Podcast Summary
Lessons from high school track coach on resilience and self-validation: Push yourself to the limit, value internal validation, and focus on what feels worthwhile.
Importance of resilience and self-validation, as taught by Steven Schwartzman's high school track coach, Jack Armstrong. Schwartzman emphasized the value of pushing oneself to the limit and not relying on external validation. He also shared that his parents never congratulated him on his accomplishments, instilling in him the importance of internal validation and the pursuit of what feels worthwhile to him. This mindset has carried over into his parenting, as he encourages his children to do their best and be happy, rather than seeking validation from others. The enduring lessons from his coach have helped Schwartzman overcome early struggles and make better decisions in both his personal and professional life.
Pushing past limits for greater success: Intense training and endurance can lead to confidence and success in competition. Motivation and a team environment can enhance performance.
Intense training and pushing past limits can lead to greater success and confidence in competition. The speaker describes how their high school track coach, who employed rigorous training methods, helped them and their team perform at their best during actual meets. The coach's approach instilled a sense of endurance and motivation that led to no losses during their tenure. In contrast, the speaker's experience at Yale was vastly different, as they trained as an individual rather than as a group, which they found uninteresting. The speaker's competitive nature was evident from a young age, and they carried this drive into their career, starting with a job in investment banking, where they admittedly struggled but eventually found success and rose to become a respected CEO. Overall, the importance of pushing past limits and staying motivated, whether in athletics or in one's career, was a recurring theme throughout the speaker's experiences.
Overlooking insufficient qualifications for potential: Seize opportunities, show enthusiasm, and believe in your abilities, even without qualifications. Mentors can play a crucial role in shaping your career.
Sometimes, a lack of qualifications or experience can be overlooked if you show enthusiasm and a willingness to learn. The speaker shared his experience of getting a job in the investment business despite having no idea what it entailed, all because the head of the firm saw potential in him. He was hired with no qualifications and very little knowledge, but through hard work and determination, he managed to succeed. This story highlights the importance of seizing opportunities and having faith in one's abilities, even when they may seem insufficient at first. It also emphasizes the value of mentors and the role they can play in shaping our careers.
Feeling unimpressed by a curriculum or environment doesn't mean there's no value to be gained.: Even if you feel uninterested or unimpressed, continue to engage and learn from diverse experiences and mentors to gain valuable insights.
Sometimes, being in an environment where you're not surrounded by people who are significantly smarter than you can lead to feelings of boredom and a sense that the curriculum or experience is uninteresting. However, it's important to remember that every component of a system must be coordinated for the system to function effectively. During his time at Harvard Business School, the speaker found the curriculum repetitive and the teaching unimpressive. Despite these feelings, he received a heartfelt letter from his former employer, persuading him to stay and finish the program. Ultimately, the speaker found great value in his experience at Lehman Brothers, where he learned from experienced professionals in a small, intense environment. This experience taught him the importance of persevering through challenges and the value of learning from those with expertise.
The ease of access to information changes the learning experience in banking: While the ease of access to data in modern banking makes the process faster, it may lead to a reduced appreciation for its significance. Adapting to changing business landscapes is crucial for success.
The ease of access to information in modern banking significantly changes the learning experience compared to the past. For those trained in the old ways, like our interviewee, every number was hard-earned, and the deep understanding of the data's origins made the learning process more valuable. However, with the advent of technology, data is now readily available at the click of a button. While this makes the process faster, it may lead to a reduced appreciation for the data's significance. The interviewee's career transition from Lehman to Blackstone illustrates this change. After Lehman's acquisition by American Express, the interviewee faced the challenge of starting Blackstone from scratch. Despite their reputations and capabilities, they found it difficult to attract clients due to the absence of M&A boutiques. This experience taught valuable lessons about the importance of adapting to the changing business landscape.
Perception of entrepreneurs influenced by past firms: Entrepreneurs' past firms can impact perception, but character and past successes can secure investment
The perception of a corporation towards an entrepreneur and their capabilities can be heavily influenced by the firm they previously worked for, rather than their individual abilities. This was a lesson learned the hard way when two entrepreneurs, starting a new business with no established model, found themselves struggling to secure contracts despite their past successes. The early days of building a business are a challenging time, both financially and personally. The entrepreneur must balance the demands of growing a company and raising a family, which can be particularly difficult when the financial success of the business is uncertain. Despite these challenges, the entrepreneurs were able to raise significant capital based on their personal track records, demonstrating that character and past successes can be valuable assets in the world of finance. However, securing investment was not easy, and they faced numerous rejections before achieving success. Ultimately, their determination and belief in their abilities allowed them to establish a new paradigm in finance, despite the initial uncertainty and fear of failure.
Learning from mistakes in business: Successful entrepreneurs learn from their mistakes, take responsibility, and involve their team in decision-making to minimize risks and protect investors' interests.
Experience and learning from mistakes are crucial in business success. The speaker shares his personal story of starting a fund in the late 1980s and facing numerous rejections and challenges. Despite raising funds just before the Black Monday crash, he managed to preserve capital by taking responsibility for his mistakes and making structural changes. He realized that being an investment genius was not the key to success, and instead, he implemented a decision-making process where all partners collaborate and scrutinize proposals to minimize risks. By involving everyone and encouraging open discussions, the firm learned more and protected investors' interests. The moral obligation to wear the pain of mistakes rather than passing it on to others is a testament to the speaker's character and commitment to his firm.
Embracing a culture of learning from mistakes and minimizing risks: A rigorous and honest decision-making culture that values learning from mistakes and minimizing risks leads to better long-term outcomes. Look for individuals with exceptional intelligence, judgment, and adaptability to spot potential high performers.
Having a rigorous and intellectually honest culture in decision-making, focused on minimizing risks and learning from mistakes, leads to better long-term outcomes for an organization. The speaker emphasizes the importance of not losing money as a key principle, and shares how their firm operates with a team-based approach where everyone understands the key drivers of an investment. Mistakes are seen as opportunities for learning and improving processes, rather than a blame game. The speaker also emphasizes the importance of experience and continuous learning in executive development. The grading system they use for talent assessment ranges from 7 to 10, with 10 being the highest level of performance and potential. To spot potential tens, they look for individuals who demonstrate exceptional intelligence, judgment, and the ability to learn and adapt quickly. They also value individuals who can effectively collaborate and contribute to the team.
Identifying and harnessing unique talents in business: Effectively managing a team requires recognizing exceptional abilities and placing individuals in roles that best utilize their skills. Seek advice from mentors to make informed decisions and avoid missteps.
Effective leadership in business, much like in sports, requires identifying and harnessing the unique talents of individuals, with a focus on those who possess exceptional abilities (10s). These individuals can handle various roles and create successful businesses. Those who are reliable and hardworking but lack exceptional abilities (7s) may not develop beyond their current capabilities and can be challenging to manage. It's crucial to have a well-evaluated process for identifying and placing team members in roles that best suit their skills. When starting out as a CEO, one may not fully appreciate the importance of time management and the need to consider the impact of decisions on the team as a whole. Learning to navigate these complexities and seeking advice from experienced mentors can help in making informed decisions and avoiding potential missteps.
Lessons Learned from Entrepreneurship: Effective hiring, open communication, a clear vision, and strategic worrying can lead to business success. Personal life should not be compromised for constant business worry.
Running a company requires careful hiring and onboarding processes, as well as a culture that encourages open communication and feedback. Compromising on hiring and assuming people know what they're doing can lead to problems. It's also important to have a clear, big vision for your business, as the effort put into it should be worthwhile. Additionally, worrying can be liberating in a business context, enabling better decision-making and risk assessment. However, personal life and business life are different, and foundational aspects of personal life should not be compromised by constant worry. Overall, the lessons learned from experience are invaluable in navigating the challenges of entrepreneurship.
Navigating Life's Challenges with Wisdom and Adaptability: Gaining self-awareness and experience helps make informed decisions in relationships and business. Identifying warning signs and taking calculated risks can lead to personal and professional growth.
Making the right choices in life, whether it's about relationships or business, becomes easier as we grow older and gain a better sense of ourselves. Sam Zell, a successful businessman, shares his experiences of getting married young and going through a divorce, learning that people change and objectives could be different. He also recalls predicting the financial crisis in 2008 and making significant real estate deals despite the looming danger. Zell's ability to identify the warning signs and make informed decisions demonstrates the importance of self-awareness and experience in navigating life's challenges. Additionally, his success in capitalizing on opportunities during the crisis highlights the potential rewards of taking calculated risks. Overall, Zell's insights underscore the value of wisdom, self-reflection, and adaptability in achieving personal and professional growth.
Blackstone's Survival During the Financial Crisis: Blackstone grew six times in 11 years after the crisis, thanks to their large cash reserves, strategic decision-making, and unique investing approach, which now delivers double the stock market returns.
During the financial crisis, Blackstone, one of the largest asset management companies, experienced significant losses but survived due to their large cash reserves and strategic decision-making. Despite the crisis causing a massive deleveraging in the financial markets, the company's leadership remained calm and saw it as a temporary setback. After the crisis, regulators forced financial institutions to increase their equity to total asset ratios, causing assets to shrink and making Blackstone's counter-indicative growth even more impressive. The company grew six times in 11 years, and their unique investing approach now makes them double the stock market returns, which has attracted more investors over time. Blackstone's success story is a testament to their strategic foresight, financial resilience, and ability to stay calm during volatile market conditions.
Understanding Economic Cycles for Informed Investments: Stay informed about economic cycles to adjust investment strategies and avoid potential pitfalls. Near cycle tops, require strong momentum and safety. Factor in unusual circumstances. Real estate offers a slower cycle with visible supply and demand changes. Sell before things go south in areas of excessive optimism and supply.
Understanding the stage of economic cycles is crucial for making informed investment decisions. When considering investments, particularly in real estate, it's important to be aware of the current stage in the cycle and adjust your approach accordingly. Near the top of the cycle, investments need to have a strong momentum thesis and a safe net worth to withstand potential downturns. When looking at historical data, it's important to factor in unusual circumstances, such as negative interest rates. Real estate, being a supply and demand business, offers a slower cycle with visible supply and monthly demand changes. In areas with excessive optimism and supply, selling before things go south is the best strategy. In summary, staying informed about economic cycles and adjusting investment strategies accordingly can help investors avoid potential pitfalls.
