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Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm

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Speaker 1: Jason Kelly and I'm Carol Masser. Welcome to the Bloomberg

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Speaker 1: Business Week Extra. It's our weekly podcast. This is where

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Speaker 1: we give you one of our full conversations from the week,

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Speaker 1: and this week Carol John Winkle read, the co CEO

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Speaker 1: of TPG. I got a chance to catch up with

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Speaker 1: him at the Bloomberg Equality Summit. It turned out to

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Speaker 1: be more timely than anyone expected. TPG, of course, caught

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Speaker 1: up a couple of weeks ago in that college admission scandal,

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Speaker 1: one of their most prominent executives leaving the firm after

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Speaker 1: being implicated. And here's that full conversation. Let's start on

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Speaker 1: the news as we do here at Bloomberg. UM. A

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Speaker 1: couple of weeks ago, one of your partner's, Bill McGlashen

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Speaker 1: was wrapped up in this now very well known admission scandal.

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Speaker 1: You guys, I think it's fair to say louse swiftly

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Speaker 1: both internally and externally. I want to ask you where

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Speaker 1: you stand now with your investors, because notably, one of

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Speaker 1: the decisions you made was to go to investors in

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Speaker 1: the New Riots Fund and say, look, it's all good.

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Speaker 1: You can have your money back if you want. How

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Speaker 1: have they reacted? And then I want to talk to

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Speaker 1: you about what's going on inside the firm. Well, I think, UM,

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Speaker 1: a couple of weeks ago, when this news first broke,

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Speaker 1: it was a as you might imagine, it was pretty shocking.

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Speaker 1: I mean, this is something that we had no knowledge

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Speaker 1: of or had no idea this was all happening. And UM,

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Speaker 1: so anytime something like this happens, you know, you sort

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Speaker 1: of takes your breath away for a minute. UM. But

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Speaker 1: we UM, you know, we reacted as you describe, I mean,

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Speaker 1: we tried to react, you know, pretty in a pretty

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Speaker 1: focused way. And UM. One of the things that I

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Speaker 1: think we felt it was really important to do was

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Speaker 1: to make sure that we were communicating and so we

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Speaker 1: went out to all of our stakeholders. And by the way,

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Speaker 1: that's both both externally in terms of our investors r LPs,

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Speaker 1: and also internally because this is obviously a very important

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Speaker 1: thing internally as well with all our people. But our investors,

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Speaker 1: I would say overall number one are very supportive UM

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Speaker 1: and UM. They obviously understood the context that UM. Unfortunately

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Speaker 1: Bill was engaged in this scheme UM on a personal basis, UM,

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Speaker 1: and so our investors, Number one, we're very supportive. Our

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Speaker 1: investors understand what we're trying to accomplish as a firm

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Speaker 1: with respect to the franchise that Bill was part of,

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Speaker 1: which is our growth equity franchise and also importantly our

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Speaker 1: impact franchise, which obviously has a lot to do with

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Speaker 1: why we're here today, UM and UM. And but naturally

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Speaker 1: have a lot of questions. They have a lot of questions,

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Speaker 1: UM and UM. And so what we've committed to our

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Speaker 1: investors is that we're UH. We we've undertaken an investigation

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Speaker 1: internally to make sure that none of the things that

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Speaker 1: Bill was engaged and were in any way, shape or

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Speaker 1: form bleeding into the business. UM. We owe that to

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Speaker 1: our investors, and so we're working on that. UM. We're

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Speaker 1: gonna go back to them and give them to read

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Speaker 1: out when we're done with that and when we finished

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Speaker 1: with all of our work UH and UH. And importantly

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Speaker 1: also I think our investors understand that you know, our

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Speaker 1: growth and our rise impact franchise. You know, we're talking

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Speaker 1: about a hundred people, a hundred plus people. We have

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Speaker 1: a deep, broad team. UM, we have our our impact

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Speaker 1: fund is now made close to thirty investments over about

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Speaker 1: a billion one of capital UM. And so when you

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Speaker 1: actually look at the companies we've invested in and the

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Speaker 1: work these companies are doing, I think they all realized

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Speaker 1: that there is a bigger there's something bigger here than

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Speaker 1: just one individual. So they're very constructive the you reference

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Speaker 1: giving you know, us allowing them to take their money back.

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Speaker 1: What we did, what we were in process, we were

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Speaker 1: beginning to raise the second fund, so we had some

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Speaker 1: we had done a first close and we went back

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Speaker 1: to our investors instead. Of course, you'll have an opportunity

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Speaker 1: to reevaluate UM and so UM everybody is comfortable with

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Speaker 1: where we are right now. We'll have a read out

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Speaker 1: ultimately of the of of of our internal work and

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Speaker 1: you know, then we'll go forward from there. So help

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Speaker 1: us understand this in the kind in the broader context

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Speaker 1: of the work that you are doing inside TPG around

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Speaker 1: diversity and inclusion. This is something that you really personally

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Speaker 1: have taken on since you arrived just a few years ago.

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Speaker 1: And we can go back to your history at Goldman

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Speaker 1: as well, But but I do want to understand the

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Speaker 1: current context and how not just this latest news and

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Speaker 1: this in the lastin situation, but but more generally, what

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Speaker 1: moment are you at in your work internally? Well, I

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Speaker 1: think just just you know, the broader context of why

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Speaker 1: I feel it's so important, and I think why we

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Speaker 1: feel it's so important is because, UM, it's not just

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Speaker 1: a question of diversity is one aspect of it. I

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Speaker 1: like to view it as a much in a much

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Speaker 1: broader context. I think in the world that we live

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Speaker 1: in today, being a fiduciary investing on behalf of the

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Speaker 1: stakeholders that we invest on, behalf of, and also having

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Speaker 1: an organization that people feel they really want to be

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Speaker 1: part of, it's really important in my view that you

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Speaker 1: have that that there's some expression of values, like what

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Speaker 1: do you stand for as a company? What what what's

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Speaker 1: important to you? What are you trying to accomplish. So

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Speaker 1: it's not just diversity is one part of it, UM,

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Speaker 1: you know, I like to start more from the perspective of, UM,

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Speaker 1: what are your what's what sort of your values? As

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Speaker 1: an organization? UM, how do you think about just in

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Speaker 1: the normal course of your investing activities, how do you

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Speaker 1: think about what we're doing, why we're doing it. Um.

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Speaker 1: I'd like to think about the environment at the firm. Um.

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Speaker 1: I start with kind of inclusivity, and then that bleeds

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Speaker 1: into the whole idea of diversity. Um. Are we an

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Speaker 1: organization where people feel like they really want to be

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Speaker 1: part of this kind of living, breathing organism that is

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Speaker 1: our that isn't that is a firm? And so I

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Speaker 1: feel like, UM, when I got to the firm, I

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Speaker 1: think that we were sort of in the beginning stages

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Speaker 1: of sort of getting our heads around that. And I

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Speaker 1: think in the past couple of years in particular, I

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Speaker 1: think this whole concept of sort of value orient or

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Speaker 1: value orientation, UM, what do you stand for? What are

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Speaker 1: you trying to accomplish? Um? I think that is accelerated

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Speaker 1: in a big way, not just a TPG just generally

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Speaker 1: in the market. Well, and I want to ask you

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Speaker 1: about that because I think it's fair to say. I

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Speaker 1: don't think anyone in this room would disagree. This is

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Speaker 1: not something private equity has been good at. It has

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Speaker 1: been really white, it's been male, it's been bros So

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Speaker 1: bros bros. Um. So why First of all, I mean briefly, why,

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Speaker 1: and and second, do you have a legitimate shot at

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Speaker 1: changing that narrative quickly. Well, Um, first of all, why

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Speaker 1: is because UM, I think, Well, first of all, it's

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Speaker 1: important to me. UM. I think that when you when

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Speaker 1: you are part of an organization, and I learned this

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Speaker 1: a little bit in my past organization at Goldman Sacks.

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Speaker 1: I mean, when you're part of an organization that is white,

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Speaker 1: bro homogeneous, you know, and then you're then you have

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Speaker 1: a set of experiences where you kind of get out

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Speaker 1: of that that kind of that that atmosphere, you realize

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Speaker 1: the difference. You realize the richness of being in a

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Speaker 1: much more heterogeneous environment. You realize the richness of having

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Speaker 1: a bunch of different type of people sitting around. UM.

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Speaker 1: Some some of it's some of it's subtle, but some

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Speaker 1: of it's not that subtle, Okay, in terms of UM,

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Speaker 1: the idea flow, UM, who you connect with externally, UM,

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Speaker 1: you know, and again going back to kind of what

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Speaker 1: you stand for. So I feel like it makes you

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Speaker 1: a much better, much richer, much more interesting organization and

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Speaker 1: your ability in our in our world where you're trying

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Speaker 1: to actually invest in companies, you're trying to you're trying

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Speaker 1: to relate to and connect to c e O S

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Speaker 1: or you're trying to relate to that are running other companies,

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Speaker 1: you're trying to relate to companies that are prosecuting businesses

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Speaker 1: where they're dealing in a diverse world. I think having

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Speaker 1: an understanding of for that having having a connection in

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Speaker 1: some way, shape or form because your organization is trying

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Speaker 1: to do some of the same things. To me, that's

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Speaker 1: a very important thing. So I think that so just

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Speaker 1: kind of level setting. I think it's very important in

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Speaker 1: that respect. In terms of changing it fast um, I

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Speaker 1: think it depends on what your definition of fastest. I mean,

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Speaker 1: I think I think if you look at because your

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Speaker 1: LPs have made it clear that this is something that's

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Speaker 1: very important. I think if you look at what we

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Speaker 1: look like, I I've been there for a little over

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Speaker 1: three and a half years. If I used that as

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Speaker 1: a frame of reference, if you look at where we

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Speaker 1: were three and a half years ago versus where we

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Speaker 1: are today, I think we've have moved the needle a lot.

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Speaker 1: Do we have to move it a lot more? We do,

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Speaker 1: but I think we've moved it a lot. Just I mean,

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Speaker 1: just give you some examples. I mean, you know we

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Speaker 1: have we have focused on UM creating an environment that

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Speaker 1: is more inclusive and people feel more comfortable in things

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Speaker 1: like we have done. As an example, we we just

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Speaker 1: we just UM changed our family leave policy. Our family

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Speaker 1: leave policy is UM is gender blind. It's eighteen weeks

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Speaker 1: UM for the primary caregiver. It's four weeks for the

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Speaker 1: secondary caregiver. You can take four of those weeks at

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Speaker 1: any time during the course of the year. We have

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Speaker 1: undertaken a program UM two with and we think about this,

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Speaker 1: by the way, with respect to our broader ecosystem, not

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Speaker 1: just the thousand people at TPG. We can we we

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Speaker 1: have investments in almost two companies. Of those two IT

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Speaker 1: fifty company, these we are actually on the board and

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Speaker 1: in some cases control, in some cases don't control, but

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Speaker 1: have influence. A year ago, we set out to change

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Speaker 1: the composition of our boards for every single company where

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Speaker 1: we have control or or significant influence UM from a

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Speaker 1: gender and UH and UH diversity perspective. As an example,

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Speaker 1: in the last year we have made we've changed the

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Speaker 1: board gender composition and over thirty of our companies and

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Speaker 1: we're going to continue until we have basically touched them all.

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Speaker 1: And in the process of doing that, giving an example

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Speaker 1: of sort of importance of this, kind of the network

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Speaker 1: effect of this and the process of doing that, we

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Speaker 1: put together a listing of women who could serve on boards.

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Speaker 1: Believe it or not, there's six hundred women on that

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Speaker 1: list that we have through our network, have connected to

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Speaker 1: and basically are really um incredible people who could play

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Speaker 1: some kind of role in helping us govern our companies. UM.

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Speaker 1: We changed our bathroom signage in all of our offices

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Speaker 1: so people can use whatever bathroom they want to depending

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Speaker 1: upon how they identify from a gender perspective. These are

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Speaker 1: little things, and I'll give you another example that's a

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Speaker 1: little thing, you know, But we have a partnership with

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Speaker 1: sf MoMA where during Black History Month and Hispanic Heritage

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Speaker 1: Month and um UH and these various highlighted UM diversity

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Speaker 1: months throughout the year, we have an installation of art

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Speaker 1: in our offices. So people walk around and they see

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Speaker 1: these placards and they see that we see artwork by

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Speaker 1: Black artists, by Hispanic artists, by women, etcetera. So we're

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Speaker 1: trying to just really take a very holistic perspective in

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Speaker 1: terms of how we're trying to do this to really

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Speaker 1: move the needle and I think we've moved the needle

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Speaker 1: a lot three and a half years. The hardest part

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Speaker 1: of the needle to move is population, right, because you

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Speaker 1: can do it on your incoming population staff, the staff people.

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Speaker 1: You can do it on your incoming population very easily. So,

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Speaker 1: for instance, our two thousand and nineteen incoming associate class

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Speaker 1: is um either women or minorities are class coming in.

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Speaker 1: We're getting close to that as well. Where you have

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Speaker 1: Moving that diverse population through the organization is more of

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Speaker 1: a challenge, and we're trying to do that, but you know,

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Speaker 1: and I think it will take some time to do that,

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Speaker 1: but we're trying to do that. And do you feel

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Speaker 1: pressure from your limited partners? You're talking to them all

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Speaker 1: the time, you know, you were saying to me, you're

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Speaker 1: traveling later this week to meet with investors. Is this

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Speaker 1: and what's the substance of the of those conversations. I

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Speaker 1: coming up more I would say that um, more of

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Speaker 1: From that perspective, I would say they've been focused on

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Speaker 1: things like E S G initiatives for a long time.

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Speaker 1: They haven't been as focused on diversity. I will say

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Speaker 1: that in my first you know, a year and a half,

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Speaker 1: when I met with LPs. I don't know if I

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Speaker 1: of surprised how how infrequent it came up. I was

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Speaker 1: surprised how infrequent it came up. And is that just

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Speaker 1: because they're like, where are making money? Like it's cool

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Speaker 1: with us? You know, I don't know. I I think

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Speaker 1: I think that again, I think it's sort of a

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Speaker 1: governance needle has moved everywhere now, right, It's moved everywhere,

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Speaker 1: you know, state pension funds, state retirement funds. You know.

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Speaker 1: I'd have meetings with him and it barely came up.

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Speaker 1: It's coming up now. So I think it definitely has

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Speaker 1: The politics of the country has lived right absolutely. I mean,

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Speaker 1: the current conversation is pretty this is pretty laser focused

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Speaker 1: is definitely bleeding into the conversation. And so when you

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Speaker 1: we were talking a little bit backstage about without going

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Speaker 1: into what we're talking about backstage, but you know, David

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Speaker 1: Solomon has been the new CEO of Goldman. He's been

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Speaker 1: pretty vocal about this as well. You feel like he's

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Speaker 1: moving the name. I I think I think he is.

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Speaker 1: I mean, I think Goldman has been at this for longer. Um.

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Speaker 1: I think that. Um it feels to me like when

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Speaker 1: I look at Goldman, and it's not exclusively the Goldman,

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Speaker 1: but it's sort of like you would kind of advance

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Speaker 1: then all of a sudden kind of you level out,

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Speaker 1: and then you kind of get on it again and

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Speaker 1: you level out. And I think David is now sort

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Speaker 1: of steepening the curve again. I think he is. I

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Speaker 1: think it's clear that it's something that he wants to

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Speaker 1: talk about. And so as a result of that, if

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Speaker 1: the CEO wants to talk about it, you know a

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Speaker 1: lot of other people are and start talking about it.

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Speaker 1: So before we wrap up, what hasn't worked, like over

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Speaker 1: your career and maybe more recently at TPG. You know,

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Speaker 1: I'm guessing you know, you guys, our idea, Guys, you

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Speaker 1: sit around and you think, all right, let's do this.

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Speaker 1: Has there been anything where like huh wow, I didn't

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Speaker 1: go so well? Well, I think a couple of things.

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Speaker 1: I think what doesn't okay, just in terms of doesn't

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Speaker 1: work or as not as effective. I think that you

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Speaker 1: can't just it can't just be coming down from the

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Speaker 1: CEO UM. You have to figure out ways of holding

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Speaker 1: people throughout the organization accountable. So it's very important that

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Speaker 1: when you go through your meetings at the end of

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Speaker 1: the year with managers who are running groups of people

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Speaker 1: are running businesses, this has to be part of the conversation.

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Speaker 1: There has to be a level of accountability, Like it matters.

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Speaker 1: And I know it's crude, but in terms of you know,

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Speaker 1: how people think about their careers. If they don't think

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Speaker 1: it's going to affect their career, or if they if

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Speaker 1: they don't think in some way it's going to affect

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Speaker 1: their financial well being, they probably aren't going to focus

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Speaker 1: on it. As much as they should. So I do

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Speaker 1: think you have to do that. So that would be

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Speaker 1: one thing. If you're not doing that, it's probably not

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Speaker 1: going to work as well. Another issue is, um do

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Speaker 1: you this this whole concept of as you try to

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Speaker 1: accelerate um and move um uh diverse parts of the

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Speaker 1: population through your organization. Uh how um how do you?

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Speaker 1: How do you quality control? In other words, you want

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Speaker 1: to make sure that as you move people through the organization,

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Speaker 1: you're you're bringing them along. They need mentorship, they need sponsorship.

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Speaker 1: But what if they're not performing? And so you have

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Speaker 1: to make a tough decision. And one of the things

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Speaker 1: that I have found is that in the process of

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Speaker 1: managing that, UM, you can't you can't just promote people

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Speaker 1: or move people along because a are in a diverse

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Speaker 1: part of the population if they're also not being successful

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Speaker 1: and so then and when I remember this was back

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Speaker 1: when I was at Goldmen I remember the prospect of

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Speaker 1: having to let somebody go who was in one of

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Speaker 1: those who was in a diverse part of the population.

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Speaker 1: And I remember frankly being scared, like, you know, I've

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Speaker 1: got to do this, and this person is obviously viewed

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Speaker 1: as diverse how is the rest of the organization going

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Speaker 1: to view it? And so what I did is I

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Speaker 1: actually got together with a group of people who were

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Speaker 1: from the same part of the diversity spectrum to talk

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Speaker 1: to them about it. And what I learned was that

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Speaker 1: they were as insistent on me on me managing that

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Speaker 1: person out as I thought it was necessary, because they

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Speaker 1: felt the last thing we want is to have somebody

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Speaker 1: who's just underperforming or is viewed as being kind of

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Speaker 1: put there for the wrong reasons. And so I ended

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Speaker 1: up getting the support of that group. So as far

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Speaker 1: as sort of how it got communicated through the organization,

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Speaker 1: that was very helpful. And so I think that you

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Speaker 1: have to you have to have performance standards for everybody, right,

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Speaker 1: and changing those performance standards is not is not a

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Speaker 1: very good thing to do. Having said that, what you

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Speaker 1: do have to do is I think you do have

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Speaker 1: to in my view, have reached down in the organization.

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Speaker 1: Like one of the things that we're doing is when

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Speaker 1: we think about partner selection at TPG, we are looking

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Speaker 1: at um women and minorities. We have a special process

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Speaker 1: to look at them and make sure that we're we

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Speaker 1: are evaluating whether or not people at the right point

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Speaker 1: in their careers are getting vetted so that you know,

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Speaker 1: and we were we are going as far in some

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Speaker 1: cases as maybe vetting someone a year early, are year

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Speaker 1: earlier than they otherwise would be because we want to

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Speaker 1: make sure that they're getting the proper exposure. And um

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Speaker 1: at doesn't mean we're promoting them too early. It just

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Speaker 1: means we're creating visibility in the organization. All right, Before

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Speaker 1: I let you go, got to ask what does success

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Speaker 1: look like ten years from now? For for TPGs that

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Speaker 1: different kinds of deals. Obviously the firm looks different internally,

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Speaker 1: but what's the outcome? I think I don't think it

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Speaker 1: will be different, well, only different kinds of deals in

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Speaker 1: the sense that if you have a diverse group of people,

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Speaker 1: you know, you may be identifying different opportunities as a

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Speaker 1: result of that, and so that may change the composition

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Speaker 1: of the portfolio a little bit. I think what success

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Speaker 1: looks like is that if you looked at ultimately the

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Speaker 1: drivers of the business, people who are running different businesses,

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Speaker 1: running different strategies, I think you're gonna it will look

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Speaker 1: like a more diverse set of people. There will be

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Speaker 1: there will be women, there will be black professionals will

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Speaker 1: be his latinos running these different businesses, and I think

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Speaker 1: that's entirely possible. I think it's entirely possible. And that's

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Speaker 1: John Winkle Reed, the co CEO of TPG, and Carol.

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Speaker 1: What I found interesting was certainly acknowledging a lot of

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Speaker 1: the challenges that private equity faces. This was for a

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Speaker 1: long time a very insular industry, small, tight and candid leaves.

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Speaker 1: You heard us talk about, very white and very male.

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Speaker 1: They're trying to change that, and they're trying to change

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Speaker 1: in part because they're getting a lot of pressure from

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Speaker 1: their own investors. Yeah, very revealing conversation. We started to

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Speaker 1: tune into Bloomberg Business Week Radio Live Monday through Friday,

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