29,240 Speaker 1: and have five young kids, and sitting around in my 208 00:12:29,360 --> 00:12:32,119 Speaker 1: library and my gym shorts is not exactly an inspiration 209 00:12:32,160 --> 00:12:35,400 Speaker 1: for your children. And I'm genetically engineered to work. So 210 00:12:35,480 --> 00:12:38,240 Speaker 1: I knew I had to do something. And I was 211 00:12:38,360 --> 00:12:42,520 Speaker 1: very fortunate to have a number of financial partners so 212 00:12:42,600 --> 00:12:44,720 Speaker 1: I didn't have to run around with a tin cup. 213 00:12:44,920 --> 00:12:50,720 Speaker 1: But spent literally two thousand, thirteen, fourteen and fifteen thinking 214 00:12:50,760 --> 00:12:54,679 Speaker 1: about how the landscape had changed, looking at the lessons 215 00:12:54,720 --> 00:12:58,920 Speaker 1: of a lifetime, what worked, what didn't. Since I could 216 00:12:58,960 --> 00:13:03,040 Speaker 1: create my own own ethos in a new enterprise, what 217 00:13:03,160 --> 00:13:06,320 Speaker 1: would my business principles be? John Whitehead, I think in 218 00:13:06,360 --> 00:13:09,000 Speaker 1: the late seventies sat down and wrote the Business Principles 219 00:13:09,000 --> 00:13:13,040 Speaker 1: of Golden Sacks, which has guided generations. And not that 220 00:13:13,080 --> 00:13:15,000 Speaker 1: I'm John Whitehead, but I took a page out of 221 00:13:15,040 --> 00:13:17,680 Speaker 1: his playbook and put down my own thoughts of Chairman 222 00:13:17,720 --> 00:13:22,200 Speaker 1: Mao and kind of put that into action. And so 223 00:13:22,320 --> 00:13:25,960 Speaker 1: today we have over three billion dollars, We've got an 224 00:13:26,000 --> 00:13:29,280 Speaker 1: up and running Hong Kong office that focuses on Asia, 225 00:13:29,520 --> 00:13:33,120 Speaker 1: as well as New York City. So it um it 226 00:13:33,160 --> 00:13:37,840 Speaker 1: was a good time to leave, and it was nice 227 00:13:37,880 --> 00:13:42,160 Speaker 1: to have the time to think. And your comment about 228 00:13:42,200 --> 00:13:46,240 Speaker 1: small verses large, it's it was very interesting to go 229 00:13:46,440 --> 00:13:49,960 Speaker 1: from running a life for better term in Army Division 230 00:13:50,640 --> 00:13:53,400 Speaker 1: to a platoon of Navy Seals. And I sit on 231 00:13:53,440 --> 00:13:55,680 Speaker 1: the board of the Navy Seal Foundations, so I don't 232 00:13:55,720 --> 00:13:58,320 Speaker 1: take that lightly. And you know, a platoon of seals 233 00:13:58,320 --> 00:14:00,520 Speaker 1: can take over a city just like a vision. And 234 00:14:00,520 --> 00:14:04,920 Speaker 1: so having senior folks who I've worked with throughout my career, 235 00:14:05,280 --> 00:14:08,600 Speaker 1: so we actually could finish each other's sentences, we knew 236 00:14:08,600 --> 00:14:12,200 Speaker 1: how we took our coffee. Was also a very exciting 237 00:14:12,440 --> 00:14:15,800 Speaker 1: opportunity to get the band back together again and have 238 00:14:15,880 --> 00:14:20,120 Speaker 1: a focused strategy and have a small group of investors 239 00:14:20,120 --> 00:14:24,200 Speaker 1: who would write large checks frankly and and support our activities. 240 00:14:24,440 --> 00:14:27,080 Speaker 1: That's quite interesting. So one of the things that I've 241 00:14:27,120 --> 00:14:30,600 Speaker 1: noticed over the past decade or so is a lot 242 00:14:30,640 --> 00:14:35,880 Speaker 1: of the negative spotlight has been shined on hedge funds, 243 00:14:36,000 --> 00:14:39,760 Speaker 1: and private equity seems to be capturing all the positive limelight. 244 00:14:40,400 --> 00:14:44,920 Speaker 1: What is it about this sector of alternative investments that 245 00:14:45,240 --> 00:14:49,520 Speaker 1: seems to have had a golden touch, especially since the 246 00:14:49,560 --> 00:14:54,240 Speaker 1: financial crisis ended well, I think frankly, throughout history of 247 00:14:54,320 --> 00:14:56,520 Speaker 1: private equity, which you know, you can go back to 248 00:14:56,560 --> 00:14:58,680 Speaker 1: the end of World War Two and the start of 249 00:14:58,760 --> 00:15:03,120 Speaker 1: ben Rock, and how how in its essence it is 250 00:15:03,200 --> 00:15:09,479 Speaker 1: supporting growth, It is supporting the establishment of companies. If successful, 251 00:15:09,600 --> 00:15:13,720 Speaker 1: it creates jobs, it creates wealth, and it has a 252 00:15:13,800 --> 00:15:19,400 Speaker 1: long term perspective. You really can't buy a company and 253 00:15:19,480 --> 00:15:22,720 Speaker 1: build a company and do it in thirty days. Some 254 00:15:22,840 --> 00:15:26,080 Speaker 1: of my most successful investments we have owned for well 255 00:15:26,120 --> 00:15:29,480 Speaker 1: over a decade, and frankly, but for the terms of 256 00:15:29,560 --> 00:15:32,520 Speaker 1: each fund, these are things that I would own forever. 257 00:15:32,600 --> 00:15:34,760 Speaker 1: And there are some of the investments where I was 258 00:15:34,800 --> 00:15:38,120 Speaker 1: able to take stock which I own forever and will 259 00:15:38,120 --> 00:15:43,280 Speaker 1: own forever. And I think that aspect of business building, 260 00:15:43,760 --> 00:15:47,680 Speaker 1: of the effect and communities, the effect on labor forces, 261 00:15:47,800 --> 00:15:52,040 Speaker 1: and how it can build globally makes it an attractive 262 00:15:52,040 --> 00:15:55,240 Speaker 1: asset class. And frankly, I think the returns over the 263 00:15:55,320 --> 00:15:58,520 Speaker 1: last few decades have been quite superior to the public markets, 264 00:15:58,520 --> 00:16:01,680 Speaker 1: and I think that attracts a lot of interest. And 265 00:16:01,760 --> 00:16:05,440 Speaker 1: of all the alternative investments, it is private equity is 266 00:16:05,480 --> 00:16:09,280 Speaker 1: the one that is least correlated to the public markets, 267 00:16:09,360 --> 00:16:13,080 Speaker 1: and and that is certainly something that is is appealing. 268 00:16:13,440 --> 00:16:17,600 Speaker 1: You mentioned in one of your investments or some of 269 00:16:17,640 --> 00:16:21,320 Speaker 1: your investments, you've taken stock. When I look at the 270 00:16:21,360 --> 00:16:25,520 Speaker 1: world of venture capital, it's almost all stock. How different 271 00:16:25,640 --> 00:16:30,640 Speaker 1: is merchant banking in terms of the structure versus something 272 00:16:30,680 --> 00:16:35,000 Speaker 1: like venture capital. Merchant banking is probably investing at a 273 00:16:35,120 --> 00:16:39,720 Speaker 1: later stage then venture capital, which could literally be an idea. 274 00:16:40,240 --> 00:16:43,880 Speaker 1: An engineer comes in with a new mouse trap. Experienced 275 00:16:43,920 --> 00:16:47,160 Speaker 1: people who understand what it could do will back it 276 00:16:47,240 --> 00:16:51,240 Speaker 1: even before it has any revenues. Uh. And it's a 277 00:16:51,400 --> 00:16:57,080 Speaker 1: pre revenue concept or just possibly small revenue concept, whereas 278 00:16:57,080 --> 00:17:01,400 Speaker 1: more traditional merchant banking, it's established the revenue, there's a 279 00:17:01,440 --> 00:17:05,400 Speaker 1: business plan, there's a need for capital, for growth, for acquisition, 280 00:17:06,160 --> 00:17:11,040 Speaker 1: for foreign establishment. And so it's just a difference in timing, 281 00:17:11,119 --> 00:17:15,240 Speaker 1: if you will, between coming in at inception and coming 282 00:17:15,280 --> 00:17:18,000 Speaker 1: in with a little more maturity and a track record. 283 00:17:18,119 --> 00:17:22,399 Speaker 1: Quite interesting. Let's talk a little bit about your firm, 284 00:17:22,520 --> 00:17:26,320 Speaker 1: Cornell Capital, which I believe you mentioned has about three 285 00:17:26,359 --> 00:17:30,639 Speaker 1: billion dollars in in assets under management. Tell us a 286 00:17:30,680 --> 00:17:33,720 Speaker 1: little bit about your deal sourcing. Do you go out 287 00:17:34,119 --> 00:17:37,400 Speaker 1: and look for deals do deal? Does deal flow come 288 00:17:37,440 --> 00:17:40,000 Speaker 1: to you? How do you how do you find things 289 00:17:40,040 --> 00:17:42,520 Speaker 1: to put money into? Well, when you consider I've been 290 00:17:42,520 --> 00:17:46,480 Speaker 1: doing this now somewhere between thirty five and forty years, 291 00:17:46,520 --> 00:17:51,880 Speaker 1: and at Goldman, Sachs personally lead an investments into one 292 00:17:51,960 --> 00:17:57,680 Speaker 1: hundred plus companies, which probably means I've spoke to three 293 00:17:57,680 --> 00:18:01,720 Speaker 1: to five hundred CEOs over my career. When I left 294 00:18:01,720 --> 00:18:05,800 Speaker 1: Goldman and retired in two thousand thirteen, I spent literally 295 00:18:05,840 --> 00:18:10,439 Speaker 1: two to three years calling every CEO I ever met 296 00:18:11,160 --> 00:18:14,040 Speaker 1: and just letting them know that I was free. I 297 00:18:14,080 --> 00:18:17,480 Speaker 1: was hopeful that they would call me back, and frankly, 298 00:18:17,520 --> 00:18:19,560 Speaker 1: for every call I made, I got to back. And 299 00:18:19,640 --> 00:18:23,240 Speaker 1: once you can get into the CEO network and they 300 00:18:23,359 --> 00:18:27,680 Speaker 1: understand what you would like to do and they understand 301 00:18:27,800 --> 00:18:31,399 Speaker 1: how you would like to do it, that reference, you know, 302 00:18:31,520 --> 00:18:34,000 Speaker 1: John will call Jane, who will call Jack, who will 303 00:18:34,000 --> 00:18:37,840 Speaker 1: call Susan, and all of a sudden deal flow is created. 304 00:18:38,040 --> 00:18:42,399 Speaker 1: And those personal relationships where they've had a good experience 305 00:18:42,400 --> 00:18:45,439 Speaker 1: when you were a sponsor and back them is just 306 00:18:45,680 --> 00:18:50,439 Speaker 1: fantastic recommendation to someone else who's thinking about capital or 307 00:18:50,640 --> 00:18:54,439 Speaker 1: alternatives and looking for a financial partner. We Also because 308 00:18:54,480 --> 00:18:56,320 Speaker 1: of the time I spent at Goldman, Sachs have a 309 00:18:56,359 --> 00:18:59,439 Speaker 1: pretty good relationship with the other houses on the street, 310 00:18:59,640 --> 00:19:02,880 Speaker 1: and half the world is in auction these days, so 311 00:19:02,920 --> 00:19:06,800 Speaker 1: we maintain a strong presence with um Wall Street, generally 312 00:19:06,880 --> 00:19:09,480 Speaker 1: just to hear what's going on. But it's the key 313 00:19:09,520 --> 00:19:12,399 Speaker 1: I think to our success so far is really having 314 00:19:12,840 --> 00:19:16,359 Speaker 1: proprietary deal flow from our CEO network. So what is 315 00:19:16,400 --> 00:19:20,560 Speaker 1: the process like when a possible deal comes in, how 316 00:19:20,600 --> 00:19:23,760 Speaker 1: do you go through the process of evaluating it and 317 00:19:23,800 --> 00:19:29,000 Speaker 1: how do you decide what's an appropriate funding level and valuation. Well, 318 00:19:29,040 --> 00:19:31,919 Speaker 1: after we put the Luigi board away and realize it 319 00:19:31,960 --> 00:19:35,440 Speaker 1: could be a good opportunity, you basically are looking you 320 00:19:35,960 --> 00:19:38,400 Speaker 1: you put your lines in the water, and you know 321 00:19:38,560 --> 00:19:42,320 Speaker 1: what you'd like to do. So, for example, our expertise 322 00:19:42,560 --> 00:19:46,639 Speaker 1: is an insurance so many of the big departments on 323 00:19:46,680 --> 00:19:49,320 Speaker 1: Wall Street, and many of the insurance executives that I 324 00:19:49,400 --> 00:19:52,440 Speaker 1: know are very kind to call us with many ideas, 325 00:19:52,640 --> 00:19:56,639 Speaker 1: and in our portfolio we have to tow insurance investments. 326 00:19:57,200 --> 00:20:00,640 Speaker 1: We also are very interested in consumer industrial and so 327 00:20:00,880 --> 00:20:04,000 Speaker 1: we own the company that produces pyre X and the 328 00:20:04,040 --> 00:20:08,280 Speaker 1: instant pot and corral dishes. We also own the world's 329 00:20:08,400 --> 00:20:14,240 Speaker 1: largest manufacturer of skincare, also purell um and hair care. 330 00:20:14,480 --> 00:20:18,760 Speaker 1: And so when these calls come in, you understand whether 331 00:20:18,840 --> 00:20:23,280 Speaker 1: it fits the criteria you like, and then you spend 332 00:20:23,320 --> 00:20:27,879 Speaker 1: time and you see what the opportunity could be. And 333 00:20:27,920 --> 00:20:31,360 Speaker 1: so taking our investment in KATC, which is the largest 334 00:20:32,000 --> 00:20:36,639 Speaker 1: manufacturer of skincare, it was dominant in North America, and 335 00:20:36,720 --> 00:20:40,640 Speaker 1: we realized that because of our Asia strategy, we could 336 00:20:40,680 --> 00:20:43,159 Speaker 1: actually help take them to Asia, and we could do 337 00:20:43,200 --> 00:20:46,399 Speaker 1: it in a very effective manner. And one of the 338 00:20:46,480 --> 00:20:49,920 Speaker 1: things we do because we're small, and we've told our 339 00:20:49,960 --> 00:20:53,080 Speaker 1: investors that we will create a very focused portfolio where 340 00:20:53,119 --> 00:20:57,040 Speaker 1: we will routinely commit ten to fift of our capital 341 00:20:57,200 --> 00:21:00,800 Speaker 1: in each investment, and we have a very large co investment, 342 00:21:00,880 --> 00:21:04,240 Speaker 1: which has been secret to our ability to punch above 343 00:21:04,240 --> 00:21:07,240 Speaker 1: our weights. So for every dollar of investment in the fund, 344 00:21:07,640 --> 00:21:10,000 Speaker 1: there's a dollar and a quarter of co invest which 345 00:21:10,320 --> 00:21:13,399 Speaker 1: lowers the cost for my LPs, but it also allows 346 00:21:13,440 --> 00:21:15,560 Speaker 1: them to put more capital to work, which they're all 347 00:21:15,600 --> 00:21:19,680 Speaker 1: interested in doing. And so understanding we could take KATIEC 348 00:21:19,920 --> 00:21:23,120 Speaker 1: internationally was one of the reasons why we were very 349 00:21:23,119 --> 00:21:26,320 Speaker 1: aggressive in buying it. And when we bought it, we 350 00:21:26,480 --> 00:21:30,199 Speaker 1: had roughly a hundred million of EBITDA and today on 351 00:21:30,240 --> 00:21:33,399 Speaker 1: a run rate basis, it's about three hundred million. Having 352 00:21:33,440 --> 00:21:37,960 Speaker 1: acquired the world's largest packaging asset and then acquiring another 353 00:21:38,200 --> 00:21:41,960 Speaker 1: personal and house care business and taking them to China 354 00:21:42,080 --> 00:21:44,879 Speaker 1: and partnering with my old friends at Ali Baba, and 355 00:21:44,960 --> 00:21:48,560 Speaker 1: so our ability when you first get the phone call 356 00:21:48,920 --> 00:21:52,280 Speaker 1: to have the creativity and the vision about what value 357 00:21:52,359 --> 00:21:54,960 Speaker 1: you could add, which is a horrible concept, value add 358 00:21:55,000 --> 00:21:58,600 Speaker 1: value AD. Everyone talks about it, but it's actually true. 359 00:21:58,720 --> 00:22:00,359 Speaker 1: You sit there and say, what can I do to 360 00:22:00,440 --> 00:22:03,840 Speaker 1: this What in my experience or in my relationships will 361 00:22:03,880 --> 00:22:06,480 Speaker 1: allow me to take this very fine company and double 362 00:22:06,600 --> 00:22:11,000 Speaker 1: or triple its opportunities going forward? And it takes time 363 00:22:11,960 --> 00:22:14,760 Speaker 1: to develop that, and so far we've only owned it 364 00:22:14,760 --> 00:22:16,920 Speaker 1: for a year and a half and where you know, 365 00:22:17,000 --> 00:22:19,640 Speaker 1: way I had a plan, even even with the setbacks 366 00:22:19,760 --> 00:22:23,119 Speaker 1: that everyone's experiencing because of the virus. I have to 367 00:22:23,160 --> 00:22:26,440 Speaker 1: ask about some name brands you just mentioned. One obviously 368 00:22:26,560 --> 00:22:29,520 Speaker 1: is PUREL. But before I get to that, what are 369 00:22:29,560 --> 00:22:33,919 Speaker 1: the consumer brands of KATC What name brands might a 370 00:22:33,920 --> 00:22:38,119 Speaker 1: listener recognize? Well, they manufacture, they don't own any brands, 371 00:22:38,160 --> 00:22:41,680 Speaker 1: So we will manufacture for St. Lauder, for l Brands, 372 00:22:41,800 --> 00:22:46,119 Speaker 1: for Laureale, for Johnson and Johnson. We are a contract manufacturer, 373 00:22:46,320 --> 00:22:49,320 Speaker 1: so we own no brands, but we support brands with 374 00:22:49,720 --> 00:22:53,439 Speaker 1: you know, manufacturing with R and D because we have 375 00:22:54,040 --> 00:22:58,440 Speaker 1: three laboratories that are constantly creating new compounds to make 376 00:22:58,480 --> 00:23:02,480 Speaker 1: things better and more ecological, um and just better for people. 377 00:23:02,600 --> 00:23:06,080 Speaker 1: And you mentioned Purell. What's your relationship with Purell and 378 00:23:06,200 --> 00:23:11,639 Speaker 1: how are they managing for a crisis that was tailor 379 00:23:11,760 --> 00:23:15,880 Speaker 1: made for them practically, Well, you know, hand sanitizers. Now 380 00:23:15,960 --> 00:23:19,359 Speaker 1: you can't walk into any building or any establishment and 381 00:23:19,480 --> 00:23:22,840 Speaker 1: not have hand sanitizers. So I think that market was 382 00:23:22,880 --> 00:23:27,399 Speaker 1: already strong and now it has exploded because I have 383 00:23:27,560 --> 00:23:30,600 Speaker 1: them in my car. I'm sure you do. And listeners, 384 00:23:30,640 --> 00:23:32,280 Speaker 1: you have them in the home, you have them in 385 00:23:32,359 --> 00:23:35,840 Speaker 1: every office, every bathroom, and so they're managed. They were 386 00:23:35,920 --> 00:23:41,160 Speaker 1: managing brilliantly, and now their businesses has dramatically improved because 387 00:23:41,200 --> 00:23:45,520 Speaker 1: of the public safety issue around contamination. So that will 388 00:23:45,640 --> 00:23:51,840 Speaker 1: probably only continue and many brands are launching sanitizers and 389 00:23:52,040 --> 00:23:54,879 Speaker 1: it's probably a growth area for the next few years. 390 00:23:55,240 --> 00:23:57,640 Speaker 1: I think everybody was caught a little flat footed when 391 00:23:57,680 --> 00:24:01,760 Speaker 1: the demand suddenly spiked back in February. In March, have 392 00:24:01,880 --> 00:24:06,080 Speaker 1: they ramped up production to meet this massive new demand 393 00:24:06,200 --> 00:24:09,600 Speaker 1: for something that can help keep us safe from an 394 00:24:09,600 --> 00:24:13,520 Speaker 1: infectious virus. Yeah, I think production is in full swing. 395 00:24:14,119 --> 00:24:16,480 Speaker 1: There was probably two or three weeks when it was 396 00:24:16,560 --> 00:24:20,359 Speaker 1: in short supply, but that has been completely taken care of. 397 00:24:20,680 --> 00:24:23,280 Speaker 1: Are you guys located in New York City or where 398 00:24:23,119 --> 00:24:27,680 Speaker 1: are you headquartered? We are ordered at Park Avenue, which 399 00:24:27,720 --> 00:24:30,280 Speaker 1: is the corner of fifty nine in Park in Our 400 00:24:30,600 --> 00:24:32,879 Speaker 1: Hong Kong office is in the Bank of China building. 401 00:24:33,119 --> 00:24:35,760 Speaker 1: So let's talk a little bit about what's been going 402 00:24:35,840 --> 00:24:38,840 Speaker 1: on with private equity, and I want to start by 403 00:24:38,880 --> 00:24:43,960 Speaker 1: putting a few um numbers on this. Typically we look 404 00:24:43,960 --> 00:24:46,480 Speaker 1: at the equity markets and over long periods of time 405 00:24:47,080 --> 00:24:51,119 Speaker 1: we could see an eight to sort of return over decades. 406 00:24:52,040 --> 00:24:56,399 Speaker 1: What sort of returns our private equity targeting these days? Well, 407 00:24:56,600 --> 00:25:00,560 Speaker 1: everyone always tries to double money plus. Uh. Some people 408 00:25:00,560 --> 00:25:06,240 Speaker 1: will advertise plus, some will say depending on the asset 409 00:25:06,359 --> 00:25:09,160 Speaker 1: class and the style of investing. You know, a premium 410 00:25:09,160 --> 00:25:12,680 Speaker 1: of five basis points to the tenure treasury, which today 411 00:25:12,720 --> 00:25:16,520 Speaker 1: does not look that dramatic, even out the Treasury is um. 412 00:25:16,560 --> 00:25:19,000 Speaker 1: So it really depends on who you talk to. I've 413 00:25:19,040 --> 00:25:23,120 Speaker 1: always been a fan of you know, Mr buffettum Bill 414 00:25:23,200 --> 00:25:26,560 Speaker 1: Berkeley at W R. Berkeley. You know, these geniuses have 415 00:25:26,680 --> 00:25:31,840 Speaker 1: basically been making fifteen returns their entire career, so effectively 416 00:25:31,920 --> 00:25:37,480 Speaker 1: doubling plus every five years, with very low failure rates 417 00:25:37,560 --> 00:25:42,200 Speaker 1: and very high success rates. And that's basically the strategy 418 00:25:42,280 --> 00:25:45,560 Speaker 1: that I learned at Goldman and that we are certainly 419 00:25:45,600 --> 00:25:48,560 Speaker 1: employing at Cornell Capital. So one of the things that's 420 00:25:48,560 --> 00:25:53,280 Speaker 1: always confusing when I discuss returns with private equity investors 421 00:25:54,200 --> 00:25:57,600 Speaker 1: is the various ways it's described. Some of it is 422 00:25:57,680 --> 00:26:01,440 Speaker 1: cash on cash returns, some of it is I r R. 423 00:26:01,520 --> 00:26:05,200 Speaker 1: What is the best way to measure returns? If I'm 424 00:26:05,280 --> 00:26:09,040 Speaker 1: a an endowment or foundation and I have a billion 425 00:26:09,040 --> 00:26:12,720 Speaker 1: dollars to put into a private equity funds, how should 426 00:26:12,760 --> 00:26:16,560 Speaker 1: I expect those returns to look like over the life 427 00:26:16,560 --> 00:26:20,840 Speaker 1: of that funds. Well, it's an excellent question, and there 428 00:26:20,840 --> 00:26:24,600 Speaker 1: are many opinions on how they should be measured. I 429 00:26:24,680 --> 00:26:29,119 Speaker 1: try and balance I r R with Mike multiple of 430 00:26:29,240 --> 00:26:33,359 Speaker 1: invested capital. I r R is a wonderful tool for 431 00:26:33,480 --> 00:26:38,320 Speaker 1: measuring performance against other asset classes. But at the end 432 00:26:38,320 --> 00:26:41,119 Speaker 1: of the day, you can't pay electric bills with I 433 00:26:41,320 --> 00:26:44,080 Speaker 1: r R. You pay them with cash or your MIKE. 434 00:26:44,960 --> 00:26:48,520 Speaker 1: And so I understand that you know, many folks that 435 00:26:48,560 --> 00:26:54,120 Speaker 1: manage liabilities for unions or universities measure themselves and their 436 00:26:54,160 --> 00:26:56,919 Speaker 1: folks get paid on I r R. But you have 437 00:26:57,040 --> 00:27:00,720 Speaker 1: to fall back on MIKE at some point because you 438 00:27:00,760 --> 00:27:03,440 Speaker 1: need the cash to actually pay your bills. When do 439 00:27:03,760 --> 00:27:06,280 Speaker 1: no one's going to accept I r R. So I 440 00:27:06,320 --> 00:27:09,800 Speaker 1: think frankly I r R has become more of a 441 00:27:09,840 --> 00:27:15,480 Speaker 1: tool and gets more focus, and I always check as 442 00:27:15,520 --> 00:27:18,959 Speaker 1: to whether I've actually made money as opposed to just 443 00:27:19,080 --> 00:27:21,480 Speaker 1: I r R, because I r R is quite you 444 00:27:21,520 --> 00:27:23,439 Speaker 1: can manipulate I r R. So if I put a 445 00:27:23,480 --> 00:27:28,080 Speaker 1: dollar to work today and within nine months I pull 446 00:27:28,119 --> 00:27:31,879 Speaker 1: out one point one times or one point one five 447 00:27:31,960 --> 00:27:35,520 Speaker 1: times my capital, I'll have I r R. But if 448 00:27:35,560 --> 00:27:37,720 Speaker 1: I get a bill for a hundred bucks to pay 449 00:27:37,760 --> 00:27:40,000 Speaker 1: my car or to pay my mortgage, they're not going 450 00:27:40,040 --> 00:27:42,760 Speaker 1: to take my I r are. They want the cash, 451 00:27:43,000 --> 00:27:46,000 Speaker 1: And so you need a balance as you're putting both together. 452 00:27:46,280 --> 00:27:50,280 Speaker 1: So we have been since the financial crisis in an 453 00:27:50,320 --> 00:27:55,280 Speaker 1: era of unprecedentedly low rates. How does that impact how 454 00:27:55,320 --> 00:27:59,840 Speaker 1: you go about either thinking about making investments or funding companies. 455 00:28:00,440 --> 00:28:03,320 Speaker 1: What's the role of ultra low rates over the past 456 00:28:03,359 --> 00:28:05,720 Speaker 1: decade or so, and how does that impact how you 457 00:28:05,760 --> 00:28:10,000 Speaker 1: do your job. It is quite attractive to borrow because 458 00:28:10,080 --> 00:28:16,000 Speaker 1: borrowing has been historically in this last decade incredibly cheap 459 00:28:16,880 --> 00:28:23,480 Speaker 1: and covenant light, which frankly allows for excess. Throughout my career, 460 00:28:23,560 --> 00:28:27,040 Speaker 1: I have been afraid of leverage, and I have always 461 00:28:27,080 --> 00:28:30,480 Speaker 1: over equitized and under levered when I was at Goldman 462 00:28:30,640 --> 00:28:35,480 Speaker 1: and certainly now as a new fund, as a young firm, 463 00:28:35,520 --> 00:28:38,080 Speaker 1: we didn't want to make a mistake, and so our 464 00:28:38,200 --> 00:28:42,920 Speaker 1: average leverage in our entire portfolio is three point nine times. 465 00:28:43,800 --> 00:28:47,840 Speaker 1: We have no subordinated securities, no mezzanine debt. We over 466 00:28:47,960 --> 00:28:52,680 Speaker 1: equitize everything because I can't predict when a meteor will 467 00:28:52,760 --> 00:28:55,640 Speaker 1: hit the planet or a virus will shut down the 468 00:28:55,720 --> 00:29:01,400 Speaker 1: US economy, and so our portfolio certainly has operational challenges, 469 00:29:02,000 --> 00:29:05,840 Speaker 1: but we have virtually no balance sheet risk because we 470 00:29:05,920 --> 00:29:10,760 Speaker 1: have protected the balance sheet by over equitizing the position. 471 00:29:11,400 --> 00:29:14,920 Speaker 1: Many firms in the last ten years have used leverage 472 00:29:14,960 --> 00:29:18,880 Speaker 1: to their advantage and report and have achieved high I 473 00:29:19,200 --> 00:29:22,960 Speaker 1: r rs. But at a time when a punch comes 474 00:29:23,040 --> 00:29:27,240 Speaker 1: out of left field, that capital structure is not going 475 00:29:27,320 --> 00:29:29,400 Speaker 1: to be in a position to take advantage of the 476 00:29:29,520 --> 00:29:33,640 Speaker 1: environment or possibly not even survive. And so you know, 477 00:29:33,680 --> 00:29:36,760 Speaker 1: I'm an optimistic person by nature, but I'm an optimistic 478 00:29:36,800 --> 00:29:41,160 Speaker 1: person whose glass is always half empty, not half full. 479 00:29:41,320 --> 00:29:43,280 Speaker 1: And so I'm always trying to hope for the best, 480 00:29:43,320 --> 00:29:46,400 Speaker 1: but preparing for the worst. And that's the philosophy in 481 00:29:46,480 --> 00:29:49,120 Speaker 1: our firm. And so that's why at this moment in time, 482 00:29:50,080 --> 00:29:52,760 Speaker 1: and you know, as I said, we have issues we 483 00:29:52,840 --> 00:29:56,200 Speaker 1: are dealing with, but we will be just fine going 484 00:29:56,280 --> 00:29:59,200 Speaker 1: forward because of how we've structured things. People have a 485 00:29:59,240 --> 00:30:02,000 Speaker 1: tendency to for get that, Hey, leverage is a double 486 00:30:02,040 --> 00:30:04,840 Speaker 1: a D sword. If it helps on the way up, 487 00:30:05,040 --> 00:30:06,720 Speaker 1: it's going to leave a mark on the way down. 488 00:30:07,040 --> 00:30:09,920 Speaker 1: That is something I've learned throughout my career and my 489 00:30:10,000 --> 00:30:13,520 Speaker 1: mentors have drilled that into my head. So before I 490 00:30:13,640 --> 00:30:16,880 Speaker 1: leave Private Equity and talk about some of the bogeron, 491 00:30:17,120 --> 00:30:21,160 Speaker 1: I have to ask one question. Vcs are notorious for 492 00:30:21,360 --> 00:30:25,480 Speaker 1: posting their missed opportunities. It's almost a badge of honor. 493 00:30:25,800 --> 00:30:29,440 Speaker 1: Oh I said, no to Apple in four or whatever 494 00:30:29,720 --> 00:30:32,760 Speaker 1: whatever it happens to be. Any major deals that you 495 00:30:32,880 --> 00:30:35,320 Speaker 1: passed on that you look back and say, you know, 496 00:30:35,440 --> 00:30:37,280 Speaker 1: maybe we should have pulled the trigger on that one. 497 00:30:38,120 --> 00:30:42,080 Speaker 1: There's always one or two that got away. Um. But 498 00:30:42,320 --> 00:30:44,719 Speaker 1: I will tell you I I tend to look forward, 499 00:30:45,080 --> 00:30:48,600 Speaker 1: and some of the largest deals I did, you know, 500 00:30:48,640 --> 00:30:51,800 Speaker 1: working with rich Kinder Kinder Morgan to take him private 501 00:30:52,280 --> 00:30:55,040 Speaker 1: fifteen years ago was one of the highlights of my career. 502 00:30:56,040 --> 00:30:59,080 Speaker 1: Carrying his briefcase and learning from a master was an 503 00:30:59,120 --> 00:31:02,440 Speaker 1: extraordinary achievement. You know. Some of the things I was 504 00:31:02,480 --> 00:31:04,520 Speaker 1: not able to do that I wanted to do in 505 00:31:04,600 --> 00:31:10,320 Speaker 1: Asia have proved to be quite successful without our involvement, unfortunately. 506 00:31:10,360 --> 00:31:13,680 Speaker 1: But back then I was not in a political position 507 00:31:13,720 --> 00:31:17,160 Speaker 1: so to speak, to sway the Investment Committee. And today 508 00:31:17,200 --> 00:31:19,840 Speaker 1: I'm in a little bit of a different different position. 509 00:31:20,040 --> 00:31:25,120 Speaker 1: So looking forward, not looking backwards. Henry, you and I 510 00:31:25,200 --> 00:31:28,200 Speaker 1: don't know each other personally, but I really can't picture 511 00:31:28,240 --> 00:31:31,440 Speaker 1: you carrying anybody else's bag. No, No, I'm happy to 512 00:31:31,480 --> 00:31:33,240 Speaker 1: do it. I'd like to be a good student. Believe me. 513 00:31:33,280 --> 00:31:35,320 Speaker 1: There's a lot of good teachers out there. So so 514 00:31:35,400 --> 00:31:38,000 Speaker 1: let's talk a little bit about some of the boards 515 00:31:38,040 --> 00:31:42,200 Speaker 1: that you were on. Um, your trustee at the Whitney Museum. UM, 516 00:31:42,480 --> 00:31:45,360 Speaker 1: I love what they did moving down to the high Line. 517 00:31:45,440 --> 00:31:50,520 Speaker 1: It's it's really a fascinating new uh location. How involved 518 00:31:50,520 --> 00:31:54,560 Speaker 1: were you with that process? Well, the whole board was 519 00:31:54,600 --> 00:31:57,960 Speaker 1: involved with the process. I think the Whitney board is 520 00:31:58,040 --> 00:32:02,560 Speaker 1: like a family. We had a medici, Leonard Lauter, who 521 00:32:02,800 --> 00:32:09,920 Speaker 1: led the charge in supporting the museum, just an unbelievable philanthropist, thoughtful, 522 00:32:10,400 --> 00:32:14,320 Speaker 1: and the board followed his lead and it was, frankly 523 00:32:14,360 --> 00:32:18,040 Speaker 1: a debate. You may recall the Whitney tried many different 524 00:32:18,320 --> 00:32:22,280 Speaker 1: architectural ideas for the corner of seventy in Madison, and 525 00:32:22,360 --> 00:32:24,280 Speaker 1: at the end of the day, the idea of moving 526 00:32:24,320 --> 00:32:28,760 Speaker 1: downtown and creating your own environment was something that excited 527 00:32:28,800 --> 00:32:32,479 Speaker 1: the board and it was a bold move. Frankly, I 528 00:32:32,520 --> 00:32:36,400 Speaker 1: think Madison Avenue did roughly three to four hundred thousand 529 00:32:36,520 --> 00:32:40,280 Speaker 1: visitors a year, and the museum now does well over 530 00:32:40,320 --> 00:32:43,960 Speaker 1: a million, sometimes close to two depending on what the 531 00:32:44,000 --> 00:32:47,840 Speaker 1: exhibit is and align basically being one goal post on 532 00:32:47,880 --> 00:32:51,280 Speaker 1: the high Line and how the whole meat packing district 533 00:32:51,760 --> 00:32:55,520 Speaker 1: has exploded as an exciting center was just fortuitous for 534 00:32:55,520 --> 00:32:58,960 Speaker 1: the museum, and it's it's in really good shape. Although 535 00:32:59,080 --> 00:33:01,280 Speaker 1: right now, due to you know what's going on, it's 536 00:33:01,280 --> 00:33:03,960 Speaker 1: closed down, but I know it will open back with 537 00:33:04,040 --> 00:33:07,160 Speaker 1: a roar and the and the board. It's a terrific board. 538 00:33:07,320 --> 00:33:11,080 Speaker 1: And Adam Weinberg, who is the director of the museum. 539 00:33:11,120 --> 00:33:13,479 Speaker 1: I love Adam. The board loves Adam. He has been 540 00:33:13,520 --> 00:33:17,000 Speaker 1: a fantastic director and he's the one who probably deserves 541 00:33:17,440 --> 00:33:23,080 Speaker 1: Optimistic Lorder the most um accolades forgetting the museum downtown 542 00:33:23,120 --> 00:33:25,200 Speaker 1: and making it a success, as well as the whole 543 00:33:25,240 --> 00:33:27,960 Speaker 1: team at the museum. It's been it's been, frankly, quite 544 00:33:28,000 --> 00:33:31,320 Speaker 1: a quite a wonderful time to be involved with the museum. 545 00:33:31,520 --> 00:33:34,680 Speaker 1: So so let's talk about somewhat different sort of board 546 00:33:34,720 --> 00:33:38,120 Speaker 1: you're on. You're you're involved with the Navy Seal Foundation. 547 00:33:38,760 --> 00:33:41,400 Speaker 1: Tell us a little bit about that organization. What does 548 00:33:41,440 --> 00:33:45,280 Speaker 1: it do and how did you get involved in that? Well, 549 00:33:45,560 --> 00:33:49,120 Speaker 1: you know, unfortunately we all sleep comfortably in our beds, 550 00:33:49,560 --> 00:33:52,840 Speaker 1: and as George Orwell said, rough men have to go 551 00:33:52,880 --> 00:33:57,280 Speaker 1: out and defend the country. And the Navy Seals, you know, 552 00:33:57,360 --> 00:34:00,840 Speaker 1: there are men lost in battle, and you forget that 553 00:34:00,880 --> 00:34:04,720 Speaker 1: these are husband's fathers, sons. And when they come back 554 00:34:04,720 --> 00:34:08,040 Speaker 1: to the States, uh, you know when when if they're 555 00:34:08,440 --> 00:34:11,880 Speaker 1: Gold Star families, they get a death benefit from the government, 556 00:34:12,280 --> 00:34:15,560 Speaker 1: they get an American flag as a triangle and thank 557 00:34:15,600 --> 00:34:18,360 Speaker 1: you for your service. And I heard about this almost 558 00:34:18,360 --> 00:34:20,879 Speaker 1: twenty years ago from a colleague of mine who grew 559 00:34:21,000 --> 00:34:23,719 Speaker 1: up with one of the captains in charge of one 560 00:34:23,719 --> 00:34:27,719 Speaker 1: of the seal teams. And I was flabbergasted that these warriors, 561 00:34:27,760 --> 00:34:32,440 Speaker 1: these heroes literally were their families were not really taken 562 00:34:32,480 --> 00:34:34,359 Speaker 1: care of when they came back, and when you think 563 00:34:34,400 --> 00:34:38,799 Speaker 1: about how they are deployed and they are the tip 564 00:34:38,880 --> 00:34:42,279 Speaker 1: of the spirit, just was extraordinary to me. So I 565 00:34:42,320 --> 00:34:48,520 Speaker 1: got involved early. UM. The foundation supports the children, supports 566 00:34:48,560 --> 00:34:51,560 Speaker 1: the families, and supports the men who come back, some 567 00:34:51,640 --> 00:34:56,440 Speaker 1: of which are been wounded, uh injured, in all levels 568 00:34:56,440 --> 00:35:00,880 Speaker 1: of support. And Robin King, who runs as the president 569 00:35:00,960 --> 00:35:04,640 Speaker 1: of the organization, she's amazing. Her husband's master chief. So 570 00:35:04,800 --> 00:35:08,400 Speaker 1: talk about tough UM. And it's an honor. It's actually 571 00:35:08,440 --> 00:35:11,160 Speaker 1: one of the greatest honors of any of the philanthropies 572 00:35:11,200 --> 00:35:13,399 Speaker 1: that I've ever been involved with. To meet these men, 573 00:35:14,080 --> 00:35:16,479 Speaker 1: to understand what they've done for the country and in 574 00:35:16,480 --> 00:35:19,440 Speaker 1: in some small way, letting them know that God forbid 575 00:35:19,480 --> 00:35:23,040 Speaker 1: their felt in battle, their children, their families will be 576 00:35:23,120 --> 00:35:27,680 Speaker 1: taken care of. And so it grew from a tiny 577 00:35:27,719 --> 00:35:31,200 Speaker 1: idea twenty some odd years ago to today where you know, 578 00:35:31,239 --> 00:35:34,040 Speaker 1: we have a ninety million dollar endowment. We would love 579 00:35:34,080 --> 00:35:37,399 Speaker 1: to double that so that no gold Star child ever 580 00:35:37,480 --> 00:35:40,800 Speaker 1: has to worry about paying for tuition or paying for 581 00:35:41,800 --> 00:35:46,040 Speaker 1: any type of schooling or or anything. And that's, UM, 582 00:35:46,080 --> 00:35:48,239 Speaker 1: that's the goal, is to really support these guys in 583 00:35:48,280 --> 00:35:51,560 Speaker 1: some way while we're back home and they're protecting the nation. 584 00:35:51,800 --> 00:35:56,160 Speaker 1: That is fabulous and amazing, and I'm glad to hear 585 00:35:56,880 --> 00:35:59,840 Speaker 1: that there are people in the country who recognize this 586 00:36:00,000 --> 00:36:03,799 Speaker 1: acrifices that are made and actually you're doing something about it. 587 00:36:04,320 --> 00:36:06,440 Speaker 1: The last board, I have to ask you about your 588 00:36:06,520 --> 00:36:10,040 Speaker 1: chairman of the Citizens Committee of New York City, whose 589 00:36:10,080 --> 00:36:13,960 Speaker 1: goal is to help people in low income areas improve 590 00:36:14,000 --> 00:36:16,600 Speaker 1: the quality of life in their city. What is that 591 00:36:16,840 --> 00:36:20,239 Speaker 1: organization like? What do you try and do to make 592 00:36:20,280 --> 00:36:23,320 Speaker 1: positive impact in New York? Well, Barry, I was the 593 00:36:23,400 --> 00:36:27,240 Speaker 1: chairman for fifteen years, UM, and I did pass the baton, 594 00:36:27,360 --> 00:36:30,440 Speaker 1: but I was honored to be associated with this I 595 00:36:30,760 --> 00:36:32,800 Speaker 1: was born and raised in the Bronx. I'm the first 596 00:36:32,840 --> 00:36:34,920 Speaker 1: in my family to be born in the country, just 597 00:36:35,040 --> 00:36:39,319 Speaker 1: raised by my mom. And this organization was started by 598 00:36:39,400 --> 00:36:45,640 Speaker 1: Oz Elliott and it basically helps the Block Association's neighborhood 599 00:36:45,800 --> 00:36:50,640 Speaker 1: groups throughout the city. They've touched ten thousand groups. So 600 00:36:50,680 --> 00:36:53,960 Speaker 1: if you want to plant to garden, you need money 601 00:36:54,000 --> 00:36:56,480 Speaker 1: to create an after school program, you want to help 602 00:36:56,560 --> 00:37:00,440 Speaker 1: feed the elderly. After nine eleven, you know, the Aybridge 603 00:37:00,440 --> 00:37:03,120 Speaker 1: section in the Bronx, which was my old neighborhood, had 604 00:37:03,160 --> 00:37:07,400 Speaker 1: many people who were not documented working in the restaurants 605 00:37:07,600 --> 00:37:09,799 Speaker 1: in the trade center, and we were the first to 606 00:37:09,800 --> 00:37:13,319 Speaker 1: get up there with checks to support their family. It 607 00:37:13,440 --> 00:37:18,360 Speaker 1: is literally blocked by block neighborhood by neighborhood poverty relief, 608 00:37:18,520 --> 00:37:21,359 Speaker 1: but it's done by the citizens, so it's not imposed 609 00:37:21,960 --> 00:37:25,239 Speaker 1: from above. It is created by the people who have 610 00:37:25,360 --> 00:37:28,480 Speaker 1: the experience that need a solution. And so whether you're 611 00:37:28,520 --> 00:37:31,560 Speaker 1: a libertarian or a liberal, you've got to love the 612 00:37:31,600 --> 00:37:35,399 Speaker 1: fact of how citizens come together get supported by their 613 00:37:35,440 --> 00:37:38,320 Speaker 1: fellow citizens. Because the checks we write to these groups 614 00:37:38,320 --> 00:37:41,120 Speaker 1: are under a thousand dollars, but you'd be amazed what 615 00:37:41,239 --> 00:37:44,480 Speaker 1: a thousand dollars can do to create a block association. 616 00:37:44,680 --> 00:37:47,200 Speaker 1: And it's been around since the mid seventies. It was 617 00:37:47,760 --> 00:37:50,200 Speaker 1: created in the financial crisis of New York City and 618 00:37:50,280 --> 00:37:53,279 Speaker 1: seventy and the way we're spending money right now, it 619 00:37:53,320 --> 00:37:56,000 Speaker 1: wouldn't surprise me if we have another financial crisis coming 620 00:37:56,040 --> 00:37:58,960 Speaker 1: in New York City. But it was a way to 621 00:37:58,960 --> 00:38:03,279 Speaker 1: get citizens to get involved in their neighborhoods, and it was. 622 00:38:03,480 --> 00:38:06,600 Speaker 1: It's a terrific organization and it's continuing now that I 623 00:38:06,640 --> 00:38:10,520 Speaker 1: have retired, so to speak, as their chairman. Quite quite 624 00:38:10,560 --> 00:38:14,799 Speaker 1: interesting and sounds like a worthy organization. I know, I 625 00:38:14,880 --> 00:38:18,080 Speaker 1: only have you for a couple more minutes, So let's 626 00:38:18,239 --> 00:38:21,200 Speaker 1: let's get to our our favorite questions that we ask 627 00:38:21,920 --> 00:38:27,520 Speaker 1: um all of our guests. And let's start out with streaming. 628 00:38:27,520 --> 00:38:29,840 Speaker 1: What are you? What are you watching either on Netflix 629 00:38:29,920 --> 00:38:33,560 Speaker 1: or Amazon or Disney or whatever? What podcasts or are 630 00:38:33,600 --> 00:38:37,160 Speaker 1: what are you doing to stay entertained during this shelter 631 00:38:37,280 --> 00:38:40,600 Speaker 1: in place period? Well, as I mentioned, I've got five 632 00:38:40,719 --> 00:38:45,560 Speaker 1: kids aged seven to fourteen, so I have rediscovered every 633 00:38:45,640 --> 00:38:50,800 Speaker 1: Disney movie out there and price and then I have 634 00:38:50,920 --> 00:38:56,400 Speaker 1: tried to introduce them to some Hollywood classics, Casablanca, the 635 00:38:56,400 --> 00:38:59,800 Speaker 1: man of Shot Liberty Valence. Um. And I'm a little 636 00:39:00,120 --> 00:39:03,520 Speaker 1: less successful in getting them involved with the classics, but 637 00:39:03,719 --> 00:39:08,840 Speaker 1: I've I've become reacquainted with my Disney childhood. That that 638 00:39:09,040 --> 00:39:13,759 Speaker 1: Disney Plus went from almost no subscribers to I think 639 00:39:13,800 --> 00:39:17,000 Speaker 1: they're up to forty million in an incredibly short period 640 00:39:17,040 --> 00:39:21,959 Speaker 1: of time. It's a giant lockdown success story. Um. You've 641 00:39:21,960 --> 00:39:25,439 Speaker 1: mentioned mentors several times. Tell us about your mentors who 642 00:39:25,440 --> 00:39:29,879 Speaker 1: helped helped your career, help who helped you form your 643 00:39:29,960 --> 00:39:35,680 Speaker 1: philosophy of merchant banking. Well, my my first boss was 644 00:39:35,760 --> 00:39:39,160 Speaker 1: Dan Knightick at Golden Sacks and he was tougher than tough, 645 00:39:39,320 --> 00:39:44,560 Speaker 1: but generous with his teaching, and he set me on 646 00:39:44,640 --> 00:39:48,759 Speaker 1: my way. Uh. Steve Friedman made me a partner in 647 00:39:48,880 --> 00:39:51,799 Speaker 1: ninety four, and Hank Paulson was kind enough to take 648 00:39:51,800 --> 00:39:57,080 Speaker 1: me under his wing, and they were my formative mentors 649 00:39:57,080 --> 00:40:00,880 Speaker 1: at Golden Sacks. And then I met Bill Berkeley. M. 650 00:40:01,239 --> 00:40:05,080 Speaker 1: Bill is the chairman of W. R. Berkeley Insurance, a 651 00:40:05,160 --> 00:40:09,919 Speaker 1: spectacular investor and a partner of mine and a very 652 00:40:10,000 --> 00:40:13,520 Speaker 1: tough task master. Uh. You know, he is a little 653 00:40:13,520 --> 00:40:15,920 Speaker 1: older than me, and he's up every morning at the 654 00:40:15,920 --> 00:40:19,239 Speaker 1: crack of dawn and demanding the same from everyone. And 655 00:40:19,280 --> 00:40:23,120 Speaker 1: he's terrific. My friend Farruke Pastiki, who runs the Quait 656 00:40:23,200 --> 00:40:25,960 Speaker 1: Investment Authority, He has been a wonderful mentor for me 657 00:40:26,040 --> 00:40:29,560 Speaker 1: over the years. And then frankly, my wife, the best 658 00:40:29,560 --> 00:40:32,759 Speaker 1: sounding board on the planet. I lay it all out 659 00:40:32,800 --> 00:40:35,840 Speaker 1: for her and her quintessential common sense and deep intellect. 660 00:40:36,360 --> 00:40:39,200 Speaker 1: It's like, no, you're being stupid there, No, that sounds okay, 661 00:40:39,200 --> 00:40:42,360 Speaker 1: you know. So it's a combination of having you know, 662 00:40:42,480 --> 00:40:45,680 Speaker 1: true love at home and wonderful partners in your life 663 00:40:45,680 --> 00:40:48,640 Speaker 1: that basically point out we're acting like an idiot and 664 00:40:48,680 --> 00:40:51,719 Speaker 1: try and set you on the right path. That that 665 00:40:51,840 --> 00:40:55,359 Speaker 1: sounds like a nice group of of mentors. What are 666 00:40:55,360 --> 00:40:57,279 Speaker 1: you reading these days? Tell us about some of your 667 00:40:57,280 --> 00:41:01,719 Speaker 1: favorite books or or what you're plowing through now. Well, um, 668 00:41:02,080 --> 00:41:04,920 Speaker 1: favorite books. I always go back at least once a year, 669 00:41:04,960 --> 00:41:07,200 Speaker 1: and I read On the Road by Jack Carouac and 670 00:41:07,560 --> 00:41:11,440 Speaker 1: The Sun Also Rises by Ernest Hemingway, just because they 671 00:41:11,440 --> 00:41:14,440 Speaker 1: touched me when I was living in Paris courtesy of 672 00:41:14,520 --> 00:41:19,080 Speaker 1: Davis Polk in my twenties, and there are essential truths there. 673 00:41:20,000 --> 00:41:23,200 Speaker 1: I've been reading a lot more history these days, the 674 00:41:23,239 --> 00:41:25,759 Speaker 1: foibles of how we fell into World War One? Because 675 00:41:25,800 --> 00:41:27,759 Speaker 1: I worry a little bit about what's happening in the 676 00:41:27,800 --> 00:41:31,560 Speaker 1: South China Sea. And then my kids, I pulled out 677 00:41:31,560 --> 00:41:34,560 Speaker 1: some old dickens for them. So we're plowing through Tellato 678 00:41:34,680 --> 00:41:37,560 Speaker 1: cities and great expectations. And so that's that's been the 679 00:41:37,640 --> 00:41:40,719 Speaker 1: last that's been the lockdown reading list for the last 680 00:41:40,719 --> 00:41:43,879 Speaker 1: two months. Well, what's the book you mentioned about how 681 00:41:43,920 --> 00:41:46,879 Speaker 1: we fell into World War One? Did I hear the title? Well, 682 00:41:46,960 --> 00:41:54,040 Speaker 1: Barbara Tuckman Guns of August Catastrophe Europe at War by 683 00:41:54,239 --> 00:41:59,239 Speaker 1: Max Hastings. I mean, there's it's just history does move 684 00:41:59,320 --> 00:42:03,520 Speaker 1: in circle. And so seeing how a nations fell into 685 00:42:04,080 --> 00:42:06,960 Speaker 1: cataclysm a hundred plus years ago and I worry a 686 00:42:07,000 --> 00:42:10,560 Speaker 1: little about it today with what's going on internationally, just 687 00:42:10,680 --> 00:42:13,719 Speaker 1: reminds me of, you know, what to do because I 688 00:42:13,800 --> 00:42:16,640 Speaker 1: am involved in Asia society and the Council on Foreign 689 00:42:16,719 --> 00:42:19,800 Speaker 1: Relations and in a small way just try and remind 690 00:42:19,840 --> 00:42:22,160 Speaker 1: people that, you know, we're not immune for making the 691 00:42:22,200 --> 00:42:25,960 Speaker 1: same mistake twice. To say the least. That the book 692 00:42:26,000 --> 00:42:28,840 Speaker 1: that has always stayed with me about the transition period 693 00:42:29,320 --> 00:42:32,160 Speaker 1: from World War One to World War Two is the 694 00:42:32,320 --> 00:42:35,879 Speaker 1: Lords of Finance by Liquidamat. I don't know if you're 695 00:42:35,920 --> 00:42:40,759 Speaker 1: familiar with that, just a terrific book, yep. Absolutely. Um, 696 00:42:40,840 --> 00:42:44,080 Speaker 1: So are our final two questions. What sort of advice 697 00:42:44,560 --> 00:42:47,400 Speaker 1: would you give to a recent college grad or or 698 00:42:47,520 --> 00:42:51,320 Speaker 1: someone of that age who was interested in pursuing a 699 00:42:51,440 --> 00:42:57,560 Speaker 1: career in merchant banking. First, maintain a sense of humor 700 00:42:57,960 --> 00:43:01,319 Speaker 1: and make sure you have lots of patients, because you 701 00:43:01,440 --> 00:43:05,520 Speaker 1: need both in order to be successful. I think I've 702 00:43:05,520 --> 00:43:11,000 Speaker 1: found that broad based liberal arts with an ability to 703 00:43:11,120 --> 00:43:15,479 Speaker 1: understand the world in its totality. So read a book 704 00:43:15,520 --> 00:43:18,879 Speaker 1: of poetry, read a novel, understand history, understand a little 705 00:43:18,920 --> 00:43:23,040 Speaker 1: of science. Just demonstrate a knowledge of the world and 706 00:43:23,080 --> 00:43:26,720 Speaker 1: be open to trends and not locked into specific thinking. 707 00:43:27,560 --> 00:43:33,360 Speaker 1: And obviously work whatever relationships your you have, your friends, parents, 708 00:43:33,440 --> 00:43:38,440 Speaker 1: your parents, your college development group, because getting out and 709 00:43:38,480 --> 00:43:42,839 Speaker 1: talking to as many people as possible is important. To 710 00:43:42,920 --> 00:43:45,400 Speaker 1: find a fit. Because I will tell you how I 711 00:43:45,400 --> 00:43:47,800 Speaker 1: haven't really only had three jobs in my whole life. 712 00:43:47,960 --> 00:43:51,399 Speaker 1: Davis Polk which was spectacular, and then Golden Sacks, where 713 00:43:51,400 --> 00:43:54,120 Speaker 1: I was for thirty years, and now at Cornell Capital 714 00:43:55,040 --> 00:43:59,360 Speaker 1: finishing seven years here. Um, finding that fit where you 715 00:43:59,360 --> 00:44:02,440 Speaker 1: are inspired to do your best, where you have colleagues 716 00:44:02,440 --> 00:44:06,120 Speaker 1: who will challenge and support you. Um. You know these 717 00:44:06,160 --> 00:44:10,839 Speaker 1: are platitudes, but they're also essential truths. And being not 718 00:44:10,920 --> 00:44:13,320 Speaker 1: being afraid to saying you know what, this just doesn't 719 00:44:13,360 --> 00:44:16,080 Speaker 1: work for me, or demanding some attention, or walking into 720 00:44:16,080 --> 00:44:19,000 Speaker 1: your boss's office, make sure you're prepared. Just don't walk 721 00:44:19,040 --> 00:44:21,400 Speaker 1: in there with attitude. You have to walk in with 722 00:44:21,520 --> 00:44:24,480 Speaker 1: a thoughtful point of view and and explain what is 723 00:44:24,480 --> 00:44:27,880 Speaker 1: troubling you or where you'd like to go. It's like 724 00:44:28,000 --> 00:44:31,719 Speaker 1: quite interesting in our final question, what is it that 725 00:44:31,800 --> 00:44:34,799 Speaker 1: you know about the world of investing today that you 726 00:44:34,840 --> 00:44:39,160 Speaker 1: would have found useful thirty plus years ago? I wish 727 00:44:39,160 --> 00:44:42,839 Speaker 1: I was a little smarter about the digital revolution that 728 00:44:42,920 --> 00:44:46,080 Speaker 1: was happening in the eighties and nineties. I remember when 729 00:44:46,120 --> 00:44:49,520 Speaker 1: Microsoft went public and I bought a few shares, but 730 00:44:49,560 --> 00:44:51,960 Speaker 1: I had no idea what they did. Just was one 731 00:44:52,000 --> 00:44:56,360 Speaker 1: of those things that sounded exciting and not really understanding, 732 00:44:56,719 --> 00:45:00,520 Speaker 1: you know, Google and Yahoo and am us On and 733 00:45:00,680 --> 00:45:06,120 Speaker 1: Apple until they were already formed. Um was probably a 734 00:45:06,160 --> 00:45:09,759 Speaker 1: big miss on my part. Now I'm you know, my 735 00:45:09,840 --> 00:45:11,880 Speaker 1: fourteen year old is teaching me, So I feel like 736 00:45:11,920 --> 00:45:15,040 Speaker 1: I've got a great mentor there um, and I think 737 00:45:15,080 --> 00:45:18,839 Speaker 1: that's the one thing I did not put enough emphasis on. 738 00:45:18,880 --> 00:45:23,760 Speaker 1: This changing technology landscape quite interesting. We have been speaking 739 00:45:23,800 --> 00:45:26,960 Speaker 1: with Henry Cornell, founder of Cornell Capital and one of 740 00:45:27,000 --> 00:45:31,560 Speaker 1: the original architects of Goldman Sachs Merchant Banking Division. If 741 00:45:31,600 --> 00:45:34,399 Speaker 1: you enjoy this conversation, well be sure and look up 742 00:45:34,400 --> 00:45:36,959 Speaker 1: an inch or down an inch on Apple iTunes, where 743 00:45:37,000 --> 00:45:40,120 Speaker 1: you can see any of the previous three hundred plus 744 00:45:40,160 --> 00:45:43,680 Speaker 1: such conversations we've had over the past five years. You 745 00:45:43,719 --> 00:45:48,680 Speaker 1: can find that at Apple iTunes, Spotify, Google Podcast, Overcast, Stitcher, 746 00:45:49,120 --> 00:45:53,440 Speaker 1: wherever your final podcasts are sold. We love your comments, 747 00:45:53,600 --> 00:45:58,280 Speaker 1: feedback and suggestions right to us at m ib podcast 748 00:45:58,320 --> 00:46:01,920 Speaker 1: at Bloomberg dot net. Give us a review on Apple iTunes. 749 00:46:02,560 --> 00:46:05,520 Speaker 1: You can check out my weekly column on Bloomberg dot 750 00:46:05,600 --> 00:46:10,040 Speaker 1: com slash Opinion, follow me on Twitter at Ridholtz. I 751 00:46:10,040 --> 00:46:12,479 Speaker 1: would be remiss if I did not thank our crack 752 00:46:12,600 --> 00:46:15,680 Speaker 1: staff that helps put together these conversations each week. Michael 753 00:46:15,680 --> 00:46:18,480 Speaker 1: Boyle is my producer slash booker. Tim Harrow is my 754 00:46:18,560 --> 00:46:22,600 Speaker 1: recording engineer. Michael Batnick is my head of research. A 755 00:46:22,680 --> 00:46:26,640 Speaker 1: Tico val Bron is our project manager. I'm Barry Riholts. 756 00:46:26,880 --> 00:46:30,320 Speaker 1: You've been listening to Masters in Business on Bloomberg Radio