tv The David Rubenstein Show Peer to Peer Conversations Bloomberg June 23, 2018 1:00pm-1:30pm EDT
david: you wanted to go into technology banking. robert: like all things, in the land of the blind, the one-eyed man is king. david: were there a lot of african-americans in the technology area at that time? robert: very few. david: what propelled you to say i am going to give this all up and start my own company? robert: very few software companies were actually efficiently run. we took the kernels of best practices. david: you became involved in philanthropy. robert: philanthropic endeavors report of my family and my -- were a part of my family and my family dynamic. one thing we have to do is ensure our society is a just 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.
♪ 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? ♪ david: 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] raised i was basically in a family of -- i will call it 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 the rest of my family the becominge of a, educated, b, working hard, and
becoming the pinnacle of success in one's community. and you know, when i look back at those days and the formative elements of who we were in our communities, i saw parents who gave generously of time, energy, effort, and intellectual capacity to our community. and 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 to now explain to people what you did that made this great fortune. robert: we bridged a couple of ideas. software is truly still the most productive tool introduced over -- introduced in our business economy 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. and that particular business had a set of practices they use, 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 kernels of those best practices. i said if you took them as an engineer and created a process around delivering those best practices across the world of enterprise software, you could do quite well. david: when you grew up in denver, was there a lot of discrimination against african americans? robert: i grew up at a time when desegregation was just starting. and so prior to that, like all cities in america and large cities, there are segregated communities, and there still are. it is unfortunate. i grew up in a predominantly african-american community. we all lived in that community for the most part because you , you stilledlining had no excess ability to capital to buy homes, which, in essence, 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.
enforced 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. david: when martin luther king made his famous speech. robert: i think the impact of her bringing me and my brother for the summer 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: now 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. this is very near to where martin luther king jr. gave his speech. your mother was living in denver at the time you were brought here? robert: correct, but she grew up in washington. david: 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 actually worked in the senate building. he worked in the senate lounge
and served coffee, tea, and took hats and coats from various senators as they came in. when president obama was first inaugurated, i brought my grandfather, who was 93 at the time. while we were sitting there and in our seats, really understanding and feeling the majesty of the moment for him, he said 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 being inaugurated and i remember 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 so long as you are willing to work hard and drive forward on a set of principles and ideals that are important and, frankly, authentic. that sticks with me to this day. david: you went to cornell. you majored in engineering. robert: i did. 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? [laughter] you graduated from
cornell, and then your first job was at goodyear. robert: goodyear tires, yes. david: you then 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 was called fresh pack and believe it or not, it extended the shelf life of foods. from there, i went to kraft general foods. there i have product equipment and process development. and for me, my whole life at that point, i was all about, how do you create a unique solution no one else had come up with, create ideas no one had come up with, and solve problems. david: how did you go from working in the engineering parts of these various companies to a financial engineering of goldman sachs? robert: it is quite an interesting story. i had done very well, top student in my first year of business school. so i had to come back for summer graduation 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. he comes over after to give me
my award, and he said hey, you have a really interesting background. have you thought about a career in investment banking? i said well, there are a bunch of former investment bankers in my class. i don't like any of them. he said, why not? i said, they think they know everything and are pretty arrogant. you have to understand, i am an engineer and we do know everything. and it bothers us. he chuckled. he did not take offense to my joke, and i was happy. but i said honestly, i don't understand what investment bankers do. i was a scientist. i was a technologist. i thought about the world through that lens. and this was another case where somebody extended themselves for me, which is why it is important that i continue to pay that forward. he said let's come to my office and let's talk about it. so we 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. and -- david: these are all prominent african-american business leaders. robert: all prominent african-american business leaders. and all of them took the meetings. from there, they introduced me to other people to take meetings. i literally had 100 interviews
in my fall of the second year of business school. i figured out mergers and acquisitions was the only business i wanted to be in in investment banking. i said -- because with the exception of warfare, it is how assets get transferred in this planet. it is a ceo-level discussion, board-level discussion, a strategic discussion, and that was quite interesting to me. and i thought i could add particular value and insights to that particular business. david: the three jobs you had before you went to business school, did you feel any dissemination against you because you were african-american? robert: oh yeah. it is one of those 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 telling how, explaining the dynamics, the biology and 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. and that kind of 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 in time in your life, you have to look yourself in the mirror and say look, you have to take a little risk. ♪
david: you went to columbia business school and i assume you did pretty well there because you went to goldman sachs afterwards. what year did you join? robert: 1994. david: you worked there for a while, and then how did you decide you wanted to go into technology banking? robert: right. well, like all things, in the land of the blind, the one-eyed man is king. at the time, technology for us was defense contractors. we had another company we had taken public called microsoft. we had another company we called on 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 our first m&a banker on the ground in san francisco focused on tech and then we decided to form a tech group and that created a whole other nexus and dynamic of opportunity. david: your job is to convince clients to hire goldman and give them good advice. robert: right. david: did you meet steve jobs? robert: i did not meet steve jobs personally, but i was on the team that we actually got engaged.
we had to, at the time, you may not remember this, 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: all right. so you are doing very well out there. you're now living in the san francisco area, making a big success and you are buying and, by investment banking standards, i assume you are 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 and tire and rubber days, the impact that software really had on businesses. the thing i noticed was that there were very few software companies that were efficiently run. well, why? the big part was most executives who start software companies, they wrote code or they knew a market opportunity and they sold the code. there was never anybody who taught them how to run software companies. so i then run into this small company in houston, texas, that was the most efficient software
company i have ever seen. they had basic things they did extremely well and i said, if you took those basic things and you basically apply them to other companies, you could run those business similarly and create tremendous value in those companies. that was the idea. that was the conception. david: they said, that is a good idea, why don't you do it? robert: in essence. they said well, if you actually thought about taking some of these best practices and buying enterprise software companies and driving them forward, you can do pretty well. i said, that is a great idea. we can do that. i said, well, they gave me an offer that looked interesting. my lawyer said it was a bad deal, robert, but you should take it. david: you said to goldman, i am leaving, did they try to talk you out of it? robert: of course. of course. they made a pitch against it, but like all things, at some point in time 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.
it is so interesting. of course, i started doing research. it was the same age that 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: if you look at it today, it is a little over 300. david: what you do is unique. 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 for the best. but what you actually did was something different. you put a system together to make sure everyone of your -- every one of your companies was going to follow this system. can you explain that? robert: early on, you could not borrow money in software companies anyway. it was not probably until maybe 2006 or 2007 that you could lever up software companies. so there was no debt available. the only value, the value that you could create had to be inherent in the business, you have to now improve the operations. what we do, we took the kernels of best practices, and developed a whole systemic approach. here is how you use this best
practice to improve the efficacy of whatever that function is within that company. we then have a group, vista consulting group, that delivers, with over 100 people, who delivers the best practices to the management team and the management team adopts those best practices. the way i like to think about it, we install the best practices in those businesses cracks thely rubik's cube of profitable growth. not only are we increasing the profit margins of those businesses, but we actually can accelerate the growth of those businesses at the same time. david: let's describe the company today, how many employees does vista have? robert: about 300. 100 in the investment team, 100 or so in bcg, and 100 or so in administration. so 300 people in the core of what is vista. david: at what point did you realize you are good at this, -- the first year, the second year? when did you realize, i am really good at this? robert: it took a while, believe it or not. it wasn't really until we
finished our first fund. we actually closed out the last deal and we said, we actually are pretty good at this. david: you signed a giving pledge. robert: one thing we have to do is ensure is our society is a just society. our site he has the ability to -- our society actually has the ability to 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, david, here we go. david: very impressive. robert: what we have here, this 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 the bureau and other places, we can capture those and digitize them and we can have access to them. this is the best of the institutional records, but the real beauty here 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 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. but i'm excited. we should probably take a look to see if any of that is accessible at this point. ♪
>> in ancestry in a family search, you can search for individual people. the first hit we get is in world war ii. robert: 1915, 1914. that is him. yeah. >> there we go. robert: there you go. >> born about 1881, that looks good. and the census, this is the 1940 census. robert: my grandmother and great-grandmother. >> they lived on florida avenue. robert: yep. >> she is a domestic. and they were renting their home. she has an eighth grade education. in the 1940 census, 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 wealthy, which was in the last few years or so, you became very involved in philanthropy. much of your giving is related orafrican-american projects causes, and i would like to talk about a couple of those. robert: sure. david: 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 still stained in part by 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 a sense of pride of who we are and where we are going, and also 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, their videography, whatever it might be, and it is now a part
of this museum. and people will be able to learn about their family histories in ways that will come alive. david: was this something your parents instilled in you? why did you become such an active philanthropist? robert: i saw my mother write a $25 check to the american negro -- the united negro college fund every month growing up. and even when i wanted a new pair of converse all-stars, she said, you need to earn the money and go get them yourself. check,e wrote that $25 which i could have bought two pairs with. she instilled in me the importance of giving to the community. i saw my father, who was on the board and ran the local ymca, and how he contributed time, energy, and intellectual capacity in raising funds so the kids in our neighborhood could go and spend time at summer camp and enjoy the outdoors and understand the importance of the building one a
sense a spirit of soul. -- spirit and soul. so all through my life, growing up, philanthropic endeavors were part of my family dynamic. david: you signed the giving pledge. was that hard to do, which says you will give away half of your wealth? 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 that 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.
david: you have another very interesting philanthropic project. you have a ranch that you have converted. robert: yeah. it is called lincoln hill. it is actually the oldest african-american resort community founded by african americans. and it was founded 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 and spend their vacations. i went up there the first time when i was just six months old, so it goes way back in history. everyone from duke ellington, soren neil hurston, langston neil hurston,a langston hughes, count basie all come there and stay there because they could not stay in hotels in denver 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 inner-city kids every summer come to the ranch. we also give to about 200-300
wounded veterans every year. in the winter, though, when the ranch is pretty much shut down, one of the things that we identified -- my wife identified this -- that there are programs, one is called together we rise that we partner with, that actually handles aging out foster kids. so 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. because you have a big brain and you're trying to outsmart a small brain, so why is that so complicated? [laughter] robert: because those little brains are actually focused on outsmarting you because you are in their territory. it nature.uty of -- thetly, david, is an beauty of it, honestly, david, is 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 water with your feet on the soil and it is rushing around you, and at some point in time if you open yourself to it, you realize all things become one, and you stand there and you start to 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 still is. david: and 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 a little better. her thoughtfulness about what the community needs is still very relevant and valid. so she identifies areas where she says, robert, you need to way you canthis help one kid or hundreds of 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: ok. all right. robert: no, the greatest pleasure, in all honesty, david, is frankly to liberate the human spirit. when you are able to liberate the human spirit and see that
spirit really become its best self and that person become its best self, that is the greatest thrill on the planet. david: what would you like to have people say is your legacy? eventually, you might slow down. you might do something else. would you ever go into government? robert: you know, 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 into what is 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. so 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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