Camden Yards, Baltimore, Maryland. An iconic ballpark and home, of course, to the Baltimore Orioles. Here's the punchline. The Baltimore Orioles are owned by my friend, mentor, and boss, David Rubenstein. While he's the co-owner and co-founder of Carlyle, David's passion, I think he would tell you, is baseball. And so we'll have a conversation about his life, his successes, his failures, what drives the kind of extraordinary American figure, a financier, a sports franchise owner, an extraordinary philanthropist, somebody like David Rubenstein. That's all coming up on today's episode of Navigating Leadership with me, Admiral Jim Stavridis.
David, good morning. It's great to be with you.
Well, my pleasure to be here. Thank you very much for giving me this opportunity.
Well, thank you. I'm going to start back in your days in the Carter administration. I think at one point you said to me, you know, there were times during the Carter administration where I kind of had to be the bad guy. I had to be someone who would say, "Well, maybe that's not such a good idea." In the Navy, we say, you know, if you see something going wrong and you walk by it, you own it. So, take me back to that Carter White House.
While I was very young, I was 27 years old and only three years out of law school. I got lucky because I worked in the campaign as a deputy to the man who became the domestic adviser for President Carter, Stewart Eizenstat. So, I became his deputy in the White House. I didn't really know Carter. I'd never met Carter until about a month after he was inaugurated, because I had worked in the campaign and he was traveling around. I just didn't know him. And I was one of the people in the West Wing who did not come from Georgia and who really didn't know Carter. So from time to time I would say, "Well, this doesn't seem to make sense. It's not going to work in Washington," even though I was a young person. So very often I had to say, "This is probably not going to work." And you know, people would say, "Well, you don't know anything. You're only three years out of law school. We know President Carter. This is what he wants to do." So, you know, as you know, when you try to say to somebody, this isn't going to work, sometimes you get people pushing back and sometimes people might listen to you.
All I can compare that to, I spent two years as effectively the chief of staff to Don Rumsfeld, and you could push back all you want and it never penetrated. Let me take you back to the White House one more time in the world of Carter. And it's a question, David, about resiliency and what happens when something goes wrong. So, Jimmy Carter famously desperately wanted, like they all do, a second term as president, but he failed. He lost in that election ultimately, as we all know, to Ronald Reagan. So, you're leaving the White House. You've devoted years to the Carter White House. How did that feel?
That was probably the low point of my professional career. I'm glad I brought it up because for four years I'm at the White House, 27, 28, 29, 30 years old. People were telling me how smart I am, how wonderful I am, my office in the West Wing, people were lobbying me all the time and so forth. And you're meeting famous people. Come to the White House. And everybody said, "If you ever want a job, call me up." I said, "I'm going to be here in the second term. So, why do I need a job?" And we lost the election to Ronald Reagan and we got blown out. It was a blowout election. Carter lost, I think it was 489 to 49.
Yeah. Like almost every state.
We lost almost every state. It was a blowout. All of a sudden, I started calling people saying, "Well, remember I'm the guy you said you want to hire?" Nobody would call me back because who wanted a Carter White House aide or an ex-Carter White House aide in the era of Reagan? And it's not unlike what people who worked in Joe Biden are now finding, because if you were a senior person in the Biden administration and you were important at that time, now because of President Trump's views probably on Biden, these people have a hard time getting a job. They have a hard time getting speaking assignments. It's not that easy. The same thing was true in Carter. Now Ronald Reagan didn't worry about the ex-Carter aides whether they were getting jobs or not. But truth is nobody wanted to hire us. So I'm the only child. My parents are blue-collar workers and my mother was saying, "Well, David, what are you gonna do? You don't have a job." I said, "Well, I have so many offers. I don't know which one to take." The truth is, I didn't have any offers. And finally, after six months, somebody felt sorry for me. They gave me a job practicing law, but it wasn't a partnership in a major firm. It was a senior associate. I had to work my way up to be a partner. So, it was humbling and I learned a lot from it, which is, you know, when you have adversity, you got to push forward. If you just mope around, you know, life is going to get worse. In Jimmy Carter's case, for example, he thought he was probably going to get reelected in part because while we had inflation, we had hostages, he always thought we'd get the hostages out and that would be a breakthrough. But he didn't take Ronald Reagan seriously as an intellect. He thought Reagan was just an actor. He made a mistake in that regard and therefore he thought he would win. And most White House staffs have a view that they know more about what's going on than everybody else because they get all the information better than anybody else. So Carter thought he would win up until the very, very end. And then when he lost, they came back to Plains and they realized that their peanut business had almost gone bankrupt. It was near bankruptcy.
So he's lost the presidency. He doesn't have the money to build a presidential library. No one really wants to give him a speaking assignment or anything like that. And he's more or less broke.
Yeah.
So it was really humbling for him and very difficult. And then interestingly over the next 44 years he reestablished himself. So that when he came back to Washington for the memorial service for him, at the age of 100, when he lived to 100, people were lauding him for what he had done in the 44 years, not what he had done in the four years as president.
Yeah. Often people say he's the best ex-president we ever had. And you know, there might be some truth to that, but I want to stay on the point of continuing on. And so you come out of the White House, as you say, now you're in a kind of in the land of legal working at a law firm. I know you didn't love all of that, but now we come to the founding of Carlyle. Can you kind of tell that story? And where the heck does the name come from?
Well, a couple things about it. Nobody's ever won a Nobel Prize hating what they do. You have to love what you do. And if you don't love practicing law, you're not going to be great at it. And I didn't love practicing law. My clients reminded me I wasn't that great a lawyer. And so I read about a man who had done what's called a leverage buyout. Bill Simon, former Secretary of Treasury, had bought a company called Gibson Greeting Cards and he put in a million dollars of his own money and 18 months later he sold it and he made $80 million on a million-dollar investment. I said, I don't know what that leverage buyout is, but that's probably better than practicing law. So I decided I would try to start the first private equity firm in Washington. The phrase private equity hadn't even been invented yet. We called them buyout firms. And I couldn't get people that had enough finance experience to come together to do it. I was maybe going to be a lawyer. I wasn't a great lawyer, but I would offer to be a lawyer for it. And eventually, I recruited enough people that we could start it. And we didn't have any money. So, we went out and raised about $5 million to get us off the ground. One of the founding partners admired a financier named Andre Meyer who was the head of Lazard Frères and his biography had come out recently and he was a man who lived in the Carlyle Hotel and he had a lifestyle that my partner aspired to have, a single man's lifestyle living in the Carlyle Hotel in New York and running a big finance firm. So the Carlyle name was available. All the usual Greek and Roman names we couldn't pronounce. So we said Carlyle it is.
Well, as someone with a last name Stavridis, I think that would never have been part of the firm. You were kind enough to invite me to join the firm about eight years ago, and I've loved every minute of it. And I love the private equity part, but also the things we do in private credit, wealth management. But someone asked me the other day, you know, Admiral, how do you like private equity? And I said, 'Well, kind of your point.' I said, 'Well, if you told me about private equity 30 years ago, I wouldn't be an admiral, but I would have a really big boat.' So, there is some value in all of this, both the personal, but also the idea of being part of something bigger than yourself and taking risk. How much risk did you feel you were taking on when you guys founded Carlyle?
Well, at the time I didn't have that much I was giving up. True. My partners, though, had pretty good jobs. Dan D'Aniello was a reasonably senior officer at Marriott. Bill Conway was the chief financial officer of MCI, a telecommunications company that was very prominent at the time. And so they were giving up something. And I often wondered how they decided to do it. And you know, there's different answers, but how they were willing to take a risk. They were all in their late 30s. And you know, I read that an entrepreneur will start his or her first company between 25 and 37. And if by the age of 37, you haven't started an entrepreneurial venture, your chances of doing so are very, very limited. And I read that when I was 37. I said, uh-oh, if I don't start an entrepreneurial venture by 37, I'm going to be stuck practicing law my entire life, and I'm not that good at that. So, I decided I would try to do it at 37. You know, if I'd gone to New York and said to investment bankers or private equity firms there, I'm going to start a firm in Washington, D.C. and we're going to do private equity, they would laugh because who cared about Washington those days? But our focus was this. I said, what we're going to do is try to take advantage of our situation. Now, Everett Dirksen, a former Senate minority leader from Illinois, once famously said, when you're getting kicked out of town, get out in front and pretend you're leading a parade. Now, what does that mean? It means take advantage of the situation you're in. So our situation is we're in Washington. We're not in New York. So I said we understand companies heavily affected by the federal government better than the guys in New York. And most prominently was aerospace defense companies which are heavily regulated by the federal government. And so we did bring in very shortly after we started a man named Frank Carlucci who was Secretary of Defense under Ronald Reagan and he gave us a lot more credibility than we already had and therefore it was very helpful and then we got into some aerospace defense deals because of that.
Yeah. And of course, James Baker, former Secretary of State, kind of also fulfilled that role at the firm. Had been a lot of really wonderful Washington connections with the firm. But today, we're starting to move also very, very strongly in the world of New York now at almost $500 billion in assets under management. What do you think is going on? What's working for Carlyle at the moment?
Well, our track record has been pretty good over the years. We've been investing now for more than 30 years and it's done pretty well and as a result of that people think the brand name is good and people feel comfort in it. What people want when they give you money is they want to be sure that the money is going to be safely managed and they're going to get it back with a profit. And so we've been able to do that for some 30-plus years. When we had early on in our career at Carlyle, we had Jim Baker, John Major, Frank Carlucci, George Herbert Walker Bush as an adviser. People thought, well, if these people are involved with it, it must be a reputable organization and so it did work out. Now other people and other firms doing the same thing, they bring in former government people to give them some credibility or expertise in a given area. But today, while we're based in Washington, D.C. and our understanding of Washington is still very, very good, we probably have more people in New York City than we have in Washington, D.C.
Well, this kind of gets me thinking about longevity and how you keep going and how you build a reputation. And if I can kind of shift gears, we're doing this talk in Camden Yards. When this was opened in '92, people were marveling at it because they said, "We're actually building an old-fashioned baseball stadium in a modern kind of setting." And every baseball stadium built in the United States since then has followed this model.
Followed this model. But what I do is I actually start out in the owner's box greeting all the people. Then if I have a private meeting, I'll go to the bunker, but then I go down to the field. We have a seat right in the first row. And so I sit there and I throw out hats to fans and baseballs.
But I usually do that. This past year I only did it when we were ahead because I didn't want to go down to look behind.
Like you're a rookie. You're Jim Stavridis, you know, a shortstop. By the way, I am an excellent shortstop.
Well, you were a great SWAC player.
I was an all-American, but now here I am. I'm a rookie. I'm coming in here. Where's my locker? Is that the right word? My cubby hole. I mean, how do who decides that? The team captain?
It probably isn't the owner, but I don't know. You know, right now you can have anyone that you want. Which one you want? Anyone you want.
