We started Oaktree in '95. The neat thing is, we did not have a budget. We didn't have a profit plan. Nobody ever said how much money we think we're going to make. What we said was, we've done a good job for the clients. If we can keep doing that, we'll have a success. Period. That was the whole discussion.
The mantra was put the clients first.
Yeah. Clients' interest always comes first. You know, that was the reputation we developed over time. Now, I've got a question for you. Oaktree was your idea. You came to me and asked me, 'Hey, how would you feel?' What motivated you, besides Nancy?
Well, you know, yeah, my wife gave me a big kick in the pants. But no, the truth is, I think that we have positive reasons and negative reasons. The positive reason was that we thought we could do a good job for the clients. We wanted to have a firm that ran our way. When we were at TCW, we were one division of a company with 50 divisions, run 50 different ways. And, you know, aggressive, defensive, top-down, bottom-up, forecasting agnostic, every which way. And I had a senior position there, and I didn't want to shill for businesses I didn't believe in. And we had a feeling for how money should be run, and we wanted to have an organization that ran that way. That was the positive reason, and of course, we thought we could make money because at TCW, they got half the fees, and we didn't think, you know, in a business like Bruce's, we get 20% of the profits. And if there's a management fee, and they do the marketing, market support, and the accounting, and the legal, and the premises, and every okay, they get their percentage of it. But when you can, if Bruce can turn $10 into 20, and you get a $2 carried interest on the profit, why should they get half of it? That's where they drew the line at half, so we left. And we thought we could make more money. So those were the positive reasons, and the negative reasons were that we could not. We wanted to become owners of that firm in a substantial way, and they didn't want to share that. So we went out and we did our own. But I want to tell everybody in this room something I think is really important. As Bruce says, I was the boss. And
I haven't said it in this group. Can I say my piece first and then let you talk?
Yes, sure. So, I was asked about, you know, my relationship with Howard, which is 30 years now. And I said, 'Well, he was my boss. He hired me.' I said, 'But, he was the world's greatest boss.' I mean, just so constructive, optimistic, always encouraging and, you know, never if I made a mistake, which of course everyone makes mistakes, but never get down on me for it. Just the world's greatest boss. And I would tap dance to work every day. That culture that he set and that we ultimately set together has permeated throughout Oaktree and has really, I think, created some real business success for us. But when he came to me and said, 'Hey, how about being my partner and starting Oaktree?' And, you know, I said, 'Sure, as long as we're equal partners.' He said, 'Yeah, equal partners.'
Bruce said to me, he's not such a teddy bear as he seems. And I said, 'Well, how about starting our own firm?' He said, 'Sure, come with me with proposed economics.' And I went to him, I thought it over for a couple days, and I went to him and I said, 'Look, here's what we do. I'll get 40%, you'll get 25%, and our other colleagues will split 35%.' And Bruce said, 'No, no, we should be equal.' And I thought about it for a minute and I said, 'Yeah, you're right.' And that was the best decision I ever made. And it's a great lesson for business because there's a tendency for each person to want to keep more for themselves. But the truth is, that's not always the right decision. Our joint decision to be equal partners was the best decision that we ever made.
And the point I want to make is when he was my boss and then when we were partners, we've had this enjoyed the same relationship throughout. It's just been a joy and I think it really has contributed greatly to the success of our enterprise. I mentioned that earlier that in 30 years we've never had an argument. We have business disagreements, certainly. But never an argument.
And it's by hashing out our business disagreements that we get to better answers than either of us could come to by ourselves. But this business about keeping more for yourself. When we went out on the road to try to convince, we had 7 billion under management when we left TCW. And our hope was that we would bring it over. So we went around to the TCW clientele and we tried to win them over. And one of the questions they asked was, 'Well, what is your attitude toward sharing the ownership of the firm with other employees?' And I told them a story that I got from a kids book when I was reading to my son that the sun and the wind are having an argument about which is more powerful and they can't settle it. So they say, 'Well, you see that guy walking along the mountain ridge? He's wearing a coat. Whichever of us can get the coat off that guy is the more powerful.' So the wind blows and blows and blows and blows and blows. And the stronger it blows, the tighter the guy holds the coat. And then the sun shines his warming rays and the guy takes the coat off. And it's really just an example that business can be an incredibly positive place and we've had an incredibly positive experience and sharing and integrity and straightforwardness and as Bruce says putting the client first makes it incredibly rewarding. And you know, we've been successful professionally and monetarily, but I think both of us would say that the greatest thing has been the opportunity to be successful on the high road.
Yeah. I guess when we started Oaktree, Howard wrote our investment philosophy and our business principles.
And sharing the fruits broadly was one of our key business principles. In fact, we were one of the very first of our type firm to really broaden the ownership of the equity. We did it after our first year in business.
There were five of us who owned it when we started. At the end of the first year we made that 18. Three years later we made it 26 and a few years after that 35.
I remember you saying at the time, I want to have less and less of a growing pie. And ultimately that's what happened.
And that's how you make it grow, is by owning less and less. Now, on the other hand, remember I said we were in Brinson's office and I said
