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tv   Bloomberg Businessweek Debrief A Conversation With Justin Trudeau  Bloomberg  June 22, 2018 6:00pm-6:30pm EDT

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david: you wanted to go into technology banking. tim: michael things land of the , blind, the one-eyed man is king. david: were there technology opportunities? tim: very few. david: what propelled you to say i am going to give this all up and start your own company? tim: very few software companies working efficiently run. david: you became involved in philanthropy. tim: philanthropic endeavors are part of my family dynamic. one thing we have to do is ensure our society is a just a society. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪
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david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? when you were growing up in denver, the son of school teachers, did you ever think you would become the wealthiest african american in the united states? [laughter] robert: i was raised in a family of achievers. my mother and my father both had doctorate degrees in education and they emphasized not only to , my brother and i, but to the rest of my family, becoming educated, working hard, and becoming the pinnacle of success in one's community. and you know, when i look back
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at those days and the formative elements of who we were in our community, i saw parents who gave generously of time, energy, effort, and intellectual capacity to our community. i think what that led me to do was always think about striving for excellence. david: we will talk about your background in a moment, but i would like you to explain what you did to make this great fortune. robert: we bridged a couple of ideas. software is truly still the most productive tool introduced over the last 50 years. and through my work, early as an investment banker, i got to see a number of software companies and how they operated. i ran across one that turned out to be a client, and ultimately the owner of that business, that trust, ended up being my first investor. that business had a set of business practices that helped them run that business more efficiently than any software company that i had seen. so in essence i took some of the
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, kernels of those best practices. i took them as an engineer and created a process around delivering best practices, enterprise software, you could do quite well. david: when you grew up in denver, was there a lot of discrimination against african americans? tim: i grew up at a time when desegregation was just starting. there are segregated communities, and there still are. it is unfortunate. i grew up in a predominantly african-american community. we lived in that community because you still had red lines, lack of accessibility to capital, which created the basis of a lot of wealth in america. it was a time, growing up, when i really understood the importance of community, and it was pretty much a segregated community i grew up in, until we started bussing, the forced
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busing that created desegregation of the school systems. david: when you were young, your mother brought you to the march in washington. robert: she did. the impact of bringing me and my brother was for us to understand our community stood for something, our community was striving for something and it , was important we were part of it. that is part of the lifelong part of my soul, which is i have to give back and help my community move forward in this wonderful country called america. david: as we have this discussion now, we are in the african american history and culture museum, of which you are one of the largest donors. we are very near to where martin luther king jr. gave his speech. your mother was living in denver at the time, but she grew up in washington. your grandparents, what did they do? robert: my grandfather was the postmaster general for three post offices here in the d.c. area. before that, when he was in high school, he worked in the senate building. he worked in the senate lounge and served coffee, tea, and took
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hats and coats from various senators as they came in. when president obama was inaugurated, i brought my grandfather, who was 93 at the time. while we were there feeling the majesty of the moment, he would look up in that senate building and pointed to one window and said, i used to work in that room. he said, i remember looking out the window when fdr was inaugurated and there was not a black face in the crowd. and here we are, and i am sitting with my grandfather seeing the first black president being inaugurated. and he said america is a great , place if you are willing to work hard and drive forward on a set of principles and ideals that are important. that sticks with me to this day. david: you went to cornell. you majored in engineering. robert: chemical engineering. david: and now the school of chemical engineering is named after you as a result of gifts you have given. robert: how about that? david: you graduated and your
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first job was at goodyear. you went to air products and chemicals. robert: i worked in applied research and development and had some wonderful experiences, i developed a line of products. it extended the shelf life of foods. from there, i went to kraft general foods. there i had general equipment and process development. and for me, i was all about, how do you create a unique solution no one else had come up with, great ideas no one had come up with, and solve problems. david: how did you go from working in the engineering parts of some of these companies to the financial engineering job at goldman sachs? robert: it is an interesting story. i had done very well, top student in my first year of business school. so i had to come back to get this award. as they went through my background, there was a man who ran his own investment bank who was the keynote speaker. and he comes over to me and he said you have a really
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, interesting background. have you thought about a career in investment banking? i said there are a bunch of former investment bankers in my class. i said, i do not like any of them. he said, why not? i said, i am an engineer and we know everything. and it bothers us. he chuckled. i was happy he did not take offense at my joke, but i said i don't understand what investment bankers do. i was a scientist. i was a technologist. i thought about the world through that lens. this was another case where somebody extended themselves for me and that is why it is important that i extend and pay that forward. he said let's come to my office and we will talk about it. we sit down and had lunch. he picks up the phone and calls people like stan o'neal, at the time the cfo of merrill lynch. ultimately ran merrill lynch. david: these are all prominent african-american business leaders. robert: all prominent african-american business leaders. all of them took the meetings. from there, they introduced me to other people. i literally had 100 interviews in my fall of the second year of my business school.
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i figured out mergers and acquisitions was the only business i wanted to be in in investment banking. with the exception of warfare, gets the only way assets transferred in this business. it is a ceo-level discussion, board-level discussion, strategic discussion, and that was interesting to me, and i thought i could add particular value to that business. david: the three jobs you had before you went to business school, did you feel any discrimination? robert: oh yeah. in america i have and still do. i remember a time when i was invited to give a talk in california in san francisco at one of the big conventions. and this man comes over and he asks questions about how does it , work, extension of shelflife, price. i am explaining the dynamics, the biology, and at the issues you have to think about in addition to the microbiological issues. the guy said, you are a smart guy. you just have your heritage to overcome in order to be successful in business.
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that stuck with me, at a time after all of this wonderful work i was doing that he still viewed , me through that lens as opposed to the work i had done. david: you went to goldman and said i'm leaving. did they try to talk you out of it? robert: of course. at some point you have to look at yourself in the mirror and take a little risk. ♪
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david: you went to columbia business school and i assume you did well because you went to goldman sachs afterwards. what year did you join? robert: 1994. david: you worked there for awhile, and then how did you decide you wanted to go into technology banking? robert: in the land of the blind, the one-eyed man is king. we had another company we had taken public called microsoft. we had another company called ibm. that was the world of technology as far as goldman was concerned. david: were there are a lot of african-americans in technology at the time? robert: very few. very few. i was the first on the ground focused on tech and then we decided to form a tech group and that created another nexus and dynamic of opportunity. david: your job is to convince clients to hire goldman and give them good advice. did you meet steve jobs? robert: i did not meet steve jobs personally, but i was got on the team that we actually got engaged.
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you may not remember, but apple was under assault. steve said, i am not coming back unless there is a different board. we fired the board, got rid of the ceo and invited him to come back. david: you are now living in san francisco, making a big success and you are buying investment banking standards, highly compensated and so forth, so what propelled you to say i will give up all of this and to start my own company? robert: as an engineer, i realized way back in my goodyear days, the impact that software really had on businesses. the thing i noticed was that there are few software companies that were efficiently run. why? most executives who start software companies, they wrote code, for they knew a market opportunity and they sold the code. there was nobody who taught them how to run software companies. so i ran into this small company in houston that was the
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most successful i digress thing. they had basic things they did extremely well and i said, if you take those business -- those basic things and to apply them to other companies, you could run those businesses similar lately and create tremendous value in those companies. that was the idea. david: they said, that is a good idea, why don't you do it? robert: in essence. they said, if you start buying enterprise software companies and drive them forward, you can do pretty well. i said, that is a great idea. can i do that? they give me an offer, my lawyer said it was a bad deal, but you should take it. i am: you said to goldman, leaving, did they try to talk you out of it? robert: of course. but at some point in your life you have to look at yourself in the mirror and go take a little risk. david: how old were you? robert: 39 years old.
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i started doing research and i was the same age the others left to go start their own business, so i said, let's go give it a run. david: you started buying companies with money from the houston company, so how many deals have you done? robert: a little over 300. david: many people think that buyout people, what they do is they borrow a lot of money, tell the ceo to do the best job they can, and then hope. but you did something different, you put a system together to make sure everyone of your companies was going to follow this system. can you explain that? robert: early on, you could not borrow money anyway, it was not probably until maybe 2006 or 2007 that you could lever up software companies. the only value, the value that you could create had to be inherent in the business, you know how to improve the operations. what we do, we took the kernels of best practices, and developed a systemic approach. this is how you use best
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practice to improve the efficacy of whatever that function is within the company. we then have a group, a consulting group, that delivers, it has 100 people, who delivers the best practices to the management team and the management team adopts those best practices. we install the best practices in those businesses that actually cracked the rubik's cube of profitable growth. not only are we increasing the profit margins of those businesses, but we actually can accelerate the growth at the same time. david: let's describe the company today, how many employees do you have? robert: about 300. 100 in the investment team, 100 or so in administrations, and 100 others. so 300 people in the core of what is vista. david: at what point did you realize you are good at this, when did you realize, i am really good at this? robert: it was not until we really finished our first fund. we actually closed out the last
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deal and we said, we actually are pretty good at this. about giving? robert: our society has the ability to actually cure its own problems and while we accumulate wealth on the one hand, we need to also solve the problems that are facing us today, while we are alive. so i guess i need to show you this. anyway, here we go. david: very impressive. robert: what we have is the center is designed to really capture all of the records of the african-american experience. there is the records that were institutional, when you think about - and other places, we can capture those and digitize them and it can have access to them. this is the best of the institutional records, but the real beauty is how do you go and give everybody a chance to put their family's history and their narrative as part of the u.s. environment, or part of the
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u.s., here in a place where generation upon generation can now find who they were, how they contributed, and not just the 500 people we see represented that everybody knows, but the millions of people. david: what about your family? robert: i hope they are here. we should probably take a look to see if any of that is accessible at this point. [laughter] ♪
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>> in a family search, you can search for individual people. the first hit leak it -- >> 1914, that is him. yeah. >> there we go. robert: there you go. >> what about 1881, that looks good. and this is the 1940's. robert: my grandmother and great-grandmother. >> they lived on florida avenue. robert: yep. >> she is a domestic. and they were renting their home. eighth grade education. and it says she is 59 years old. do you recognize those other names? robert: those are my grandfather's siblings. david: very impressive. you put this together, right? robert: yeah. david: when you became very
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wealthy, which was in the last few years or so, you became very involved in philanthropy. a bunch of your giving is related to african-american causes. i would like to talk about a couple. the african-american history and culture museum, where we are now at, what attracted you to that cause? robert: there are two elements , we have been stained by slavery and racism. but what we need to do is make sure we have a monument to the people who have put their blood into the soil that created what is the best country in the world. so that is point number one. point number two, i think it is important that the people, the african-american people have a place to come to feel the pride of who you we are and contribute their story. the majority of my gift is the digitization of the african-american experience. so any family can now digitize their photographs, narrative, , whatever itaphy
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might be, and it is not part of this museum. and people will be able to learn about their family histories in ways that will come alive. david: why did you become such an active philanthropist? robert: i saw my mother write a $25 check to the american negro college fund, every month. and every time i wanted a pair of sneakers, she said, you need to go work for it. she instilled in me the importance of giving to the community. i saw my father, who ran the local ymca. and how he contributed time, energy, and intellectual capacity raising funds so the kids in our neighborhood could go to summer camp and enjoy the outdoors and understand the importance of the outdoors. in building once a sense of spirit and soul. so all through my life, growing up philanthropic endeavors were , part of my family dynamic.
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david: you signed the giving pledge, was that hard to do, which says he will give away half your wealth. was that hard to do? robert: it is so interesting. it is wonderful that folks like you and warren buffett and others are out there being evangelists for what this is. one thing we have to do is ensure our society is a just a society. our society has the ability to cure its own problems. and you know while we accumulate , wealth on the one hand, we need to also solve the problems that are facing us today while we are alive. part of what i think about is i know today the problems that are facing the communities i care about. and if i have the capacity to do something about them, it is on me to do something. and the giving pledge is a good way to put a signal out there to say, listen, this is the right thing for anyone who accumulates wealth of any size, irrespective of whether you sign the pledge, to actually care about the community in meaningful ways.
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david: you have another interesting philanthropic project. you have a rant that -- ranch that you have converted. robert: it is called lincoln hill, the oldest african-american resort community founded by african-americans as a place where african-americans could buy a plot of land for $25, build a cabin, and that is where they would come in the summer for vacation. i went up there the first time when i was just -- it goes way back in history. everyone from duke ellington, langston hughes, count basie all come there and stay there because they could not stay in hotels during that period of history. so over time, after desegregation, a lot of the african-american institutions fell into disrepair and were sold off into different parts. and now we have developed a wonderful program that serves our community in so many different ways. 6000 kids every summer come to the ranch. we also bring 200-300 wounded veterans every year. in the winter when the ranch is
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, shut down, one of the things my wife identified is that there are programs, one is called together we rise that we partner with, that actually handles aging out foster kids. now we have built at the ranch a 16-bedroom ranch house and we can host up to 30 kids during the holidays. so we host them and do fun activities. david: you are a big fly fisherman. robert: i love it. david: tell me what the appeal is. you have a big brain and you're trying to outsmart a small brain, so why is that so complicated? robert: because those little brains are actually focused on outsmarting you because you are in their territory. the beauty of it, david, is you nature. you are standing in it. all things that live in this world today depend on water to live. i think about water as the literal lifeblood of this planet. and you are standing in this
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water with your feet on the soil and at some point in time if you open yourself to it, you realize you are part of this greater consciousness of existence. and the flyfishing is a way to stand in the water without looking ridiculous. david: your parents are still alive? robert: my mother is. david: she must be extremely proud of what you have achieved. does she call you all the time and tell you how great you are? robert: she usually calls me and tells me what i need to do better, what the community needs. she identifies areas where she says you need to think about this and help these kids in certain ways. david: what is your greatest pleasure of your life pleasing , your mother, making a great deal of money giving away money? , robert: catching a 30-inch rainbow. [laughter] david: all right. robert: it is frankly to liberate the human spirit. when you are able to liberate the human spirit and see that
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spirit become its best self, that is the greatest thrill on the planet. david: what would you like to have people say is your legacy? you eventually might slow down into something else. would you ever go into government? robert: i don't know. like all things, you look for areas where you can bring a unique solution to and solve a problem. i think the problems i want to solve now are an equalization of opportunity for african-americans, to help them on board onto the commercial enterprise that is america. you know, how do we create sustainable career opportunities for people, not just a job or a place to go work? i think that is through education internships. , i hope i am able to establish and build a sustainable fabric to identify these folks, get them educated in a series of schools, get them the right internships, and put them on a path to not only be creative business leaders, but also creative engineers in technologies that contribute to america.
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david: robert smith, it is a great american story. congratulations on what you have achieved. thank you very much. robert: thank you, david. ♪
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lisa: i'm lisa lisa abramowicz in for scarlet fu. this is "bloomberg etf iq." where we focus on the assets, risks, and rewards offered by exchange traded funds. ♪ lisa: speaking refuge from trade wars. how investors can find protection in etf. a strengthening dollar. the currencies that have sent investors back to hedge etf's. and oaktree capital tower marks


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