David, thanks for joining us. All right, ready to go. All right. You are known as a legend within private equity, but you're also an iconic business interviewer. You've had the chance to have hundreds of conversations with world leaders and executives. And so, what are you most excited about from this conversation? From this on this conversation. Um, well, that you're doing it. Um, I look uh Stanford uh is a great university um and Stanford Business School is a great business school. My son is a graduate of Stanford Business School who's right there and um so I had

an affection for the university. Earlier today I interviewed the uh person who runs the Stanford Endowment, Bob Wallace, who's right there. And um uh I over the years I've uh when I was chairman of the board at Duke University, I brought the board here to Stanford to show them what a good university can do and some things we could do at Duke. Uh when I became chairman of the Chicago board, I brought the University Chicago board of trustees here as well. And I've known many of the faculty members and many students I've hired over the years. I really admire this university. I'm happy to be here. And all of you who are Stanford graduates or should be consider yourself

or future graduates very lucky because your graduate degree here will help you open a lot of doors and you'll be able to make a lot of mistakes before people say well how'd you get this degree from Stanford? How'd she get this degree from Stanford? So you'll be afforded the opportunity to make mistakes because you got a Stanford JSB degree GSB degree. Well we are very lucky to have you two. So let's get into it. You were born in 1949 into a bluecollar Jewish family in Baltimore, which at the time was segregated both by race and religion.

What values from your family and your upbringing have stuck with you over the years? Well, I my parents uh were u not college graduates or high school graduates. My father dropped out of high school to go into World War II. He came back, he met my mother. Um they got she dropped out of high school to marry him. Um they got married at unsemly age. She was 17, he was 20. More than nine months later, I was their only child. And um you know when you grow up in a bluecollar setting, my parents never really were educated. Um you know, you don't feel sorry for yourself. You say um you just adapt to the situation you have. So many of you probably have had modest circumstances as well in your

life, but you know, you don't uh complain about it. You just do the best you can. And there's a real advantage to growing up in modest circumstances because you grow up in modest circumstances, you know, if you achieve something, people are going to say you probably did it on your own. If you grow up in a wealthy family and your father is famous or something, no matter what you achieve, somebody say, "Well, your father was this or that." So, it's it's more complicated to grow up in a wealthy family and then achieve something and have people think you did it on your own. So, I you know, never regret the circumstances that I had. Um, it was what it was and I, you know, it was

just a, uh, bluecollar kind of setting in Baltimore. When thinking about your arc, you've talked about education as a path to economic mobility. As the first person in your family to go to college, what did education mean to you? There's no doubt that education is um, something that if you can get it, you have it the rest of your life and people can't take it away from you. And people will judge you largely on where you were educated or whether you have an education. So when you meet somebody, they're going to typically say, "What's your name? Where you from? Where'd you go to school?" And if you go to a good school like Stanford, people are going to be impressed. Now you have an

opportunity to um show people you're not as impressive as they think if you do bad things, but you have a big competitive advantage if you go to one of the famous schools like Stanford. And so people admire a place like Stanford or other great universities because people usually to get in there you have to be reasonably talented and to get out of there you have to be reasonably talented. So you have a big advantage in life getting a degree from one of these universities. Now you have an opportunity to mess it up. You can go to Stanford or Harvard or Chicago or Duke or something and do poorly and then eventually people will say well somehow he or she got in that

university. They made a mistake when they admitted them. But generally there's a big advantage to going to a good school and everybody who went to Stanford and goes to Stanford knows that. I think the admissions council is here somewhere. I wonder what they think about me. Uh we're sitting here in the Bay Area, a place that has amazing schools. Yet in the past 20 years, there's been a rise of dropout culture largely fueled by successful entrepreneurs. Do you think the value of education has changed?

I interviewed Bill Gates one time in his office and I said, "Bill, do you think if you actually had a uh college degree, you could have been more successful in life?" and he, you know, he didn't realize it was a joke and he kind of explained well he actually made a mistake dropping out because he said the computer revolution that Paul Allen told him was about to happen wasn't actually happening and so had he stayed at Harvard it wouldn't have made a difference and obviously Mark Zuckerberg dropped out maybe for the same reasons he thought he was going to miss something but um in the end um there is a dropout culture that now people think they're going to be the next Mark

Zuckerberg or Bill Gates but that generally uh most people aren't going to do that. So, I think there's a real advantage to actually getting the degree. Maybe you don't have to get it in the same period of time that everybody else gets it. If it's a GSB, two years, maybe you take a year off or if you want, do something like that. Some people drop out and never come back GSB. It's like Steve Balmer, I think, went to one year of Stanford business school and dropped out and I don't know what ever happened to him, but I guess he worked out okay.

Yeah. Um, he's your most famous non-graduate. Yeah, he's got a he's done pretty well for himself, I would say. He's done okay. Yeah. Well, you have two degrees yourself. After an undergrad from Duke, you went on to law school at the University of Chicago, and you could have stayed in law and taken what I would consider a pretty clear and straightforward path to wealth, right? Why go into politics? Well, I was always interested in politics. I wasn't really interested in the law. Um, and the law wasn't interested in me. As uh when I practice

law, my clients kept saying, "You're not that great a lawyer." So, I realized I probably wasn't that great a lawyer. Um when I was a young boy um I in a very modest bluecollar background um we in neighborhood a man running for president of the United States was going to drive by that day and he wasn't present yet but his name was John Kennedy and I admired him u for little I knew I was probably 12 or 13 but I went out to watch him drive by and he drove by and he waved and I thought he was waving at me but I probably was waving at other people but I admired him and then when my teacher went through his inaugural address with us when he got elected. The inaugural address in G on

January 20th, 1961 was a really incredible work of art artistry. It was a very short speech, but relatively speaking, probably the best inaugural address of the 20th century with the possible exception of FDR's first inaugural address. And I thought, I don't have the charm, the good looks, the money, anything that you need to be John Kennedy, but maybe I could be the person who helped write that speech. And so I found out who wrote that speech. His name was Ted Sorenson. He was a brilliant young man who had been at the age of 31 John Kenny's top adviser in terms of speeches and things like that.

Worked on a Senate staff form. And so when I graduated from law school, I went to work at that law firm that he was at with the hope that I could get some of his pixie dust to rub off on me and that maybe I could work for somebody who' be president of United States and I could be an adviser. And in fact, I did go to work for a man who he told me would be next president of the United States or had a good chance. And I went to work, as you may have heard in the introduction, to chief counsel for somebody that was the chairman of the Senate subcommittee on Senate subcommittee on constitution amendments.

His name was Burb. And Birb did not get to be president of the United States. He was a senator from Indiana. And once I joined him as chief counsel, uh 30 days later, he dropped out. And so I said, "Oh, my acumen isn't so good in picking candidates." And then I got an interview with somebody uh else, somebody called me and said, "You want to interview with somebody else who's running for president?" I said, "Well, who is it?" They said, "His name is Jimmy Carter." I said, "He's never going to be president. He's a peanut farmer from Georgia. He's never going to be president of the United States." And I said, they said, "Well, what else do you have to do?" So,

it was a good point. So, I took the interview. I got the job. And then I joined Jimmy Carter's campaign in uh the year he was running in 1976. And he was 34 points ahead of Gerald Ford. And then uh after I finished, he won by one point. And so, people said like Carter said, "What was your contribution? I was 34 points ahead before you carpet baggers showed up." But u White House staffs, we learned are not filled on merit. are filled on who worked in the campaign. So, I worked in the campaign and my boss was Carter's domestic adviser. I became the domestic deputy domestic adviser at the age of 27, a job I wasn't qualified for, but Carter wasn't qualified to be president. I

thought he didn't know much. I didn't know much. And I got uh I got in I got inflation to 19% which nobody's done since. And so, uh you know, unfortunately, and some of you will have this experience in life, people came up to me all the time when you're working in the White House and to say, you know, you're really bright young man. if you want a job, call me. And I said, look, I'm going to be the senior domestic adviser just like Ted Sorenson was. Uh when I uh in the second term of Carter, my boss will be leave and go be attorney general. I'll be the senior adviser, same age as Ted Sorenson was, I'll be advising Carter in his second term. Why would I leave? And so I didn't

take any of those interviews. When we lost the election, the day after we lost the election of Ronald Reagan in 1980, and I told Carter, you'd never lose this election because Ronald Reagan's so old. He was 69 years old. I said, "Nobody that old can possibly be president." Now, nobody that young can be that president. But we lost. And so I c called all these people up who had told me how bright I was and they wanted to hire me. And I they never called me back because when you're out of power in Washington, you're a dead man. And so I struggled for a while to get a job. I didn't want to tell my mother her only child was unemployable.

So I kept saying I had so many job offers, I didn't know which one to take. But actually, I didn't have that many. Um and so I finally practiced law again, but I didn't really enjoy it. And you can't ever achieve anything worthwhile in life if you don't enjoy it. Nobody ever won a Nobel Prize hating what they do. If you love what you're doing, you'll probably do well. But if you hate what you're doing, you're never going to be great at it. And I didn't like practicing law. And obviously my clients didn't think I was that good at it. So I decided to start Carlile with no

knowledge of how little I really didn't know about private equity. And most people that start companies start companies with knowing very little about what they're about to do. Very few. because you just if you knew all the problems in starting a company, you probably wouldn't start it. So that's why younger people tend to start companies more than older people because older people know all the problems of getting something off the ground. Younger people usually don't. I want to talk about that unique experience that you had in the White House. It was a very exclusive seat. And at age 27, just four years into your career and younger than the average

person in this room, you were an adviser to the president. How did you get noticed so early and move up the ranks? Um, well, luck is an important thing in life and I have was lucky. So, I got an interview with a man who was close to Carter. Remember, Jimmy Carter when he was running was not exactly people somebody that really wanted to work for. When he was running, there were about a dozen other candidates who were better known than he was. And so, he really had a few people from Georgia around him. One of them was a person who um was his policy adviser and a man that

I did the interview with to get the job. But it wasn't as if they did a test on the who was the most talented person my age who wants to work in a presidential campaign. I wouldn't have gotten uh the job. But I was willing to do it. I was willing to move to Atlanta um and you had to be willing to move to Atlanta to get the job. And then Carter won. And Carter uh when you think back, everybody's too young here to remember this, but Carter was in a one-term governor of Georgia. and he probably couldn't have been reelected because you only could have one term in those days. But he wasn't that popular. And so, uh, he probably couldn't have been re-elected if it had been allowed. Yet,

he had the he had something brilliant. He reinvented the presidency and the post presidency and the pre-presidenty. He came up with this clever idea of going to Iowa and winning the Iowa caucuses. And all of you would say, well, that's very normal. You go to Iowa, then go to New Hampshire or South Carolina. That was very novel at the time because Iowa was the first caucus. And Carter quote won the Iowa caucuses which propelled him to New Hampshire, but he didn't really win. He came in second to undecided. Undecided was first. Carter came in second and he only had 12,000 votes. 12,000 votes as second propelled him to New Hampshire. Now today, to win the Iowa caucus, you probably need

150,000 200,000 votes. But in those days, it wasn't that big a deal. Carter thought of that and then he kind of won New Hampshire and then was off to the races. And before other people who are better known than he was, uh, could stop him, he had pretty much locked up the nomination. And so I kind of went along for the ride and then uh after he um got elected, he asked my boss to do something. They gave the assignment to me. Carter said something very novel. Uh and I realized he was very inexperienced when he said this. He said, "I want to honor my campaign promises." Well, you have a politician wants to honor their campaign promises.

You know, he doesn't really know what he's doing because these promises are inconsistent and they're impossible. But in those days before the internet was invented, you had to actually do research uh in a library to figure out what had happened before. So they gave me the assignment of figuring out what Carter had promised in his two years of campaigning. So I went through all the books and everything, every promise, every interview, everything, every questionnaire, and I actually compiled all of his promises. And then of course when I gave it to him, he said, "Well, I can't wait to honor these." But then I realized he, you know, that wasn't going to be realistic

because they're inconsistent with each other to some extent. But so anytime Carter had an interview, he would have me sit in them the interviews with him because I would be the person who could say, "Well, Mr. President, you can't do that because you promise you wouldn't do that or you said you were going to do this or that." So I would be the bad guy who could tell Carter he can't do these things in front of other people. So I got to know Carter a little bit, but he was a he was young, too. He was only 52 years old when he was elected. He'd had very modest government experience. Had no experience in Washington. And uh you know in the end uh in the uh you know in those days I

was probably willing to work harder than the other people on the White House staff. And so I kind of rose up a little bit. But again we the election was lost. So I had to start my life all over again. And everybody here will probably have some similar experience where you think you're great and everything is going this way and all of a sudden it goes this way because something bad happened. It wasn't your fault necessarily and then you have to build your life all over again. And the people that really get somewhere in life usually people that had that struggled. If you have a trajectory that goes this way all the time, uh, you know, it's not going to be easy when something bad

happens. When I worked in the White House, uh, there was a person in the administration, I'll try to disguise who it is, uh, who had a resume that was the greatest resume I'd ever seen. Uh he went to Harvard College, Suma Kumladi, president of the Harvard Crimson, road scholar, uh got a PhD from Oxford, uh Yale Law School, editor and chief of the Yale law school, the Yale law journal, Supreme Court clerk, and everything you want. And he was uh chiseled, great athlete, blonde hair, blue-eyed. You kind this guy, he's got everything. He's handsome. He's he's charming. He's smart. You know, and this guy every time in the current administration, somebody look at

his resume, they would give him another job just looking at the resume. And then eventually in life, he kept getting jobs that way, too. But then he had a real problem in his professional career where he had a real uh problem and he stumbled and he fell flat on his face because he had never fallen before. He never failed before. And if you've never failed, you're not know how to deal with adversity. And I had some adversity in life and adversity dealing with in Carter administration. So it propels you to have some bad experiences in life. This particular person never had it. So when he got him in his middle age as he was ready to get a big job and it and didn't work out that well, he didn't

know how to deal with it. You have to learn how to have adversity. So don't think things are bad and all of a sudden, you know, something doesn't work out for you. It's probably going to be helpful in building your character. There's a lot of value in having fortitude, but I think there's a lot of value in being tactical as well. And those that worked with you in the White House mentioned you were very tactical with your writing. you had some special techniques with your memos that moved him to the top of the president's reading stack. What made your writing so effective?

Well, but let me tell you what he's referring to. Um uh in the White House, it's probably changed a little bit now because that's now 40 years ago. But um I was not married. I had no social life. I only wanted to be in the White House. That was my goal to be an adviser to president. So I worked around the clock. And so, you know, I'd have second shift of secretaries come in around 7:00 at night. I'd work to 7 to, you know, 1:00 a.m. And so, uh, normally at the end, what the way the White House staffs work is everybody supposed to take their memo and they put it to the give it to the staff secretary. The staff secretary compiles it, summarizes it, puts in order, and gives it to the president,

puts in the Oval Office um, uh, inbox. um when you have presidents that actually read um and then um so the president would come in at 6:00 in the morning and he would read the inbox. I wanted to get him to read my memos first. So the best way to do that was to ignore the staff system and then before I go home at midnight, I would just go into the Oval Office where I had the right to do and put my memo on the very top of the president's inbox. So he'd read my memo first. And so somebody who had a different point of view, the president would get to that memo later, but he'd already say, "I decided this issue." So he didn't have to read that person's memo. So I could win a lot of

battles by getting my memo on top. So I did that a lot. It would it usually worked. You quite literally put the memo at the top. Put it at the top. He read it first and then when he got to some subject with another person who had a different point of view than mine, he would say, "Well, I already read this subject, so I don't have to read this second memo." So it worked. Simple and effective. I love it. It seemed to work. Now I think they probably have a better system. If again you have their president to actually read memos though today there are a wide range of approaches with how companies engage

with the white house. Some are aligned some remain apolitical and some try to push back. How do you think business leaders should think about where to land on that spectrum? How they should think about where to land on the spectrum of how to engage with the white house? How companies business leaders and executives? Well, our system is fairly um uh transparent. If you are a big donor to a president of the United States, you're going to get access to president.

There's no doubt about it. We have a system today. I don't make political contributions. None. Zero. Never. Um because I find it somewhat corrupting. And so u in the old days, you could give $1,000. It wasn't that corrupting. Now, there's no limit to how much you can give. So if you give a million dollars, $10 million, $50 million to a president or president's pack or something, you're going to get access all the access you want. And so that's one of that's a great way. Another way to get access is to be the CEO of a large company or important company because that will probably propel you to the White House want to hear your views as well. And then you all you can do

what other people do, which you hire people who have access to the president or there's a whole infrastructure in Washington DC of people that get access to a particular president. Every president has it. So you hire those lobbyists and they get you in. Um, so it's not that hard to get to meet a president and not that hard to, you know, make your case to them. Whether they listen or not is a different story, but it's not that difficult to do. And many people re realize that if you make political contributions to the right president, the right party, you hire the right people to get you in, and you um do some things that and say good things about the present power, you're

probably going to have some influence. And that's like it is in life. It's nothing different than any other thing in life. But in Washington DC, the stakes are so great that people are willing to put in a lot of money, a lot of time to get access to a president. And you have some presidents who will say, "Look, I can't make these decisions myself. I have to listen to staff. I want to have things come to the from the bottom and percolate to the top." We have a system today where the president is making decisions from the top down and he makes all the decisions and he's not really reading memos and not looking for both sides of the issues as much as maybe other presidents have.

So you can get a lot of influence with this president by doing the right things uh with this president or other presidents as well. Gotcha. So you got to pay to play. So with that said, moving on from the White House, I want to talk about Carlile. You founded Carlilele in 1987 and leverage buyouts were still a fairly new concept. You also had no finance experience at the time. So how did you get the right to compete in that arena?

Well, the phrase private equity hadn't even been invented then. Uh what happened was um I was a lawyer. I went back and practiced law. I wasn't that good at it. And as I said, uh if you're not that good at something, you probably aren't going to enjoy it. And I didn't enjoy it. And my clients reminded me I wasn't that good at it. So I kind of looking for something else to do. And then I read about an a man named Bill Simon who had um been Secretary of Treasury under Gerald Ford. And he did something called a leveraged buyout. I didn't know exactly what it was, but it turned out reading this newspaper article that he put a million dollars of his own money into an investment and he

made $80 million in 18 months. I said, "Wow, that must be good." He bought a company called Gibson Greeting Cards from RCA and he made $80 million in, you know, in about 18 months. I said, I didn't know what exactly what a leverage buyout was, but I thought it was better than practicing law. So, I went down the street to Bill Miller, who'd been Secretary of the Treasury in the Carter administration and said, "Look, um, your predecessor did a leverage buyout. You know a lot about finance. I don't know anything about finance. Why don't you uh why don't you start a leverage buyout company and I'll be your lawyer? And he obviously realized my legal skills weren't so great. So, he didn't really

do it. So, ultimately, I decided I would do it myself. And if you want to do anything in life and you really think it's great, do it yourself. Probably be better off. And so, I decided I would start a firm. I would hire people had MBAs and then they knew something about finance and then I would tell them and I would, you know, help them raise the money. And so, originally I recruited three other people that had MBAs. They knew something about finance. They were all living in Washington. And I told them I would raise the money. I raised $5 million to get started from four investors and that was it. And then we came up with some things that enable it to grow over the years. And we

transformed the private equity world a little bit. Uh some have done a better job than we did. But we I came up with the idea of having multiple disciplines, not just buyouts, but we do buyouts, growth capital, venture capital, uh distress debt, what it might be, and have different funds. And then I decided to globalize it by putting funds together for the Carlau in Europe, Asia, Middle East, Africa and other parts of the world. So globalize it and have many different disciplines and that was novel at the time and so I made myself into a fundraiser for Carlau in the face of the firm and I had other people focus on investments more than I was. So I was on the investment

committees, the other guys really knew more about it than I did. You described yourself as the fundraiser. Uh there are a lot of people here that are starting companies. What can we learn from you about the art of fundraising? Well, in most business schools, um I don't think there are I don't even look at your curriculum whether there their courses in fundraising. Um but you know, I've often thought that people spend half their life asking people for money and they should learn how to do it better maybe in school. So, for example, in it used to be the case to get a PhD, you had to have two foreign languages as in addition to be in addition to

knowing your subject and having a thesis. And I always thought instead of having two foreign languages as part of a PhD requirement, it should be a course in fundraising because PhDs in academic setting are always raising money for research grants or something. And people don't really know how to raise money. They don't teach it much in schools because it's considered the lowest part of the totem pole. No. When the highest part is to be the CEO or the top people making the deals and the lowest part is the fundraising part. And so people really don't like being fundraising. And there's three different types of fundraising. One is the you're doing it for business like private equity.

Another is uh you're doing it for charitable purposes and another is for political and there are different skill sets in doing them but in the end I made myself into somebody willing to go around the world and beg for money for Carlile and I you know learned how to do that and but in the end I had to do it by not reading books on fundraising because there weren't very many books on how to do fundraising. You just have to learn how to do it in the end and um you know that's what helped grow the firm. We had a good track record, but in the end, I was willing to go around and ask for people for money in a time when it wasn't that common for people to run around the world and ask for money.

One of my favorite fundraising stories of yours is going to the Middle East with former President George HW Bush. Right. Now, it's one thing to know powerful people. How do you get them to work with you? Mhm. Well, um I was in Washington DC and I if I had started Carlile and I'd moved to New York, people would have laughed at me. I they say you're not an investment banker. The extent that there were private equity firms, they were then

called u buyout firms, I guess. Um they were all run by former investment bankers out of New York investment banking firms. And so if I'd moved to New York, people would have laughed that you don't have any investment bankers in your firm and you don't have any bank background in finance. So rather than move to New York and be humiliated by people saying I didn't wasn't qualified, which I wasn't, I decided I would stay in Washington and base it there. And it was novel. And I remember there was a famous senator from Illinois named Ever Dirkson who once said, "When you're getting kicked out of town, get out in front and pretend you're leading a parade." What does that mean? It means

take advantage of the situation you find yourself in. If you're getting kicked out of town, say you're leading a parade. if you're in Washington DC, say you understand companies heavily affected by the federal government better than the guys in New York do. And so I said, we understand aerospace defense better. We understand other uh industries better, telecommunications better than the guys in New York. And to some extent, maybe we did, maybe we didn't, but it sounded good. And u and so we invest in those areas and it tended to work out. But then I realized that even if we were doing reasonably well, people weren't going to come to an annual meeting to hear David

Rubenstein's views on something or another. So I decided I would bring in some famous people who could draw people into our firm into our annual meetings into our fundraising meetings. So I initially recruited Frank Carluchi who had been secretary of defense smart man and then he did a very good job of opening doors for us in an appropriate way. Obviously you have to you know have reasonable good talent to ultimately and track record to get people to give you money but if you get in the door it's going to be helpful. And then four years later, one of the most impressive people I ever met uh was available because he lost. Um his friend George Herbert Walker Bush was defeated

for president in 1992 by Bill Clinton. And so Jim Baker, former Secretary of State, former chief of staff of the White House and former uh Secretary of Treasury as well, was available. So I went to see him and I it was tiny little firm then, but I tried to convince him that we had former Secretary of Defense Carluchi with us, maybe he could join us. and he did ultimately join and um you know when he went around the world with Jim Baker you could get in to see anybody and I you know my last name is Rubenstein so I never thought that I could go to the Middle East and raise money probably that effectively but Jim Baker said look it's not true you come with me and we can open doors. So I get

to the Middle East and first time I'm meeting people. I didn't think they would like me but they did and in the end we raised money there and then he said you know my friend is kind of tired of uh being retired and maybe he could join us as well. I said well who's your friend? George Herbert Walker Bush former president. I said okay he can join us too. And then George Herbert Walker Bush said well my friend would like to join too. Who's your friend? John Major former prime minister of England. Okay. So I got a lot of former people who' serve in government.

Now, they weren't making investment decisions obviously, but they were able to do this. If I have a dinner in London um and say David Rubenstein's going to make a speech about something, nobody's going to show up. If I say Jim Baker and and George Bush are going to talk about X, Y, and Z, people will show up and then I could get my little pitch in at the end. So, it was an effective tool. I didn't invent it, but other people have done that kind of same thing as well.

So, it was a way to get in the door. But in the end, if you don't have a good track record, you're not going to raise money. you got a reasonable track record to get people to listen to you even if they hear a speech from George Herbert Walker Bush. So it was effective technique. We were later criticized for it and we had to end it because uh when uh the Gulf War went south um under George W. Bush, people started blaming Carile saying we have nothing to do with the war. Well, George Bush is at your firm. Jim Baker used to be uh with George Bush. He you're all friends with George W. Bush. You're responsible for the war. I said I have nothing to do with the war. But in the end, um, you

know, I had to go and tell all these famous people that they were retired one day, which wasn't easy. You know, I go to George, former president of the United States, and say, "You're a friend of mine, you've been in the in the firm for x number of years, and you're very helpful, but you got to retire today because, you know, we uh we were just being heavily criticized because our image was that we were part of the W George W. Bush administration." So I would say it wasn't that wasn't easy but in the end our track record was good enough so that I didn't need to go out and bring in a lot of other pimple like that. Other firms have dial done that same thing.

They've brought in a lot of famous people. Uh David Petraeus was brought into KKR. Um you know other firms have brought in famous people and we wouldn't be against doing it but it's not necessary at this point. We're so well established. Fast forward 40 years and Carlile is now one of the most successful PE firms in history. But back in 90 1987 there was a ton of white space to start a PE firm. If you look at private equity today is there still opportunity to start and grow another Carlilele. You know um business people will say over the last couple hundred years or so everything that's been invented that should be invented has already been invented. And so there's always a

tendency to say there's nothing new to invent but there's always something new to invent. There's always new things to invest in. So yes the white space is different. In the old days, private equity, there was venture capital and very few things other than that. Now, you've got so many different gradations of it. Distress debt, private uh credit, there's, you know, infinite number of different uh categories of kind of private investments. Um there's always new opportunities. For example, uh you know, as artificial come intelligence comes along, things in the AI area, as um as nuclear fusion comes along, there's new areas to invest there. As um quantum computing comes along, there new

areas to invest there. there's always going to be something new and there's always going to be a wrinkle that somebody will apply to it. There's never been a case in the history of the world where entrepreneurs or people that have some um willingness to work harder or to try something different have not ultimately produce some successes in what they're doing. Not every not everything is going to work, but um I think there's a culture now that if you start a business, you're always going to succeed. That's probably misleading as well. Not every new business starts. 99% of the business that start don't work. But if you have a graduate degree from Stanford, let's

say, or an undergraduate degree from Stanford, or you dropped out of Stanford or Harvard or something, and you're reasonably intelligent, you started have a good idea, you probably have a reasonable chance of getting something off the ground. The trick is if you get it off the ground, you make money, what are you going to do with the money? And that's a bigger challenge. You mentioned a major inflection point right now, which is AI. And there's a race going on between OpenAI and Anthropic, who are trying to partner actively with private equity firms. A few of Carile's competitors have leaned

into a partnership with one firm or another. So, as you watch your competition take on AI, how do you make sure that Carile stays ahead? Well, we have developed close relationships with major AI companies. Um, some of things we haven't announced, some things I can't talk about, but we are we have our own internal AI unit that's uh set aside from a different city than the core of our businesses. uh we spend a lot of time on that area and we think we're in reasonably good shape in it but uh nobody has yet unveiled and maybe at some point somebody will an AI system

that is so good that you can uh get rid of all the people in your investment committee and just say we'll use AI but it is used I'll give you an example where we do use it I think we've publicly talked about this um we bought a company years ago called Alpinvest which was a leading secondaries u firm and at the time it was not thought to be that big a deal today. It's a gigantic business for us and for other firms that have secondaries business. The business has boomed in the secondary world and secondaries is more than just secondaries but people buying um secondaries or people using financing to do um uh different kinds of things that or co-investment funds and so

forth. But if you buy a large secondaries portfolio, let's suppose Harvard wants to sell $2 billion of its uh buyout and private equity portfolio. to do that, you're going to have to examine probably, you know, 500 different partnerships. And if you examine 500 different partnerships, you got to look at each deal on every partnership. That can take months and months. And it does take months and really know what the value is. With artificial intelligence, we and other people presumably in our business have been doing it. You can analyze these 500 partnerships in an hour and you can figure out whether you should bid X, Y, or Z to buy that uh that

partnership or that part of uh things that's being sold. So artificial intelligence is already being used and it's and in turning deals directly clearly everybody that is in this business is using artificial intelligence to either assess whether the company should be bought or what price you should buy it and then how to fix the company uh once you do buy it. So yeah, it's already had a big difference in our business for sure. Private equity as an industry comes with critics and one of the main criticisms I've heard recently is that PE contributes to a K-shaped economy. Gains compound at the top while others fall behind. Now, as someone who comes from a

modest background yourself, how do you respond to the criticism that Carile contributes to inequity? Well, there are two main criticisms. one you could argue that private equity when private equity first started uh it was seen as the leverage buyout phenomenon and what it was is the early days of private equity the deals were 99% leverage the deal I talked about earlier Gibson greeting cards 99% leverage 1% equity and very typically that 1% was taken out as 1% fee so there was almost no equity in it the famous RJR deal done in 1989 by KKR was 5%

equity 99 95% debt that was very typical then in 19889 9 a lot of the deals started going south because the economy wasn't good and there was a uh re looking at these deals again and so ultimately the world of private equity changed to deal where you probably put 45 to 50% equity and so not as leveraged. Well, how do you get high rates of returns if you're not that leveraged? In the early days of private equity, what people would do when they were leveraged that highly was they sell off assets, cut employees, ship jobs offshore, do all the kinds of things that were the standard playbook then and you could make a lot of money just basically the leverage working in your

favor um and then selling off assets and so forth. Today what you have typically is what we call IBA growth where you basically you have operating executives who come into the companies that you buy and try to help grow the companies IBIDA and you're not focused on shipping jobs offshore. You're not focused on shutting down plants or cutting costs. You're focusing on growing the business and that's how the business has changed. It's much different now. You're never going to convince somebody that's not in the private equity world or the investment world that investment professionals or private equity people are good for society. You're never going

to convince people of that. So, you know, you can try, but you're not going to likely succeed. I think my own view of private equity is that you have to recognize that what private equity people are doing is they're trying to make companies better than they once were. And u in the case of buyouts, if you buy something, presumably it's got some opportunity to fix it up and you can make it better. And by doing that, you are employing people, enhancing the employment if you're really successful. You're paying taxes, and you're doing other things to help society. I'll give you one example um that I u that I'm personally involved with, though I wasn't at the time. Um there was an

Armenian immigrant to this country and uh he came and he went to a school called MIT. and got a PhD and he was a biotech guy and he started doing biotech investments and one of his companies was one that uh was trying to do a new type of biotech and he wasn't really getting anywhere. My uh son-in-law uh who went to Harvard Medical School, Harvard Business School, Harvard College, knows a lot about biotech. He wanted to join that company and I said, "Look, I've looked at this company. It's never had a product in 10 years. They've never had a product approved by the FDA. So, forget it." He said, "Well, this guy is passionate about this company he's built, and I think it will turn around."

I said, "Look, listen to me. It's not going anywhere." He didn't listen to me. He joined the company. And then later, he came to me and said, "My son-in-law, this companyy's going public." I said, "Public? You have no you've never had a product uh approved by the FDA. How can you go public?" He said, "Well, it's like a research project. It's going public." So, you want to buy the stock? I said, "I'm not going to buy that stock." Um, so um later um uh when COVID came, the company uh turned out to be successful. So it was Mona and um the Armenian immigrant stayed with it and what he did is he showed that people in

the investment world do good things for society by staying with it and p producing a great product that saved people's lives. Um it shows what people that do investing can do. You can save people's lives. You can make people's lives much better. I should say I'm on the Mona board now, but I wasn't then. Um, and you know, my point is that private equity, you're never going to convince somebody that is not in the investment world that people in the investment world are great. You can you can spend all your energy doing that. You're just not going to do that. But if you uh take examples like the Mona example, other examples where companies have been improved um and jobs have been

saved or enhanced, I think you know, you've done a good thing for society in the end. Um but you know, there's no doubt that the private equity image is not great and it's not going to get better. uh you know when initially these firms were called leverage buyout firms and the word leverage became odious they again called them management buyout firms then the word buyout became odious and they came up with private equity now private equity became odious so they come up with other things and phen it's an interesting phenomenon if I have a family office now and uh when I and it's called declaration when I go to people and I say I'd like to do a transaction with you they say I don't

really like private equity firms I said no I'm going to do it with my family office family office that's wonderful we love family offices the family office has an incredible and great image and so everybody that's in private equity world should rename their private equity firms family offices because people love family offices. It's amazing. We haven't ruined the image of family offices yet. But the image of private equity is not as great as I would like it to be. Let's put it that way. And I do think that it's unfortunate. We made some mistakes in the beginning of the private equity industry and we're now fixing some of those things. And the industry does a pretty good job today of

of with EBID growth and growing companies, but there's always going to be some mistakes and some things that don't look good. And you know, there's certain industries that you're never going to invest in and look great in. For example, if you invest in nursing homes, very difficult to look good in nursing homes because you're making money if uh you know when older people are not getting medical treatment that maybe they should get and then people in nursing homes eventually die inevitably. And so you can people will come after you and say well look at all the people who died in your nursing home. Well you know what do you expect people to do in a nursing home? So

eventually they're going to die. So you know that's why you should avoid certain industries in my view. But in the end uh private equity I think does a pretty good job uh for society and I don't think it's ruined society. I think it can be improved in certain areas. It's much better than it used to be and we are the envy of the world in terms of what we've been able to do with the private equity industry. other industry, other countries haven't really done what we've done and we've benefited from it. I think um you know the United States and Western Europe are still the epicenter of private equity investing at twothirds of all private equity dollars invested in Western Europe and

United States and Canada. Still, I want to take a step back from private equity now and talk about society. You read over 120 books a year. So I'm curious what we're missing. What are you paying closer attention to that the American people are either not discussing enough or is under reportported in the media? Well, I read a lot of books because I do a lot of interviews of people and I who authors of books and I think it's a courtesy uh to read the book and actually you're probably be a better interviewer if you actually read the book. So, I that's I kind of force feed myself to do it. And it's it's uh another uh thing that I the reason I do it is this. Um and one of the reasons I

like doing interviews. If you get older, and this is a young crowd, but anybody that's 60, 70, 80 will recognize what I'm talking about. When you get to be a certain age, you realize your body and your mind aren't going to work quite as well as they used to. It just that's that's the way life is. And so when you're you're always worried if your is your brain uh departing and not going to function that well and obviously you have a genetic predisposition to Alzheimer's there not much you can do about it but if you don't have a genetic predisposition to it your b your brain will still slow down at a certain age and earlier onset Alzheimer's can be in 50s or 60s but if

you're in a normal pattern your brain is not going to work perfectly as you age but they tell you to do keep your brain exercise do crossword puzzles do um uh musical instruments uh do uh foreign languages. I'm not good at foreign languages. I can't do crossword puzzles and I have completely tonedeaf. So I took up the habit of interviewing people and interviewing you have to spar with people. You have to listen to what they say. You have to be prepared and that if you're doing an interview of somebody who has a book that's written, you read the book. So it's kind of forcefeeding yourself to read the book. So I that's why I enjoy it. And um you know I think u you know reading books is

something that more and more people should do. Sadly, sadly in this country, we're reading less. Uh about 18% of adults in this country are functionally illiterate, which means they ran can't read past the fourth grade level. If you can't read past the fourth grade level, you're very likely to wind up in a bad situation. Economically, you're not going to do that well if you can't read. Uh about twothirds of the people in federal prisons are functionally illiterate. And about 80% of the people in juvenile delinquency courts and juvenile delinquency system are functionally illiterate. And so I try to

encourage people and a lot of things I do to encourage people to read and uh some people who can't read can be taught to learn how to read. You can still learn how to read as an adult and we ought to improve literacy and I try with some of the things I do to kind of get people to read more and read books. Books focus the brain more than a than an email does in my view and it helps your brain. So that's why I like the interviewing and terms of the books and so forth. And I'll tell you how the interviewing came about. It wasn't like I said, "Hey, I should be an interviewer." It wasn't really anything like that. What happened is I now have five TV shows on interviewing that I

interviewed. And um I have one on books now on Caseban and I read interview great authors encouraging people to try to read these books. What happened was um when Carl was starting and I started having a big uh business of having annual meetings with our funds. I wanted to make sure people showed up at the Carl annual meeting so I could not only tell them how their fund was doing. They invested in them but let them know about the new funds that we had. So I'm going to sell new funds as well as let them know about the ex existing funds. Well to make sure people showed up I had to have attractive uh attractions that my saying David Rubenstein is going to make a

speech probably wouldn't attract that many people. But if I hired former presidents of the United States, former secretaries of state, former CEOs of famous companies and paid them a fee, people might show up. So I started doing that and then I realized these former presidents sometimes are boring speakers and the former states secretary of state are boring speakers and I'm paying them a big fee. So I went to the speaking agents one time and said, "Look, I might think I could interview them and maybe make it a little bit more interesting." And they said, "Is the fee going to be the same?" I said, "Yeah, the fee is the same. As long as the fee is the same, they don't care." So I started

interviewing people. I made uh you know people look funny who aren't that funny. I made people look more charming than they are. And as a result I even made Ben Bernaki look exciting. Um and so I u I took that in my brain that I could do that and then what happened was uh I became the head of the economic club in Washington and I was supposed to get four business people a year to speak and let them speak and then take questions from the members and read the cards. And then when I did that, um, the business people that came in that I recruited were CEOs of big companies, but they were terrible speakers and they were reading a text that somebody had written for them and they were people were

falling asleep. So I got the questions from the members and they were terrible, too. So I pretended I was, you know, uh, you know, getting questions from the audience, but I was making them up as I and I was, you know, and they were funny questions. So I had some humor and so I eventually I saw I'm gonna junk that form out to go to the interviews. And that's what Bloomberg saw and then they put me on TV and I started doing interviews. But I kind of happened to fall into by happen stance. Anyway, it's something I do now because you get to meet a lot of people and you get to read a lot of stuff and you know that's how I it came about and I think uh you're obviously going to

I hope get your own TV show soon, right? Knock on wood. That wasn't the original plan, but I'll happily take one if you're willing. All right. Well, you never know. Uh you never know. You might wind up on TV tomorrow. I would hopefully for good reasons. Right. Um, from all the conversations you've had, you've spoken to presidents, founders, entertainers. What have you learned about what separates the most influential people from the rest?

Well, the most successful people or usually most influential as well are people that have a drive to do to achieve something. They don't say, you know, I really want to be a follower. I really want to follow somebody else. Those aren't the most successful people. People that have an idea, they want to do something with their life. We're only on the earth for a relatively short period of time. 70 years, 80 years, 90 years, whatever it might be. Still in the grand scan span of life. It's relatively short. And you, you know, some people say, I want to just go through life. Don't bother me. I'm not going to bother anybody. I'm just going to go 9 to5, work 9 to5, and just

have two and a half children and just have an average uh life. And those people probably might have an enjoyable life. But if you really want to achieve something and you want to be a leader, that is a different skill set and you have to really be driven to do it and you have to feel like you want to do something that's more important than just, you know, uh going to work and then coming home and doing the same thing over and over again. So I noticed that leaders are people that are driven either because they had personal problems in the background. They want to prove that they were great and they can overcome the problems of their youth or they want to just

accomplish something for purposes of life. They want to leave a mark behind when they're gone. They want their children, their grandchildren to feel like they their gr their father, grandfather, grandmother or mother were were successful and did something. So there many different things, but the leaders are people that are people that have a vision of where they want to go and they're willing to take uh the trouble to try to get there even though it might be unpopular at times to do that. And they're willing to go through walls even if at times that the walls are very difficult to go through because they're going to be failing. And most people that get anywhere in life have

failed. There are very few great leaders that have gotten anywhere just going on a trajectory this way. They fail and they pick themselves up and get back into the game and they just um and then and march on. Everybody has had those problems. And if you don't fail at something in life, you're probably not working hard enough in my view. So um and then remember if you're going to be a leader, you have to know where you're taking people and you also have to know how to persuade people. All of life is really about persuading people to follow you. If you're a leader, how do you persuade people? You learn how to talk well. You don't have to be Martin Luther King at the Lincoln Memorial to be an

effective speaker. You can talk less effectively than that and still learn how to get people to follow you by expressing yourself well. Or you learn how to write. You don't have to write the Gettysburg address to influence people, but you can still write well in a meaningful way that people will follow you. People will follow you if you talk well and you have a convincing case or you write well or the most effectively is do what you tell people you want them to do. Be a leader by showing them how you're doing what you want them to do. Like George Washington stayed at Valley Forge in 1777 with his troops. He could have stayed at the Four Seasons of the uh Grand Hyatt or something, but he

stayed with his troops. Stayed with his troops and they really admired him for that. And so that's a really effective way to be a leader. So great leaders are people that uh have a vision where they want to go. They know how to communicate it and they're they're they're not interested in making money only for the sake of making money because the great leaders in the business world I want to achieve something more significant than making money. Amazing. And I'm hearing this theme of grit and determination and influence from leadership which I think we see a lot of in our class. But the most important point I wanted to convey today is really this. Um, and it's

that what everybody should want to do who's in this audience is to figure out what you can do with your life that's meaningful. We're celebrating the 250th anniversary of our country's beginning. Many of you are Americans. And uh we're celebrating it really because uh one sentence that's in the Declaration of Independence is uh is a sentence that has been the inspiration to people in this country and around the world. We hold these truths to be self-evident that all men are created equal that they're endowed by their creator where certain unalienable rights that among these are life, liberty, and the pursuit of happiness. Now obviously we haven't

had equality in this country and no country's had equality perfectly. But the idea of moving towards equality for everybody is a role model is a role is a goal that everybody should have. And the as Thomas Jefferson wrote part of what life is about as well is the pursuit of happiness. What is happiness? It's not he didn't mean by he didn't mean happiness by giddiness. He did he meant really the be able to pursue one's life in doing something meaningful with

it. And everybody here should try to figure out what do you want to do with your life that's meaningful. How are you going to give back to society and how do you become happy? The most elusive thing in life is personal happiness. As all of you probably know by now, it's not that easy to be happy. How many of you work wake up every day and you're happy all day? Very rarely the case. Your happiness occurs because you're doing something useful with your life. In the end, um generally people are happiest are people that are helping other people and helping other people in society. So all of you who are building careers should have a career that it doesn't just uh help yourself but in the end

either through the profits you make, the money you make or your time do things for other people. And the most valuable thing you have is your time. Uh you can make money all that all you want if you're inclined to do so. But you can't increase the amount of time you have. You have a finite amount of time. and think about what how you can give your time to help other people in a ways that are going to improve their lives and ultimately improve the country that you're from or the country you're living in. And that's what I think is the most important thing that business schools can do, which is to give people uh skills of how to make they can make money or run an organization, but

ultimately how they can take the benefits of what they've done with their business career or whatever their career might be and help other people either by giving money to help other people or giving their time and doing something useful. Because what you want to do is you want to get to the point of your life when you're in your 70s or 80s, you can look back and say, "I did something useful with my life." And you know, if you don't if you think only thing you're doing with your life is a piling up money, you're never going to be that happy. The most tortured people I know are some of the wealthiest people in society. They're tortured souls because they have a lot of money. They have a

lot of art and other accutrants of wealth, but they're not really happy. The happiest people are people that feel found a way to do something useful with their life and to help other people. And just think about that when you get your degree, what you're going to do that's useful with your life, not just making more money. David, thank you so much for your time. We appreciate it. Ladies and gentlemen, David Ruben sign. Thank you.