That provides security. Coffee. Thanks very much. Thanks for coming. People are going to be coming in and out because of classes. Welcome to those that are live streaming. And thank you all for coming to hear an incredible leader, speaker, and investor.
Let me first introduce a few VIPs, starting with Christina Anderson, who runs all of the marketing, branding, and communications at Blackstone. She's been there 17 years, and she's one of the most senior people in her field anywhere in the world. She works with everyone, and she's amazing.
I emailed John to ask him to come, and he said he'd be delighted. At least, Doyle. My daughter went to school with Elise, and so when you're running Blackstone, I hope you remember me. And then Marc N. Duber is here. And Alan Meltzer is here. Alan is also on the board. He supported the Kogod ballot center, which is amazing. This is part of the Alan and Amy Meltzer Speaker Series, and Alan has made it possible that we can get amazing speakers like Jon Gray here.
So I'm going to interview Jon for about 30 minutes, and then we're going to open it up to student questions. What do we do about Jon Gray? He grew up in Illinois. He went to the University of Pennsylvania. He was an English and economics major. He got a job. He met his wife in a poetry—Romantic poetry. So sorry. We'll get into that. He went to Blackstone as a 22-year-old in the private equity business. The next year, they decided to start a real estate business. Now, most people in private equity kind of—there's this hierarchy: 'We're better than real estate,' and better than investment bankers. But Jon raised his hand and said, 'I'd like to go there.' Twelve years later, he's running the business. He basically built the largest real estate business anywhere in the world for any company. And now he runs the largest alternative asset firm: the largest real estate business in the world, the largest hedge fund in the world, the largest private credit business in the world. And he's also just an incredibly kind person. So thank you very much for coming. Wow. Thank you.
Dave is a very good man, by the way. We've known each other a long time, so it's an honor to be here. Thank you all for coming out.
So my first question is, I always like starting talks like this with a bar mitzvah question. So you received some stock at your bar mitzvah, and you invested in it, right?
Because it was mostly things I knew, which were Coca-Cola, Nike. I think that turned out okay. Probably the most important thing is those stocks I held onto until I got to get my wife. And then I had to clear everything out to buy that engagement ring. There were no lab-grown diamonds at the time. So on the back end, those stocks compounded and allowed me to execute the most important decision in my life.
Okay. An English and economics major ends up at Blackstone. What did you say in the interview that convinced them to offer you a job at an investment firm?
I don't know. The summer before I got the job, I was helping run a small day camp in suburban Chicago—Camp Cohen. But I also worked at John Lehman, the brokerage firm at the time, as a summer intern. And I think that combined with this sort of unique background as an English major in finance, I was able to tell a good enough story. Blackstone in particular—I had a friend, David Blitzer, who just retired from the firm. We had a mutual friend in common, and it just sort of clicked.
What was exciting back then was the private equity business didn't really exist. People were talking about it, and this was the only firm in this space that was hiring straight out of college. I often say luck is a core competency for me. I happened to get this job at Blackstone at exactly the right time, initially in the M&A and private equity area. But about a year into it, I transitioned to real estate. Basically, at the time, I was helping them write the pitch book for the first real estate fund. They were looking for resources, and I'm not sure if I raised my hand or they tapped me on the shoulder. For me, it was mostly about avoiding going back to business school, because the standard was I was supposed to go back. This was an opportunity to stay at the firm and keep working.
Real estate had collapsed at the time, and I didn't think it was a permanent gig. I thought I'd do it for a year or two, and then we'd see what happened. It ended up becoming a full career for me before I got this job back in 2018. I think intellectually open—going to new places, living in different places—not necessarily saying 'this is the career.' That willingness to jump on a different train and help build a business that didn't exist turned out to be a good decision.
So tell us where Blackstone is today. It's basically blowing away—this hurts as a Carlyle guy. When I started Carlyle, we were both $70 billion in AUM. You've done pretty well. How big is it? What are the biggest parts?
The business today is $1.3 trillion. It's gotten a lot bigger than you would have imagined. When I joined the firm, it was $750 million in equity, so it's a pretty dramatic change. It's roughly $500 billion of credit, which didn't even exist when I joined. It's probably $300 to $400 billion of private equity, and also real estate. And then it's a little less than $100 billion in hedge funds. Embedded inside those businesses are growth, life sciences, infrastructure, secondaries—the whole gamut. It's global: Europe into Asia, the United States, all these different areas. The best thing we get is the ability to see the whole world and take that informational advantage and translate it into investing advantages. You can see what's happening in demand for digital infrastructure or power today and think about how that might show up in another geography, across asset classes. It's big, but we still run it a bit like a small business.
You started as an investor. What do you do today? Investor, leader, communicator?
I'd say I'm still an investor first. It's like running a pizza shop. You can have beautiful décor, but it's the pizza that matters. Our job is to deliver net returns for our customers. So I spend my weekends reading investments. That's the most important function.
But you've got to be more. You have to be a communicator: talking to shareholders, traveling—I was just in the Middle East for ten days talking to investors—meeting portfolio company CEOs, thinking strategically about where to raise capital, making hard people choices. It's a bit of everything.
And for those not familiar with alternative asset management: instead of buying stocks and bonds, we invest mostly in private assets—real estate, private credit, infrastructure, companies. You have to be a multi-tool athlete. You travel a ridiculous amount—150 hotel nights a year. We have a video of one of the ways you're communicating.
Hello. I'm not there. Beautiful, calm Tuesday morning. I'm still in Abu Dhabi—still running. I'm in Doha… It's raining Thursday morning in Arabia. Magnificent…
You're a social media phenomenon. How did these videos develop, and what do they do for your brand?
Christine encouraged me to go on LinkedIn. I was resistant, but relented a couple years ago. Initially I did standard posts—boring. Then I realized I often send videos to my wife and four daughters when I travel: 'Hey, I'm here, look at this cool spot.' So I did that for a broader audience—'I'm in Sydney; it's coming back from Covid; we've got great people on the ground.' It went viral, and I realized I could do it in lots of places. We're reaching a broader audience and making it human, while delivering messages.
In today's media landscape, it's hard through the written press to convey a message. We used to have a couple hundred customers—pension funds, sovereign wealth funds, endowments. Now we have 200,000 customers, individual investors around the world. Social media has issues, but it's also a way to communicate directly. The key is being as real as possible. If you misspeak, it's more real, and people are more willing to trust you. At core, what we do is an awesome responsibility. People give us capital for 10 or 15 years. They need to trust us.
You're the largest owner of data centers in the world, fueled by AI. What do you see, and how are you managing controversy and backlash?
We're on the cusp of a profound technological revolution: superintelligence at massive scale and low cost. It's amazing, and it keeps getting better. But AI needs physical infrastructure: chips, data centers, and power. As an investor, it's a 'picks and shovels' way to play the trend. We bought a company in 2021 for $10 billion that got us into data centers in a big way.
At the time, it wasn't driven by ChatGPT; it was cloud migration. But we quickly saw what was happening and started buying more land, getting entitlements, and securing more power. The business has grown 15-fold and has become our most profitable investment of all time.
Hyperscalers need these 'AI factories.' You generally don't spend real dollars until you have a long-term lease with a very large company—market caps from $500 billion to $4 trillion—signing 15- to 20-year leases. We need to ensure consumers aren't paying for the buildout. The bigger questions are disruption and the job market. We'll see many more data centers—not just in the US, but Europe and Asia too. Typically the client buys the chips, for example from Nvidia. In some cases, they sublease compute to other large language models. Today, there is a shortage of compute.
Hilton: you invested $5.5B, then the financial crisis hit, and you doubled down when many thought it was crazy. What happened?
We bought Hilton in summer 2007, closed in the fall—about as bad timing as you could choose. We bought what we thought was a special business with an amazing CEO, Christopher Nassetta. Then the financial crisis hit. Hotel revenue went down 20-plus percent; cash flow fell 40-plus percent. We had $20 billion of debt on a $26 billion deal—probably too much. We believed the downturn was cyclical, had a great management team, and decided to reinvest and deleverage at the bottom.
The cycle turned, we took the company public, split it into three companies, and made $14 billion. By early 2009, we had written the investment down by 71%—from $5.5B to about $1.5B. It was hugely formative: maintain equanimity in hard moments, focus less on paying 99 vs 101 and more on finding great businesses in great neighborhoods. In an investment memo, the first paragraph matters more than page 52 of the model. Those conversations with clients are not fun. These are drawdown funds, so you can pull capital, but you still want clients to understand.
You have to have the ability to get to the other side. Great assets can fail if leverage stops you out. We almost didn't make it, but we had access to capital. It's lonely when the world thinks you're an idiot. Not every investment turns around. In investing, you're always tested: is this cyclical or secular? A steady hand and being analytical matters. Long-term approach, do not let noise pull you off course.
Bumble—anyone familiar? We found '30 Bumble openers better than hey.' A couple questions: last thing you binge-watched?
Are you a Sunday reset or Sunday fun day type?
