I've been really looking forward to this interview of Marc. You know, we've been fortunate enough to have some great people on the show, but Marc's background is so interesting. He's been in the middle of some of the most important innovations in financial services. You know, going back to his time at Drexel and the advent of the high-yield market, which has been so important in finance, and then to co-founding Apollo and creating a trillion dollar private markets firm. If you think about the importance of the private markets, you know, that makes Apollo one of the most important financial institutions in the world. Having gotten to know Marc a little bit over the years, he's also just an incredibly thoughtful person. So I think our wealth managers and our asset managers will really enjoy hearing his thoughts on leadership, culture, et cetera. So looking forward to the conversation.
Hey, Marc, how are ya?
Thank you, it's great to be here.
My home away from home. I start each day perched right there. What can I get you?
I'll have a tea, be great.
Two teas, a peppermint tea for me.
Chamomile for me. Thank you.
Do you get a lot of traffic here every, every day?
This is an unbelievable thing. So we feed everyone two meals a day and whatever it costs, it doesn't matter.
The collaboration, the casual collisions, the commonality that people feel. Energy is just awesome. People come here from our competitors and they have lunch here. They can't believe it.
Our whole experience with you guys is the, the, the- soon as you tell one person, the entire team seems to know what's going on. The communication loop seems really tight.
It's hard, look, as you know this, people join firms but they stay for cultures.
Most talented people can work anywhere they want and when you were a little company, you knew everyone at the company. When I was, we were a little company, I knew everyone.
Now we have to be really intentional about who we are and what we want to be.
Yeah, that's for sure.
Marc, thank you so much for, for doing this today. I really, really appreciate it.
Yeah. So maybe let's start with the early days, growing up. Tell us about that. Did you have any early sort of influences or mentors in your life?
I won't say early in that way. I grew up going back and forth between New York and Florida. Ultimately went to high school in Hollywood, Florida. Most people in my family, adults, were public interest lawyers. So for one reason or another, I assumed that I would be a lawyer and go to law school. I actually was accepted to a pre-law program at a great school and then the coursework arrived and I looked at it and said, "This is terrible." So I called Penn and the Wharton School where I was also accepted, sight unseen, and said, "Can I still go?" And somehow I ended up there and when I arrived, it just made sense.
And I got to Drexel and it just made sense.
Yeah, well, before Drexel, what was your first job? Did you have any early, like, career? Because I don't think you had a traditional path into finance.
Oh, no, I've had a lot of different jobs. I was a valet parker at the Diplomat Hotel. Now, the Shell Bay Golf Club, I would drive cars between New York and Florida for snowbirds, transporting their cars for the winter. I worked in a party goods store and I worked for the best kosher caterer in South Florida. Every one of those jobs, you have to take something away from.
And then when I started getting a little bit of education, I worked at Booz Allen for a summer in financial consulting. I worked on the floor of the New York Stock Exchange, it was then the Blue Room, as a runner.
And I managed to keep busy, but my first real job was coming out of school for Drexel Burnham.
So let's talk about Drexel. So I think mid-80s, you joined Drexel.
Joined Drexel at the end of 1984.
Okay, so one of the most exciting times in the history of finance, the high-yield market was being invented. And you sat at the intersection between M&A advice and the high-yield finance buyouts. I remember I was an analyst at Morgan Stanley at the time. And every day, I'd start the day looking at the top fold of the Wall Street Journal and see a new buyout that usually Drexel had financed. That was such an incredible experience. What did you take away from all that?
First, it was an amazing experience. Really formative in terms of how I think. But it really, for me, it was clean sheet thinking. The team and particularly the leadership was not limited by what had been done before because most of what they were doing had never been done before. They were seeing and asking themselves, "What's the right answer to this? What should exist that does not exist?" And whether it was silver-backed bonds or PIK securities or the whole notion of a commitment letter, everything was about common sense brought into a business context. The other and really interesting thing, historically, the banking business had been about serving established clients whose business, at least in the short term, was not at risk. We were optimizing in the banking business their capital structure. We were raising debt and equity. Drexel was the first really large scale experience working with entrepreneurs who were creating and doing. Now we take for granted that cable television should exist, but the notion that people would pay for TV was a new notion. The notion that people would pay for cellular was a new notion. Satellite. So many of the things we take for granted were entrepreneurial visions and the ability and willingness to roll up your sleeves and figure out a business with an entrepreneur and then ask, "What makes sense?"
Let's pivot for a second to innovation. It feels to me like Apollo, and this is probably as a function of your leadership, has really embraced innovation. You're investing in lots of technology things. It feels like it's almost part of the DNA. What does that process look like here at Apollo?
You know, it comes back to what we do as CEO and ultimately what the team around us, the next gen does. But the way you get to be CEO is you're actually really good at doing stuff and therefore, they make you CEO. And once you get to be CEO, you don't get to do any stuff anymore because you realize it's not worth your time. Your job is to make everyone else's job easier. And so, I think of my job as strategy, culture, communication, and dealing with the unexpected. Culture is every day, I think it's a big part of the job. The unexpected comes when it comes and you deal with it.
This is a really hard question because the days come and go, but what percent of your time do you think you spend focused on culture-related items?
I want to say it's close to half.
Because it's not just the internal culture and the cohesion of doing it. It's how the message is communicated. It's how it's conveyed externally. So culture and communication are very hard to separate. I think that's half the job. If you're sitting in India in our office, most people went to India for labor arbitrage. Most people are thinking about India potentially being very at risk on AI. If you don't get on a plane and go have the conversation with your Indian team, they're living in fear of their jobs.
You go and see our India team and you go to say, "The world is changing. AI is here, you are the youngest, most technologically sophisticated team of any office at Apollo. You're good, put your heads down and go back to work." You could say that in Zoom. You could go live with the people for a week, take them to dinner, go out with them in their homes, do their town hall, go through each group, and they really understand that what you've said means something, that you've thought about it. And unfortunately or fortunately, there's no other way to convey these things other than directly and with people you know and with knowledge of their situation and what you're doing. That in a microcosm, I can't tell you if that's culture or communication. I think it's both.
And I think that's half the job.
So as you think about, you know, we're living in this incredible period of innovation. AI is stealing, you know, everyone's mind share in some respects, but yet as that grows, at the end of the day, Apollo is still a people business. You're still running a people business. How do you think about the growth and innovation as it relates to future leadership and talent development?
So it's an imperative. And so, we have moved a lot of people around. So what I- the observation I've made culturally is companies that are very successful, not just our company, but lots of companies have been successful, while they're on that curve up, they're doing great and everything's fine. And at some point, they hit a plateau. And at that plateau, we find a lot of companies who no longer play to win. And what that means to me is the team becomes more fearful of losing than they are desirous of winning. They stop innovating. They stop appropriately risk taking. They become fearful of every mistake. And so, how do we get people to play to win all the time? Which is a big part of the theme of what we try and do. We normalize that we make mistakes. That doesn't mean investment mistakes in other things, but it's mistakes in people, mistakes in business. We have outside one of our best investor's office a wall of shame.
This is a reminder that every one of us over our, my 42-year career, has made a bad investment or made a series of bad decisions and we've lived through it. Here, you make a bad decision, your job is to fix it, and learn from it, and move on from it, but not to be so fearful of making a mistake that you're paralyzed. This is a big part of what we're doing. And, you know, to innovate, you have to have a culture that's prepared to make a few mistakes along the way. But the theme, I think, is very clear. So six years ago, one of the things I said, which was a radical innovation, is "I don't think our business is capital constrained. I think we're idea constrained." It sounds so obvious, but it wasn't obvious at the time because our industry had been capital-constrained forever. Most of the energy was consumed in raising money. And what I said is, "If you find a good idea today, it will go in a fund, it'll go on a balance sheet, it'll be syndicated, be co-invested. There's someone who will want a good idea." And so, we reorganized the business six years ago around the capacity to originate versus the capacity to just raise money. All of a sudden, on a bunch of competitors' conference calls, I hear, "Origination." People have just discovered it like it's some secret sauce.
It seemed obvious at the time, but it was a total change. And now, we're saying something else, which is our business is now north of a trillion. Over the next few years, if things continue, we'll be north of a trillion five. Is our future that we just get bigger and bigger doing the same thing? Because we have two businesses today. We are the largest retirement services company. We are a really big, I think we're the second largest, private markets asset manager. I don't think the future is just doing these two things. I think these two businesses grow, but so many more things are coming to private markets.
Innovation is our future, innovation is our growth. And to get where we need to get to in five years, six years, seven years, we need to start today. We need to have all of the experimentation. And so, part of what we're doing is we're going to open a second headquarters.
To help people focus the mind on what's coming next. It will be away from our New York headquarters because the business itself, as it exists, is being confronted by technology, by societal and other changes. And I have every confidence the team will navigate this, but it's hard to ask them to do that and think about what comes next.
So we're going to spend a lot of time out of New York City on what comes next.
You're touching on a lot of decision-making points. And I'm curious, as a CEO, what are the decisions that you are leading or need to be in the middle of versus the decisions your partners are driving?
Well, let's start with what my desire is.
Anything someone else can do competently is one less thing I have to do.
(laughs) I'm familiar with that.
And the second, is something you know better than I know. You and I are not capable of running a business. We're just not. The business requires us to have a trusted group of partners. We can call them senior managers, we can call- but I call them partners. We are 4,000 people in asset management, 2,000 people in retirement services, and we have 200 partners. Most of my day, when I say culture, is spent on the career management and ambitions and style and leadership and wellbeing of 200 people. If I have the confidence of those 200 people, we win.
Because they will spend their whole careers at Apollo. The next generation behind them will see that the partners ahead of them are here and will assume that there's a carrot at the end, not just a financial carrot, but an emotional. And then the young people in our business will have two amazing generations of mentors. And if those partners come and go, nothing else works. And so, when it gets back to what decisions do I make, I steer people in the right direction. There are some times when we just have to say, "This is it, this is what we're doing," but we run a partnership.
And my goal is for a subset of that partnership, who is in leadership every day, to persuade them that I am right, but in a culture where they can push back, they can challenge. And then eventually, you just have to make a decision.
I think you said, "Intellectual insubordination."
I've heard you use that expression.
Which I like to distinguish from actual insubordination.
Intellectual insubordination.
Yeah, yeah.
Have you found that anything you're doing as a leader or as a manager has changed in the context of the rapid change? The world we're living in is so much more dynamic than it was five, 10, 15 years ago. Do you see yourself changing at all as a manager in that context?
I think we have to. You know, you start and no one exactly trains you to be CEO or to be the leader of a business. You eventually figure out what works for you. And some of the best advice I've gotten along the way has come from, I'll give up a name, Rich Handler at Jefferies.
And I said to Rich, "I've seen every CEO in the financial services industry. I watch how they speak and how they do this. Why do you feel so comfortable?" And he said, "Because I've figured out I'm just myself." I said, "That's just brilliant." And so, the more comfortable you get with just being yourself, the more honest it feels, the easier it is to do your job. And so, whether it's wearing the sweater as opposed to the suit or speaking the way I speak or being outspoken on issues that are important to me, I try to be myself in the job because people will know right away if you're not authentic with them. And then, I also recognize that I have to keep changing. So I challenge myself all the time on new technology. How can I make decisions on the implications of AI and how fast if I'm not forcing myself to change and to master it? No matter how uncomfortable that is sometimes.
I think you touched on a really important leadership trait that I think gets very little airtime and discussion, which is sort of genuineness. You know, when you run an organization with a lot of smart people, they can figure out in a nanosecond when they're being spun. And I think like there's probably not enough leaders that sort of focus on that first as a leadership characteristic, because I think it's probably in many respects the most powerful.
I certainly find it really powerful. This is a, look, we have a lot of talented people around us. We're blessed that way.
And sometimes, they're actually all rowing in the same direction. But at the end of the day, people want the business to be organized. They want to have their say, but they understand there needs to be a decision made. They want to know they've been at the table, you've respected it, you've heard them, you're not dogmatic. And the more you welcome that, the more comfortable you are with that, I think the more success you have running smart people.
In other businesses perhaps where there's a big difference between a small group of leaders and the workforce, maybe another style would work. I just have a hard time imagining a more authoritative, top-down, use your adjective of choice, working with your team or with my team.
You have to have the goods and they have to believe you're authentic.
I love the wall of shame or whatever, however you refer to it, because the reality is there's been a massive amount of success here at Apollo, but obviously life is life and we have our disappointments and failures. Any specific sort of thing in your life that didn't go to plan, that, you know, you took away something really important from?
Look, there's just so many, I don't know where to start. Look, the good news about our organization, and I think for me, is we tend not to make the same mistake twice, which shows at least that we can learn.
And part of this is being willing to admit it. Cultures that are not willing to admit that something has gone wrong, they stick with it to the end. And, you know, I joke in private equity, you either get two times your money or zero. People tend not to sell things at 70 cents.
