When you think about it, that's what life is all about. All of life is really about the power of persuasion. Your spouse, your children, your friends, your colleagues, your business associates. And I tell people all the time, learn how to improve your powers of persuasion. Learn how to write very well, learn how to talk very well, and learn how to be an example of what you want people to do by doing it yourself.
I'm Stan Christensen and this is All Things Negotiation. Today, my guest is David Rubenstein. David is the co-founder and current chair of the board of the Carlyle Group, one of the most successful private equity firms in the world. David is a fixture in Washington where he's advised presidents going back to Jimmy Carter. He is a fixture on the nonprofit scene in Washington where he has chaired or been on the board of the Kennedy Center, the Smithsonian Institution, the National Archives, and the Library of Congress. In our conversation today, we talk about his history at the Carlyle Group, the cultural and political situation we face currently in the country, and his book on past presidents. I think you'll really enjoy the conversation. Welcome to All Things Negotiation, David Rubenstein.
So, you and I met over 20 years ago through the Council on Foreign Relations, and I remember specifically the conversation we had, and I was so impressed with you. You drilled down on what I was doing in Silicon Valley, the boutique investment bank I was running. You were at the time running the Carlyle Group, a much larger organization, but you seemed genuinely interested in what I was doing, and that left a big impression on me. I think you're well known for building relationships and being effective at that. Can you give us a few of your secrets on things that you have found effective in building relationships in the context of ongoing relationships and negotiation?
Well, by nature, I was not an outgoing, hail-fellow-well-met type of personality. You know, the life of the party and all of that was probably the death of the party mostly. So when I was growing up, nobody ever thought I would be an outgoing kind of personality. And what happened was I basically started Carlyle in 1987, and my partners that I had recruited were people that had MBAs and they had very good finance skills. I didn't have that. I was a lawyer by training. So I tried to make myself useful. Even though I was the founder of the firm, I had to find myself a role in the firm, or otherwise my partners, who I recruited, might say, 'What are you doing here?' So I decided to take on the role of being a fundraiser. And so I learned how to speak because over and over again I would do public speeches, and eventually if you do enough of them you'll probably be reasonably good at it. And so I began to develop more of an outgoing personality, which is to say how to connect with other people. So, I wouldn't say there's any one or two secrets, but I think among the things that I think are very good to do and that I've tried to use over the years are self-deprecating humor. I think that's helpful. Always asking people about themselves. People love to talk about themselves. Ask people about themselves. Also, learn how to listen to what people are actually saying. Don't just ask people something and then not pay attention to what they've said. And then ultimately try to enjoy what you're doing because people want to be around people that are happy, enjoyable, having a good time. And if you are sour and you're kind of a depressed type of person... And so now I have lots of TV shows and I make a lot of speeches and I do a lot of interviews, but it was not something anybody would have predicted 20 or 30 years ago.
So one thing I take away from that is that was a learned thing in your life, and so people can learn to be persuasive and learn to be effective negotiators. One of your mentors was Ted Sorensen, and some of our younger listeners might not know who he was, but you know he was famously speechwriter for John F. Kennedy, adviser. You have said that persuasion by both speaking and writing are important to learn. What did you learn from Ted Sorensen, and what specific things did he do that were persuasive to you?
Well, Ted Sorensen, for those who don't know, was at 31 years old the top speechwriter and really domestic policy adviser to President Kennedy. And he really wrote the great inaugural address of 1961 that President Kennedy gave. Ted Sorensen was a wordsmith. When I went to practice law in New York after graduating law school, he was a partner at the law firm that I went to, and I went there in part because I wanted to meet with him and see if I could get some of his pixie dust to rub off on me. I learned from him that, you know, writing is a skill that takes a lot of time to perfect.
You talk about your fundraising experience at Carlyle, and as far as I know you may have raised more private equity money than any other person, and so you're kind of legendary there. It can't have always been easy. You've talked about persistence being a key skill in negotiation and getting things done. Did you sometimes have to visit people multiple times, and maybe talk about the role of persistence in negotiation and whether that played a role in your fundraising?
It's very rare that somebody will show up to make a presentation on fundraising and the person to whom you're speaking will say, 'Wow, I really wanted this kind of fund to invest in. I was waiting for somebody like you to show up on my doorstep. Where do I write the check?' That doesn't happen. So when I was starting the firm, we didn't have a track record, and people always want to see a track record. So not having a track record, you had to be better at selling people on things, and if you had a long track record that would sell itself. So I had to develop the skill of persistence and not take it personally. So one of our biggest individual investors in Geneva, I went to see him nine times, and you know the eight times he said no, no, no. Finally the ninth time he said, 'Look, please leave me alone. I'll give you some money. Don't come back again.' So persistence paid off a bit. And that he opened doors to other people that he knew. So persistence pays off, but you have to, and when you're fundraising, you have to be polite. You can't be arrogant and hit people over the head and say, you know, you have to give me this money or my firm is the greatest firm in the world. You have to be pleasant and accept what they say. Listen to them. Always listen. Because people will tell you what they think pretty much at the beginning of a meeting. So I don't like to start a meeting by saying, 'Let me tell you why this fund is great and why you should invest in it.' I like to ask people, 'Tell me a bit about yourself, what you're focused on now. Tell me a bit about your background. Tell me a bit about what you like and what you don't like.' And then when people tell you something about themselves or what their interests are, you can therefore take your message that you're going to deliver about your fund or whatever you're trying to sell and kind of fit it into what they've already told you about themselves. So I remember when I interviewed Oprah Winfrey once, I said, 'You're a great interviewer.' She said, 'No, I'm not a great interviewer. I'm a great listener. I listen to what people say and then I react to that.' And I always remember that.
So interesting. Listening is one of those things that is ubiquitous in terms of people's knowledge and advice around listening. You hear it all the time, but I think very few people are good at it. You've recently written a very effective book on the presidents where you interview some of the biographers and people most knowledgeable about those presidents. I remember once, and since you have met with a lot of the recent presidents, I remember someone telling me that Bill Clinton, listening was his key skill in negotiation, that he was an aerobic listener. The fact that he would listen intensely was the major event of the conversation. Was that your experience with Bill Clinton? And can you think of other presidents who you thought were effective listeners?
Well, to get to the presidency, you have to listen to what people are saying because otherwise you won't be able to massage your message. So, I think Bill Clinton was a very effective listener. I think others that got there listened as well. Some maybe not as well as others did, but the person for whom I worked in the White House, Jimmy Carter, you know, he started out with no chance of getting to be the Democratic nominee in 1976, but he listened to what people said and he crafted his argument and his political message to what people had been telling him. So, I think really good politicians listen to what people say, and it can be more effective than listening to what pollsters tell you.
Well, let's finish up with a couple more questions on Carlyle before we turn to the presidents and current events. At Carlyle, in addition to fundraising, you were well known for heading up recruiting. And two things that you've mentioned that you feel like are important as you recruited people were that they had higher integrity and that they were smarter than you. How do you assess in an interview whether someone has integrity or not? And how did you flush that out of the people you hired at Carlyle?
Well, I hired a lot of people who were famous. You know, Jim Baker, George Herbert Walker Bush, Frank Carlucci. They were prominent already. Their records were known. The trick is figuring out whether younger people have the integrity that you want and the skill set. And what I'm always looking for are people that, in the terms of younger people, people that want to work hard but not obsessively so that it's detrimental to their health, but want to work hard, are pretty intelligent, know how to write, know how to communicate orally, are highly ethical. And how do you determine whether somebody's ethical? Well, you can ask questions that might determine whether if they were in a certain situation, what would they do? If they had inside information, what would they do with it? So you can generally get that, but not every interview goes perfectly in terms of deciding whether the person has all the skill sets you want. I've made hiring mistakes, and you know you have to live with them, and eventually the trick is trying to figure out how to exit somebody in a graceful way. So I wasn't that good at firing people because usually when somebody was given to me to fire, I would wind up hiring them and promoting them. So eventually my firm said, you know, maybe we should have somebody else do the firing. And so they got another person in the firm who was much better at firing them. And he did it skillfully by never using the word fire. He would just say, you know, at the end of a week, he would call the person in and say, 'Well, you know, I think we have a very good package for you that will be a package that will enable you to, you know, financially do okay for a while.' And so they didn't really know they'd been fired. They just knew they were getting some money to go away.
That's a great story. Private equity firms are famous for internal, let's call them, dynamics. So, you had two co-founders, and probably the fact that you had different roles minimized to some extent the conflict. But do you have any stories of either with your co-founders or other people at the firm where you had conflicts and you had to work through them, and what worked well in that process?
Well, sure. Actually, well, we've rewritten the story of Carlyle a bit, but at the beginning there were three of us, and the three of us basically got along pretty well. We never yelled at each other, we never stabbed each other in the back, we never kind of tried to get two against one. We always said, look, you each have your own areas of responsibility, we'll defer to each other in each other's area of responsibility, and generally try to, you know, be as polite as possible to each other. So we also did something else: we didn't really socialize. I found that when you see people all the time, you work with them and you socialize with them, at some point you just say, 'I've seen too much of this person. This person's habits get on me and I don't like them.' And so basically the three of us: Bill Conway oversaw the investments, Dan D'Aniello did the administrative-related operational things, and I did the fundraising and the public relations and the recruiting. And so we didn't get in each other's way. We deferred to each other. Obviously, we communicated our views, but generally deferred to each other, and it worked out pretty well.
Let's talk a little bit about leadership transitions at Carlyle. I think you're still chairman of the board, but you've had some transitions historically. I think some of them have gone on well and maybe some not so well. What have you learned through that? And you can speak either to ones that you felt like went well and how you negotiated that, or things that didn't go well in leadership transitions.
Well, Carlyle for a long time had, of the three founders, two of us were the co-CEOs. And when we reached the age of 69, we concluded that we were ready to step back and go to the next generation. We had two people in the firm that were kind of ready. One had been a deputy to Bill Conway as an investment person. Another had been doing many different things at Carlyle. And the two of them, we designated them as the co-CEOs in the next generation, but they didn't get along with each other that well, and I think in the end there was a little bit of a tussle. But transitions always have a challenge. And in China, I am told that there is a curse, and a curse that you can say to somebody is, 'May you be condemned to live in a time of transition.' Well, I can see why the Chinese might have that curse, because transitions are always difficult. Transition in government and business and in family life, everything is difficult. So, when you have a transition from founders who are kind of, you know, the sun gods of an organization to people who are not the founders, there's always some transition tension. Some of the other firms in private equity have made very successful transitions. Some have had less successful ones, and ours didn't initially work out quite as well as we had hoped it would be, but now we're very happy with where we are.
Well, before we leave your career, your very successful career at Carlyle, you bring up that you had recruited George Herbert Walker Bush post-presidency for him, Jim Baker, another luminary in politics. You guys spent a lot of time together. You flew around the Middle East at one point. Those are the kinds of trips where you really get to know people. Talk about maybe each of them for a second and what you learned from them about negotiation and persuasion.
Well, Jim Baker was one of the most successful post-World War II professionals in government. He had served as chief of staff under Ronald Reagan, maybe the gold standard for chief of staffs. Then secretary of treasury under Reagan's second term, and then secretary of state under George Herbert Walker Bush. And he was a master at negotiating. He was very detail-oriented, very focused. If you asked him to do something, he would always ask you questions about why you wanted to do it. He'd always make sure he understood everything going on. And one of the more impressive people I'd ever met. George Herbert Walker Bush was one of the nicest people I ever met, practically. I mean, he's such a polite person, so gentle in the way he treated other people, always careful about other people's feelings, and never wanted to upset anybody. And a terrific person. I really admired both of them enormously, and I learned a lot from both of them.
Well, let's turn a little bit to the current political situation. No matter where you are in the political spectrum, everyone recognizes that we're in a polarized environment. There's lots of mistrust, and that makes negotiation difficult. Do you have any general thoughts and strategies about how to best negotiate in our polarized environment? Either anecdotes of how you've done that effectively or what you'd recommend to others.
It's a complicated situation. For the last 11 years, I've hosted a dinner on Capitol Hill for members of Congress only once a month. And I interview a great historian about American history on the theory that the members of Congress would like to hear about it. And members of Congress like it because they get to come and there's no press there. They can sit with people from the opposite party, the opposite house, and talk with people they normally aren't allowed to publicly talk with. And then they learn something about American history. And I've gotten to know a lot of members reasonably well from that process. And I would say that, you know, today it's a very... my members like the dinners because it's so unusual. Today there's no real bipartisanship. When I was working on Capitol Hill briefly in the 1970s and then later under President Carter at the White House, bipartisanship was thought to be a good thing. Today, bipartisanship is not thought to be a good thing. And therefore, people are either committed to the left or committed to the right. And the city is much different than it used to be. And you know, you used to get ahead by being known as a good bipartisanship kind of person. You could get along with both sides. Today, if you're seen as bipartisan, you're probably not going to advance in your party, either party, because it's not seen as an appropriate thing. It's a sad situation, and I don't think it's going to change anytime soon. In the end, one of the problems we have is money. Money is so prevalent in politics today that members of Congress are spending so much of their time raising money. And you raise money from the far left or the far right. You don't raise money by saying, 'I'm going to go to Washington, be right down the middle. I'm going to do what's right for the country, whether it's far left or far right.' That will not raise any money. And so, since money is so important, members of Congress get pulled to the far left and the far right. They don't like it, but they know that's the reality. And so, obviously, if there was anything you could do to change politics in Washington, D.C., it'd be to eliminate the prevalence of money in politics. I think Citizens United is so popular among certain parts of the political spectrum that I don't think it's going to change, and I don't think the justices are likely to reverse that. But I can't speak for the court, of course, but I think it's unlikely that as long as we have the view that political money is political speech and we have freedom of speech in our country, I don't think you're likely to change that decision. So, that'd be my guess.
Well, democracy seems like it's under threat. As we think about some of the key stakeholder groups in that negotiation, Congress, you've got Congress, you've got the business community, you've got the legal community, you've got the academic community. Some would say that they're not acting with courage. Do you agree with that, or do you have advice for any of those groups on how they could behave differently to preserve democracy?
Well, you know, I've thought that if John Kennedy were to write his book today, Profiles in Courage, it might be an empty book compared to what he wrote about. Courage is easy to talk about but hard to actually find because people don't want to be attacked. People don't want to be vilified. And today you have physical attacks on people. You have all kinds of political attacks on people. Social media has scared people because you do find violence very often now as a way of people trying to settle scores. So I wouldn't say there's a lot of courage in Washington, D.C. these days because members of Congress don't want to be vilified. They don't want to be physically attacked. They don't want members of their family to be physically attacked, and many of them don't want to lose their fundraising base either. So it's a complicated situation. I don't know that it's going to change anytime soon, unfortunately.
One thing that I've heard repeatedly, and it's mostly from former Congress people, is let's just take the Republican Senate for example, who might be amongst the least courageous people in terms of those groups from my opinion. They've said that the reason that the Republican senators don't stand up to the administration is they like their jobs. They just like being senators. And that's a hard answer for me to hear. Do you agree with that? Is that what you hear? Or if we're talking specifically about the Republican Senate, why do you think they're not pushing back on any of the things that are very different than the traditional Republican party platform?
Well, I can't really speak for them. I would say my impression from afar would be that they think that if they resist a lot of what is being proposed by the administration, they will be, quote, primaried, and therefore they would have to fight a primary campaign and they could well lose it, and some members of Congress have stepped down. But it's an interesting phenomenon. When I talk to members of Congress, they generally like the job they have. They complain about it and so forth. But generally members rarely retire at a young age. They rarely say, 'I just don't like the way Washington's operating.' They want to be reelected. But interestingly, when they do retire or they lose an election, but particularly if they retire, I find when I talk to them, they're never as happy as they were retired. In other words, they spent all these years being afraid of being defeated in an election or being primaried. But when they actually get out, they're never so happy.
Maybe you should invite some of the retired members of Congress to your dinners to tell them how great it is, so the current people might want to move on more quickly.
Well, that's a good idea. I'll think about it.
David Brooks from the New York Times has famously said that some of these groups, whether it's law firms or academic institutions, need to negotiate with the administration collectively rather than being picked off one by one. Thoughts on that strategy? Do groups need to form if they are resisting some of the current administration's directions?
It's very difficult to get groups with disparate backgrounds and different interests to kind of come together and en masse say we're going to be tougher on the administration. So I don't think it's likely to happen. And realistically, the administration has such a loud voice and has so much political power that it's very difficult for these individual industries to kind of combat what the administration is doing. And I'm skeptical that that will happen. I think unless a president of the United States' popularity goes down and he is not seen as a very popular person, you're probably going to see a lot of what we have seen the last couple of years continue.
That's discouraging. Let's talk a little bit about negotiations and relationships with our allies. It's my perspective that we're suffering a bit, particularly with some of our traditional allies. How do you think the administration is doing on maintaining our relationships with our allies?
Well, clearly the administration has different views on who our allies are and who they want to, I would say, support. Clearly the tariffs have had some impact with our allies. And President Trump seems to have a different view on who our best friends are overseas compared to other presidents. So, it's hard to know who our allies are, but traditionally our best allies were Western European countries, and many of them have found dealing with President Trump more difficult than they would have preferred or might have liked. And our two closest neighbors, Mexico and Canada, have had some challenges as well. So, President Trump has made some changes in who he regards as our best allies from what previous presidents had thought. And it's a little upsetting to some of these other countries, but obviously President Trump has managed to maintain his popularity despite some of these challenges to our traditional allies.
Do you think they're going to be forgiving? Let's say we had a new administration. Or do you think some of the damage to those relationships is more medium or long-term?
Hard to say at this point. I'd say it depends on who his successor is. If his successor is someone that's very close to him and also seen as a MAGA supporter, then people will probably say, yes, this is a turn in how the United States is going to treat us for quite some time in the future, and so we shouldn't think that the good old days are going to come back anytime soon. On the other hand, if his successor is somebody that is more traditional, then people will probably say what we saw under President Trump was a bit of an aberration and not the continued foreign policy of the United States. It's just hard to say because we won't know who his successor is for quite some time.
Sure. A book that you and I both like is Richard Neustadt's book on presidential power. And in that book he says the president only has the power to persuade. President Trump has taken a more transactional rather than persuasive and relational approach. So is Neustadt right, or how do you feel about the transactional versus relational approach of the president in terms of his negotiations?
Well, for those who aren't familiar, Richard Neustadt was a professor at the Kennedy School, helped to start the Kennedy School, professor at Harvard, and he was an adviser of the presidents. Richard Neustadt's book was about presidential power. And he basically used a lot of the Truman administration, which is what he was pretty knowledgeable about, as an indicator of presidential power. And what he famously said is the president doesn't have as much power as you might think, but he's got the power to persuade. But when you think about it, that's what life is all about. All of life is really about the power of persuasion. Your spouse, your children, your friends, your colleagues, your business associates. You may not have the legal ability to get them to do what you want, but you have the power to persuade them.
And I tell people all the time, learn how to improve your powers of persuasion. Learn how to write very well, learn how to talk very well, and learn how to be an example of what you want people to do by doing it yourself.
to do what you want, but you might be able to persuade them. And I tell people all the time, learn how to improve your powers of persuasion. Learn how to write very well. Learn how to talk very well. And learn how to be an example of what you want people to do by doing it yourself. And that's a very effective way to persuade people. So I think Richard Nat was correct that the president's legal powers aren't quite as great as maybe you think, but he does have the power to persuade. And obviously President Trump has been persuasive to many of his people in his core support group in terms of Republicans in the House and Senate. Whether that will continue with a successor, I don't know. I just don't know.
Yeah, I guess I see that a little bit differently. I would say that the traditional way that we think about persuasion and negotiation is anathema to the way he does things, which are to make decisions and kind of deal with consequences and persuasion later. So I guess I see that a little bit differently.
Well, he obviously has a different style of negotiating, which is to say this is what I'm going to do and that you should go along with it or there could be consequences. You know, you could argue it's a very effective way to persuade people because he's obviously managed to convince Republicans in the Senate and Republicans in the House to follow him. So maybe it's not as bad a technique of persuasion, or you can redefine the word persuasion perhaps as the traditional way.
