Every so often it’s useful to quote Blackstone BX +0.4% co-founder Stephen Schwarzman’s routine admonition to his employees: “Don’t. Lose. Money.” It’s that simple.
Forget his tens of billions. Schwarzman lives in the real-est of real worlds where the power of compounding is most profound on returns, while the loss of money has an equally profound impact on returns, albeit negative. That’s why any investment entered into by Blackstone, Apollo, Carlyle or name your top private equity firm only happens after intense grilling of the individual eager to commit the capital. Precisely because money wisely put to work can play such a crucial role in long-term returns, and in the subsequent ability of Blackstone and others to attract more wealth to put to work, Don’t. Lose. Money looms large.
For the purposes of this write-up, it’s just a reminder that the popular notion of “easy money” thrown around by economists, politicians and pundits is overly simplistic. More realistically, it’s mythical. No investor who wants to be an investor for long, parts with money easily. If readers doubt this, they need only read Schwarzman’s autobiography to develop a better sense of the rough early days of Blackstone. Barring that, they might consider how with banks, just one or two bad loans can erase the other 98 or 99 successful ones.
Read the rest of the article at Forbes.
