Over the past 34 years, Stephen Schwarzman has built Blackstone into one of the world’s most influential financial institutions, starting as a private equity firm and growing into a variety of other assets, totaling $500 billion.
Ahead of the release of his new book “What It Takes,” Blackstone’s CEO and cofounder told Business Insider that one reason his firm has been so successful is that he only hires people whose skill sets make them “perfect 10s.”
“In finance, you sit around and you invent transactions and things that you think would work,” Schwarzman said. “And to do that, you need people of a certain type. What you learn is that people who have that aptitude are not that plentiful.”
Schwarzman’s hiring philosophy is to first find people with proven exceptional skill sets and then go with someone whose way of thinking can gel with his, allowing them to communicate fluidly and reach conclusions even when they initially disagree. There are CEOs who prioritize “culture fit” and believe that skills can be learned within the company, but Schwarzman sees it the other way around. He just wants someone he can work with, and who will get the job done; adapting to corporate culture should happen organically.
Blackstone grew from leveraged buyouts into real estate, hedge funds, and credit. For each expansion, Schwarzman acquired talent was already at the top of their field, rather than spending time and energy on training existing employees for a different job, or experimenting in a new field as his team developed expertise. For Schwarzman, the task was always proving to the “perfect 10s” that Blackstone was the place to take their talent.
What Schwarzman asks in his interviews
Schwarzman has said that hiring Tony James, Blackstone’s former president and current executive vice chairman, in 2002 was one of the best decisions of his career. When Business Insider asked what it was like to first sit down with James for a job interview, Schwarzman said, “It was so much fun for me, actually.”
“If they’re really the right person, it’s sort of seamless and it’s interesting and it’s fun,” he said. “And then you figure out if there are any points of difference, and then you discuss those in an open way.”
Schwarzman said he tests candidates for top positions by bringing up situations that have already happened at Blackstone and asking questions along the lines of, “Do you think that was a smart thing? A good deal or a bad deal? Do you think they should have increased the price? Should they have increased more? Should they have waited longer?”
In these conversations, he’s looking for “synchronicity” in thinking, regardless of the answer — that is, whether the candidate thinks that a deal Schwarzman brought up was a great one or a flop, he wants to be able to clearly follow the person’s thought process. If they’re the right person, he said, the process feels “seamless.”
Another one of those 10s Schwarzman hired was Larry Fink, whose investment firm BlackRock split off from Blackstone in 1994. The move came after a disagreement the two had. Schwarzman regrets his actions at the time, and said that the experience taught him that working with the top people at your company isn’t a “zero-sum game,” and that he needed to occasionally let those he’s hired as independent thinkers pursue initiatives he doesn’t fully agree with.
“If you need that person to get into a business line,” Schwarzman said of a new top hire, “and you can see that it’s a fantastic opportunity, but you just don’t know how to get to it yourself, you try and get somebody who’s one of the top people in the world. They’re 10s, that’s how they became top in the world, and you back them and become their partner, and then they use their expertise to build something marvelous.”
You can listen to the full podcast episode below: