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I grew
up in a small town outside Philadelphia and went to the
local high school, where I ran track all four years. Our
team practiced outdoors, and in the winter, in the
bitter cold, the experience was pretty miserable. The
school was set on a hill, and as we ran around the
parking lot the wind would come whipping around the
building and hit us. We had to watch our steps carefully
so as not to slip and fall on the ice. While we were
doing our laps, the coach—a 50-year-old named Jack
Armstrong—would stand against one wall protected from
the wind, bundled up in a huge coat and wool hat and
gloves, clapping and smiling cheerfully. Every time the
pack shuffled past, he’d shout, “Remember—you’ve got to
make your deposits before you can make a withdrawal!”
Now,
this was a public school with no special facilities, and
the team was made up of average athletes with differing
levels of intelligence and motivation. But we never lost
one single meet. And because of that success, and maybe
because of the way in which the advice itself was
delivered—I remember it when people yell at me—Coach
Armstrong’s words resonated. I’ve thought of them a
million times throughout my career in finance, and
they’ve guided this firm, too.
Coach
Armstrong came to mind in one of my first weeks on Wall
Street, 35 years ago. I’d stayed up all night building a
massive spreadsheet to be ready for a morning meeting.
These were the days before Excel, and it was a huge feat
for someone as bad at statistical stuff as I was to do
this all by hand; I was pretty proud of myself. The
partner on the deal, however, took one look at my work,
spotted a tiny error, and went ballistic.
As I sat
there while he yelled at me, I realized I was getting
the MBA version of Coach Armstrong’s words. Making an
effort and meeting the deadline simply weren’t enough.
To put it in Coach Armstrong’s terms, it wasn’t
sufficient to make some deposits; I had to be certain
that the deposits would cover any withdrawal 100 percent
before we made a decision or did a deal. If I hadn’t
done all the upfront work and made completely sure that
my analysis was correct, I shouldn’t have put anything
forth. Inaccurate analysis produces faulty insights and
bad decisions—which lead to losing a tremendous amount
of money.
Today,
whenever I’m under pressure to make a decision on a
transaction but I don’t know what the right one is, I
try desperately to postpone it. I’ll insist on more
information—on doing extra laps around the intellectual
parking lot—before committing. I take the same approach
with people, too. For example, when we were looking for
a manager to start up our long-short hedge fund, we
interviewed for a year and a half. The timing was ripe
for that asset class, and if you weren’t doing something
with it, you were losing out. It took a huge amount of
time and effort for Blackstone, but we found a young
money manager we were comfortable with, and he’s become
an enormous asset.
Every
year I speak to our new associates and give them this
advice, although in my own words. This isn’t like
school, I tell them, where you want to get your hand in
the air and give an answer quickly. The only grade here
is 100. Deadlines are important, but at Blackstone you
can always get help in meeting them. As a firm, we can
always figure out how to do another lap around the
parking lot. Because what’s true when running track is
true when doing deals: The person who’s the most ready
for game day will be the one who wins. |
