APRIL 2018 THE HARBUS NEWS PAGE NINE BUSINESS AND FINANCE Exclusive: Interview with Carlyle Co- Founder David Rubenstein

In an exclusive interview wilh The Harbus, Damd Rubenst.em, co-founder ef private equiDJ giant The Carly!£ Group, talks business, markets, mul life.

SumitMalik management maybe too that rates of return are probably frequently, in fact many people going to be lower than they RUBENSTEIN: I am excited Editor-in-Chief RUBENSTEIN: Experiment. in the industry think that we You won't know exactly what were 20 years ago; because about the fact that good, young probably don't make as much you're going to do for a while. A of the competition, prices are people like you and others still change as we should. Getting person I interviewed for my TV higher. You have to accept the want to go into the industry. a good manager will make a show today, Robert Frederick fact that the ability to improve If we don't get smart people The following is a Harbus gigantic amount of difference. Smith, didn't start his company the company is the key to the coming from the best business exclusive interview with David Vista, a very successful private buyout world today. It used to be schools wanting to go into the Rubenstein, co-founder of MALIK: When you're equity firm, until he was 39. I that if you levered something up industry, then we're not going , one of the evaluating management teams, didn't start Carlyle until I was 95-5, and US GDP is growing to have the intellectual capital world's largest and what do you think are the ways 37. I think Steve Schwarzman at four or five percent, and to do these kinds of things, so alternative asset management to ask the right questions? Part didn't start Blackstone until he you're buying things at five and I'm happy that people still want firms with $ I 74 billion under of where that question comes was 39. six and seven times EBITDA to go into private equity. Not management. Rubenstein, who from is that MBAs are now put So experiment. Try different [earnings before interest, taxes, everybody wants to be at a tech is a member of the Harvard on the other side of the table, things in your 20s and 30s. You depreciation, and amortization], startup. That's pretty good. Corporation as of July 2017, whether they're going to private don't have to be Bill Gates, who you don't have to work that Secondly, I'm happy addressed the community at equity or other industries, where drops out of college and starts a hard for the leverage and the that the industry is generally Spangler Auditorium in an they have to evaluate the caliber company that works perfectly, macroeconomic environment to recognized as adding more value event co-hosted by the Venture of other individuals. from the time you 're 20. That's help you. to society than it was 20 or 30 Capital & Private Club and unusual. If you can do that or Today, when you're buying years ago. People do think that Conversations at Harvard RUBENSTEIN: Track record do what did, things at II and 12 times private equity people can make before sitting down with The is a good indicator. Very often great, but it's not the norm. The EBITDA, you 're probably companies better. I do think that Harbus to share his perspective the best managers of companies norm is to experiment and find putting in 50 percent equity, it's more recognized than before on leadership, education, and in buyout mode are people who something you ultimately love, and US GDP is growing at two that we are helping pension markets. This interview has have done it before. So if we so I would say to young people: percent. You've got to work a funds and endowments, which been lightly edited for brevity find-and Blackstone and KKR try things you think you like, and lot harder, so you have to make often serve very good social and clarity. and others do the same thing-if if you don't like it try something sure you really have a plan to pwposes, and I'm very happy you find somebody that's very else, and keep trying until you effectuate change and grow the that today ESG [ enviromnental, This is an excerpt For the full good at being a manager in one find something you really like. EBITDA, not just cut some costs social, and governance] is text, please visit harbus.org. of these levered companies, if to make your projected returns. much more of a factor in the he or she has done it well before, MALIK: Over the course analysis of a company than it Sumi! MALIK: You 've had they probably can do it well a of your career in alternative MALIK: What would worry was 20 years ago. We spend a the opportunity to meet a lot second time. investments, the private equity you the most looking forward? lot of time with ESG elements of management teams over the ls it primarily valuations? of our investments, and I think course of your career. What are everybody's doing that. the qualities that stand out in The principal difference In my view between a RUBENSTEIN: I worry that effective leaders and common there is going to be an economic successful buyout and an unsuccessful one is downturn at some point. We pitfalls that you see in leaders the CEO of the company. that are less effective? have recessions every seven years in the United States on Sumit Malik (MBA '19) is an David RUBENSTEIN: In the average. We're now nine years buyout world, the principal Very often you recycle industry evolved dramatically, into a growth cycle, I 03 or I 04 investor, writer, and entrepreneur. difference in my view between these people. You've got to and it grew dramatically. How months, so at some point there Prefessional-!Y, his background a successful buyout and an make sure they have the right did your approach to investing will be a downturn. I don't is in and private unsuccessful one is the CEO of economic incentive, and make change over those years? know when it's going to happen, equity al Warburg Pincus, strategy the company. If you overpaid sure they're as aligned with the but I want to make certain that investor as possible, and also RUBENSTElN: Today it's in the deals we look at, we are as a board member ef Santander dramatically, it's hard to Asset Management Chile, and overcome that, but you can that they really have the drive to much more competitive. In the anticipating that something overpay by five or ten percent still do this a second time, or a old days, it was 5 percent equity will slow down, and we're investment banking at Gol.dman and still do quite well if you've third time in some cases. and 95 percent debt; today it's not assuming "hockey stick" Sachs. PersonaliJ! he writes for got the right CEO. CEOs make going to be 50 percent equity projections in terms of economic academic and popular publicalions all the difference in the world. MAL[K: What career advice and maybe 50 percent debt, or growth. and pe,forms music and poi (light­ I think many people would would you have for current something in that range. When or fire-spinning) . He previously Harvard students, or Harvard I started Carlyle, there were 250 MALIK: What about the other say that the biggest mistake received anA.B., summa cum Laude, that people in the private equity MBAs in particular, whether private equity firms in the whole side of the coin? Anything that they're going into alternative world; today there are 6,500 or particularly excites you about .from Harvard Colkge and an S.M world make is staying with the .from 1k Harvard Graduate School wrong CEO too long. While we asset management or another so. the private equity industry have a reputation of changing field altogether? You have lo accept the fact today? ef Arts and Sciences.