My First MillionFrom blue collar to billionaire: How David Rubenstein built his $500B investment firm
My First Million
From Carter's White House to unemployment 0:00
David Rubenstein describes raising just $5 million from four investors in 1987 to start Carlyle, a firm that now manages $500 billion. He was 37 at the time, having read that most entrepreneurs launch their first company between ages 28 and 37, and he felt it was now or never. Before that, at 27, he had become deputy domestic policy adviser under President Carter, a job he says he was not really qualified for, but got because he had worked on the winning campaign. His blue collar parents, lifelong Democrats, were in awe when he brought them to meet the president.
Learning the job inside the White House 1:30
Rubenstein explains that his first task was tracking every promise Carter made during the campaign, since there was no internet to search and everything had to be dug out of old speeches and interviews. Knowing those promises better than anyone let him sit in on meetings and flag when a proposal broke a campaign commitment. He says every administration fills up with eager twenty and thirty year olds from the campaign, some of whom turn out great and some who do not.
Losing power after the election 3:00
When Carter lost re-election, Rubenstein found that the same people who once praised him stopped returning his calls, since power had shifted to the incoming Reagan administration. At 31 he struggled to find a law firm willing to hire a former Carter aide, eventually took a legal job he says he was not particularly good at or fond of, and then started an investment firm a couple of years later.
Building a database of successful people 4:00
Starting at age 24, Rubenstein methodically studied roughly fifty highly successful people, recording when they were born, when they began their apprenticeship, when they had their first success, and when they finally broke through. He compiled this into a database along with the stories behind each person's rise, something he says changed his life and has now been resurfaced and made available for free.
Scraping together Carlyle's first funds 9:00
Carlyle began without enough money for a real fund, so Rubenstein and his partner raised money deal by deal, convincing investors to back one transaction at a time before raising money for the next. Their first proper fund was $100 million, the second grew to a billion. He notes that Blackstone, KKR, and Apollo all started with similarly bare beginnings, and that Steve Schwarzman was turned down by 97 percent of investors when raising Blackstone's first fund.
The Jeff Bezos deal he passed on 14:00
Rubenstein recalls that one of his companies owned a bibliography of every book in print, and a young Jeff Bezos wanted to rent it to help sell books online. Bezos offered 20 to 25 percent of his future company instead of cash, but Rubenstein's team wanted cash and settled for a rental fee. They later took a small stake in stock but sold it at the IPO, a decision he now calls stupid since that stock would be worth roughly $14 billion today. He remembers Bezos as strikingly self-confident, driven, and certain he understood the book business better than Barnes and Noble did.
Recruiting statesmen to open doors 16:30
After founding Carlyle in 1987, Rubenstein recruited former Secretary of Defense Frank Carlucci, who could not join a law firm as a non-lawyer and needed a base, giving Carlyle instant credibility. He later brought on former Secretary of State James Baker, and eventually former President George H.W. Bush and former British Prime Minister John Major as advisers, reasoning that raising money in the Middle East went further with Baker at his side than with his own name alone.
Living with constant worry 19:30
Rubenstein describes selling a 5 percent stake in Carlyle to CalPERS around 2009 at a valuation near two billion dollars, then a larger stake to Abu Dhabi's Mubadala years later at a twenty billion dollar valuation, before eventually taking the company public. Even so, he says he never felt safe, because entrepreneurs always assume something bad is about to happen, and he still feels that way every day, including now as principal owner of the Baltimore Orioles, where he worries constantly about making the playoffs.
Balancing fatherhood and constant travel 22:01
David Rubenstein explains that traveling more than 200 days a year while raising three children was always a challenge. All three of his kids ended up with MBAs and work in private equity, which he jokes means he either did something very wrong or very right. He credits his spouse and other caregivers for helping raise the kids while he was away, and he tried to make the most of weekends when he returned. His children run their own businesses, which he has helped support, and he runs a family investment office owned mostly by the professionals who work there rather than by his children directly. He has committed to giving away most of his money, having signed the Giving Pledge early on, so his children will only receive a portion of what remains.
Thinking about fulfillment and admiration 23:31
Asked who he considers truly fulfilled, Rubenstein says almost nobody has everything work out perfectly. He mentions hosting high school friends from sixty years ago in Nantucket, some of whom were great athletes but now deal with artificial hips and knees from the toll their bodies took. He names Jim Baker as someone whose career in the federal government he found extraordinary and widely respected. He acknowledges many business people have admirable personal and professional lives, but insists nobody out there is perfect.
Staying grounded despite success 25:01
Rubenstein reflects on coming from a blue collar family in Baltimore, where neither of his parents graduated high school. His father worked as a postal clerk in Baltimore after returning from World War II, taking the only job available and keeping it his entire life, much like Lloyd's father who held the same job in Brooklyn. Rubenstein says he still gets his hair cut for fifteen dollars at the same neighborhood barber and has worn the same suit for about ten years. He notes his father hated wearing ties, so buying suits and ties became his own way of showing he had moved beyond his father's circumstances.
Watching people gain power 27:31
Rubenstein discusses Glenn Youngkin, who worked at Carlyle for twenty five years before leaving to run for governor of Virginia despite having no political background. Rubenstein admits he never expected Youngkin to get elected, let alone be discussed as a potential presidential candidate. He says power does change some people, and after meeting many talented individuals over the years, he has concluded it is impossible to predict who will actually break through. He points to Bill Gates dropping out of Harvard and Steve Jobs never attending college as examples nobody could have foreseen, adding that Microsoft also benefited from luck, since IBM's decision not to own the operating system it commissioned allowed Microsoft to profit enormously.
Collecting America's founding documents 30:00
Rubenstein describes stumbling into buying the Magna Carta after learning it was the only privately held copy in the United States and at risk of leaving the country. He placed it on permanent display at the National Archives and went on to acquire other historic documents, including the Emancipation Proclamation, the Declaration of Independence, and the Thirteenth Amendment, along with funding restoration of sites like the Washington Monument, Jefferson Memorial, and Lincoln Memorial. His goal is to make people more likely to learn American history by seeing original materials and restored buildings. He notes the market for such documents has grown as wealthy art buyers turn to historic papers, and that the Declaration of Independence has become especially sought after due to the country's semiquincentennial.
Founders who never expected to succeed 32:00
Rubenstein points out that the founders treated the Declaration of Independence carelessly at first, folding and storing it poorly until John Quincy Adams, as Secretary of State in 1823, realized it was fading and ordered copies made. He notes Thomas Jefferson was only thirty three at the time, and that the United States then had just three million people, including half a million slaves. Jefferson himself doubted the country would last more than twenty years, and Rubenstein says the founders would be astounded that this small eastern seaboard nation became the most powerful country in the world after World War II.
Worrying about debt and the future 33:31
Rubenstein names the forty trillion dollar federal debt as an ongoing worry, saying the country lacks real ability to pay it off and will likely do so through devalued dollars. He says every parent worries whether the world will be good enough for their children to succeed the way they did, and whether those children will be properly educated for a more complicated future.
Reading as a defense against decline 34:31
Rubenstein explains that he reads constantly partly out of courtesy to authors he interviews on his television programs, and partly because he is genuinely interested in the books. He also treats reading and interviewing as his personal defense against Alzheimer's, since he lacks other recommended brain exercises like learning an instrument or a foreign language. Recent books he mentions include Kai Bird's "American Scoundrel" on Roy Cohn and Beverly Gage's Pulitzer winning book on J. Edgar Hoover. He also describes a program he started fifteen years ago at the Library of Congress, where he interviews historians about American history in front of members of Congress from both parties, away from press coverage, and he has now compiled the best of these interviews into a forthcoming book.
A chief justice's unexpected path 37:00
Rubenstein recounts interviewing Chief Justice John Roberts, who revealed he never wanted to be Chief Justice or even a lawyer. Roberts wanted to be an American history professor, but his father warned him there was no money in it. Roberts majored in American history at Harvard anyway, and a formative moment came when a cab driver told him he had majored in the same subject, leading Roberts to reconsider his path.
Favorite eras and biographies 38:00
Rubenstein and his guest discuss a shared taste for American history between 1880 and 1940, touching on Robert Caro's "The Power Broker," which Caro has spent thirty five years expanding into a fifth volume on Lyndon Johnson, now that Caro is ninety. They also praise Ron Chernow's "Titan," on John D. Rockefeller, and Andrew Carnegie's writings, with the guest noting he got married at Carnegie Hall because of how much he loved Carnegie's book. Rubenstein recommends Andrew Ross Sorkin's book on the crash of 1929 for readers interested in that era.
Lincoln and Washington as models 40:01
Rubenstein singles out Lincoln as a president in a league of his own for saving the Union and emancipating the slaves with humility rather than self congratulation. He credits George Washington with setting the tone for what a president should be. Turning to Lincoln's assassination, he explains that had Ulysses Grant accepted the invitation to join Lincoln at Ford's Theatre, extra military guards would likely have blocked John Wilkes Booth from reaching the presidential box, but Lincoln's single military aide was away from his post drinking at a bar when the shot was fired.
Assassinations and shrinking presidential security 41:30
The conversation turns to presidential assassinations, noting four presidents have been killed, including Lincoln, Garfield, McKinley, and Kennedy. Rubenstein explains the Kennedy assassination was made possible by two errors: the Secret Service allowed the motorcade route to be published in newspapers, and staff removed the bubble top from the convertible despite uncertain weather because Kennedy's chief of staff insisted the president wanted to be seen. Rubenstein notes this was Jackie Kennedy's first political trip and her first time west of the Mississippi as first lady. He recalls that during his own time working for Jimmy Carter, the White House had no metal detectors at all, and Carter would sometimes stand on the roof of his limousine with a microphone, a level of exposure unthinkable today.
Closing exchange on writing and admiration 43:00
Rubenstein reflects that biographers usually write about people they come to admire, noting Doris Kearns Goodwin's comment that she falls in love with her subjects because she spends a decade with them. He observes that thousands of books exist on figures like Lincoln and Kennedy simply because readers keep buying them. The conversation ends with mutual thanks between Rubenstein and his host, who praises his interview-driven approach to books.
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