Private Equity: David Rubenstein's Insights and Advice

David Rubenstein believes in persistence, communication skills, and humility as essential for success in private equity, aiming to contribute to society.

### Carlyle Co-Founder David Rubenstein: Insights on Leadership, Private Equity, and the Future
* 🏢 David Rubenstein is the co-founder and current co-chairman of the board at Carlyle, one of the **iconic and largest private equity firms globally**, with a history spanning almost **40 years** and nearly **30 offices worldwide**.
* 🎙 Rubenstein is well-known for hosting popular shows on Bloomberg, writing books, giving speeches, and serving on numerous boards, showcasing his **diverse range of activities and interests**.
* 🕰 Managing time effectively, persisting through challenges, and honing communication skills are key to Rubenstein's success and the success of the **extraordinary people** he has studied.
* 📚 Rubenstein's passion for history is evident in his efforts to **preserve historic documents and buildings**, as he believes that **understanding the past is crucial for avoiding mistakes and making progress**.
* 💸 Rubenstein predicts that private equity will continue to offer **higher returns than public equity**, with the democratization of the asset class opening up **opportunities for a broader range of investors**.
* 🇺🇸 Rubenstein highlights the importance of making the US government more functional and addressing economic challenges to ensure **continued growth**.
* 🧠 When it comes to investing, Rubenstein emphasizes the role of **luck**, the need for **diversification**, and the value of **learning from mistakes**.
* 🌐 Looking ahead, Rubenstein sees industries such as **biotech, quantum computing, data science, gene editing, and climate tech** as promising areas for investors to focus on.

[Music] A very warm welcome. My name is Stefan Poz, and I'm the founder and CEO of Moonfare. Today, I host a very special deal talk, and you know the format is well known. We are interviewing here the most well-known and iconic people in private equity in the world. And today it's a very special one. We are here on site in New York in One Vanderbilt, a very famous building in the office of David Rubenstein. My pleasure. Thank you for having me. Thanks so much, David. Look, David, I could spend hours talking about what you have achieved, your career, and your background, but let me focus just on a couple of points that I want to highlight. David is the co-founder and current co-chairman of the board at Carlyle. Carlyle is, of course, well known. It's one of the iconic and oldest and largest private equity firms in the world, with almost 30 offices around the world and a history that goes back 37 years in time. David is also very well known, in particular in the US, for

hosting two very popular shows on Bloomberg, where he interviews the most prominent CEOs, investors, and politicians. And that's in addition to writing books, doing speeches, and serving as a board member of probably more than a dozen institutions, ranging from the John F. Kennedy Center for the Performing Arts to the University of Chicago. So David, it's an absolute pleasure to have you with us today as my guest. Before the interview, we typically ask our audience, and our audience is comprised of, you know, C-level executives, investors, private equity people, and so on. And we asked them, What are your, you know, what is your desire? What should I ask David in this interview? And one question came up, which is related to what I just, you know, uh, did as an introduction. You have so many activities. How do you manage to keep all these balls in the air? Well, I don't play golf. That saves a lot of time. And I don't drink alcohol. That saves some time as well. I also treat, uh, Saturdays and Sundays like they're workdays. So I don't really take a lot of

time off and uh but everything I'm doing. I enjoy so I don't regard it as work. When you enjoy something, if you enjoy golf or you enjoy tennis or whatever it might be, it's not that difficult to do. And so you make time for things you enjoy like you do in life. And so it's not that difficult. I do have a lot of people that help me manage the time. Constraints that I have but I'm enjoying everything I'm doing. My biggest problem is I'm aging as we all are and at a certain point you realize you probably can't do what you could do 20 years ago or 30 years ago. So I'm trying to get everything in before my time comes and I call it, you know, sprinting to the Finish Line. One of the things, one of your many activities is that you published, uh, recently a book. It was a couple of years ago on leadership and you wrote about the principles of Extraordinary People ranging from Bill Gates to Oprah Winfrey. What makes these

people in your experience are so special, so persuasive that millions of people listen to them and follow them. Well, persistence is everything. You have to persist. Nobody has an idea that's so wonderful everybody says, That's great, right from the start. You have to persist. Typically, you have to fail. You have to pick yourself up and get back into the game. You also have to have some communication skills. All of life is about persuading people to do what you want. You persuade people by talking well, writing well, or by leading by example. And these people that I've interviewed tend to be people that know how to persuade people. They lead by example, they interview well, they know how to get things done, and they persist, persist, persist. Look, we all can learn from history, and I've listened recently to your conversation with Walter Isaacson, who wrote, as many people know, a series of biographies on geniuses ranging from Leonardo da Vinci to Albert Einstein. I think the most recent one is on Elon Musk. I know you're very

interested in history yourself is there a historical figure a particular one that you especially admire well I certainly admire as an American Abraham Lincoln he held the country together I think without Lincoln the country would have been split in two almost certainly I admire Winston Churchill because I think with without his leadership during World War II I don't think that the result would have been what it turned out to be in more me recent times there are two women I certainly admire one of them is uh Margaret Thatcher I thought she did a very good job in revitalizing the British economy at the time and doing other things in Britain I think were were very helpful and also Angela Merkel um from your country Angela Merkel thinking about this she came from Eastern Germany to Rise Up from Eastern Germany and to lead all of Germany and to do it for almost 15 years is an incredible task and I greatly admire the things she did to kind of help bring Europe together in many ways it's a very interesting one because in my country in

Germany, the people are quite divided about her. Yeah, in many respects she's seen as particular, you know, from what she did for Europe as a whole, as a great figure. But you know, when it comes to climate change, uh, she stopped the nuclear power, uh, you know, as, um, as a source of, um, energy for Germany, which is part of the, you know, reason for the rise in, in, in, in, uh, energy prices and so on. So, people in Germany are quite divided, but it's I'm glad to hear that the outside perspective is much. The people in every country are always divided by their leaders. So, Winston Churchill wasn't uniformly popular. Abraham Lincoln was not uniformly popular. You have to regain, uh, this popularity perhaps when you're gone. So, 10 years from now, 20 years from now, 30 years from now, I think Merkel will be looked at as a much greater leader than maybe people look at her now in Germany. But some of the things she did was quite remarkable. And you think

about it today. When Merkel was the leader of Germany, she was really the leader of Europe. Today, tell me who the leader of Europe is. We don't really have somebody anywhere comparable to her. So yes, she may have done some things that some people in Germany don't like, her people around the world. But when you think about her as a historical figure 50 years from today, she'll be looked back as a very significant figure in German and European history. Definitely, uh, look David, let's talk a little bit about, uh, private equity and the way. I call the current environment is the world is in disorder. We have war, uh, in, in Europe. We have this terrible conflict. I would call it a war in the, in the Middle East. Uh, we have this, you know, emerging more and more emerging conflict and source of, you know, of war in Taiwan. Um, we have broken value chains across the, the globe. Uh, we have the climate change with all, you know, aspects that, that come along. We have, you know, seen, um, many, many, um, uh, difficulties in getting financing done, deals done, a mismatch.

between buyers and sellers in the private equity industry. What has Carlyle been doing to cope with this environment? Anything that you changed from the way you approached things in the past. I remember in any given time in the world throughout the world's history, there's always problems. There's never a time where everything is wonderful, peace and prosperity break out all over the world, and nobody has anything to worry about. So we always have problems. So today is, and we have particular problems today, but they'll pass in time, and we'll go into other problems. In Carlyle's case, it's a large global firm, well-known around the world. Now we've been around, as you point out, almost 40 years, and we've had a very good track record over this long period of time, investing through good and bad times. Today, it's a time where it's harder to get loans than it used to be because interest rates are high, but they're coming down. It's also harder to get sellers and buyers to come up with

an agreement on price because buyers are afraid they might be buying into a recession, and sellers are afraid they're not going to get the return that they told their investors they're going to get. So there's been a mismatch of 10 or 20% in terms of valuations, and I think that will come together a bit this year as interest rates come down. And as I think we're not going to go into recession. I think there was a fear of recession in the United States for quite a bit last year. I think right now we're past that fear. Now, recessions can always happen, but right now I don't think there's a feeling in the United States we're likely to go into recession. So I think think the deals world will get much better. I think you'll see more deal activity selling and buying by Carla and other firms. What is your reason in this context or your reasoning or explanation for the mismatch in public markets which are at an all-time high, at least the German Ducks as an example, and the

feeling and sentiment in the private equity industry. Why is this mismatch out there? Well, there's a reason why private equity and public equities are different because they're different people that go into these kinds of things. And the public markets are really a sentiment about people are thinking any given day every given hour. Um, private equity has longer perspective and so a longer perspective tends to have people look at things somewhat differently. But the public markets are really an indicator of what people are thinking that day or that hour about the outlook of the world, the economy, the war in peace, and so forth. Private markets are a little bit different, so they should always be a bit of a mismatch. And if they were always the same, there would be no reason to go into private equity because if they just reflect exactly what public equity does, find not just go into public equity. It's easier to get in, easier to get out. So private markets are always going to be somewhat different. And with respect to, you know, what has to happen on the

private side of things that markets can rebound. You mentioned the interest rates coming down, you mentioned that, you know, hopefully a recession can be avoided, the soft landing. Anything else that needs to happen this year so that we really have a profound basis for a rebound? Well, in the United States, I think our biggest worry, or my biggest worry, is the dysfunction of the US government. We haven't been able to get our Congress to work together in a bipartisan way, and obviously working with an executive, a chief executive, is more complicated when you don't have a bipartisan approach in Congress. So that is something that's difficult for us to kind of convey to people around the world who don't live here. You know, Woodrow Wilson famously said, I wanted to make the world safe for democracy, and we entered World War I, and the United States foreign policy for years has been to make the world safe for democracy. But I think we need to make the United States safe for democracy, and we need to get our democracy to work somewhat.

better that's number one concern in the United States. Number two is whether the economy can really hold up. We don't appear to be going into a recession, but recessions come out of the blue sometimes. We have recessions every seven years on average in the United States. We really haven't had a serious recession for seven years or so. So as a result, I think we are due for something to be a Lowdown or a Slowdown in the economy. I don't know that it's going to happen anytime soon, but at some point in the next two or three years, we obviously have a Slowdown, and that's something we have to always guard against. Look, we talked earlier about that people in their countries are probably all divided about their political leadership, and talking and beating many people here in New York this week, many people stated that it's very, very likely that we have a new old president Donald Trump end of this year. Would that be, you know, helpful in bringing the Democracy back and maybe even, you know, mitigating negative impact?

on the economy that you mentioned or what is your view on on this likely scenario. I worked in the White House for President Carter and so I've been hanging around Washington and president for many many years. I have a book coming out later this year on the presidency and my general view is trying to predict who the president of United States is going to be about one year in advance is a Fool's Aaron so we're now roughly 10 months away 11 months away from a presidential election if you were to predict who the president's going to be each of the last 10 presidential elections a year in advance you'd be wrong almost every time. The conventional wisdom is always wrong so it's hard to know. The conventional wisdom today is you have two people who are older than me running for president United States so while the population's going down in terms of its age in some respects we have a lot of young people we have two older people who are likely to be the candidates but things could change

we just don't know. Look, going back to 2008, uh David, and you are not only a visionary leader, you also made a visionary statement about the future back then because you said, Once you know the recession has ended or will end, private activity would enter into its platinum age, and you know the time would be better than it has been ever before. And this is exactly what has happened, uh. So, you talked a little bit about the near-term future. What is your view on private equity in light of these incredible 10 years that are behind us? For the next 10 years, private equity has done well because of the incentives given to managers and incentives given to the professional investors. And so, it's really been a way to get better rates of return for average investors, and that's worked through good and bad times. So, I think that continues to be the case. Now, the rates of return may come down compared to where they were 20 years ago because there was less competition, but as more and more people come into private equity

and rates come down the rates of return come down it's still going to be higher than public Equity returns so over the last 30 years or so on every given year any given year over last 30 years private Equity returns in any particular year outperform public Equity returns and so as a general rule of thumb if you go with good private Equity people you're likely to outperform public Equity returns I think that will continue as well and particularly we're going to have more democratization of private equity and more e private equity in outside Europe and the United States Europe and United States account for roughly 65% of all private Equity but now you've got the emerging markets that are truly emerging so Latin America the Middle East Africa Asia you're going to see more private Equity over the 10 next 10 years go into those countries therefore there more opportunities for people to make private Equity returns look you mentioned the outperformance and you mentioned the democratization let me jump on on both topics um for a minute in terms of

outperformance. Totally true. But it depends all on manager selection. If you just, you know, there is no index as I say. You can't buy an index and play Private Equity. It's a recipe for disaster because you wouldn't get more than what you would get in public markets, if at all. You have to play with the best firms. Like, like, Car. What is your explanation? You know, when you also take the fundraising environment, that the large firms, the Blackstones, Cares, KKRs absorb most of the fundraising, and other emerging Alpha-generating managers are being left out. Why? Why is that? I wouldn't say they're left out because there are lots of organizations now, large Sovereign Wealth Funds or public Pension Funds, that want to go after emerging managers, and therefore it's actually much easier than it was 10, 20, or 30 years ago to get emerging managers funded. There's no doubt that just like anything in the world, the biggest companies get the most capitalization. Public companies, the biggest public companies, Apple or so forth, they get the

biggest attention. The biggest shareholders, and the same is true on private equity. But there is a real interest now in going to the smaller firms, and that is because a lot of people realize that the smaller firms can probably get higher rates of return because they're deploying fewer dollars. So if you go with a good emerging manager, somebody that's worked in a large firm like Carlyle or Blackstone or KKR, and they start their own firm and it's relatively small, you can probably get a lot of co-investment there, which you wouldn't otherwise get. You can probably get your capital deployed more readily because the fund isn't that big. So there's a lot of interest in emerging managers, and I think that's going to continue. You know, David, why I founded Moonfare. I wanted, when I was, as I told you, with KKR for more than a decade and had the privilege to invest into the funds and alongside the firm into certain companies. And when I left KKR, I was suddenly, you know, left out there.

no chance. A minimum investment was 10 million, not my pocket size, uh, not today, not at that point in time, and that was basically the origin of the idea to set up and to found Moonfare. Why it came out of a feeling of unfairness, yeah, the large families, institutional investors able to play this fantastic asset class, private individuals like me being left out. And the truth is, 98% of the population is left out to play Private equity and is not benefiting from this unprecedented value creation that's happening in private markets. We talked or we briefly touched on democratization, what is your view on this? We call it Mega theme that Moonfare among others is spearheading. Of course, public Pension funds, the United States or around the world, they are representing money that is owned really by teachers or firemen or policemen or so forth so they do get some benefit from private Equity because those big funds are going into private Equity Funds but for an individual like you or an individual like me if I want

to go into a private equity firm. If I was not at Carlile, it'd be difficult at sometimes to do this, particularly if you don't have a high net worth. So we think that there should be more of a democratization, and let me explain the situation. If you are an idiot but your father gave you 1 million dollars, you're qualified to be an investor in private equity. If you are brilliant, you're first in your class at Harvard or yeah or Princeton or someplace like that, but you go to Teach for America or a nonprofit, you don't have a big income, you need to have a bigger income, but you can't earn it by going to private equity because you're not quote qualified. It's kind of ass backwards in many ways, and I think the regulators United States are beginning to recognize this. So increasingly, I think you're going to see a situation where you'll have your 401ks, your IRAs or equivalent kind of things in Europe or other place around the

world retirement counts will be able to put a certain amount of money into IL private Equity because it won't be so large, and it's not likely to do poorly. Overall, so I think that will happen, but it takes time. Democratization is not easy to achieve, but it will take time. I'd say over the next 10 years, you'll see a more democratization of private Equity all over the world, so almost everybody will have some ability to say they're an investor in private Equity if they want to be. Look, definitely same view, it takes time, it needs education, it needs the right products, and the industry is working on it. Look, let me go back and lean on your incredible experience over 37 years now with carile where we have seen, you know, crisis and recessions all the time through. Are there any Evergreen investing principles that you stick to no matter what? Well, the most important investment principles are one, diversify, number two, don't believe the rates of return are going to be as high.

As somebody might tell you, have realistic expectations. If you're trying to get 50% internal rates of return, you're more likely to get 0% rates of return. So also rely on good money managers. The average person cannot really do deals himself or herself. It's not realistic. So you've got to rely on money managers who give you reasonable fees. They're very transparent about what they're doing and they have a track record. They have a reputation for integrity and they have a reputation for getting good people to stay there and work there. So do a lot of examination of the people you're investing with, but give good people money to AG. Don't put it all in one area, one basket or so forth. And also have realistic expectations of rates of return. Look, some people say a year ago or so, and actually it was, I think, December 6th or so, when OpenAI and GPT came into everybody's, you know, words. That was the creation of a minute of hype and, of course, I

guess there's no doubt that AI will change the world but but accept of and taking AI to the side what are the industries you you say investors should focus most on in in the next 5 to 10 years well of course the traditional Industries are ones that are still going to be very popular so um you know let's say things like uh manufacturing or consumer retail they're not going away clearly in recent years we've seen a big interest in sports related investing uh big interest in U uh biotech investing I think biotech will be a big big boom area for next 10 years or so one area I'll mention is something that is not unrelated to AI but it's called Quantum Computing Quantum Computing will revolutionize Computing I hope I live long enough to see it because it's complicated to get it done but that's a very important area I think data science related to AI is also a very important area I think U all things related to um crisper which is the ability to kind of

change genes in humans and so forth. That will be a big growth area, and I think things related to climatech will also be very important over the next 10, 20, 30 years or so. And talking about AI for one minute, what is your view? Will the large Tech players, the Apples, the Googles, also those that are close to the governments, will those be the big winners, or do you think we will see a new AI Google, a new AI Apple, and new AI meter coming the way, or will they be absorbed by the big ones who are also close to Washington? The conventional wisdom today is that the best way, the safest way to play AI, is to go in the Google, the Apples, the Microsoft. That may be the safest way, but the highest rate of return probably will come from some startup in Silicon Valley or in Europe somewhere that we don't know about. So I think it's not easy to say it's going to be one or another who would have

predicted 20 years ago that Apple would be the most valuable market company in the world. Or who would have predicted AI would come on as rapidly as it has. So you just don't know. I would say don't put all your eggs in one basket. Look, you mentioned some of the largest tech companies in the world and talking about investing. You know, you have done as Carly, you personally, an incredible, you know, incredible track record in terms when it comes to investing. But let's talk of some of the misses. Any, you know, misses where you say we really missed. We got something fundamentally wrong. We didn't invest into this company, which became, you know, a player. And what is your thinking around luck when it comes to investing? Well, luck is very important in life, generally. You know, where did you meet your spouse, your partner? Where did you go to school? All these kind of things are a matter of luck. You might have had a introduction or you might have met somebody by chance.

everything is luck in some respects, but you can make your own luck by trying to find good contacts or good relationships and so forth. Um, there's no doubt that um I've made a lot of mistakes in the investment world, and anybody that's an investor has made a lot of mistakes because if you don't try to do many different things, you're not going to be really finding the good deals. So, I've missed, for example, Facebook when Mark Zuckerberg was in college. I thought it was going nowhere. I turned it down. Uh, Jeff Bezos at the very beginning, I we had some stock, we sold it right away, we thought that was going nowhere. Um, we turned down, um, Mark Andre's initial company, uh, we thought that was going nowhere. I make mistakes every day. I talk about them maybe more than I should, but I make mistakes all the day, all the time because I want to show people that even if you are a reasonably good investor, you're likely to make mistakes, but don't be afraid to.

make mistakes because that's what life is about. Learning from your mistakes couldn't agree more. It's something that I tell my children every day, by the way, learn from your mistakes. Look, one thing that I really David, and I don't want to flatter you, but I find it impressive is what you do with your money for, for with, for different courses, especially in the area of Art and Science. And one thing that I found particular, you know, brought my attention was that you purchased, you purchasing a lot of historic uh documents, but you purchased a copy of the Magna, and you gave it back to a public institution. What is, what, why or why do you think that preserving history is, is so important? Well, life is really a Darwinian kind of thing. You're theoretically making progress as we go forward and make learn from mistakes, but when you learn about history, you learn about the mistakes that were made in the past and the good things in the past, but if you don't learn about history, you're not going to know the things you should.

avoid doing the things you should do better at. So, when you learn historic documents, you learn what's in the Magna Carta. You'd say, Why do they do that? And, What does it really mean for us? And, What is the importance of preserving these documents? Is this. We know what's in the Magna Carta. We know what's in the Declaration of Independence. We know what's in the Constitution. Why do we need these old copies? Because it turns out that humans still don't have a brain that treats original documents the same as seeing something on a computer slide. If you see the original Magna Carta, you're more likely to be prepared when you go to see it and learn about it. You're more likely to have a curator tell you about it when you're there. And you're more likely to read about it later. The same is true on buildings. I like to preserve old buildings. The Washington Monument, the Jefferson Memorial, Lincoln Memorial. Why? Because when people go there, they're going to

get a sense of history, and all of life is about learning about the mistakes of the past and the good things in the past. And if we don't preserve history, and we don't study history, we're going to make a lot of mistakes that we shouldn't make. Look, I said it in the beginning, we always ask our audience in advance before these deal talks, uh, to hand in their questions. And I want to go into a few of them, but before I go into the, uh, Q&A from our audience, um, let me ask the following: you were born in a blue-collar Jewish family in Baltimore, and you said that you weren't particularly successful as a lawyer and your political career. You mentioned in the car Administration was pretty short-lived, but you went on and founded one of the largest and most successful private equity firms in the world. Give him your journey. What's one of the biggest life lessons that you have learned? And the question that I always ask in these deal talks, what advice would you give your

younger self. Well, um, I wish I had done many things differently when I was younger. Maybe stay in shape better, uh, maybe learn more skills than I have, maybe learn how to play a musical instrument. Wish I could speak a foreign language, which I really can't do. But the most important thing is don't take no for an answer, be persistent, try to be polite to people, treat people the way you want them to treat you, and most importantly, retain some humility. I think the greatest leaders in the world are humble because they've made mistakes, they've learned from it. Now, Abraham Lincoln didn't go around saying, you know, I won the Civil War, I should get people to tell me how great I am. Great leaders are humble. Now, there are leaders that are not so humble, they may not be the role models that I have in mind, but I think humility, no matter what you accomplish, you realize you're just one person out of 8 billion on the face of the Earth. Nobody's that important and so

you've got to retain certain humility, and that's what is important to me. Retaining humility, because whatever I might have accomplished, I got lucky in many ways. And in the end, when I'm gone, people won't remember me anyway. So, you have to put this in context. Nobody is going to change the world dramatically by him or herself. So true, David. Thanks so much for this. Look, let's move to a couple questions from the audience, from the community. And one I like very much because there's a quote from another very famous private equity pioneer and dealmaker who said, I know my investors or investment team for 10 years now. I have observed them over the past 10 years, but I still don't know who of them is really a great investor. So, the past 10 years were, I call them honeymoon types. Everybody, more or less, every fool could make a deal and make some money. Which skills now looking forward in more turbulent water?

would call it which skills and capabilities are required for private equity firms to stand out and to survive. I think today the large firms KKR, Blackstone, Apollo, Carlyle, TPG. These firms are hard to replicate today because they're so large, and it's take a while for somebody build up something to that size. I think today specialization is very important early on. WE specialized, but then we grew past the specialization. We have specializations now, but not known now for one thing, the same with KKR or Blackstone. I think if you really want to make a mark for yourself in private equity today, take a small area, make it your own, be the expert in it. So, for example, I have a daughter that invests in healthy food. So, I don't think she knows many of the things that about what Carlyle does, but she knows healthy food because that's her area of expertise. And so, I don't know much about healthy food, but if I care about knowing more, I ask her. And that's true of investors if they want a

specialization. They, I'd say, I want an environmental expert, a fintech expert, so try to specialize. The most important thing is treat your investors well through good and bad times. Don't be arrogant with them when you're really doing well. Be humble if you do really well, and also make sure you give them information all the time, but also give good incentives to the people working for you. You want people to work for you because they really enjoy working for you and they think they're doing something useful. And I think this is a very important point. I'd like to tell people that when private equity people are doing something useful, they're doing something and they're doing something well, they're doing something useful for society. For example, there's a private equity firm in Massachusetts that for 10 years backed a small biotech company that didn't produce one product in 10 years. They stayed with it, and later that company produced became Moderna, which produced the vaccine that many of us benefited from. So what those people did in that

particular biotech firm was to stay with it, and they did something useful for society. So, when you're a really good private Equity investor, and you're doing something useful for society, I think it's a helpful thing for Humanity. Also, I think if you look at the US economy, it's been really pulling away from the rest of the world. Now, it's pulling away from China and pulling away from Europe. Our economy used to be smaller. The GDP of the United States in Europe, Europe has more people. Now, our GDP is bigger. Why is that? I think because the private Equity uh ethos in the United States has become so important in our business community that we've used these principles and we made ourselves more productive and we're more efficient than we used to be. So, I think private Equity investors should feel they're contributing some to society. They're not just making money to just you know buy Yachts or things. They're doing something useful as the Mna example I think illustrates. Look, it's a striking point.

you are making it's in indeed the GDP whole Europe uh pre-financial crisis was larger than the US now it's 1.5 times difference right post-financial crisis I would add to what you have said is also the ability of uh Europe to cope with crisis and take the chances out of it yeah. America at the end made money with all these bailout and and begings uh Europe is a very very different. Well Europe is a more complicated place in many ways obviously. Brexit has changed the face of Europe in some respects and many different cultures and languages and so forth but think about this um Europe has brilliant people great universities great Technologies but right now today as we sit here and talking in 2024 what technology developed in Europe is essential for your day-to-day life. The technology people are dependent on are Google Microsoft Netflix Apple um Amazon these are generally American Technologies where is the European technology now. I don't want to denigrate Europe I hope Europe comes up with a great technology that we're all

dependent on. But why did Europe not develop one of those technologies? There's lots of answers to that. We can't do them all here and go through all the answers. But I think Europe has fallen behind as an entrepreneurial kind of society. And I think the Americans have done some things that Europeans didn't do. Now, if you want to spend a great time in summer, there's no place better than being in the Mediterranean or Europe, right? Europe is a great place to visit. But a technology that changes the world hasn't yet come from Europe in the last 20 or 30 years. I hope that will happen in the future, though. I guess it's a bit doubtful because just one example, David sharing. When I talk, and I'm very much interested in AI and talk to many, and we have great talent in AI in Europe as well. It's not only the US and China. But if you talk to these guys, they say, No, I'm going to move to either a small place in Switzerland.

or I going to move to the US why because uh my my you know nurture is data and because of data regulation. I'm not getting what I need in order to run my algorithms so people are leaving the country and we have a great regulative uh regulation framework. Now EU is very proud to be the first one who came up with something um let's see how it plays out but but the talent is leaving the ship so probably the next big theme will be again a war or fight between the US and China and not Europe about that but I would say for example you're uh France developed the first internet type company. They had an internet before we ever heard of the internet here but it didn't didn't come their fruition in many ways didn't conquer the world. Also in the United States um parents often say I hope you will grow up and be a successful business person not all the parents but the idea of making a lot of money is not considered a sin in the United States whereas in certain parts.

of Europe. You're not incented by your parents to grow up and make a lot of money. And therefore, you kind of do other things. And maybe people don't work quite as hard in certain areas. America's not perfect. We have lots of problems. And I can go through them all day. But I do think we've been able to develop an entrepreneurial society. And think about it. The word entrepreneur is not an American word. It's a French word. But ironically, we're more entrepreneurial in the United States than the French are or other people in Europe. It's kind of a strange thing when you think about it. Look, I'm a big believer, David, and you are, of course, one of the examples for this, that people who become extremely successful are seeing things that others don't. And when it comes to hiring now and getting the best talent, you probably have to get talent on board in Carly, which is different to what you would have needed 20 years ago. Are there any particular skills or capabilities when

it comes to young people you are looking at that are different from you know what was relevant. When I joined KKR 20 years ago well, I think the basic skills are mostly the same. Learn how to communicate with people by either writing reasonably well or talking reason well. Learning how to work past 9 to 5, you've got to put in the time and the effort. Learning how to benefit from your mistakes, it's very important to do that. Learning how to connect with people, learning how to share the credit and take the blame. Many people don't like to take the blame, you should take the blame if something bad happens and if something good happens share the credit with other people. These are kind of principles that I like and I want somebody when I hire somebody who I think wants to do something with their life more than just make money. They want to do something where they're trying to make the world a better place somewhat in the background of their mind so that they won't just make money.

and just put it in the bank account for themselves. I want people that actually have a vision of being a useful human being and doing something useful for humanity. And when it comes to education, what would you recommend them? What would you advise them? There are some, you know, extremes telling us or telling me, Don't send your children to university. It's useless. It's a commodity. Knowledge is a commodity. Sam Altman, by the way, said in an interview very recently that even creativity is not what differentiates people. What would it be? There's always going to be a Bill Gates, there's always going to be a Mark Zuckerberg who dropped out of Harvard, both cases, and they did reasonably well. If you think you're Mark Zuckerberg or Bill Gates and you're going to take a chance, fine. But in general, for 99.9% of the people, getting a good education, a college education, if not a graduate education as well, is a better chance to succeed in my view.

remember when you get an education to go to the purpose of getting an education is not to make money. The purpose is to make you a better person, have your brain think more, be more creative, be a person that you really going to be proud of to say, This is my child, he or she can read well, talk well, and is educated about society. And so, I think it's a mistake if we often say to people, Well, you should go be a plumber, or you should be an electrician, you're not really qualified to go to college, or you're not going to benefit from it. You get a lot of other benefits on a college, not just making money and learning how to make money. So, I think people should get as much education as they realistically can, and you know, everybody will be an exception in some case. There'll be a Mark Zuckerberg or Bill Gates, but as a general rule, unless you really are that talented or you're Albert Einstein or you're really just gifted. And Albert Einstein did have a PhD, but as a general

rule of thumb. I think education is the way out of poverty, the way out of blue-collar backgrounds like I had. If I didn't have the education I had, I would probably not be anywhere close to where I am today. Makes total sense, David. Let's assume it's December 2024 and you look back. What would you say for you personally, for Carly, for the globe, for the world? What would be a successful year? What would be where you say, Wow, this was Terri? Of course, I always think the world's falling apart and bad things are going to happen to me. So, if I got through the year without any health problems and the economy did pretty well, I'll be happy. But as a general rule of thumb, I think what we need to do in the world this year in 2024 is try to resolve the situation in Gaza and Israel, resolve the situation between Ukraine and Russia. Hopefully, nothing between China and Taiwan occurs. If we can have no major war like that going on, that would be a great step.

forward if we can make some progress in climate change, that would be a step forward. If we can actually figure out how to make AI work so that people's lives are better, not threatened by it, I think that would be a good thing. And I think in my own case, the case of the United States, get our government to work in a functional way so that we're not just in a perilous of Pauline all the time, whether we can fund the government or not, and then actually find ways that make more people come out of poverty and more people feel like they're on the purpose, they're on the earth for a purpose, and they're doing something useful, and they're enjoying their lives. Many people don't enjoy their lives. We have a very high suicide rate in the United States, and other countries have a higher growing suicide rate. We also have problems that of health challenges. We have in the United States drug problems, obesity, other things. I hope we can work on these kind of things so 2024 is a

year where we're going to have an important presidential election United States hopefully it will lead to something happening in the future but we've got some challenges we got to address for sure David let's hope that some of these dreams if not all uh become true that would be already a terrific achievement for today it was fantastic having you with us H thank you so much for for your time terrific insights um I really enjoyed the deal talk my pleasure thank you for having me and congratulations on the success of your own company thanks so much David and to the audience thanks so much for dialing in and for all the questions hope to see you of course at our next deal talk session which is you know soon to come and stay healthy until we are all together again thank you so [Music] much

Deal Talk - Episode 15: David Rubenstein (Carlyle)

Moonfare

An Interview with David Rubenstein, Co-founder of Carlyle

David Rubenstein, co-founder of Carlyle, manages a multitude of activities by treating weekends like workdays and enjoying what he does.

He believes that the key to success lies in persistence, communication skills, and leading by example, based on his experience interviewing influential people.

Rubenstein admires historical figures like Abraham Lincoln, Winston Churchill, Margaret Thatcher, and Angela Merkel for their remarkable leadership and accomplishments, despite the divided opinions about them.

The Current State of Affairs in Europe and the Private Equity Industry

Angela Merkel was a significant leader in German and European history, with no current equivalent.

The private equity industry is facing challenges due to the global disorder, including difficulty in reaching agreements on deals.

The mismatch between public and private markets is due to their different perspectives, and the rebound of the private equity market depends on the resolution of political dysfunction in the US and the avoidance of a recession.

A new president in the US is seen by some as a potential solution to the current challenges.

The Future of Private Equity and the Rise of Moonfare

David Rubenstein discusses the future of private equity, highlighting the continued success of the industry and its expansion into emerging markets.

He also emphasizes the growing interest in emerging managers and the potential for high returns.

Moonfare's founder, meanwhile, expresses the company's mission to democratize private equity and provide access to individual investors, aiming to address the unfairness in the market.

The Future of Private Equity and Investment Opportunities

Private equity investment is currently limited to the wealthy, but there is a growing need for democratization in the industry.

David Rubenstein predicts that over the next 10 years, there will be a push for more widespread access to private equity investment.

He emphasizes the importance of realistic expectations and the need to rely on good money managers for successful investing.

Rubenstein suggests that in the next 5 to 10 years, investors should focus on traditional industries like manufacturing and consumer retail, as well as emerging areas such as biotech, quantum computing, data science, CRISPR, and climatech.

He also discusses the potential for new, unknown startups to provide the highest rate of return in the AI industry, challenging the current dominance of tech giants.

The Importance of Luck, Investing, and Preserving History

Luck plays a significant role in life and investing, but good relationships and efforts can also create opportunities.

Even successful investors like David have made mistakes, emphasizing the importance of learning from them.

Preserving historic documents and buildings is crucial for learning from the past and avoiding the same mistakes in the future.

It is important to be persistent and not take no for an answer, while also treating others with kindness and retaining humility.

Great leaders are humble and learn from their mistakes, realizing the importance of staying modest.

No matter what is accomplished, it's crucial to remember one's place in the world and the element of luck in success.

The Variance in Technological Development Between Europe and the US

The US has been more successful in developing essential technologies for daily life compared to Europe.

Europe's regulatory framework and cultural attitude may be causing a talent drain in technology and entrepreneurship.

The focus on making money and the entrepreneurial mindset in the US is more prominent than in Europe, impacting the approach to business and success.

The Value of Education and Aspirations for 2024

- Getting a college education is seen as a better chance of success for the majority of people, not just for making money, but for personal growth and societal contribution.

- In 2024, the hope is to resolve conflicts in Gaza, Israel, Ukraine, and Russia, make progress in addressing climate change, and ensure that AI improves people's lives.

- The goal for the United States in 2024 is to have a functional government, reduce poverty, and improve overall well-being and purpose for its citizens.