Hello, I'm Mick Dempsey, president of Marsh Investments and Retirement, and welcome to CEO Perspectives, which is a podcast series where we sit down with some of the world's leading CEOs to share perspectives, be able to get some of their thoughts and insights on leadership, and also discuss some of the emerging themes and issues that are shaping our market. And I am delighted to welcome John Gray, president and COO of Blackstone. John, it's great to see you. Thank you for coming along today.
I'm very excited. I'm very excited. Thank you very much. You are our first guest under our new rebrand and we're all very excited. John Doyle is leading the charge to bring all of our businesses together under that single brand of Marsh and we're very excited to be able to bring all the capabilities that we have across our firm to our clients. So it's an exciting next step for us.
Great. That's our current journey. I might start maybe looking back at your journey because every leader has a journey and yours has been very much intertwined with that of Blackstone, being there from the earliest stages through all of the enormous growth and success that's been achieved, right through to being president and COO of the firm. How do you reflect on that and think about the learnings as a leader along that incredible journey?
Well, I guess I'd start by saying I feel very lucky. I grew up in suburban Chicago. I'd never been to the east coast of the United States till I went to college. I went to the University of Pennsylvania. My senior year in college, I met my future wife in romantic poetry class, and I got a job working for a very small investment advisory firm, and I'm still with that firm, so 34 and a half years later.
It's just one of those things where I was in the right place at the right time. Blackstone was just at that point — it had started in 1985, but it was really starting to grow. It had raised its first private equity fund at that point and it had a small advisory business. It had less than a hundred people, less than a billion dollars under management. Compare that to 1.3 trillion today.
Yeah. Pretty dramatically different.
But the place had an energy about it. Even back then, Steve Schwarzman, Pete Peterson, they had a drive to make this place something special. They had attracted really talented people and they had a real focus on delivering for clients. And so when I look at the fact here we are all these years later and you say, you know, why has this firm had this incredible success, I would say that those core values — putting the clients first, delivering for them, and then attracting and retaining amazing people who care deeply, who want to be the very best and really have a great team spirit, a esprit de corps — that has really stayed as a sort of a constant throughout this whole journey. And for me, it's just been very fun to be part of it. I started initially in our M&A and private equity area on the corporate side for a year. Then we got into real estate and I got to be part of building what would grow to be the largest real estate investment business for 25 years, and then the last eight and a half years in this role. And I've loved the whole thing, and I just love the intellectual challenge of investing. I love the people I get to meet with, and it can be exhausting at times, but it's still a lot of fun. And the fact that the firm is so entrepreneurial and always pushing to grow, that also makes it very special.
Yeah, one of the standout points you made there around talent — that always strikes me whenever I meet anybody from Blackstone — is the quality of the people and the strength of the culture there. So it's great to have those reflections. One of the, I guess, the environment that's been there has been a very strong one supporting the private markets' broader growth tailwinds, you know, related to strong demand for long-term capital, interest rate environment, you know, bank retrenchment, you know, many, many other factors that have been driving that. As you think about the next steps, the next stage for private markets, what do you think as you look forward? Is it entering its most important stage, its most challenging stage? How do you think about the next 10 years?
I definitely think we're at a very exciting point in terms of the growth trajectory. When I think about challenges, if you went back to the financial crisis, back then we were only engaged in the highest return strategies, often with more leverage — private equity, real estate private equity — and we had this market shock, economic shock that was definitely a vulnerable time because we had a more narrow, more fragile business. The last four years, seeing this interest rate shock where cost of capital went up a lot, that posed challenges. But what's been happening, particularly over the last 10 plus years, is a diversification of what the business is. So what was fairly narrow in these high-risk, high-return strategies, which we continue to do and are very proud of the results, serving a relatively small number of customers — mostly pension funds, endowments, sovereign wealth funds — we've seen this big growth in what the business is and what it can do. And so today you see us running the gamut from very senior debt, providing investment-grade private credit for insurance clients and earning them a premium return on investment-grade credits. We see other areas like core-plus real estate, infrastructure, longer-duration, long-term hold asset classes. We see an expansion in the other equity activities in Asia, in energy transition, in life sciences, secondaries business, and now of course this growth in wealth as well, where we're not only serving institutional clients, insurance clients, but individual investors. And so you've seen this massive broadening of what we do and who we do it for, and that just gives the business much more balance. So when rates went up a lot and it impacted real estate, the credit business did really well. As you move to a different part of the cycle, as technology, some of your growth equity businesses, as we get towards this AI infrastructure world, infrastructure, real estate benefit, investment-grade private credit benefits. And so when I think about the potential expansion of our firm, I think it can be much larger than what it is today. And it feels much more durable because it used to be narrower and in sectors more prone to facing challenges. And as we broaden out what we do, who we do it for, it makes the firm feel much stronger, much healthier. And I would say importantly, the intellectual capital we get is greater. And so all the data and insights are helping make each of the businesses better. So today I feel like, you know, what it's shown me the last few years is even in difficult environments we can grow. We're over 1.3 trillion in assets and the momentum feels quite positive.
The importance of private markets more generally is now at such scale. You know, it's embedded in the financial system. That also presents in some ways the challenge as it maybe evolves towards, you know, public market responsibilities with more scrutiny. How do you think about that in terms of the core benefits of private markets being able to hold as it goes forward?
Well, I think there's no question that when you get greater scale, you get more scrutiny, you have more responsibility. So I think as a first stop, we have to operate at the highest standard. We have to make sure health and safety, the way we treat people who work at these companies, everything we do has to be at a really high standard because people are focused on us. And I would say the firm does a really good job at this. Doesn't mean we get it perfect every time, but I think this has to be a core value when you're doing this, particularly when you're managing money for public institutions, they expect this of us.
