Steve Schwarzman: Wall Street’s arch dealmaker

Blackstone CEO Steve Schwarzman © JIM WATSON/AFP/Getty Images

Steve Schwarzman has had an illustrious career in finance, while his friendship with Donald Trump has made him a pivotal figure in the US-China trade war. Yet he remains a relative unknown. Jane Lewis reports.

“A most unusual man…unknown to most Americans”, is how the doyen of US business culture, Steve Forbes, describes Steve Schwarzman. It’s a strangely amorphous introduction to the co-founder of Blackstone, one of the world’s largest asset managers – especially since, according to Forbes, Schwarzman’s “entrepreneurial bent” has made him “the most influential” American financier “since the original J.P. Morgan”.

A good locust

As Blackstone has grown (it currently has $545bn under management and is the largest owner of real estate in the world) so has Schwarzman’s stature, says Bloomberg. He’s graduated from being a takeover titan to “an international powerbroker”. A defining anecdote in his new book centres on a 2006 discussion with the German chancellor, Angela Merkel, whose deputy had just dismissed private equity firms as locusts. “But I’m a good locust,” the billionaire shot back.

During the financial crisis, Schwarzman played a useful role advising the US Treasury. His international connections and longtime friendship with Donald Trump have since seen him emerge as a “back channel in US-China relations”, says Lionel Barber in the Financial Times. Much in demand among peers as a “Trump whisperer”, he’s a prolific philanthropist who has built one of the most successful businesses on the planet. Yet Steve Schwarzman has “never quite received the credit he believes he deserves”.

Schwarzman grew up in Philadelphia, the son of a Jewish shopkeeper whose lack of ambition baffled him. Schwarzman says he inherited “the right gene mix” from his mother, “a very formidable, strong survivor” who understood the power of social connections. She helped get him to Yale, where he joined the exclusive Skull and Bones secret society, and he never looked back. After Harvard Business School, he joined Lehman Brothers where he indulged his latent love of beauty and comfort by lavishly redecorating his office. “I wanted… a cocoon against all the psychological stresses of my work, like a… library in an English house”.

From Lehman to Blackstone

Schwarzman quit Lehman in 1985 and founded Blackstone with his friend Pete Peterson with an initial $400,000 investment. The original idea was to pursue mergers and acquisitions work, but Blackstone soon branched out into alternative assets. The firm’s early near-death experience, following a disastrous gamble on a steel company called Edgcomb, taught him a lot about his shortcomings as an individual investor and paved the way for Blackstone’s famously collegiate approach to investment and risk. He describes his own particular talent as seeing “things that are going to happen, or could happen, that other people don’t see. And then I’m a bit different from other people – I go and do them”. “Encounters with Schwarzman are rarely dull,” says Barber. He’s “a combative character who, while outwardly charming, does not take kindly to criticism”. But although we’ve often “exchanged expletives”, there “have never been any hard feelings”. “Steve is one of the most honest people I know,” says one rival. “Most people lie to your face. He’ll always tell you… he’s going to screw you.” Perhaps that’s why Schwarzman remains, at 72, “Wall Street’s arch dealmaker”.