“David M. Rubenstein (davidrubenstein.com) is co-founder and co-executive chairman of The Carlyle Group, a global investment firm with $230 billion under management”
I’m always fascinated by people who seemingly had no aspirations to be rich and yet end up stumbling into wealth. #GodWhen
Growing up, David Rubenstein’s goal was to work in the White House. He achieved that goal at 27, joining Jimmy Carter’s administration as a deputy domestic policy advisor. Unfortunately, or fortunately, for him Carter lost re-election, leaving Rubenstein out of job. He then left government, going first into private legal practice and then starting private equity fund, The Carlyle Group.
Carlyle now has ~$220bn in assets under management and Rubenstein is a billionaire.
I really enjoyed his feature on Tim Ferris’ podcast which you can find here (apple) or here (youtube).
I’ve included notes below but I have to say, I ❤️ how energetic he is. At 71, he’s still sharp and active. He wrote his first book at 70, wrote his second book at 71 and is planning to write a book a year. “Sprinting to the finish line” is what he called it. 🥰.
An incomplete list of the things I found interesting
Evolution of the private equity industry
Ever wanted to hear theories about where the 2 and 20 formula came from? He gives you the gist.
Partnerships built by knowing what you’re good at aka Face your front.
Rubenstein knew he was good at fundraising and hiring. He focused on that and let his partners oversee the investments.
Brand extension
Carlyle was one of the first PE funds (so he says) to extend it’s brand to different types of funds. At the time, most PE funds would have 1 type of fund - a buy out fund. Carlyle decided to extend its brand and create different types of funds all housed under the same Carlyle brand name: a venture fund, a real estate fund etc etc.
It’s probably obvious why a strategy like this makes sense but it’s still helpful to understand the mechanics. This approach effectively allows you to increase your revenue per customer without a comparable increase in your cost of acquiring said customer. Example: You sell a customer 1 product. When you sell them a second product, you’re likely not gonna have to work as hard to convince them to buy from you. They already know you. The last product you sold them worked. So you get a bump in revenue, without needing to spend as much time and effort acquiring said customer. It’s sort of like when my interior designer Obida pimped out my apartment and then convinced me to buy art and clothes from him too.
If you want to geek out more on brand extension, check out this quite academic article .
Do the unsexy work
Lots of people in the industry hated fundraising. They felt it was unseemly. Rubenstein didn’t mind and he got it done 🤷🏾♀️.
Fundraising
There are 3 types of fundraising: political fundraising, business fundraising, philanthropic fundraising. Business fundraising is probably the easiest because you can offer people a return (so he says - I’d argue that political donors also get returns 😌)
Tips on fundraising: don’t be sorry to ask people for money. Have all the information at the tips of your fingers. Always saying “let me get back to you” is a drag. Give people a chance to think about it. Follow up in an appropriate time. If they pass, keep them updated about how the investment they might have made is going. Give people information. Be transparent. Be honest. Give bad news up front.
People don’t view fundraising as a skill set that’s worth intellectual time - very few courses or books. #AShame
Start small
Carlyle started with $5mn $2mn to operate and $3mn to invest. Their first proper fund was $100mn. The second was $1bn. They’re now at $220bn.
Reading
Reading is critical. Books open new worlds. 30% of Americans who graduate from college do not read another book after college. 50% of Americans haven’t bought a book in the last 5 years. (Aliteracy - you can read but you chose not to). 14% of Americans are functionally illiterate.
PS: Not just articles and so on but books 😩because books focus the mind. It takes a certain concentration skill to sit and get through a book.
I stopped taking notes at hr 1 of a 1hr 45 min convo. Drop your hot takes in the comments 👅
Random fun fact:
Apparently “venture” funding, evolved from the phrase “adventure” funding … which was a phrase used to describe particularly risky types of funding.
How did they get $5m and spend 2 bucks on operations... most folks will take that to start all day!