Masters in Business LIVE: Carlyle Group CEO Harvey Schwartz | Masters in Business

Sure. Well, first of all, Barry, thanks for doing this. Great to see you again, everyone. Fantastic to be here. This is such an amazing venue. So Carlyle today is about 450 billion of assets spread across private equity, real estate, infrastructure, credit, insurance, and secondaries and co-invest. For all of you in the audience, there are a number of solutions you can show your clients: CATAC, which is the best of credit, our secondaries co-invest business, and towards the end of the year we'll be launching our private equity solution. But I would say, for me, I've been at Carlyle for two years. It's been an incredible privilege. The firm was founded in 1987 by David, Bill, and Dan, who really have created a culture which is extraordinary in terms of the people. We're 2,300 people today. Zack Foreman, I don't know if Zack Foreman's in the crowd anywhere. Zack, can you stand up? Zack leads our effort down here. So everybody should go to Zach afterwards. And then we have a booth. So, hey, that's I'm done with my advertising for the day. But I feel like I've accomplished that.

Well, I mean, there are other successful people from New Jersey, Barry. John Stewart, Bruce Springsteen. No, there's a couple. But what Barry's getting at is a little bit unconventional. I mean everybody has the complexity of their life story but for me I did grow up in New Jersey. I had two parents who were quite educated but tragically they suffered from severe mental illness. My mother suffered from what we would call today bipolar disorder and my father suffered really quite tragic schizophrenia which over time really just completely consumed him. And this is many decades ago. So treatment wasn't as good, understanding wasn't as good, the stigma of mental health related issues and severe mental health is still an extraordinary problem everywhere in the world, certainly in our country. But back then it was even much worse. And so my mother passed when I was 14. I don't want you all to feel like you have to go to therapy with me and Barry, by the way. But my mother passed when I was 14. And then it was me and my father and it wasn't a particularly healthy environment and so I basically ended up doing really badly in high school. I barely graduated by the time I was a senior. I think it was like right around Christmas when I was a senior in high school in New Jersey. I'd missed 27 days of school which by the way if you actually do the math is super hard to do. And so there was a good chance I wasn't going to graduate. I didn't apply to any colleges, but I got super fortunate and Chris was really generous when she introduced me. She referred to as a mentor and I think you do have mentors for hopefully everyone here has mentors in your life. I had people that were more like angels that really intervened for whatever reason they did to help me at certain crazy pivotal times in my life. And one was a woman named Linda. I had pli she encouraged me to apply to Rutgers. I wasn't going to college. I applied. I didn't get in.

Yeah. Well, that was like one of the earlier angels. So when I realized I had missed so many days of school, there was a chance I wasn't going to graduate. Certainly my grades were not doing well. My father and I were deteriorating pretty quickly and when I turned 18 in March of that year, it was my birthday last week by the way. In March of that year I signed myself out of high school and I had called some friends in California. I asked if they would let me come live with them and so I moved to California. I actually graduated high school out there. There were a lot of angels but that family was an extraordinary angel. They took me in but I didn't apply to any colleges and then eventually Linda came along and encouraged me to apply to Rutgers. That was the next year. That was back in New Jersey.

Yeah. No, of course. And yet another successful person from New Jersey right here live. So it was a complicated, confusing time. I had to come back. I lived with my father. That wasn't great. I was working as, for those you're old enough, a health instructor at a squash club in Chatham, New Jersey. And there was a thing called Nautilus. I was the person that trained people in the gym, which is a sort of hard for you to imagine looking at me today, but I had hair, thinner, better, more fit. But anyway, Linda and her husband used to come through and I just got to know them and she said she was a Rutgers graduate, but she wasn't an influential person like you, Barry. And she encouraged me to apply. I didn't get in because of my track record in high school. And she was so incensed by this that she called the university and basically convinced them to interview me and write an essay about why I was such a screw-up in high school. And Rutgers, which is an incredible institution, changed their selection, allowed me to go to school, and that's why Linda's an angel and the Moore family is an angel. And these people really intervened in my life in ways that are kind of hard to conceive. And Rutgers today, I think the stats are well over half the students still get financial aid. Sort of one in three are first ever to go to college in their family. It's an amazing institution and for someone like me gave me all the opportunity in the world.

Very clumsily. I didn't know, Rutgers certainly back then much better now, I didn't know there were JP Morgans in the world or Morgan Stanleys or Goldman Sachs. I didn't even know where Wall Street was. I'd never been to Wall Street. First time I went, I was surprised. It was such a little street. I just pictured a much bigger street. So I was pretty naive, as naive as you could get. And then through a friend, I took a job at a firm called JB Hanauer. For those of you old enough, it was a municipal bond firm back in the day. This is 1987. Just show of hands. How many people know what it means to work on a draw? So I worked on a draw, which means you got paid $1,000 a month but effectively it was a loan and you owed it back and you cold called and you tried to build your book of business. And I proved to be uniquely bad at this. Maybe a little bit was timing. My first day coming out of the training program was the day the stock market fell in '87. October 19th, down 58 points. There I was naively cold calling people. By the way, back then there were like real phones. You had to actually push buttons and stuff and they had this little cushion thing. You would keep your head like this and you were mostly crippled by the end of the day. So yeah, it was a bad time to try and I didn't do very well at it. I had no money. I owed everybody in the world money. I had borrowed a lot of money to go to school, friends, anyone I could find. And it was pretty stressful.

Well, I got really fortunate. I was at a tough point. My daughter was one year old and I was kind of really running out of money. At one point I thought, geez, I might have to file for personal bankruptcy, but I didn't really know what that meant, but I knew it was a thing you did when you ran out of money. And again, a friend did me a huge favor and got me a position in the back office at Citibank in 1989. And that was really the first time I'd say I was on a track that would begin to look more conventional. Although obviously starting in the back office, I was hired as a temp. I eventually became a full-time employee and then I went into the credit training program at Citibank. But I will say right around that period I asked someone I worked with at Citibank and I was so impressed with how intelligent they were. And this will give you a sense of how clumsy I was still. And we went out one night and I said something to the effect of, geez, you're so smart. I would have thought you would have accomplished more by now in your life. Which is a horrible cringeworthy thing to say to someone. But he was so gracious, taught me a lot in that moment because he was gracious about it. Didn't get offended. And he said, you know, Harvey, you'll learn in your life careers are 50% luck, 50% skill. And that always stuck with me, Barry, because I don't know that it's 50% luck, but for me, I got to say like there are days it feels mostly 90/10 or 99/1 that it's luck. And I think along the way people, every time you're given a responsibility, somebody's making a leap of faith giving you that responsibility. And along the way, people did, whether it was at Citibank, then I went to Goldman Sachs, I had some incredible experiences at Goldman Sachs. I moved around quite a bit. After leaving Goldman Sachs in 2018, ultimately Carlyle called. Carlyle calling is luck, right? It's just a random thing that I end up sitting here with you.

Yeah, that's true. I don't want to overweight the luck thing. People would say to me when I say that, well, you can make your own luck. And that's true. To some extent, you can influence your luck through hard work. But okay, everybody in this room just by being here, there's prerequisites, right? You're all smart, everybody's hardworking because that's like prerequisites. That's just table stakes stuff. I do think luck and randomness play a lot in life. You know, I'm 61. I was born in 1964. In my life, that's a really good time to be born. Like, I don't think you can not acknowledge some of these things. But I will say my early experiences, if anything, I would say I was so insecure because I didn't get into college and I barely got out of high school. I think it just motivated fear. I was scared, insecure, and I think all that kind of compounded into feeling like, wow, I am alongside all these people who went to these extraordinary schools. And then the only way I could compete I kind of felt was to just work a lot. I always felt like that was my thing. And to this day, that's kind of what I think although obviously I've had a set of experiences now which give me more confidence.