“There's nothing more interesting to people than their own problems. If you can find out what they are and come up with solutions, they will talk to you no matter what their rank or status.”
This quote from Steve Schwarzman's 2019 book What it Takes: Lessons in the Pursuit of Excellence, was the starting point for a rich discussion at our fifth annual NextGen Innovation Summit, about which problems today's emerging entrepreneurs should be looking to solve.
Hosted by Salman Mahdi, Vice Chairman of Deutsche Bank International Private Bank, the event took place on November 17, 2020. For the first time in its history, it had to take place online, owing to the ongoing pandemic. But with Schwarzman – the Co-Founder, Chair and CEO of alternative investment group Blackstone – as the first guest speaker, it was no less inspiring.
The winning entrepreneurs of tomorrow, Schwarzman suggested, will be those who address society's biggest challenges head-on: arresting climate change, protecting the environment, enhancing human connections and bringing people together in more meaningful ways.
“Social media is basically ripping the fabric of the political body and we're going to have to find a way to deal with that so we can have a productive society,” he said, arguing that liberal democracies will become damaged if we continue to build echo-chambers online where only likeminded people get news or information. “As entrepreneurs, if you can come up with something that addresses that issue, I think we would all be grateful to you!”
Is the widening generation gap an entrepreneurial opportunity?
A lot has been written about the fact that young people today perceive themselves as losers on issues ranging from housing to climate change and student debt. However, Schwarzman observed that there are all kinds of divisiveness in society – whether it’s generational, ethical, racial or economical – and emphasised his view that it’s time for a reset.
“You are going to be the most fortunate generation, because you're living through this period of time," he argued, echoing a recent message he gave to the young employees at Blackstone: "You're not just assuming everything follows a set pattern. You're being forced to think differently.”
Referencing his own humble beginnings, Schwarzman continued by discussing the importance of education. “I believe that education is the passport to a better life," he said. "And just as healthcare should be a right, education is a right.”
He remarked that there are lots of things we can do to revamp our current school system so that pupils have better opportunities and added: “it’s an obligation of the grown-ups to provide this.” Using his involvement with Catholic schools in New York as an example, he explained that 70% of the students are from the poverty line or below. Most of them experience problems at the larger, urban schools. But once they have access to a more progressive education, 98% of them go on to graduate from high school and 96% go on to college.
"If you think you’re doing just fine, because you’re doing fine at that moment, you’re missing the plot."
Chairman, CEO and Co-Founder, Blackstone
How to deal with change and protect yourself as an entrepreneur
Schwarzman noted that any investment or business idea can be replicated by your competition, who will inevitably charge less to get your business. “It’s like a bunch of moths taking care of your sweaters.”
He stressed the importance of trying to build some level of protection with intellectual capital. The alternative is to look constantly for the next big thing that someone else won’t figure out. As a result, Schwarzman says, “I have no interest in what we’ve done other than what I’ve learned from it.”
Whenever you fail, it’s important to confront it and work out what went wrong. The question to ask yourself is this: "What analytical piece did I miss so I can fix it and make sure it never happens again?"
Our world is one of continual reinvention, he reminded our attendees. It requires you to question constantly what’s about to go wrong with your business model. “And if you think you’re doing just fine, because you’re doing fine at that moment, you’re missing the plot.”
Equality, hard work and cheerful interrogation: the cultural keys to Blackstone's success
“Our culture at Blackstone is pretty clear: we like smart people, we like people who work very hard, we like complete transparency and cheerful interrogation,” Schwarzman said, adding: “I am not a believer in paid guests.” If you’re at a table to discuss a topic, he emphasised, you’re there to help it progress.
He then described the culture at Blackstone in more detail, noting that it is run as an organisation where everyone is treated as an equal. He tells younger employees that they are no different from him. And reminded listeners that just because someone is older doesn’t mean they are more capable than junior members of staff.
“When you start a culture by entitling everyone as an equal and treating them so, then people have a very good sense of self-worth and inclusion in a team.”
Schwarzman is also a great believer in only hiring nice people. Explaining that he once worked at an organisation that blew itself apart by employing a large proportion of very bright, very difficult human beings. Nice people with a hunger and drive to be the best in the world are integral to the long-term success of a business.
Why US-China relations will be critical to the global COVID recovery
Although the U.S. and China are just two countries, together they comprise at least 35% of the world’s economy, Schwarzman pointed out. So, wherever we live, we should care how these huge engines interact with each other.
Schwarzman noted that we’re close to a low in US-China relations. It’s clear that the two countries will be long-term competitors in certain areas. But usually when you compete with someone there are also things that you can do together for mutual benefit.
In order to restart a more sensible dialogue, it’s important to identify these common areas and find a way to productively engage on them. Schwarzman suggested this could be climate change and sustainability issues, healthcare and research. And, as countries with huge cyber capabilities, they could even work together on the threat from terrorism.
With no shortage of challenges facing the next generation of entrepreneurs – from the growing generational divide to fast-paced technological disruption – it was heartening to hear a lifelong entrepreneur see so many opportunities amid the uncertainty. The powerful forces in play today, he concluded, are actually fertile ground for innovation, reinvention and renewed optimism.
Deutsche Bank Wealth Management's Next Generation programme, led by Vice Chairman Salman Mahdi, has built multi-generational relationships with clients for over 20 years. You can watch highlights from the 2019 NextGen Innovation Summit here.