Executive Q&A: Blackstone CEO Steve Schwarzman

Blackstone CEO Steve Schwarzman

Blackstone CEO Steve Schwarzman

Most business students dream of a career like the one Steve Schwarzman has enjoyed. A Harvard MBA (’72), Schwarzman became a managing director at Lehman Brothers when he was 31. Seven years later, he co-founded Blackstone, an investment firm that he grew from a $400,000 startup to a market leader with $330 billion dollars in assets under management. In the process, he has emerged as a patron of education, best known for launching the Schwarzman Scholars, an academic and cultural immersion program designed to foster deeper ties between the United States and China.


Beyond his entrepreneurial instincts and philanthropic social impact, Schwarzman’s workplace philosophy is also in tune with today’s Millennial sensibility. In an industry sometimes known for big egos and cutthroat politics, Schwarzman has nurtured a culture differentiated by its emphasis on openness and teamwork. At Blackstone, mutual respect, friendliness, passion, and integrity are as key to success as meticulous models and big bankrolls. Here, everyone gets a voice, which gives everyone a sense of purpose and a fair playing field.

“It’s very important that people understand that we only have people who want to be helpful, team-oriented, and believe in a meritocracy culture,” Schwarzman tells Poets&Quants in an exclusive interview. “We’re not looking for people who want to create more stress with people around them,” he adds.  “So the firm internally should be a highly supportive environment and we’re very rigorous in making sure that’s what it is.”


Of course, Schwarzman wasn’t always a Wall Street titan. As an MBA student, he considered dropping out. In Blackstone’s early days, he too had plenty of doors slammed in his face. While vision and grit enabled Schwarzman to build the world’s largest alternative asset manager, he credits something far different for keeping him fresh and focused these days: Intellectual curiosity.

“It’s really a bit of an intellectual piece and trying to figure out what’s going to be happening in different parts of the world,” he says. “You have to marshall a knowledge of politics, economics, human behavior, cycles – it’s really fascinating and an endlessly changing challenge and job. It’s not really a job. It’s a life. If you enjoy focusing on things that never seem to be resolved and are constantly evolving, then it’s exciting.”

Recently, Schwarzman sat down with Poets&Quants to share his advice with current and aspiring MBA students. What are the biggest mistakes that new MBAs make in their jobs? When should MBAs strike out on their own as entrepreneurs? And what was Schwarzman’s surprise choice as his favorite course at Harvard Business School? Check out this Q&A for some great insights.

Let’s say you took the job as the dean of a top MBA program. From the vantage point of someone who hires MBAs, what do you consider to be the most important parts of educating MBA students?

It’s been a while since I’ve been in business school, so I’m not up to date on all of the contemporary curriculum. The advantage of an MBA is that you have the perspective of a few things. One, you get two more years of maturity. Two, you’ve been surrounded by very smart peers and you have a lot of time in a loosely structured environment to discuss issues from different points of view. Third, you’re going to be exposed to a lot of different areas than you might if you were doing whatever job, if any, that you had before you got there.

In a way, it’s a wonderful laboratory to learn about people, content, and process. And there are a lot of different ways that that could be implemented. So that’s the advantage of going through the MBA.

Every organization has “unwritten rules” that new hires must heed to be considered part of the team and move up in their careers. Imagine you were counseling a newly-graduated MBA. In your experience, what are a few of the biggest unwritten rules that they must master to gain the confidence of their superiors, clients, and peers?

I look at MBAs as sort of entry level full-time professionals. There are certain general rules that I think work very well. The first is to always ask people questions about things that you don’t know. In finance, there is very little new. It is an apprentice business. So somebody has to teach you. In other words, there’s no need for you to invent things that other people understand. People are more than willing to explain and teach you so you can do them efficiently. Typically, the biggest mistake that first-year MBAs make is wasting their time trying to figure out something, whether it is already a well-trod path or an easy answer. There isn’t extra credit for figuring it out yourself. They just want you to do it. When you’re a second, third or fourth year associate, your job is to teach the people who come in after you. So there’s no penalty for asking somebody something in a new and in that sense strange environment.  It’s a habit that, once you pick it up, is good for your whole career. You can always ask things you don’t understand and get a quick answer. And if no one can answer it – that’s a problem.

The second thing is to observe what’s going on for your first three-to-six months so that you get a sense of how an organization works.

Third, you don’t need to take on too many assignments to be successful. In other words, students coming out of school think that whenever someone asks you to do something then you accept it. They think the more things that you’re working on, the happier you’re going to make everyone and the more you’re going to progress. Since entry level people typically don’t know how long it takes to do anything, they all make the same mistake, which is that they accept too many things. And then they can’t finish them on time and they disappoint the people who asked them to work on those things.

This is almost certain death because the people who asked you to work on something actually need what they asked you to prepare. If you show up at the last moment and say, “I’m sorry I just couldn’t do your thing because I was doing something else,”  you can make an enemy because you embarrassed someone senior to you who trusted you. Since everyone makes the same mistake, there is a solution, which is as soon as you’re aware that you’ve taken on too much, you must go to someone senior and tell them what problem you’ve created for yourself. They will help you manage your way out of it so that all the work gets done, whether it gets done by you or gets done by someone else. The big thing is that it does get done because a client needs it. Speaking up early, without embarrassment, is something that you have to do. As bad as you think that is for you, imagine getting to the end and not delivering something at the critical part of an analysis.

Those are classic mistakes of first-year MBAs.

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