Steve's journey began far from Wall Street. Growing up in a family that valued hard work, discipline, and education, values that would shape his approach to leadership throughout his life. After earning his undergraduate degree at Yale and then his MBA at Harvard Business School, Steve quickly distinguished himself, as I remember well, as one of Lehman Brothers' youngest partners leading their mergers and acquisitions business. And then in 1985 he co-founded Blackstone with Pete Peterson and he and I met that year when he was raising Blackstone's first fund and we'll come back to that. So what began at the time actually as a small advisory firm has grown into the world's leading investment firm with a market cap and I'm always stunned when I think about it Steve of 150 billion and AUM of close to $1.3 trillion numbers which we would have never imagined sitting there at that time. But importantly beyond business Steve has made a real impact on philanthropy as a central part of his legacy. He founded the Schwarzman Scholars program to bring together future global leaders and is expanding the Steven A. Schwarzman Foundation to focus on education, culture, medical innovation and AI which we'll come back to. But Steve is really widely respected not only as an advisor to global leaders which he performs an important role on but also as a mentor who has developed a world-class generation of professionals in Blackstone and outside of Blackstone. Thank you for being with us today Steve. It's an honor and a pleasure. And as you know after the session we'll do our usual comments and questions on Slido which obviously I don't know how to work. Steve, let's start at the very beginning. As a teenager, you first mentioned mowing lawns and recruiting your brothers in Philadelphia. What did that first business venture teach you about entrepreneurship, trust, initiative, managing? What did you get out of those beginnings?
Well, I learned that it was good to have income. As you have discussed, it was good to have someone else doing the work. I was the sales department so I brought in the business and I also learned that if you underpay the people who do the work you end up with a revolution and so that was a wise lesson for life.
But Steve growing up in Philadelphia sort of what values from your childhood most shaped you in terms of leadership, decision making, philanthropy because your beginnings were very important to you. What were the values you...
Well, it's like everyone, you know, you grow up in a family and you see what your family's values are. And my dad worked really six days a week at his store. And then on the seventh day, he did orders, you know, sort of at the dining room table. So that's what I internalized as normal. And you know I also growing up got a chance to do athletics, you know, in school at a very competitive level and I absolutely loved that. I loved the training. Sometimes I didn't love the training so much, but you know, the actual competition. I was on a track team, we never lost. From 8th grade to finishing high school. We won every dual meet. We won a lot of championships. We were third in the United States in sprints. And so that was really wonderful. Plus you know I got to be president of my school. And that was interesting. First how do you get there, you know which is a sales function right and then I wanted to do unique things in that job. And so I thought about what could you do? And then I ended up communicating with my little management team, my vice president and so forth of the student council and we ended up bringing a big rock and roll group who was, you know, the top 10 chart to the school and things that they'd never done. So that part of my life was I guess a little bit of a warm-up for my grown-up.
It certainly was, but also was a very very if I may say it was a traditional family upbringing and then you went from this lovely, if I could say middle class upbringing in Philadelphia and you showed up at Yale. What impact did that have when you show up at this fancy Ivy League school coming out of Philadelphia in terms of your ambitions, your development? How did you fit in? What did you think?
Well, what I should say first, to complete the background, until I was 13, I grew up in an area that wasn't very good, you know, economically and, you know, one of the kids I played with's father was basically assassinated by the mob. And I remember going over to his house afterwards and he had a tool box filled with $100 bills. Now, this is in the 1950s, right? A $100 bill who had ever seen one, let alone a kid having stuff like that. So it wasn't, you know, it was a tough part of life. And so I was very privileged to be able to have that part of life and then the nice suburban middle class part of life. Now as to Yale that was a complete shock, right? And you know I got a 68 on my first English paper on Bartleby the Scrivener by Herman Melville and then I got a 66 on my second paper and I said, 'Oh my god, I'm going to fail out. I'm doing my best.' Right? And this is like a catastrophe. And the English professor called me for a meeting which was not surprising and I sat down and he said, 'Mr. Schwarzman, I'm here to talk to you about your English paper.' And I said, 'Well, there's no reason to really do that.' And he said, 'Why might that be?' I said, 'Because I had nothing to say and I said it poorly.' And he said, 'By God, you're not stupid. You just can't think and you can't write.' He said, 'I'll teach you to write first. Because you can't write and learn how to think at the same time. And then once you figure out how to write, I'll give you the answers for other essays and then you'll learn how to think.' And by the end of my first year instead of failing out, which I was in real danger of doing, I ended up on dean's list, which was sort of the top level. So they rescued me. And then culturally it was life-changing because I had never imagined or ever seen what it was like to be part of you would call it sort of the establishment which existed in the 1960s mostly gone now. But you know in my dormitory I had a kid named George W. Bush. He was a year ahead of me. And I remember we had a parents weekend once a year and I remember waiting for my parents and George's father had gotten to the lunch earlier. He was just standing around. I didn't know he was George's father. And you know I introduced myself. We ended up talking for 15 minutes. Now, who would imagine both of these guys would be president of the United States. Right. And so my world dramatically changed and expanded. My horizons expanded because you'd meet all these extraordinary people not just the classmates but the older people. I mean the master of my college was the grandson of another president, William Howard Taft, you know and his wife and you know she gave me books on ballet because I was interested in that and I ended up starting a whole ballet thing. Well, this never and I ended up as a grown-up, you know, chairman of the Kennedy Center, right, for the performing arts. And this never would have happened. So, Yale opened your eyes completely from that standpoint. And frankly, you know, a lot of the kids around you were people you probably had never run into in Philadelphia. So it was a very very different kind of and in some ways kind of set the basis and we'll come back to that because after Yale you went to HBS to Harvard Business School and Steve I always feel that amongst many things you're an entrepreneur at heart. What did you get out of Harvard Business School or was it just something you had to do after Yale for the next progression?
No, no. I got a job at a firm called Donaldson, Lufkin & Jenrette right after I graduated waiting to go into the military. You know and I got put in a situation that was completely hopeless. I was a social science major. You know, psychology, anthropology, biology, and one of the other social sciences. And you know, I had no idea about economics. I never took an economics course. I still haven't. And they gave me a desk, a secretary and asked me to start doing financial assignments and somebody gave me something called an annual report. And I opened this thing up. I said, 'Why do they have all these numbers at the back and then all these little, you know, sort of small letters and, you know, and the footnotes.' They had a thing that said footnotes. Footnotes to what? And you know I somehow managed to survive by avoiding assignments for like eight months. And it was the most frightening time in my life because I was completely unprepared. And these were grown-ups. I mean they like had a real business. And ultimately sold to Credit Suisse. And I think it was 10 or 12 billion dollars deal and I basically said I got to learn some of this foundational stuff or I can't put myself in this thing and I'm going to wash out and fail and that's why I went to Harvard Business School because you know I had a huge deficiency.
So you had two fear of failures. One at Yale starting out in English, a second, you know, close encounter of the third kind at DLJ and each time you repaired it by moving yourself forward and by learning. By HBS. But then in 1972, Steve, you joined one of the most storied old line companies, Lehman Brothers.
Well, let me just talk about Harvard Business School for a second because you asked me. That was really fascinating. It's the first time in my life that I was a really smart kid. And I mean, I always was in the top, you know, like 5%, but there were always 4.9% ahead of you. At Harvard Business School, they really didn't have those smart kids there anymore. I don't think I got any smarter, right? But all of a sudden, I knew the answers to all this stuff and most of the other people didn't. Some of them couldn't even write sentences. I know that sounds strange. They came from all over the place. It was during the Vietnam War and business was really badly perceived and all the smart people went to law school. They went to medical school. Nobody went to business school and that's changed completely now. But I became like a real piece of work, right? at the business school and they had you know every section I think there were like you know 12 different sections of 77 kids the faculty picked their three best kids. So I was one of those for an organization and then I became the president of that organization. So my Harvard Business School experience was foundational from your school. And I was going to drop out after December because they were only teaching one basic principle which is that everything in the business relates to everything else. And you have to have it all lined up. You know, you have to have your personnel stuff right. You have to have your supplier stuff, right? And you know, you have to have your sales stuff work and it all has to be brought together in a seamless thing. Okay, I got that after 3 weeks. And I looked forward and I said, 'My god, I've got almost two years left to have different versions of the same thing.' And I was going to drop out and I wrote a note to Dick Jenrette who's passed away and I said Dick you know this was by December I'm going to drop out I want to come back to work I want to go somewhere else to work whatever and he wrote me this lovely six-page letter handwritten letter dear Steve in December of my first year at Harvard Business School. I wanted to drop out. I thought the kids weren't very smart. It wasn't challenging. And I wanted to switch to get a PhD in economics. I recommend in the strongest way that you do not drop out. You finish up. We can hire you later. you're always welcome here or you'll do something else. And being a sort of a confused kid, I basically said, well, if that's what Dick says, I'm going to stay absolutely the right decision and I owe it all to him. So, one of the things about leadership, mentorship, whatever, you're not aware of the impact you can make on other people. So I owe the course of what I'm doing to Dick.
Well, I mean that's you know from your standpoint these people along the way and obviously you've done it on a broader basis had big impacts from you whether it's going back to Yale whether it's in Philadelphia but as I was mentioning you then went and joined this the old line almost the opposite of DLJ if I may say it you know Lehman Brothers you know down on I think it was 55 Wall if I remember one William Street one William exactly one of the most establishment places out there. What kind of challenges did you face going from HBS Dick Jenrette which was very entrepreneurial the old DLJ to a pretty stodgy old line investment bank? What did you see there Steve?
Well, my first day at work, the Lehman building was a, you know, sort of like a triangle type building at One William Street. It's still there. And all made out of stone. And I walked to the elevator and pressed the little thing. They had steel doors, the doors open. And a guy walked out. I was in my new suit. My wife had brought me a new briefcase. In the olden days, you used to have a briefcase. Keep your work in. And the door opens and guy walks out. He looks at me and he said, 'You must be one of the new people.' I said, 'Yes, it's my first day at work.' He said, 'You'll love it here at Lehman Brothers.' And I'm thinking, 'Well, that's why I chose it.' And he said, 'At Lehman Brothers, you never have to be worried about being stabbed in the back because here we just walk right up to you and stab you in the chest.' This is my first day at work. And you know, I sort of went, 'Well, this is going to be an adventure.' And it was, but it ended up being...
I mean you became one of the youngest partners, if not the youngest partner at Lehman, in the M&A business and then this establishment entity ended up being sold in 1984 to American Express.
You were the one that sold it as I remember well, but you left and decided to start a business from scratch. What led you to take that level of risk from your standpoint? Because you were leaving the establishment and going into the unknown.
Well, it was one, I had a non-compete, right? So, I couldn't go anywhere. Second, the firm was sold because, you know, there was a senior management failure. And there was some trading done that violated trading limits. And we sort of woke up one day and found out the firm didn't have a net worth. And you know I was 10 years younger than the people who were on the board. It was all internal board private company. And the people 10 years older than me didn't try and get rid of the senior management that had perpetrated this disaster on the rest of us. And so we were sort of floating towards a financial collapse. And I was asked because I was heading the merger department at that point. I think I was 34 something like that. To sell the firm by the opening of business on Monday. So, you talk about a high stress situation. I then knew what the financial situation of the firm was. And I said, 'Okay, I've only got so many shots on goal here.' And, you know, I got to get to an announcement Monday morning. So, and it's Thursday, Thursday, Friday, Saturday, Sunday. I've got four days, two of which are weekend days. And you know I approached my next door neighbor who was president of Shearson Lehman American Express or Shearson American Express. And you know talked to him and you know he talked to the CEO of American Express and we worked out a deal by announced on Monday. But through that process I got to see how the people ahead of me had behaved and what had happened with this whole mess and the lack of appropriate governance and I said look there were a lot of other ways to solve this problem. We could have brought in external capital. we could have stayed independent, but you know, it was like easier to sell the business so everybody could get rich. And these were all inheritors, right? You know, they did nothing but join the firm like me.
And you inherited all these accounts and then you cultivated those. You got some new business. You certainly got into the action then, but you took on a real level of risk. I mean, Steve, when you and I met, I remember this actually quite clearly. My old boss, Bruce Wasserstein, threw me a piece of paper and said, 'I've got a very good friend of mine across the street. Go see if you can help.' And I knew nothing. As you know, zero. And I went over to your office and I remembered clearly and I met with you in the Seagram's building and your partner at the time, Pete Peterson, barely looked up to say hello. He was writing a speech and you and I sat down and I don't know if you remember this but you made a comment to me that in effect said we're too late for the LBO business you know it's already passed there's KKR, Gibbons, Green, Forstmann, Little etc we're late what were the doubts that were going through your head because we were looking at as you know you were raising it's hard to believe Blackstone One what were the doubts in your head at the time?
Well most entrepreneurs don't have a lot of doubts because if you did, you'd be crazy to like do this entrepreneurial stuff. So, you know, I thought we basically had a three-part strategy. One was to go into the M&A business because we knew how to do it. It's one of the world's great businesses. You need no capital and all you do is talk and somebody gives you millions of dollars. This is wonderful. You know like today unfortunately I'm not getting anything for this but you know you go to a boardroom and you tell them what you think and they give you millions of dollars if you're good at the advice business. And I knew this would be a good way for us to fund our growth. And since we were the most active merger department in the world at that time, Goldman had bigger size, but we had more deals. That I knew that that was like a gimme. And second thing we said we're going to do was now called the private equity business was then called the leverage buyout business. So we're going to need to do a fund. And then the third thing we were going to do was start new money management businesses. We didn't know what they'd be, but to take advantages of the cyclical nature of the markets the invention of new areas and that we go in that we called them at that point affiliates. We'd own 50% the people we brought in would own 50 and one of which became BlackRock. And was then called Blackstone Financial. And you know we would control the business because I was worried about bad behavior mostly if things weren't successful because people in finance tend to do things that are in their own interest. I always was only interested in the customer's interest and sometimes those could be in conflict. So I wanted the control to make sure we never hurt a customer in any way. And the person had to be sort of top people in the world and the business had to have really big potential. So that was our strategic plan. And we announced that and we sent out notes to everybody we knew. You had to do that then. There was no internet. You mailed these things. And I expected the phone to ring off the hook. And so I took all these envelopes, there were like 500 of them to the post office and waited and nothing happened. I remember I mean nothing happened. So I thought maybe the delivery was lost. And so we started calling the 500 people and it's a lot harder to get through when you're not at Citibank and you're at some no-name startup. So we finally got through the first person and he said he didn't have anything for us to work on but he did get our note. So that in a way was more depressing and so we worked our way through as many people who would take our call. And we got no business and I kept thinking what was going on here and also this sounded like certain death if you have no business and you call everybody you know. And I said you know there's something I missed here. And what I missed is that there were no boutiques in the United States. And we set ourselves up with two guys who were very well known at that time. But nobody on the client side, no corporation would ever consider hiring two competent people but insignificant compared to you know Morgan Stanley, Goldman Sachs, First Boston, Lehman. So we actually had launched ourselves on some kind of modified suicide mission which I was not aware of because I had been working with all these companies Pete and myself and they loved working with us and we had huge amount of business when I was a partner at Lehman. I was the third highest paid partner after the chairman and the president and I was like early 30s and then all these people lost your phone number. Yeah, it was really depressing. So after going through all those people I said to Pete, 'Well, what do you think we ought to do next?' He said, 'Well, let's wait a month and call him again.' Now, this is a great strategic plan, right? You know, you want to understand fear. Fear is starting out with $400,000, 200 from each of us. And every day you open, it's like one of those hourglass things. More sand goes out. And I kept watching our 400,000 go down to it was like 183,000 before we got our first person who said, 'I'll work with you.' It was really frightening. So frightening and isolated. No one to talk to. And you know we had a big perception. So there was a big expectation that we would be successful. And in New York I learned that people are not truly happy unless somebody they know well is failing. And apparently I had nominated myself for that position. And you know so these were really desperate times and what happens at the beginning of a business like this is all the good business goes to like Citicorp. And the only things we would get hired for were these marginal like am I actually going to work on this? You know, I worked on our first piece of business was $50,000 fee and I had never paid a legal bill that low and you know, I just poured myself into this little assignment because this is survival. And I must say this entrepreneur thing can really be overrated. I mean, this is dangerous, scary stuff. But once you're launched, you got to make it happen.
But I remember when you got Blackstone One done, which was an important moment in your time. I remember all of it. Well, we're not going to get into it now of closing dinner at Tavern on the Green, if you remember that. Well, but you actually, and I think it's been one of the hallmarks of you, Steve, is when you hit a roadblock, you turn around and, you know, just adjust the direction of travel. You had some issues earlier on. One of your first deals ran into problems if you and I remember right and the Edgecombe deal which we remember and then in the 1987 market crash you lost some money in risk arbitrage so with your affiliate at the time you'd gone through all these different setbacks. What happened with those setbacks? How did they drive you in terms of as you look forward to evaluate risk and pivot? And we're going to come back to the rest of your post.
Yeah. Well, I was untrained in terms of being an investor, you know, I was an adviser, you know, and so you know, I made a mistake on our third investment because I really didn't understand how to do investments. You know, we had somebody walked in with one of our new partners, so I barely knew them. You know, came in with a deal and said it was a great deal. And we had no investment committee process. It was just sort of lined up at my desk. I thought that was what people did. I then realized it isn't. But what happened is one of the other partners heard about the deal and he came in and said this is like an awful deal. It's going to go busted, you know, within 6 months. And I said why? So what did I do? I called the two of them in and asked them to plead their case. And I picked the wrong one. And we did the deal when the deal couldn't make its first interest rate payment because steel distribution deal and steel prices collapsed and you know as a result of that you know there was no earnings and we had to put more money in it finally rescued the new money lost the old money I had you know my one of my investors literally you had me come to their office and was screaming at me. And I grew up in a family where nobody ever raised their voice. And the idea that somebody was screaming at me you I was the dumbest and unfortunately I had to agree with them. There was no defense. And I was sitting in this wooden chair in front of this guy's desk and I felt my face getting redder and redder. Hotter, not redder, hotter. I said, 'Why isn't my face getting hot?' And it's because I was going to start crying. And I said, 'I can't start crying. I just can't do that.' It was such a shameful, awful, moment. And I remember walking out of that office and it was a autumn day and it was by the Hudson River. The leaves were coming down. The sun was bouncing off of the river. It was cool, windy. And I said, 'I'm never going to have another meeting like this in my life.' And I didn't. And I said, 'Okay, I got to learn this investment thing. I'm not a genius, apparently.' Okay, we're going to have to have a group decision-making process. We're going to have to have everything in writing. We're going to have to accept nothing anybody writes. You know we're going to have to have a group in effect analytic session where everybody at the table has to speak. No free riders and what you have to do is criticize the deal. Where are the weaknesses? What assumptions are being used? Why are they the right assumptions? Why? What are the range of things that can happen as we play with these assumptions? And we're never going to lose money again. And everybody at this new firm is going to get used to this kind of analytic rigor, right? Analytic attack, whatever you call it. And so the key to having a successful financial institution among others is to depersonalize decision-making. Biggest problem you have is when people work on deals, they fall in love and if you say it's not a good deal, they don't like you and they make it really clear that they're unhappy with you. And if you turn them down a second time, they get even more unhappy. And if you do it a third time, they're going to be at risk of leaving because everyone in finance is very proud because it's an intangible business and nobody actually knows the right answer. So the ego that people use is dispositive and I wanted to create a system where all of that acting out and the bad deals that mostly get done by financial institutions. People know in advance it's going to be mediocre. They just approve it because they don't want to deal with that person and that's the truth of it. And the deals that are wonderful, they're the easiest to approve. And they just sort of almost talk to themselves. And you could do really well. So what I learned by doing that was how to perfect that kind of system. What I learned was some arbitrage guy who we told not to do something. It was a United Airlines takeover deal monsterized deal at the time and you needed all the major banks in the world to finance it and one of our partners for reasons unknown subscribed to Japanese newspapers and he read that the Japanese newspapers were going to finance the deal which meant there wasn't enough capital in the world to do it which meant the deal that was announced was going to collapse and we told this guy, 'Don't play that deal.' And, you know, he set up a deal with us where he had independence. And he said, 'Well, I disagree with you.' I said, 'How could you disagree? There's nothing to disagree about. The Japanese aren't going to do it.' You know, there's always stuff on deals and they come together and this and that. So he took a really big position and of course the Japanese didn't show up. You know, we lost a fortune on the thing and he was, you know, calling me. I was in a hotel the west coast of Florida. And I remember calling in to see how we were doing. He said, 'Steve, it's a great day today. We only lost $2 million because it would have been five, but I traded us out of this position.' And I'm listening to this guy and I'm thinking, 'This is a great day. I lost $2 million.' And I said I'll forget his I won't use his name. But I said, you know, this is not a great day. We've had a whole series of losses and now we're losing more. I said, 'I don't have any power other than the power to fire you because that's the only way you would come to work and I accommodated your needs, which I'll never do again. And I'm going to have to fire you.' And he said, 'I don't blame you. I've been terrible. I haven't listened to you and you should fire me.' And I'm going, what kind of nutty situation is this? Okay. You know, obviously I picked the wrong person. And so, I'm very cautious on liquid securities. We have a variety of controls. You know, on the small part of our business, we've got a hundred billion dollars basically in hedge fund area. But you know, I learned be really careful who you pick and make sure you have the ability to control. Because I may not be an arbitrage trader, but if you're in the M&A business, you know what's going to happen as well as they do. And, you know, it was not an area that we emphasized. But I also learned lessons. The key to being successful long term is every situation is a learning experience and you have to share those learnings with everyone around you. And you have to analyze failures in finance. You know, nobody actually ever wrote the memo where you made a bad investment. I think that it was all whited out afterwards. No, nobody owns that deal. Nobody was responsible. The room's empty. And I look at those situations much differently and I look at them and say okay you know we failed. The question is why did this go wrong? If it goes wrong and how do we never have it happen again and everybody's got to face that. Now you will find that that's an alien experience in finance. You know, people just they sort of like go into the cracks someplace. Nobody wants to talk about something that doesn't work. I like talking about things that don't work because that's how you learn. That's how you change an organization. And those are the learning lessons.
But Steve, we're going to come to culture in a moment here. One of the other hallmarks of what you've done. I mean, we talked about the LBO business now called something else, private equity. You basically pivoted the firm a number of different times. You were the first people really in real estate, I mean, which is now massive. You were the first people in credit with, you know, when you started out with GSO and now you've got $300 billion of AUM that's coming out of the retail system, which is obviously very significant. I'm going to switch around. What has been the secret from your standpoint with these different businesses of keeping what I think you were just talking about really which is the culture? How did you keep the culture alive and what has it meant for your leadership here over time? Because I think one of the biggest hallmarks that Steve Schwarzman has had is the culture of the firm. How has this evolved with all these different businesses coming into the firm?
Well, it's actually pretty simple to tell you the truth. You know, you have to have a set of principles that you can easily share with everybody that you know they can understand and those become the rules of the road. And you know it's easy if you articulate that you want to be the best in the world at whatever you choose to do. So that way we can measure ourselves really easily. You don't need to hire anybody. You want to have excellence in everything. You want to work hard. You want to have a business built on complete meritocracy. No glass ceilings. A business that keeps expanding. So everyone can have a place to grow. I believe in no internal politics of firing a firing offense. I watched what happened at Lehman, right? And that wasn't going to happen. I believed in the highest level of integrity in everything we do. Believe in never losing money and only hiring nice people. In finance, you get a real range of characters. And there's always that one really smart, dysfunctional person whose office you don't walk by, you walk around. And I don't want that person. I don't want anyone at the firm to be scared of anyone that we should be, you know, working collaboratively. I tell people if anybody contacts you during a day internally asking you something that you have to get back to them that day because they're calling you for a reason. They want to know something you know and you're going to do the same thing in reverse someday and you want that done. I have a bunch of these things that I could rattle off and we tell people I'm still addressing all the new employees. And we tell them when we're interviewing they should know this. I also believe in interviews, you need to see people more than one day because sometimes they look different, right? behave differently and we believe in having like 15 people 17 people interview somebody. That's critical because you need that consensus on that other person because you want them, you know, to fit into your culture. And if not, you don't have a culture. And what I tell people as I lay all this stuff out. You know, we're very high performance culture. We only hire now. Wasn't that way at the beginning. You hire anybody you could. But now we hire, you know, .28 of 1% of the people who try and work at the firm. I mean, you know, Harvard's like 3%. And we're hiring people like from Harvard. When you get to our level now and what's important is people have to understand and I tell them you can have your own views on politics, books, music, you know, almost anything in life. But our basic principles are not open for discussion. It's what it is. If you don't like it, you shouldn't work here. Because it won't work. And consequently like everybody at the firm believes that when you have that it's so powerful, incredibly powerful.
And it's produced I mean we're going to I want to come on to philanthropy which is important but just as people should recognize who would have thought Blackstone and BlackRock two of the probably the two of the most important financial institutions in the world sort of came out of this vision and I think it's something for everyone to kind of reflect on and I think the hallmark has been Steve your cultural leadership from that standpoint that has had a massive impact over 40 years and congratulations on that anniversary. I want to go just I want to go to your philanthropy because you become a major donor to educational institutions cultural institutions give us a little bit of a quick view on the Schwarzman Scholars program. What has motivated you? What are you trying to achieve there, Steve?
When I do things typically philanthropically, I'm actually not trying to give away money. I wish somebody else would put up the money. But I try and I'm going to use the word attack problems where I think I can do something unique. And just to give money to things I don't find exciting although that's what people think philanthropy is. So I was looking at US-Chinese relations back in 2010. I mean, an interesting story with the Chinese when we went public in 2007, right? done with your help that the Chinese government showed up before the deal and asked to buy 9.9% of the offering and we worked that out. Gave them non-voting stock, no seat on the board because I didn't know them. It's not that I didn't like them. I just, you know, I'd only been to China once in my life in 1990. And you know so we did the deal $31 a share if you'll remember. I do. And it was the second largest IPO of the decade. The largest one was done by an aspiring company called Google. It worked out for them for sure. And you know I was put on a lot of visible Chinese things and I met a lot of people in China and then there was a 100th anniversary of the university where I had an affiliation there and the president came and asked me to give him a lot of money for the 100th anniversary. His timing was perfect. It was I think it was 6 months after the global financial crisis. Our stock had gone from $31 to $3.55 and this guy's asking me for a lot of money. I mean, I used to think I had a lot of money. It all went away. And you know, so I told him to go away, which he did. And then they changed presidents at some point and the new president decided he wanted me to give money. Well, it was a few years later and you know things had started to improve and you know I tried to avoid him and I did a really good job and finally you know he called and he said well I'm coming to see you. At that point in China nobody traveled. You needed government approvals to do that. So the fact that this guy was coming to see meant, you know, he had like gone up the chain above the university level. So I said, 'Oh my goodness, I might have to do something. I wonder what I would do if I had to do something.' So I sort of said, 'What would be really interesting that could impact the world?' And I said, 'Well, why don't we start something like the Rhodes Scholarship program? you know, call it the Schwarzman Scholars because that's what it was and bring people from all over the world to China to see what it's like. Do it for a year. And you know, let them visit different places in the country. Get them a mentor from, you know, their society, have them work a little bit part-time either in a charitable organization or a corporation. Get the best kids in the world. build a building where they all live together so they meld and you know let's have it be 40% US 20% China 40% rest of world and that's what we did and it's turned out to be absolutely phenomenal and I ran into President Obama who I knew right before the opening. And he said something like, 'Steve, what are you up to these days?' And I said, 'Well, I've got this thing I'm thinking of starting in China.' He said, 'Well, how can I help you?' I said, 'Well, how about a video for the opening or a letter?' He said, 'Okay, talk to Valerie Jarrett, who was his chief of staff.' And he said, 'I'll do that.' So, we showed up in China with a letter from the president. And I knew the way China worked, if I had an American president letter, the China president was going to be hardpressed to not respond. And there was just a new president elected or appointed or whatever they do in China named Xi Jinping who I'd met you know seven years earlier in Shanghai. And so we got a letter from him. So basically we got the presidents of both countries to endorse this academic program which is pretty amazing. And we announced this thing and you know we had to hire a faculty do all kinds of stuff but we've managed to get the most amazing human beings I've met to come to this program and we have all these you know famous speakers from around the world and famous professors and well we've got our 10th reunion in April. We have 90% of the students going back to Beijing. Just think about your own experiences going to university, going to reunion. Do you get 90% back? So, the bond that we've done here is important. And the Chinese government loves the program. They really love it.
I think it's very significant. You know, Steve, there's so many more questions and I want to leave a bit of time for the audience here right now. Just as a last thing, one of the ways I look at you also too is people come to you for advice. It's just one of those things they want to come to your office and hear your views. I've certainly done it and many more important people than me do. You've advised governments. How do you look at your role when you're advising leaders from the standpoint of how you approach it? because you're a voice that people turn to.
I always try and look at every situation and figure out what both sides are thinking. And if somebody says, 'What do you think I should do?' It's about what? Who's involved? What's the right course to accomplish your objectives? It's not a lot different than the sort of advisory role you would take here at Citi but it's with countries and you know the people who run countries unlike the people who do M&A work aren't always expert in all the things they're supposed to be doing. In fact, there's such a range of things if you're running a country, you can't master all that. And so, you're dealing with people who have apparent authority but don't always have complete comfort in an area. And so if you are asked a question within your own comfort zone you know it's surprisingly easy to help these people. And you can explain why you think a certain thing works or you know in some cases you can say look there are two or three options of what you can do here. You say so here's what I think about each of those. What do you think? And then you know they might say, 'Well, what do you think we should do?' And I said, 'Well, you can use option two or three. They both work.' Or, you know, there's a clear winner here as to where you should be going. And it's just like an open conversation where you know in a way to be a really good in the advice business you have to assume you're the client not yourself. That's a point people should remember. Look at it from their vantage point.
