David Rubenstein, Co-Founder and Chairman of the Carlyle Group: Pursue Something Meaningful

From this on this conversation. Well, that you're doing it. I look, Stanford is a great university and Stanford Business School is a great business school. My son is a graduate of Stanford Business School who's right there, and so I had an affection for the university. Earlier today I interviewed the person who runs the Stanford Endowment, Bob Wallace, who's right there. And over the years, when I was chairman of the board at Duke University, I brought the board here to Stanford to show them what a good university can do and some things we could do at Duke. When I became chairman of the Chicago board, I brought the University of Chicago board of trustees here as well. And I've known many of the faculty members and many students I've hired over the years. I really admire this university. I'm happy to be here. And all of you who are Stanford graduates, or should be, consider yourself, or future graduates, very, very lucky, because your graduate degree here will help you open a lot of doors, and you'll be able to make a lot of mistakes before people say, 'Well, how'd you get this degree from Stanford? How'd she get this degree from Stanford?' So you'll be afforded the opportunity to make mistakes because you got a Stanford GSB degree.

Well, my parents were not college graduates or high school graduates. My father dropped out of high school to go into World War II. He came back, he met my mother. She dropped out of high school to marry him. They got married at an unsavory age. She was 17, he was 20. More than nine months later, I was their only child. And you know, when you grow up in a blue-collar setting, my parents never really were educated. You know, you don't feel sorry for yourself. You just adapt to the situation you have. So many of you probably have had modest circumstances as well in your life, but you know, you don't complain about it. You just do the best you can. And there's a real advantage to growing up in modest circumstances, because if you grow up in modest circumstances, you know, if you achieve something, people are going to say you probably did it on your own. If you grow up in a wealthy family and your father is famous or something, no matter what you achieve, somebody will say, 'Well, your father was this or that.' So it's more complicated to grow up in a wealthy family and then achieve something and have people think you did it on your own. So I never regret the circumstances that I had. It was what it was, and it was just a blue-collar kind of setting in Baltimore.

There's no doubt that education is something that if you can get it, you have it the rest of your life and people can't take it away from you. And people will judge you largely on where you were educated or whether you have an education. So when you meet somebody, they're going to typically say, 'What's your name? Where are you from? Where'd you go to school?' And if you go to a good school like Stanford, people are going to be impressed. Now you have an opportunity to show people you're not as impressive as they think if you do bad things, but you have a big competitive advantage if you go to one of the famous schools like Stanford. And so people admire a place like Stanford or other great universities because people usually, to get in there you have to be reasonably talented and to get out of there you have to be reasonably talented. So you have a big advantage in life getting a degree from one of these universities. Now you have an opportunity to mess it up. You can go to Stanford or Harvard or Chicago or Duke or something and do poorly, and then eventually people will say, 'Well, somehow he or she got in that university. They made a mistake when they admitted them.' But generally there's a big advantage to going to a good school, and everybody who went to Stanford and goes to Stanford knows that.

I interviewed Bill Gates one time in his office and I said, 'Bill, do you think if you actually had a college degree, you could have been more successful in life?' And he didn't realize it was a joke and he kind of explained, well, he actually made a mistake dropping out because he said the computer revolution that Paul Allen told him was about to happen wasn't actually happening, and so had he stayed at Harvard it wouldn't have made a difference. And obviously Mark Zuckerberg dropped out, maybe for the same reasons, he thought he was going to miss something. But in the end, there is a dropout culture that now people think they're going to be the next Mark Zuckerberg or Bill Gates, but generally most people aren't going to do that. So I think there's a real advantage to actually getting the degree. Maybe you don't have to get it in the same period of time that everybody else gets it. If it's a GSB, two years, maybe you take a year off or if you want, do something like that. Some people drop out and never come back. It's like Steve Ballmer, I think, went to one year of Stanford Business School and dropped out, and I don't know what ever happened to him, but I guess he worked out okay.

Yeah, he's done pretty well for himself, I would say.

Well, I was always interested in politics. I wasn't really interested in the law. And the law wasn't interested in me. When I practiced law, my clients kept saying, 'You're not that great a lawyer.' So I realized I probably wasn't that great a lawyer. When I was a young boy, in a very modest blue-collar background, in the neighborhood a man running for president of the United States was going to drive by that day, and he wasn't president yet, but his name was John Kennedy, and I admired him. For all I knew, I was probably 12 or 13, but I went out to watch him drive by, and he drove by and he waved, and I thought he was waving at me, but he probably was waving at other people. But I admired him. And then when my teacher went through his inaugural address with us when he got elected, the inaugural address on January 20th, 1961 was a really incredible work of artistry. It was a very short speech, but relatively speaking, probably the best inaugural address of the 20th century, with the possible exception of FDR's first inaugural address. And I thought, I don't have the charm, the good looks, the money, anything that you need to be John Kennedy, but maybe I could be the person who helped write that speech. And so I found out who wrote that speech. His name was Ted Sorensen. He was a brilliant young man who had been, at the age of 31, John Kennedy's top adviser in terms of speeches and things like that, worked on a Senate staff. And so when I graduated from law school, I went to work at that law firm that he was at, with the hope that I could get some of his pixie dust to rub off on me and that maybe I could work for somebody who would be president of the United States and I could be an adviser. And in fact, I did go to work for a man who he told me would be the next president of the United States or had a good chance. And I went to work, as you may have heard in the introduction, as chief counsel for somebody that was the chairman of the Senate subcommittee on constitutional amendments. His name was Birch. And Birch did not get to be president of the United States. He was a senator from Indiana. And once I joined him as chief counsel, 30 days later, he dropped out. And so I said, 'Oh, my acumen isn't so good in picking candidates.' And then I got an interview with somebody else. Somebody called me and said, 'You want to interview with somebody else who's running for president?' I said, 'Well, who is it?' They said, 'His name is Jimmy Carter.' I said, 'He's never going to be president. He's a peanut farmer from Georgia. He's never going to be president of the United States.' And they said, 'Well, what else do you have to do?' So it was a good point. So I took the interview. I got the job. And then I joined Jimmy Carter's campaign in the year he was running, in 1976. And he was 34 points ahead of Gerald Ford. And then after I finished, he won by one point. And so people said, like Carter said, 'What was your contribution? I was 34 points ahead before you carpetbaggers showed up.' But White House staffs, we learned, are not filled on merit. They're filled on who worked in the campaign. So I worked in the campaign, and my boss was Carter's domestic adviser. I became the deputy domestic adviser at the age of 27, a job I wasn't qualified for, but Carter wasn't qualified to be president. I thought he didn't know much. I didn't know much. And I got inflation to 19%, which nobody's done since. And so, unfortunately, and some of you will have this experience in life, people came up to me all the time when you're working in the White House to say, 'You know, you're a really bright young man. If you want a job, call me.' And I said, 'Look, I'm going to be the senior domestic adviser just like Ted Sorensen was. In the second term of Carter, my boss will leave and go be attorney general. I'll be the senior adviser, same age as Ted Sorensen was. I'll be advising Carter in his second term. Why would I leave?' And so I didn't take any of those interviews. When we lost the election, the day after we lost the election of Ronald Reagan in 1980, and I told Carter, 'You'd never lose this election because Ronald Reagan's so old. He was 69 years old. I said, 'Nobody that old can possibly be president.' Now, nobody that young can be president. But we lost. And so I called all these people up who had told me how bright I was and they wanted to hire me. And they never called me back because when you're out of power in Washington, you're a dead man. And so I struggled for a while to get a job. I didn't want to tell my mother her only child was unemployable. So I kept saying I had so many job offers, I didn't know which one to take. But actually, I didn't have that many. And so I finally practiced law again, but I didn't really enjoy it. And you can't ever achieve anything worthwhile in life if you don't enjoy it. Nobody ever won a Nobel Prize hating what they do. If you love what you're doing, you'll probably do well. But if you hate what you're doing, you're never going to be great at it. And I didn't like practicing law. And obviously my clients didn't think I was that good at it. So I decided to start Carlyle with no knowledge of how little I really didn't know about private equity. And most people that start companies start companies knowing very little about what they're about to do. Very few, because if you knew all the problems in starting a company, you probably wouldn't start it. So that's why younger people tend to start companies more than older people, because older people know all the problems of getting something off the ground. Younger people usually don't.

Well, luck is an important thing in life, and I was lucky. So I got an interview with a man who was close to Carter. Remember, Jimmy Carter when he was running was not exactly somebody that people really wanted to work for. When he was running, there were about a dozen other candidates who were better known than he was. And so he really had a few people from Georgia around him. One of them was a person who was his policy adviser and a man that I did the interview with to get the job. But it wasn't as if they did a test on who was the most talented person my age who wants to work in a presidential campaign. I wouldn't have gotten the job. But I was willing to do it. I was willing to move to Atlanta, and you had to be willing to move to Atlanta to get the job. And then Carter won. And Carter, when you think back, everybody's too young here to remember this, but Carter was a one-term governor of Georgia, and he probably couldn't have been reelected because you only could have one term in those days. But he wasn't that popular. And so he probably couldn't have been reelected if it had been allowed. Yet he had something brilliant. He reinvented the presidency and the post-presidency and the pre-presidency. He came up with this clever idea of going to Iowa and winning the Iowa caucuses. And all of you would say, 'Well, that's very normal. You go to Iowa, then go to New Hampshire or South Carolina.' That was very novel at the time because Iowa was the first caucus. And Carter, quote, won the Iowa caucuses, which propelled him to New Hampshire, but he didn't really win. He came in second to undecided. Undecided was first. Carter came in second, and he only had 12,000 votes. 12,000 votes as second propelled him to New Hampshire. Now today, to win the Iowa caucus, you probably need 150,000 to 200,000 votes. But in those days, it wasn't that big a deal. Carter thought of that, and then he kind of won New Hampshire and then was off to the races. And before other people who were better known than he was could stop him, he had pretty much locked up the nomination. And so I kind of went along for the ride. And then after he got elected, he asked my boss to do something. They gave the assignment to me. Carter said something very novel, and I realized he was very inexperienced when he said this. He said, 'I want to honor my campaign promises.' Well, when a politician wants to honor their campaign promises, you know, he doesn't really know what he's doing because these promises are inconsistent and they're impossible. But in those days, before the internet was invented, you had to actually do research in a library to figure out what had happened before. So they gave me the assignment of figuring out what Carter had promised in his two years of campaigning. So I went through all the books and everything, every promise, every interview, everything, every questionnaire, and I actually compiled all of his promises. And then of course when I gave it to him, he said, 'Well, I can't wait to honor these.' But then I realized that wasn't going to be realistic because they're inconsistent with each other to some extent. But so anytime Carter had an interview, he would have me sit in the interviews with him because I would be the person who could say, 'Well, Mr. President, you can't do that because you promised you wouldn't do that or you said you were going to do this or that.' So I would be the bad guy who could tell Carter he can't do these things in front of other people. So I got to know Carter a little bit, but he was young too. He was only 52 years old when he was elected. He'd had very modest government experience. Had no experience in Washington. And you know, in the end, in those days I was probably willing to work harder than the other people on the White House staff. And so I kind of rose up a little bit. But again, the election was lost. So I had to start my life all over again. And everybody here will probably have some similar experience where you think you're great and everything is going this way, and all of a sudden it goes this way because something bad happened. It wasn't your fault necessarily, and then you have to build your life all over again. And the people that really get somewhere in life are usually people that had that struggle. If you have a trajectory that goes this way all the time, you know, it's not going to be easy when something bad happens. When I worked in the White House, there was a person in the administration, I'll try to disguise who it is, who had a resume that was the greatest resume I'd ever seen. He went to Harvard College, summa cum laude, president of the Harvard Crimson, Rhodes Scholar, got a PhD from Oxford, Yale Law School, editor-in-chief of the Yale Law Journal, Supreme Court clerk, and everything you want. And he was chiseled, great athlete, blonde hair, blue-eyed. You kind of think, this guy, he's got everything. He's handsome. He's charming. He's smart. You know, and this guy, every time in the current administration somebody looked at his resume, they would give him another job just looking at the resume. And then eventually in life, he kept getting jobs that way too. But then he had a real problem in his professional career where he had a real problem and he stumbled and he fell flat on his face because he had never fallen before. He never failed before. And if you've never failed, you don't know how to deal with adversity. And I had had some adversity in life and adversity dealing with the Carter administration. So it propels you to have some bad experiences in life. This particular person never had it. So when he got to his middle age as he was ready to get a big job and it didn't work out that well, he didn't know how to deal with it. You have to learn how to have adversity. So don't think things are bad and all of a sudden, you know, something doesn't work out for you. It's probably going to be helpful in building your character.

Well, let me tell you what he's referring to. In the White House, it's probably changed a little bit now because that's now 40 years ago. But I was not married. I had no social life. I only wanted to be in the White House. That was my goal, to be an adviser to the president. So I worked around the clock. And so, you know, I'd have second shift of secretaries come in around 7:00 at night. I'd work from 7:00 to, you know, 1:00 a.m. And so normally at the end, the way the White House staffs work is everybody's supposed to take their memo and give it to the staff secretary. The staff secretary compiles it, summarizes it, puts it in order, and gives it to the president, puts it in the Oval Office inbox. When you have presidents that actually read, and then so the president would come in at 6:00 in the morning and he would read the inbox. I wanted to get him to read my memos first. So the best way to do that was to ignore the staff system, and then before I go home at midnight, I would just go into the Oval Office, where I had the right to do, and put my memo on the very top of the president's inbox. So he'd read my memo first. And so somebody who had a different point of view, the president would get to that memo later, but he'd already say, 'I decided this issue.' So he didn't have to read that person's memo. So I could win a lot of battles by getting my memo on top. So I did that a lot. It usually worked.

Put it at the top. He read it first, and then when he got to some subject with another person who had a different point of view than mine, he would say, 'Well, I already read this subject, so I don't have to read this second memo.' So it worked.

It seemed to work. Now I think they probably have a better system. If again you have a president who actually reads memos, though.

How they should think about where to land on the spectrum of how to engage with the White House? How companies, business leaders and executives?

Well, our system is fairly transparent. If you are a big donor to a president of the United States, you're going to get access to the president. There's no doubt about it. We have a system today. I don't make political contributions. None. Zero. Never. Because I find it somewhat corrupting. And so in the old days, you could give $1,000. It wasn't that corrupting. Now there's no limit to how much you can give. So if you give a million dollars, $10 million, $50 million to a president or a president's PAC or something, you're going to get all the access you want. And so that's one way. Another way to get access is to be the CEO of a large company or important company, because that will probably propel you to the White House wanting to hear your views as well. And then you can do what other people do, which is you hire people who have access to the president, or there's a whole infrastructure in Washington, D.C. of people that get access to a particular president. Every president has it. So you hire those lobbyists and they get you in. So it's not that hard to get to meet a president and not that hard to make your case to them. Whether they listen or not is a different story, but it's not that difficult to do. And many people realize that if you make political contributions to the right president, the right party, you hire the right people to get you in, and you do some things and say good things about the person in power, you're probably going to have some influence. And that's like it is in life. It's nothing different than any other thing in life. But in Washington, D.C., the stakes are so great that people are willing to put in a lot of money, a lot of time to get access to a president. And you have some presidents who will say, 'Look, I can't make these decisions myself. I have to listen to staff. I want to have things come from the bottom and percolate to the top.' We have a system today where the president is making decisions from the top down, and he makes all the decisions, and he's not really reading memos and not looking for both sides of the issues as much as maybe other presidents have. So you can get a lot of influence with this president by doing the right things with this president or other presidents as well.