- The Blackstone Group Chairman, CEO & Co-Founder Stephen A. Schwarzman recently expressed his viewpoints on success and on the markets
The Blackstone Group Chairman, CEO & Co-Founder Stephen A. Schwarzman is known for running one of the largest private equity firms with about $571 billion in assets under management. During a couple of speaking sessions, Schwarzman expressed his viewpoints on succession and on the markets.
On Succession
Schwarzman and former Blackstone President Tony James decided to choose Jonathan Gray as the next president of the company. And initially, they kept the process a secret so that Gray would have time to grow into the role, according to Business Insider.
And Schwarzman pointed out that it is counterproductive for companies to set up public competitions between senior executives at the company to decide who is better suited for the role.
In an interview with Business Insider at the World Economic Forum, Schwarzman said that succession planning can go south when companies expose who the new leader will be too quickly or put them in direct competition with their peers.
The decision by Schwarzman and James to select Gray as the president was kept quiet for over a year. During that time Gray shadowed James and Schwarzman closely and was more active in the process of promotion and compensation decisions before officially starting the leadership position.
“We wanted to make sure whoever took his position as president of the firm would be well-trained and it would be a seamless transition… We let Jon know, but we didn’t let anyone else know,” said Schwarzman via Business Insider. “Between compensation issues, promotion issues, supervision issues, dealing with crises — which happen all the time in the modern world — we didn’t think it made any sense to just put somebody into that position of dealing with that type of thing without watching a lot of it happen.”
Schwarzman told Business Insider that he had been “mystified” about how companies have “bake-offs” between 3 executives and teach none of them anything while selecting one. As a result, the other one or two might leave the company and then the third one has the responsibility without the proper experiences.
Schwarzman still plays an active role in the day-to-day operations at Blackstone. And he plans to continue to be active as long as he has the energy and judgment.
View Of The Markets
More recently, Schwarzman spoke at the Goodwin & Columbia Business School: Real Estate Capital Markets Conference 2020. At that event, Schwarzman said he does not see excesses posing a systemic risk of the market. But he pointed out that there are certain aspects of the market that he does not understand.
Specifically, the normal part he understands is that even though market prices are “pretty high,” it is not enough to cause a crisis. However, he does not understand the negative interest rates meaning that he does not know why he would pay someone to take his money.
“I don’t really understand,” quipped Schwarzman at the event via Institutional Investor. “I would rather build a warehouse with a few guards”
Blackstone has $163 billion of real estate assets at the end of last year. And Blackstone used to dismiss warehouses as “pedestrian,” but then the company decided to start aggressively buying warehouses in 2010 due to the massive growth of e-commerce of players like Amazon.com and Walmart.
Schwarzman pointed out that buying warehouses has been great. “Better than malls,” Schwarzman acknowledged.
Schwarzman also noted that the trade relationship between the U.S. and China will be important for global growth since the two countries potentially representing as much as 40% of the world’s economy.
And Schwarzman had recently helped negotiate the first phase of the trade deal between the U.S. and China.
