A Quote by David Rubenstein
People used to think that private equity was basically just a compensation scheme, but it is much more about making companies more efficient.
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It's clear to me when you do private equity well, you're making companies more efficient and helping them grow and become more profitable. That success means our investors - such as public pension funds - benefit, which contributes to the economic wealth of society.
We really wake up every day trying to build businesses. That is the goal of private equity. It's a misnomer out there that private equity profits by shrinking companies. In fact, it's just the opposite. Private equity creates value by growing great companies.
I've probably done more venture capital deals and expansion financings than I have done private equity deals. But both are the same. Private equity companies have also built jobs.
The private equity world is a relatively small one. There are currently probably a few thousand professional jobs worldwide. In private equity, that's probably about all there is. So in the scheme of things, the firms are all relatively small.
I am much more aware of making the plot more original, avoiding contrivance, having the story matter much more. I used to think more about symbols consciously. Now I think much more about the story.
I think there are a lot of companies that are staying private longer. Much more of their growth is happening while they are on the private side. So their valuations are hitting $1 billion while they are still private more often.
The governments are seen to be less effective than they used to be. The private sector is perceived as being so much more efficient, and so globalization implies a transfer of power to the private sector.
Now the Japanese companies are more focused on that. To have two independent directors - I think it's good to have outside people look at you and think of what you could be doing better. Those are voluntary, but most of the companies told me they're going to do it. And I think it's good for them to say our returns on equity, for example, should be higher. Also, I think some could be more ambitious.
We have all kinds of government compensation systems that are much more efficient than the lawyers.
When private industry makes a mistake, it gets corrected and goes away. As governments make mistakes, it gets bigger, bigger and bigger and they make more, more and more because as they run out of money, they just ask for more and so they get rewarded for making mistakes. In the meantime that is exactly what we are doing by subsidizing companies which are failing, we have a reverse Darwinism, we've got survival of the unfittest, the companies and people that have made terrible mistakes are being rewarded and other people are being punished and being taxed.
Nobody in my generation ever started out in private equity. We got there by accident. There was no private equity business - actually, the word didn't even exist - when I started. I got there out of the purest of happenstance and so I think many people find what they really enjoy doing just in that way. So another piece of advice for you is: don't worry too much about what you're going to be doing when you get out of business school - life will come your way.
Being a good private equity investor is more complicated than it seems. I would say that there are a few characteristics that are important. If you look at the skill set that you need to ultimately be a successful private equity investor, at least at the senior level, you have to be, in this business, a good investor. You have to be able to help companies perform and you have to have judgment around exiting investments. If you look at the skill sets there, they include some things you can teach and some that you can't.
The first commandment of economics is: Grow. Grow forever. Companies get bigger. National economies need to swell by a certain percent each year. People should want more, make more, earn more, spend more - ever more.
The first commandment of the Earth is: enough. Just so much and no more. Just so much soil. Just so much water. Just so much sunshine. Everything born of the Earth grows to its appropriate size and then stops.
You need a debate and a vote on the principles: Do you want more Europe or less Europe? Do you believe we are more efficient with defense and security with Europe, or not? Do you believe we are more efficient for our companies with or without Europe? Those are the questions we have to discuss and push our people to vote on it.
I'm a very big proponent of cloud. We've used it a lot in private sector, and as far as we can tell, it is not only more efficient, it's probably also more secure for lots of very complicated technical reasons. I think it's a very important thing for government to do, and also to have systems that talk to each other.
I drink much less than most people think, and I think much more than most people would believe. I am quite sincere about some of the things which people take very lightly, and almost insultingly unconcerned about some of the things which people take most seriously. In short, I am basically antisocial: certainly not to an alarming degree , but just more so than I appear to be.
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