Insecurity teaches you that you need to be very dependent on other people. Me, insecurity sort of is a secret weapon. I just try to surround myself with super smart people. I've had the privilege of working with some of the smartest people on Wall Street.
You've mentioned being insecure in the past tense several times so far. Or do you think you're more secure today or do you still think you carry the full...
Repeated failure doesn't really train you, in my opinion, for success. Success comes and you're like, whoa, that was surprising. Like I was surprised the first time I got an A in a class at Rutgers, right? You need multiple A's before you realize, oh, this is a thing I can do.
Yeah, I can maybe do this.
Correct. So, I would say I suffered impostor syndrome, the classic definition, till my mid-30s. But this insecurity thing is not a bad thing. So I try to worry about the right things, empower the right things. But I would say as a core competency, I don't want to let go of insecurity. Yeah. Because it's been my friend over time. But I think what it does is it makes me very open, as open as I hope I can be, to hearing other people's ideas.
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On today's episode of Icons and Ideas, I've got the CEO of Carlyle, Harvey Schwartz. Carlyle is one of the largest private capital firms in the world. But my favorite part of today, we're going to cover all of that, markets, economy, and everything else, but it's really about Harvey's non-traditional background that has me most interested. So, thanks for spending time with me today, Harvey.
Peter, great to be here. Thanks very much for taking the time. Really honored. Yeah, I'm honored to be with you. And you know, your story starts in Morristown. Your dad's a scientist and from there it gets really different.
Yeah. I guess non-traditional probably is the right language, you know.
Two parents who were both very well educated. My father was a scientist, PhD. My mother had a master's but unfortunately they were both very seriously ill. They both suffered severe mental illness. My mother suffered what we would call today bipolar disorder and my father suffered from very severe schizophrenia. Now this is — I was born in 1964. So it's many years ago, the pharmaceuticals that were available, the treatment protocols that were available weren't nearly what they are today, although they need a lot of work today.
Yeah. I hear today is still rough.
Yeah. The biggest issue of being a young person in that environment was many things but mostly the stigma, the stigma around that. Ultimately, my mother passed away when I was 14. She died of breast cancer. Actually would probably live today. And then it was my father and I and I kind of — you can almost mark it in time when after my mother passed away, I kind of just completely went off the rails. I was a freshman in high school and basically ended up being a bit of a feral kid. My big achievements in high school were I missed 23 days of school by Christmas my senior year, which if you think about it in some ways is an achievement, right?
I had credit at the local liquor store in town because I was a big kid. I was always a big kid. So, I was the kid that — look, I was 16 and I had credit at the liquor store. These are not things to romanticize obviously. So, I don't say it looking back, but to say that I was a long shot for being on the Icon discussion show with any ideas is I think one of the most extraordinary understatesments of all time. I kind of basically figured out how to get out of high school through some favors. Didn't apply to college, took a year off, ultimately applied to Rutgers, was the only school I applied to in New Jersey. Didn't get in. A woman and her husband took an interest in me. I was actually working as a health instructor at a club in New Jersey, which is I know hard to picture me sitting here today, but you have to picture different hair and a different physique and everything. And you know, she was a Rutgers graduate, but she wasn't an influential person like yourself or other people you and I know. I'm now on the board of Rutgers, an extraordinary institution.
And she couldn't believe I didn't get in. She called the school. Name is Linda. Linda called the school. I'm still friends with her to this day. And Linda called the school and said, 'Hey, I think you made a mistake with this young person.' And she was so annoying to the administration that they ultimately said to her, 'Hey, have him write an essay about why he was such a poor performer in high school and we'll interview him.' And they did and they changed their mind. And I went to Rutgers and I would say between the family that helped me get out of high school, Linda, and other people who for whatever reason took an interest in me, saw something in me, gave me an opportunity when I — I think it's inexplicable looking back at it. It's pretty remarkable. I think you know what — I'm sure you've had mentors. I've had mentors. I think there are mentors and there are angels. I've had angels and if you're lucky enough to have angels give you an opportunity, you have to really reflect on it and just realize how fortunate you are. And I've had angels come into my life and as a result through some path of luck, certainly worked hard, was very insecure for probably till I was in my mid-30s about anything related to professional performance which we can talk about. But yeah, I feel super fortunate to be sitting with you here today. And there'd be a lot of people that wouldn't have expected that when I was certainly a senior in high school, that's for sure.
What does Linda say when you have lunch with her or call — I mean...
You know, I've asked the Lindas who have intervened in my life and there's a handful of them, like my angels, and I recently said to one of them and said, 'Hey, why did you help me get that job?' Right? And he said it was just the right thing to do. And I think Linda saw something. She didn't think it was right. She just did it. Now, the story with Linda is a little bit unique in that there were some parallels in our lives, which I won't get into her personal life in terms of her family history. So, there was some relatability in terms of some of the parenting challenges that we both had as kids.
So there was a connection there. But I think people, again, they just saw something and they did the right thing. And they took a chance. And you know, when you're in a position like you are or I am, a leadership position or a position of influence, in many respects, you're giving people opportunity all the time. You're taking a chance on someone. And I'm very fortunate that people took a chance on me. And I can chart that pretty specifically.
My first opportunity out of college, you know, when I work with your people, I'm so impressed by them, your team, because I am a failed financial adviser. You know, when I came out of Rutgers, I was working at a small firm in New Jersey — I mean, you might remember this. They used to call it — you worked on a draw.
Yeah. So, for those in the audience who don't know what that is, you basically cold called back in the day, that was legal. This is 1987, there are prohibitions on that today, but you would solicit on the phone and you got paid $1,000 a month. That was hard to live on even in 1987. And then, of course, if you built your business, you had to pay that back. I proved to be particularly bad at this actually, but I really have tremendous respect for anybody that works in your field and does what you do. But then through a whole other series of opportunities, someone got me a job at Citibank in the back office. I was hired as a temp and again managed to convert that into a bigger opportunity at Citibank.
Ultimately, Citibank sent you to business school. It's just kind of — I'm very grateful. So, you know, going back to the angels, as you call them, that stepped into your life, do you find yourself more aware of someone around you that's struggling with mental health or is just in need for a break? And do you find yourself going out of your way in a way you wouldn't otherwise given the breaks you got early on?
Yeah. So, I can break that into two parts. I think on the mental health front, I didn't even speak about my parents' illness really to an event I did where I interviewed Ray Dalio a number of years ago and Ray and I were in the green room catching up and I said — and Ray openly speaks about some challenges in his family. I said, 'Oh, I know a lot about this.' I told my parents. He said, 'Do you ever speak about it?' I said, 'No.' He said, 'You should.' I said, 'Okay.' Now why didn't I speak about it is the more important question. The reason I never spoke about it is in our family my mother had a very explicit rule. You never talked about the family illness and she was very severe about this. Again it was the stigma and so I kind of grew up not talking about it. So it was reflexive. It wasn't like I actively made the decision not to talk about it. But I did that day very briefly talked about the fact that my mother had attempted to die by suicide and a couple people came up to me in the audience afterwards, about 3,000 people there, raise a good draw, and they said, 'Thank you for talking about mental health.' And I said, 'Why are you whispering?' And it occurred to me there was something about mental health that I didn't understand and that people were uncomfortable talking about it because of the stigma.
And if you really think about it, Peter, and I've gotten more knowledgeable over the years. I'm on the board of an organization called One Mind. And I've spent time in this space. The brain is just an organ. Just like the heart, right? Just like the liver. Someone has heart disease, we don't have a problem talking about it. If someone has a brain illness, nobody wants to talk about it. It's getting better, but it's so wildly misunderstood. And there's a lot of reasons for that. But I realized that just by talking about it, it was having some marginal benefit. So during the period of time after I left Goldman Sachs, about five years before I joined Carlyle, I spent time exploring philanthropic initiatives around brain health. I've sponsored some early stage brain scientists where it's difficult to get research funding because they're so early in the pre-clinical stage. And just kind of got myself smarter because I realized growing up in a household with family members who struggled with severe mental illness actually left me knowing very little about mental illness and the state of the world today.
In terms of giving people opportunity, I would say that for sure someone in my situation has to feel the obligation in some respect to give back however I give back. I once had a mentor who — and I've told this story before, but I clumsily said to this mentor when I was 25, it's a bit cringeworthy this story in retrospect, but I said, 'Hey, can we go out and maybe have a beer? I'd like some advice.' And one of the smartest people I'd ever met and worked for. And I said, 'Geez, I would have thought you would have accomplished more in your career given how smart you are.' Which is a horrible thing when you think about it. So, horribly positioned question. And he taught me a lot in the next few minutes. The one thing he really taught me was grace because he could have been offended by that question, but not in the slightest. He knew it was just an inexperienced kid who was 25 trying to learn something. Very graceful. Second thing he said was, 'Well, you'll learn over life careers.' This was his paradigm. 50% luck, 50% skill.
I've often thought, wow, at least 50% luck.
That's right. And for me, someone like me may be way more.
Yeah. And so, sure, I also think that my generation of finance professionals growing up in the late 80s, 90s, I think in the workplace, generally speaking, and I could be wrong about this, but generally speaking, it was culturally more acceptable to give people more responsibility early. And I felt like people really — not forgetting the opportunities they gave me which are extraordinary. Having the chance to take on leadership positions, go build businesses and go do things. I think there was maybe more willingness to do that. And so I really try to inspire that at Carlyle and my team tries to inspire that because we want people to feel within the realm of their capabilities. We want people to feel stretched. We want them to feel like they can have an impact. We want them to feel like they can do the best they can for their clients, the best they can for the businesses, and that is very constructive for all outcomes.
Now, we don't want people to take so much on that they don't succeed. But I do think there's an element of willingness to give people chances, which I hope my team does, and I hope I can inspire that too because so many people did it for me. But I think it's both a moral obligation, but I also think that there's a professional outcome that makes a lot of sense in the workplace, but certainly outside of the workplace. I'm very involved with Rutgers. I sponsor student scholarships. How do I pay back that debt, right? A university that said no then says yes. And without Rutgers, who knows? So, yeah, I think all of us need to be very cognizant of the opportunities we've had and wherever we can within the realm of what we can do. Yeah, I think we pick your language, pay it forward, pay it back, whatever the case may be.
You mentioned that it's getting more accepted to talk about mental health now. What do you think — there's a lot of prognosticating about the crisis right now, a big crisis right now with mental health and suicide and what do you think has changed that's made it so much more prevalent? It seems like it used to be, you know, people might have been born with an issue and some environmental and now it seems like there's a lot of environmental that's piling on all of this.
Yeah. You know, I'm pretty careful to not portray myself as a medical expert. I think that part of it is just awareness and actually some degree of willingness to talk about it. You know, I don't think my situation and my family was particularly uncommon. Yes, maybe having two parents that suffer from severe mental illness is a bit uncommon, but the notion of the stigma and unwillingness to talk about it — now, it had knock-on effects. So, I ended up being — my daughter, she always reminds me that I'm not supposed to describe it this way, but I ended up being the fattest kid in the school. And my sister had her issues. I sort of ate my emotions as a kid. So there were a lot of coping mechanisms that we worked on. I don't think that's changed. I think awareness has changed.
I can't imagine being that kid and having Instagram, Facebook, Snapchat, like the pressures that young people have today for expectations, all that stimulation, processing that information, and the world's more complicated. You know, I grew up in a really — again born in 1964. I'm sure we'll get to the economy, but pretty powerful geopolitical environment, very favorable, very powerful demographic environment, very powerful economic trends. It's more complicated today. So, I think that's all in the soup. But I think it's good at least that there's more discussion, but I still don't think we're nearly at the level we are for other illnesses, which is truly tragic.
Yeah. To me it feels like there's a real crisis. And so it's — I think the more people that are out there talking about it. I lost a friend in the financial services industry to suicide and he really struggled in his last days to express what was really going on. I think the more people like you — I mean, like you're running one of the biggest private capital firms in the world and you're talking openly about this, I think is really good.
Well, that's nice of you to say. I appreciate that. I think there is an element of that just because hopefully the discussion normalizes. So what I realized, so after that experience at that one conference back in 2017 with Ray Dalio, I was so struck by the fact that people had that reaction. You know, again, I'm a fortunate person, Peter. So people would come up to me after those conferences and say, 'Hey, how did a kid who failed out of high school and didn't get into Rutgers actually achieve whatever I've achieved?' And that's incredibly flattering and it's great. Get to talk about yourself and hopefully be some inspiration for another kid going to a state school like Rutgers or maybe doesn't come from the perfect background or perceives to be the perfect background.
And I then said, 'Wow, that was so striking to me.' I went and I repeated the exercise very deliberately. So, I spoke at a Rutgers event not too long after and I briefly talked about my parents and getting into Rutgers and of course a young person from the school reached out to me through a professor and said, 'Hey, I lost my father to suicide, died by suicide. I'd love to talk to you about it senior year of high school.' They had a small charitable thing. Was very, very moving. But, you know, I realized the expression I've used is I didn't realize the room was short of air and it needed air and I didn't know it and I don't think anybody else knew it. And so there is a benefit to talking about it and focusing on the initiative because there are a lot of people just struggling in silence and in darkness and don't know how to receive help.
I also lost one of my closest friends died by suicide right at the beginning of the pandemic and hard for me to talk about but at the time I remember someone on his team said, 'I just spoke to him last night and he seemed fine.' So people are really trapped.
Yes. No doubt about it. Let's go back to you growing up. Talk about this incredible story. So you graduate from Rutgers which should have never — you should have graduated from high school. Shouldn't have gotten into Rutgers. Graduated from Rutgers. You get the first — you break making calls. You don't love that. You wind up at Citi. Take me from there because we know.
So it took me two years to almost run out of money and be bankrupt. I had a daughter who was one. Most incredible thing that ever happened in my life. And I was at a real crossroad. Someone did me a favor, offered me a position to be in what we called the back office at Citibank at the time. I was hired as a temp, hourly temp. Managed to convert that to a full-time position, then ultimately became an analyst. There was another angel intervention along the way there. Angel intervention to get the back office job, angel intervention to actually become part of the analyst pool, which I won't drag you through the details of that.
And then I was a derivative specialist at a time when derivatives were quite popular in the 90s. And then one of our colleagues at Citibank went to Goldman Sachs in '96, brought somebody else, brought me over in '97. And then I had this — I ended up being a really fortunate 30-year career in finance. Nine years at Citibank, 21 at Goldman Sachs, but I didn't show up at Citibank till 1989. I was 25.
Yeah. Working as a temp and so it was a very late start. Goldman Sachs was incredibly generous to me. I ended up having multiple senior positions. I co-headed the trading businesses with three of the most talented people in the world during the financial crisis. Then I was a CFO, then I was co-president. I left in 2018. David Solomon went on to run Goldman Sachs. I found myself in a position at mid-50s in a place I never thought I'd be.
You know, I started out with no resume. I had a pretty decent resume by the time I finished. And I took a couple years to spend time on philanthropy, passion projects, private investing, and again I had a decent resume when I finished, so I would get opportunities. None were compelling enough. And then Carlyle called in the end of '22, and then I signed on in the beginning of '23. And that's — I think we met a couple weeks after that. So here we sit three and a half years later.
Were you worried about taking that? You were following — you're one of the biggest private capital firms in the world. You're following these legends kind of. Yeah. So, how did you feel about stepping into that?
One of the things that happens, we all have a certain amount of insecurity.
Even those who don't show it have a lot of insecurity.
I would say I had a disproportionate amount of insecurity because of the way I grew up. You know, it doesn't build a lot of confidence, Peter, to not get out of high school. I guess I snuck out of high school. I switched high schools my senior year to graduate. Okay. I don't get into Rutgers. I do get out of Rutgers. I am a failed financial adviser. Then I tried to start a construction company. That failed. It was a series of failures. Then I finally found my groove.
Now I'll tell you what insecurity teaches you. Insecurity teaches you that you need to be very dependent on other people. So you're right, David Rubenstein, Bill Conway, Dan D'Aniello, they are — you know, Carlyle was founded in 1987. So I'm being a failed financial adviser, they're creating private equity.
And David Rubenstein leaves the White House and — accident of birth because he's from Baltimore — and he's left the White House, he forms Carlyle in DC in 1987 when there wasn't even a thing called private equity. It was called leverage buyout.
Yeah. So when you say, 'Yeah, they're legends.' I see that as, 'Oh, great. Can I learn from them?' And that doesn't intimidate me.
Actually, the key decision for me in joining Carlyle was my ability to work really fluidly with them. At the time, they owned roughly the same amount. They owned 30% of the firm. It's — hey, this is their baby, right? It's everything to them right behind their families and their philanthropies and everything else. And so what is intimidating when you pause to think about it, and most of the time we're all running so fast we don't pause and think about it, so you gain comfort from the not thinking about it, is wow, there's a lot of responsibility. There's 2,500 employees who at the end of the day are counting on you and your leadership team to make the right decisions. We have 750,000 people in our portfolio companies, makes us one of the top 10 employers in the world.
So getting all that right, the obligation as a fiduciary to our clients, we're not a big balance sheet firm. So like you, we're a fiduciary, right? And so to get all that right, to get our relationship right with our partners, when you really pause and think about that, that feels like a lot of responsibility. To me insecurity sort of is a secret weapon. I just try to surround myself with super smart people because if you haven't been the smartest person in the room you're very comfortable not being the smartest person in the room and that was me all the time. I've had the privilege of working with some of the smartest people on Wall Street in my old life coming from Citibank to Goldman Sachs and here.
And so I stepped into a situation where I had the founders, their support, the board and just this incredible pool of talent at Carlyle, whether it's private equity, real estate, private credit, what we do in insurance, what we do in our secondary co-invest business. And I knew what they had built had this powerful global brand. And I didn't really think of it this way, but a very dear friend of mine when it was announced said, 'That's the perfect job for you.' I said, 'Why?' He said, 'Because you stayed on the superhighway of finance, but you moved a couple of lanes over.' Yeah.
And so, yeah, I had a chance to learn, do different things. But at the end of the day, all of us who are privileged enough to have these jobs have to ask ourselves, can we have an impact? Can we be intellectually stimulated? What value do we provide? And I felt good about all that by the time we were done. But I did a lot of diligence and they did a lot of diligence on me, which I remember saying to Bill Conway, 'Hey, this has to be right because this is a big personal decision for me.' He said, 'Hey, it's a big personal decision for me.' And that was perfect. So, we were very aligned in the significance of what we were doing together.
You've mentioned being insecure in the past tense several times so far. Do you think you're more secure today or do you still think you carry the full...
Well, I think there's gradations.
Yeah. You've gotten better.
Yeah. So, I would say — you know, again, I don't want you and your audience to feel like you have to go to therapy with me today. But, you know, being the — and my daughter always says like, 'Hey, Dad, you're not supposed to say fattest.' And she's a lot smarter than me, but, you know, being the fattest kid in the school was probably the hardest thing, believe it or not.
Teased, bullied, all of that. And so, that sort of set the stage and then the underperformance. And I think there was a period of time where I'd say, hey, repeated success trains you for success. Repeated failure doesn't really train you, in my opinion, for success. Success comes and you're like, 'Whoa, that was surprising.' Like, I was surprised the first time I got an A at a class at Rutgers. Right. And so, you need multiple A's before you realize, oh, this is a thing I can do.
Correct. So, I would say I suffered impostor syndrome, the classic definition, till my mid-30s. And then I realized, oh, but this insecurity thing is not a bad thing. So I try to worry about the right things, empower the right things. But I would say as a core competency, I don't want to let go of insecurity. Yeah. Because it's been my friend, you know, over time. But I think what it does is it makes me very open, as open as I hope I can be, and I'm sure there's days my team doesn't feel this way, to hearing other people's ideas because I am a real believer that everybody in our industry, it's super competitive. They work very hard. They're very smart. These are smart, smart people, and they're ethical or they don't survive in our industry.
Creativity is hard to — there aren't a lot of people that can do what you did starting out with, you know, a handful of assets, some advisors and built what you built. That requires something special and luck — something special — and whether it's creativity or adaptability, I think you can encourage that by having the right group come together to solve complex problems. At the end of the day that's what we're really trying to do. That's why we have investment committees. That's why we encourage teamwork. So I do think by bringing people together and to do that...
And there's no question. I have no problem asking any question. The most basic question. I think it really can be annoying for people, but I'm not embarrassed by that because I think if there's ever been a benefit of being the fattest kid in the school, maybe that's it.
