What It Takes: Lessons in the Pursuit of Excellence

by Stephen A. Schwarzman

People often smile whenever they hear my number one rule for investing: Don’t. Lose. Money. I never understand the smirks, because it is just that simple. At Blackstone we have established, and over time refined, an investment process to accomplish that basic concept. We have created a framework for assessing risk that has been incredibly reliable. We train our professionals to distill every individual investment opportunity down to the two or three major variables that will define the success of our investment case and create value. At Blackstone, the decision to invest is all about disciplined, dispassionate, and robust risk assessment. It’s not only a process but a mind-set and an integral part of our culture. This is how we do it: The concept of an investment committee is commonplace across Wall Street and other industries. A handful or more senior leaders from a given firm invite deal teams to present a new opportunity that has usually already been summarized for them in the form of a memorandum. The deal team will try to sell a potential investment to the committee, listing all the reasons a deal is great and quantifying the potential for profits. If the committee members like what they hear, they bless the deal, and the presenting team is relieved to know they can proceed. If not, it feels like a loss, and the deal team usually skulks out of the room feeling defeated, memos in hand and perhaps muttering to themselves. Not at Blackstone. We structure our investment p...

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