WEBVTT - Preview: Blackstone's Jon Gray on the Moment His Career Could Have Ended

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<v Speaker 1>Hi everyone, I'm friends seeing and I really hope you're

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<v Speaker 1>enjoying the show. Leaders with friend Scene Blackweather Podcast Now,

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<v Speaker 1>the ones you enjoy. Send it to your friends the reviews.

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<v Speaker 1>It really helps other people discover the podcast. Here's a

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<v Speaker 1>preview of the conversation we have coming up next week

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<v Speaker 1>with John Gray, number two at Blackstone. You're known as

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<v Speaker 1>the Hilton deal guy. Right twenty years ago, you take

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<v Speaker 1>this massive bet on Hilton, you pay twenty six billion

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<v Speaker 1>for it at Blackstone with twenty billion debt. What were

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<v Speaker 1>you thinking?

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<v Speaker 2>I wasn't as wise back then, I guess at the time.

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<v Speaker 2>If you go back, this is right before the financial crisis,

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<v Speaker 2>and I was running our real estate business, and what

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<v Speaker 2>we were looking for was how could we buy great

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<v Speaker 2>real estate or operating businesses at reasonable prices. And there

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<v Speaker 2>were so much debt in the market fueling private real

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<v Speaker 2>estate values that we found we could buy the public

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<v Speaker 2>companies at better prices. So we ended up paying a

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<v Speaker 2>big premium thirty plus percent over where the company was trading,

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<v Speaker 2>and we committed in July of seven. We closed in

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<v Speaker 2>late October. By early eight, things are going badly. The

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<v Speaker 2>financial crisis really picks up, and the company has a

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<v Speaker 2>twenty percent decline in revenue and a forty percent decline

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<v Speaker 2>in cash flow, and we put a lot of debt

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<v Speaker 2>on it. And I would say at that moment it

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<v Speaker 2>did feel like it was career shortening and that I

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<v Speaker 2>shouldn't be sitting here today.

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<v Speaker 1>Did you think, what have I done? Or did you think?

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<v Speaker 1>I think?

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<v Speaker 2>There was part of me that was what have I done?

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<v Speaker 2>But there was also part of me that was this

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<v Speaker 2>is a great business. We still thought that travel was

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<v Speaker 2>a long term growth business and that the core of

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<v Speaker 2>the company, the branded hotel business where you manage enfranchise

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<v Speaker 2>hotels Hilton, Hilton Garden and Hampton Waldorf, that that business

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<v Speaker 2>could grow a lot beyond the United States. And then

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<v Speaker 2>we just had to weather this storm. And so we

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<v Speaker 2>ended up putting in an extra eight hundred million dollars

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<v Speaker 2>at the bottom. By the way, we wrote off quite

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<v Speaker 2>a storm. It was quite a storm. We wrote down

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<v Speaker 2>the investment by seventy one percent, So the largest investment

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<v Speaker 2>in our firm's history we wrote down by seventy one percent.

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<v Speaker 2>You had to go to meetings with investors and I'd

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<v Speaker 2>had to say to them, hey, I know we've done this,

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<v Speaker 2>but it's unrealized we're going to get through this. And

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<v Speaker 2>there was obviously, rightfully a lot of concern. Ultimately, the

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<v Speaker 2>sun came back out, the business grew, we took the

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<v Speaker 2>company public, and we made fourteen billion dollars and by

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<v Speaker 2>all accounts, that should not have happened. And so the

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<v Speaker 2>question becomes what you learned. One is the importance of

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<v Speaker 2>staying calm. So I always say to my kids, and

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<v Speaker 2>now I say to everyone in Blackstone, stay calm, stay positive,

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<v Speaker 2>never give up. And I think that was really important

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<v Speaker 2>in a moment like this.

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<v Speaker 1>That was a taste of my interview with John Gray.

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<v Speaker 1>The full episode will be out on Monday. Please subscribe

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<v Speaker 1>and share with friends.