The following is a conversation with Steven Schwartzman, CEO and co-founder of Blackstone,
one of the world's leading investment firms with over $530 billion of assets under management.
He's one of the most successful business leaders in history.
I recommend his recent book called What It Takes that tells stories and lessons from
his personal journey.
Steven is a philanthropist and one of the wealthiest people in the world, recently signing
the Giving Pledge, thereby committing to give the majority of his wealth to philanthropic causes.
As an example, in 2018, he donated $350 million to MIT to help establish its new college of
computing, the mission of which promotes interdisciplinary, big, bold research in
artificial intelligence.
For those of you who know me, know that MIT is near and dear to my heart and always will be.
It was and is a place where I believe big, bold, revolutionary ideas have a home,
and that is what has needed in artificial intelligence research in the coming decades.
Yes, there's institutional challenges, but also there's power in the passion of individual
researchers, from undergrad to PhD, from young scientists to senior faculty.
I believe the dream to build intelligence systems burns brighter than ever in the halls of MIT.
This conversation was recorded recently, but before the outbreak of the pandemic.
For everyone feeling the burden of this crisis, I'm sending love your way.
Stay strong, we're in this together.
This is the Artificial Intelligence Podcast.
If you enjoy it, subscribe on YouTube, review it with five stars on Apple Podcasts,
support on Patreon, or simply connect with me on Twitter.
And Lex Friedman, spelled F-R-I-D-M-A-N.
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And now here's my conversation with Steven Schwarzman.
Let's start with a tough question.
What idea do you believe, whether grounded in data or intuition,
that many people you respect disagree with you on?
Well, there isn't all that much anymore since the world's so transparent.
But one of the things I believe in and put it in the book, what it takes is,
if you're going to do something very consequential,
do something that's quite large, if you can, that's unique.
Because if you operate in that kind of space, when you're successful, it's a huge impact.
The prospect of success enables you to recruit people who want to be part of that.
And those type of large opportunities are pretty easily described.
And so not everybody likes to operate at scale.
Some people like to do small things because it is meaningful for them emotionally.
And so occasionally you get a disagreement on that.
But those are life choices rather than commercial choices.
That's interesting. What good and bad comes with going big?
See, we often in America think big is good.
What's the benefit? What's the cost? In terms of just bigger than business,
but life, happiness, the pursuit of happiness?
Well, you do things to make you happy. It's not mandated.
And everybody's different. And some people, if they have talent like playing pro football,
other people just like throwing the ball around, not even being on a team.
What's better depends what your objectives are. It depends what your talent is.
It depends what gives you joy.
So in terms of going big, is it both for impact on the world
and because you personally gives you joy?
Well, it makes it easier to succeed, actually, because if you catch something,
for example, that's cyclical, that's a huge opportunity,
then you usually can find some place within that huge opportunity where you can make it work.
If you're prosecuting a really small thing and you're wrong,
you don't have many places to go. So I've always found that the easy place to be
and the ability where you can concentrate human resources,
get people excited about doing really impactful big things,
and you can afford to pay them, actually, because the bigger thing can generate much more in the way
of financial resources. So that brings people out of talent to help you.
And so altogether, it's a virtuous circle, I think.
How do you know an opportunity when you see one in terms of the one you want to go big on?
Is it intuition? Is it facts? Is it back and forth deliberation with people you trust?
What's the process? Is it art? Is it science?
Well, it's pattern recognition.
And how do you get to pattern recognition? First, you need to understand the patterns
and the changes that are happening. And that's either it's observational on some level.
You can call it data or you can just call it listening to unusual things that people are
saying that they haven't said before. And I've always tried to describe
this. It's like seeing a piece of white lint on a black dress, but most people disregard
that piece of lint. They just see the dress. I always see the lint. And I'm fascinated by
how did something get someplace it's not supposed to be. So it doesn't even need to be a big
discrepancy. But if something shouldn't be someplace in a constellation of facts that
made sense in a traditional way, I've learned that if you focus on why one discordant note
is there, that's usually a key to something important. And if you can find two of those
discordant notes, that's usually a straight line to someplace. And that someplace is not where
you've been. And usually when you figure out that things are changing or have changed,
and you describe them, which you have to be able to do because it's not some odd intuition. It's
just focusing on facts. It's almost like a scientific discovery, if you will. When you
describe it to other people in the real world, they tend to do absolutely nothing about it.
And that's because humans are comfortable in their own reality. And if there's no particular
reason at that moment to shake them out of their reality, they'll stay in it, even if they're
ultimately completely wrong. And I've always been stunned that when I explain where we're going,
what we're doing, and why almost everyone just says, that's interesting. And they continue
doing what they're doing. And so I think it's pretty easy to do that. But what you need is a
huge data set. So before AI and people's focus on data, I've sort of been doing this mostly
my whole life. I'm not a scientist. I'm not alone a computer scientist. And you can just hear what
people are saying when somebody says something or you observe something that simply doesn't make sense.
That's when you really go to work. The rest of it's just processing.
So you know, on a quick tangent, pattern recognition is a term often used throughout
the history of AI. That's the goal of artificial intelligence is pattern recognition, right?
But there's, I would say, various flavors of that. So usually pattern recognition refers to the process
of the, we said, dress and the lint on the dress pattern recognition is very good identifying
the dress is looking at the right pattern that's always there that's very common and so on.
You almost refer to a pattern that's like an what's called outlier detection in computer science,
right? The rare thing, the small thing. Now, AI is not often good at that. Do you just almost
philosophically the kind of decisions you made in your life based scientifically almost on data?
Do you think AI in the future will be able to do? Is it something that could be put down
into code? Or is it still deeply human? It's tough for me to say since I don't have domain
knowledge in AI to know everything that could or might occur. I know in my own case that most
people don't see any of that. I just assumed it was motivational, but it's also hard wiring.
What are you wired or programmed to be finding or looking for? It's not
what happens every day. That's not interesting, frankly. I mean, that's what people mostly do.
I do a bunch of that too, because that's what you do in normal life. But I've always been
completely fascinated by the stuff that doesn't fit. Or the other way of thinking about it,
it's determining what people want without them saying it. That's a different kind of pattern.
You can see everything they're doing. There's a missing piece. They don't know it's missing.
You think it's missing, given the other facts you know about them. You deliver that and then
that becomes sort of very easy to sell to them. To link on this point a little bit,
you've mentioned that in your family, when you were growing up, nobody raised their voice
in anger otherwise. You said that this allowed you to learn to listen and hear some interesting
things. Can you elaborate as you have been on that idea? What do you hear about the world if you
listen? Well, you have to listen really intensely to understand what people are saying as well as
what people are intending, because it's not necessarily the same thing. People mostly
give themselves away, no matter how clever they think they are. Particularly if you
have the full array of inputs. In other words, if you look at their face, you look at their eyes,
which are the window on the soul, it's very difficult to conceal what you're thinking.
You look at facial expressions and posture. You listen to their voice, which changes.
When you're talking about something you're comfortable with or not, or you're speaking
faster, is the amplitude of what you're saying higher. Most people just give away what's really
on their mind. They're not that clever. They're busy spending their time thinking about what
they're in the process of saying. If you just observe that, not in a hostile way, but just
in an evocative way and just let them talk for a while, they'll more or less tell you almost
completely what they're thinking, even the stuff they don't want you to know. Once you know that,
of course, it's easy to play that kind of game, because they've already told you everything you
need to know. It's easy to get to a conclusion if there's meant to be an area of common interest,
since you know almost exactly what's on their mind. That's an enormous advantage, as opposed to just
walking in in some place and somebody telling you something and you believing what they're saying.
There are so many different levels of communication.
So a powerful approach to life you discuss in the book on the topic of listening and really
hearing people, is figuring out what the biggest problem, bothering a particular individual or
group is and coming up with a solution to that problem and presenting them with a solution. In
fact, you brilliantly describe a lot of simple things that most people just don't do. It's
kind of obvious, find the problem that's bothering somebody deeply. And as you said, I think you've
implied that they will usually tell you what the problem is. But can you talk about this process
of seeing what the biggest problem for a person is, trying to solve it, and maybe a particularly
memorable example? Sure. If you know you're going to meet somebody, there are two types of
situations, chance meetings, and the second is you know you're going to meet somebody. So
let's take the easiest one, which is you know you're going to meet somebody.
And you start trying to make pretend you're them. It's really easy. What's on their mind?
What are they thinking about in their daily life? What are the big problems they're facing? So if
they're you know to make it a really easy example, you know, make pretend you know they're like
president of the United States. It doesn't have to be this president. It can be any president.
So you sort of know what's more or less on their mind because the press keeps reporting it.
And you see it on television, you hear it, people discuss it. So you know if you're going to be
running into somebody in that kind of position, you sort of know what they look like already.
You know what they sound like, you know what their voice is like, and you know what they're
focused on. And so if you're going to meet somebody like that, what you should do is take
the biggest unresolved issue that they're facing and come up with a few interesting solutions
that basically haven't been out there or that you haven't heard anybody else
I was thinking about. So just to give you an example, I was sort of in the early 1990s and I
was invited to something at the White House, which was a big deal for me because I was like,
you know, a person from no place. And you know, I had met the president once before
because it was President Bush because his son was in my dormitory. So I had met him at
parents' day. I mean, it's just like the oddity of things. So I knew I was going to see him because
you know, that's where the invitation came from. And so there was something going on. And I just
thought about, you know, two or three ways to approach that issue. And you know, at that point,
I was separated. And so I had brought a date to the White House. And so I saw the president,
we sort of went over in a corner for about 10 minutes and discussed whatever this issue was.
And I later, you know, went back to my date. It was a little rude, but it was meant to be
confidential conversation. And I barely knew her. And you know, she said, what were you talking
about all that time? I said, well, you know, there's something going on in the world. And
I've thought about different ways of perhaps approaching that. And he was interested
in the answers. Of course, he was interested. Why wouldn't he be interested? There didn't seem
to be an easy outcome. And so, you know, conversations of that type, once somebody
knows you're really thinking about what's good for them and good for the situation,
it has nothing to do with me. I mean, it's really about being in service, you know,
to this situation. Then people trust you. And they'll tell you other things,
because they know your motives are basically very pure. You're just trying to resolve a
difficult situation and help somebody do it. So these types of things, you know, that's a
planned situation. That's easy. Sometimes you just come upon somebody and they start talking.
And, you know, that requires, you know, like different skills. You know, you can ask them
what you've been working on lately. What are you thinking about? You can ask them, you know,
has anything been particularly difficult? And, you know, you can ask them. Most people,
if they trust you for some reason, they'll tell you. And then you have to instantly go to work on
it. And, you know, that's not as good as having some advanced planning. But, you know, almost
everything going on is like out there. And people who are involved with interesting
situations, they're playing in the same ecosystem. They just have different roles
in the ecosystem. And, you know, you can do that with somebody who owns a pro football team
that loses all the time. We specialize in those in New York. And, you know, you already have
analyzed why they're losing, right? Inevitably, it's because they don't have a great quarterback.
They don't have a great coach. And they don't have a great general manager who knows how to hire
the best talent. Those are the three reasons why a team fails, right? Because they're salary caps.
So, every team pays a certain amount of money for all their players. So, it's got to be those three
positions. So, if you're talking with somebody like that, inevitably, even though it's not structured,
you'll know how their team's doing and you'll know pretty much why. And if you start asking
questions about that, they're typically very happy to talk about it because they haven't solved that
problem. In some case, they don't even know that's the problem. It's pretty easy to see it. So, you
know, I do stuff like that, which I find is intuitive as a process, but, you know, leads to
really good results. Well, the funny thing is, when you're smart, for smart people, it's hard to
escape their own ego and space of their own problems, which is what's required to think
about other people's problems. It requires for you to let go of the fact that your own problems
are all important. And then to talk about your, I think, while it seems obvious, and I think quite
brilliant, it's a difficult leap for many people, especially smart people, to empathize with, truly
empathize with the problems of others. Well, I have a competitive advantage, which is I don't
think I'm so smart. So, you know, it's not a problem for me. Well, the truly smartest people,
I know say that exact same thing. Yeah, being humble is really useful, competitive advantage,
as you said. How do you stay humble? Well, I haven't changed much since I was in my mid-teens.
You know, I was raised partly in the city and partly in the suburbs. And, you know, whatever
the values I had at that time, those are still my values. I call them like middle-class values.
That's how I was raised. And I've never changed. Why would I? That's who I am. And so the accoutrement
of, you know, the rest of your life has got to be put on the same, you know, like solid foundation
of who you are. Because if you start losing who you really are, who are you? So I've never had
the desire to be somebody else. I just do other things now that I wouldn't do as, you know, sort
of as a middle-class kid from Philadelphia. I mean, my life has morphed on a certain level.
But part of the strength of having integrity of personality is that you can remain in touch
with everybody who comes from that kind of background. And, you know, even though I do
some things that aren't like that, you know, in terms of people I'd meet or situations I'm in,
I always look at it through the same lens. And that's very psychologically comfortable. And it
doesn't require me to make any real adjustments in my life. And I just keep plowing ahead.
There's a lot of activity and progress in recent years around effective altruism.
I wanted to bring this topic with you because it's an interesting one from your perspective.
You can put it in any kind of terms, but it's philanthropy that focuses on maximizing impact.
How do you see the goal of philanthropy, both from a personal motivation perspective and the
societal big picture impact perspective? Yeah, I don't think about philanthropy the
way you would expect me to, okay? I look at, you know, sort of solving big issues, addressing
big issues, starting new organizations to do it, much like we do in our business. You know,
we keep growing our business, not by taking the original thing and making it larger,
but continually seeing new things and building those and, you know, sort of marshaling
financial resources, human resources. And in our case, because we're in the investment
business, we find something new that looks like it's going to be terrific. And we do that,
and it works out really well. All I do in what you would call philanthropy is look at
other opportunities to help society. And I end up starting something new,
marshaling people, marshaling a lot of money. And then at the end of that kind of creative process
says somebody typically asks me to write a check. I don't wake up and say, how can I, like, give
large amounts of money away? I look at issues that are important for people. In some cases,
I do smaller things because it's important to a person. And, you know, I have, you know,
sort of, I can relate to that person. There's some unfairness that's happened to them. And so,
in situations like that, I'd give money anonymously and help them out. And, you know, it's like a
miniature version of addressing something really big. So, you know, at MIT, I've done a big thing,
you know, helping to start this new school of computing. And I did that because, you know,
I saw that, you know, there's sort of like a global race on AI, quantum and other major
technologies. And I thought that the US could use more enhancement from a competitive perspective.
And I also, because I get to China a lot and I travel around a lot compared to a regular person,
you know, I can see the need to have control of these types of technologies. So, when they're
introduced, we don't create a mess like we did with the internet and with social media.
Unintended consequence, you know, that's creating all kinds of issues and freedom of
speech and the functioning of liberal democracies. So, with AI, it was pretty clear that there was
enormous difference of views around the world by the relatively few practitioners in the world who
really knew what was going on. And by accident, I knew a bunch of these people, you know, who were
like big famous people. And I could talk to them and say, why do you think this is a force for bad?
And someone else, why do you feel this is a force for good? And how do we
move forward with the technology by the same time, make sure that whatever is potentially,
you know, sort of on the bad side of this technology with, you know, for example,
disruption of workforces and things like that, that could happen much faster than the industrial
revolution. What do we do about that? And how do we keep that under control so that the really
good things about these technologies, which will be great things, not good things, are allowed to
happen? So, to me, you know, this was one of the great issues facing society. The number of people
who were aware of it were very small. I just accidentally got sucked into it. And as soon as
I saw it, I went, oh, my God, this is mega, both on a competitive basis globally, but also in terms
of protecting society and benefiting society. So that's how I got involved. And at the end,
you know, sort of the right thing that we figured out was, you know, sort of double MIT's computer
science faculty and basically create the first AI-enabled university in the world.
And, you know, in effect, be an example, a beacon to the rest of the research community around the
world academically, and create, you know, a much more robust US situation, competitive situation
among universities, because if MIT was going to raise a lot of money and double its faculty,
well, you could bet that, you know, in a number of other universities, we're going to do the same
thing at the end of it. It would be great for knowledge creation, you know, great for the
United States, great for the world. And so I like to do things that I think are really positive
things that other people aren't acting on, that I see for whatever the reason. First,
just people I meet and what they say, and I can recognize when something really profound is about
to happen or needs to. And I do it at the end of the situation. Somebody says, can you write
a check to help us? And then the answer is sure. I mean, because if I don't, the vision won't happen.
But it's the vision of whatever I do that is compelling.
And essentially, I love that idea of whether it's small at the individual level or really big,
like the gift to MIT to launch the College of Computing. It starts with a vision and you see
philanthropy as the biggest impact you can have is by launching something new, especially on an issue
that others aren't really addressing. And I also love the notion, and you're absolutely right,
that there's other universities, Stanford, CMU, I'm looking at you, that would essentially,
your, the seed will, will, will create other, it'll have a ripple effect that potentially
might help us be a leader or continue to be a leader in AI, this potentially very transformative
research direction. Just to linger on that point a little bit, what is your hope long term
for the impact the college here at MIT might have in the next 5, 10, even 20, or let's get crazy 30,
50 years? Well, it's very difficult to predict the future when you're dealing with knowledge
production and creativity. MIT has obviously some unique aspects globally. And there's four big
sort of academic surveys. I forget whether it was QS, there's the Times in London,
you know, the US News and whatever. And one of these recently MIT was ranked number one in the
world, right? So, so leave aside whether you're number three somewhere else, in the great sweep
of humanity, this is pretty amazing, right? So, so you have a really remarkable aggregation
of, of human talent here. And where it goes, it's hard to tell you have to be a scientist
to have the right feel. But, but what's, what's important is you have a critical mass
of people. And I think it breaks into two buckets. One is scientific advancement. And,
and if the new college can help, you know, sort of either serve as a convening force within the
university, or help sort of coordination and communication among people, that's a good thing.
Absolutely good thing. The second thing is, is in the AI ethics area, which is, in a way,
equally important, because if, if the science side creates blowback, so that science is, is,
is, you know, a bit crippled in terms of going forward, because society's reaction
to, to knowledge advancement in this field becomes really hostile. That then you've sort
of lost the game in terms of scientific progress and innovation. And so the AI ethics piece is
super important, because, you know, in a perfect world, MIT would, would serve as a global convener.
Because what you need is, is you need the, the research universities, you need the companies
that are driving AI and quantum work. You need governments who will ultimately be regulating
certain elements of this. And you also need the media to be knowledgeable and trained. So, so,
so we don't get sort of overreactions to one situation, which then goes viral. And it ends
up shutting down avenues that are perfectly fine, you know, to be walking down or running down that
avenue. But, but if enough discordant information, not even correct necessarily, you know, sort of gets
you know, sort of, sort of, is pushed around society, then you can end up with a really hostile
regulatory environment and other things. So you have four drivers that, that have to be
sort of integrated. And so if, if, if the new school of computing can be really helpful in that
regard, then that's a real service to science, and it's a service to MIT. So, so that's, that's why
I wanted to get involved for both areas. And the hope is, for me, for others, for everyone,
for the world, is for this particular college of computing to be a beacon and a connector
for the, for these, for these ideas. Yeah, that's right. I mean, I think MIT is perfectly
positioned to do that. So you've mentioned the media, social media, the internet as
a, this complex network of communication with, with flaws, perhaps, perhaps you can speak to
them. But it, you know, I personally think that science and technology has its flaws, but ultimately
is one, sexy, exciting. It's the way for us to explore and understand the mysteries of our world.
And two, most, perhaps more importantly for some people, it's a huge way to, a really powerful
way to grow the economy, to improve the quality of life for everyone. So how do we get, how do you
see the media, social media, the internet as a society, having, you know, healthy discourse
about science? First of all, one that's factual, and two, one that's finds science exciting,
that invests in science, that pushes it forward, especially in this science fiction,
fear-filled field of artificial intelligence. Well, I think that's a little above my pay grade,
because, you know, trying to control social media to make it do what you want to do,
appears to be beyond almost anybody's control. And the technology is being used
to create what I call the tyranny of the minorities. Okay, a minority is defined as, you know,
two or three people on a street corner. It doesn't matter what they look like. It doesn't matter
where they came from. They're united by that one issue that they care about. And their job is to
enforce their views on the world. And, you know, in the political world, people just are
manufacturing truth. And they throw it all over. And it affects all of us. And, you know, sometimes
people are just hired to do that. I mean, it's amazing. And you think it's one person, it's
really, you know, just sort of a front, you know, for a particular point of view. And this has become
exceptionally disruptive for society. And it's dangerous. And it's undercutting,
you know, the ability of liberal democracies to function. And I don't know how to get a grip
on this. And I was really surprised when we was up here for the announcement last spring
of the College of Computing. And they had all these famous scientists, some of whom were
involved with the invention of the internet. And almost every one of them got up and said,
I think I made a mistake. And as a non-scientist, I never thought I'd hear anyone say that. And
what they said is, more or less, to make it simple, we thought this would be really cool
inventing the internet. We could connect everyone in the world. We can move knowledge around. It
was instantaneous. It's a really amazing thing. He said, I don't know that there was anyone
who ever thought about social media coming out of that and the actual consequences for people's
lives. You know, there's always some, some younger person, I just saw one of these yesterday,
he's reported on the national news, he killed himself when people use social media to basically,
you know, sort of ridicule him or something of that type. This is dead. This is dangerous.
And, you know, so I don't have a solution for that other than going forward. You can end up
with this type of outcome using AI to make this kind of mistake twice is unforgivable.
So interestingly, at least in the West and parts of China, people are quite sympathetic
to, you know, sort of the whole concept of AI ethics and what gets introduced when and
and cooperation within your own country, within your own industry, as well as globally,
to make sure that the technology is a force for good.
On that really interesting topic, since 2007, you've had a relationship with senior leadership,
with a lot of people in China, and an interest in understanding modern China, their culture,
their world, much like with Russia. I'm from Russia originally. Americans are told a very
narrow one-sided story about China that I'm sure misses a lot of fascinating complexity,
both positive and negative. What lessons about Chinese culture, its ideas as a nation,
its future, do you think Americans should know about, deliberate on, think about?
Well, it's sort of a wide question that you're asking about. You know, China's a pretty unusual
place. First, it's huge. You know, it's physically huge. It's got a billion three people,
and the character of the people isn't as well understood in the United States. Chinese people
are amazingly energetic. If you're one of a billion three people, one of the things you've
got to be focused on is how do you make your way through a crowd of a billion 2.99999 other people.
Another word for that is competitive. Yes. They are individually highly energetic,
highly focused, always looking for some opportunity for themselves because they need to,
because there's an enormous amount of just literally people around. And so, you know,
what I've found is they'll try and find a way to win for themselves. And their country is complicated
because it basically doesn't have the same kind of functional laws that we do in the United States,
in the West. And the country is controlled really through a web of relationships you have with other
people and the relationships that those other people have with other people. So, it's an incredibly
dynamic culture where if somebody knocks somebody up on the top who's three levels above you and
is in effect protecting you, then you're like a sort of a floating molecule there without
tethering except the one or two layers above you, but that's going to get affected. So,
it's a very dynamic system and getting people to change is not that easy because if there aren't
really functioning laws, it's only the relationships that everybody has. And so, when you decide to
make a major change and you sign up for it, something is changing in your life, there won't
necessarily be all the same people on your team. And that's a very high risk enterprise. So,
when you're dealing with China, it's important to know almost what everybody's relationship
is with somebody. So, when you suggest doing something differently, you line up these forces in
the West. It's usually you talk to a person and they figure out what's good for them. It's a lot
easier. And in that sense, in a funny way, it's easier to make change in the West, just the
opposite of what people think. But once the Chinese system adjusts to something that's new,
everybody's on the team. It's hard to change them, but once they're changed, they are incredibly
focused in a way that it's hard for the West to do in a more individualistic culture. So,
there are all kinds of fascinating things. One thing that might interest the people who are
listening were more technologically based than some other group. I was with one of the top people
in the government a few weeks ago and he was telling me that every school child in China
is going to be taught computer science. Now, imagine 100% of these children. This is such a
large number of human beings. Now, that doesn't mean that every one of them will be good at
computer science, but if it's sort of like in the West, if it's like math or English,
everybody's going to take it. Not everybody's great at English. They don't write books. They
don't write poetry. Not everybody's good at math. Somebody like myself, I sort of evolved to the
third grade and I'm still doing flashcards. I didn't make it further in math, but imagine
everybody in their society is going to be involved with computer science.
I just even pause on that. I think computer science involves at the basic beginner level
programming and the idea that everybody in the society would have some ability to program a
computer is incredible. For me, it's incredibly exciting and I think that should give United
States pause and consider what, talking about sort of philanthropy and launching things.
There's nothing like launching, sort of investing in young youth, the education
system because that's where everything launches. Yes. Well, we've got a complicated system because
we have over 3,000 school districts around the country. China doesn't worry about that as a
concept. They make a decision at the very top of the government that that's what they want to have
happen and that is what will happen. We're really handicapped by this distributed power.
In the education area, although some people involved with that area will think it's great,
but you would know better than I do what percent of American children have computer science
exposure. My guess, no knowledge would be 5% or less. If we're going to be going into a world
where the other major economic power, sort of like ourselves, has got like 100%
and we got 5% and the whole computer science area is the future, then we're purposely or
accidentally actually handicapping ourselves and our system doesn't allow us to adjust quickly
to that. Issues like this, I find fascinating. If you're lucky enough to go to other countries,
which I do and you learn what they're thinking, then it informs what we ought to be doing in
the United States. The current administration, Donald Trump, has released an executive order
on artificial intelligence. Not sure if you're familiar with it in 2019. Looking several years
ahead, how does America sort of, we've mentioned in terms of the big impact, we hope your investment
in MIT will have a ripple effect, but from a federal perspective, from a government perspective,
how does America establish with respect to China leadership in the world at the top
for research and development and AI? I think that you have to get the federal government
in the game in a big way and that this leap forward technologically, which is going to happen
with or without us, really should be with us. It's an opportunity, in effect, for another
moonshot kind of mobilization by the United States. I think the appetite actually is there
to do that. At the moment, what's getting in the way is the kind of poisonous politics we have,
but if you go below the lack of cooperation, which is almost the defining element of American
democracy right now in the Congress, if you talk to individual members, they get it
and they would like to do something. Another part of the issue is we're running huge deficits.
We're running trillion-dollar plus deficits. How much money do you need for this initiative?
Where does it come from? Who's prepared to stand up for it? Because if it involves taking away
resources from another area, our political system is not real flexible to do that. If you're creating
this kind of initiative, which we need, where does the money come from? Trying to get money
when you've got trillion-dollar deficits, in a way, could be easy. What's the difference
of a trillion and a trillion a little more? It's hard with the mechanisms of Congress,
but what's really important is this is not an issue that is unknown and it's viewed as a very
important issue. There's almost no one in the Congress when you sit down and explain what's
going on who doesn't say, we've got to do something. Let me ask the impossible question.
You didn't endorse Donald Trump, but after he was elected, you have given him advice,
which seems to me a great thing to do, no matter who the president is, to positively contribute
to this nation by giving advice. Yet, you've received a lot of criticism for this.
On the previous topic of science and technology and government, how do we have healthy discourse,
give advice, get excited conversation with the government about science and technology
without it becoming politicized? It's very interesting. When I was young,
before there was a moonshot, we had a president named John F. Kennedy from Massachusetts here.
In his inaugural address as president, he asked, not what your country can do for you,
but what you can do for your country. We had a generation of people, my age, basically people,
who grew up with that credo. Sometimes you don't need to innovate. You can go back
to basic principles. That's a good basic principle. What can we do? Americans have
GDP per capita of around $60,000. It's not equally distributed, but it's big. People have,
I think, an obligation to help their country. I do that. Apparently, I take some grief from
some people who project on me things I don't even vaguely believe, but I'm quite simple.
I tried to help the previous president, President Obama. He was a good guy,
and he was a different party. I tried to help President Bush, and he's a different party.
I don't care that much about what the parties are. I care about, even though I'm a big donor
for the Republicans, but what motivates me is, what are the problems we're facing?
Can I help people get to a good outcome that will stand any test?
We live in a world now where the filters and the hostility is so unbelievable. In the 1960s,
when I went to school and university, I went to Yale. We had so much stuff going on. We had a war
called the Vietnam War. We had black power starting, and we had a sexual revolution with
the birth control pill. There was one other major thing going on, and the drug revolution.
There hasn't been a generation that had more stuff going on in a four-year period than my
era. Yet, there wasn't this kind of instant hostility if you believed something different.
Everybody lived together and respected the other person. I think that this type of
change needs to happen, and it's got to happen from the leadership of our major institutions.
I don't think that leaders can be bullied by people who are against the classical version of
free speech and letting open expression and inquiry. That's what universities are for,
among other things, socratic methods. In the midst of this onslaught of oddness,
I believe in still the basic principles, and we're going to have to find a way
to get back to that. That doesn't start with the people in the middle to the bottom who are using
these kinds of screens to shout people down and create an uncooperative environment. It's
got to be done at the top with core principles that are articulated. Ironically, if people don't sign
on to these kind of core principles where people are equal and speech can be heard and you don't
have these enormous shout-down biases subtly or out loud, then they don't belong at those
institutions. They're violating the core principles. That's how you end up making change,
but you have to have courageous people who are willing to lay that out for the benefit
of not just their institutions, but for society as a whole. I believe that will happen,
but it needs the commitment of senior people to make it happen.
Courage, and I think for such great leaders, great universities, there's a huge hunger for it,
so I'm too very optimistic that it will come. I'm now personally taking a step into building a
startup first time, hoping to change the world, of course. There are thousands, maybe more,
maybe millions of other first-time entrepreneurs like me. What advice you've gone through this
process? You've talked about the suffering, the emotional turmoil, all my entail. What advice
do you have for those people taking that step? I'd say it's a rough ride, and you have to be
psychologically prepared for things going wrong with frequency. You have to be prepared
to be put in situations where you're being asked to solve problems you didn't even know those
problems existed. For example, renting space. It's not really a problem unless you've never
done it. You have no idea what a lease looks like. You don't even know the relevant rent,
and in a market, so everything is new. Everything has to be learned. What you realize is that
it's good to have other people with you who've had some experience in areas where you don't know
what you're doing. Unfortunately, an entrepreneur starting doesn't know much of anything, so
everything is something new. I think it's important not to be alone because it's overwhelming.
You need somebody to talk to other than a spouse or a loved one because even they get bored with
your problems. Getting a group, if you look at Alibaba, Jack Ma was telling me they basically
were like a financial death store at least twice. The fact that it wasn't just Jack,
I mean people think it is because he became the public face and the driver, but a group of people
who can give advice, share situations to talk about, that's really important.
That's not just referring to the small details like renting space.
No.
It's also the psychological burden.
Because most entrepreneurs at some point question what they're doing because it's not
going so well, or they're screwing it up and they don't know how to unscrew it up
because we're all learning. It's hard to be learning when there are like 25 variables
going on. If you're missing four big ones, you can really make a mess. The ability to
in effect have either an outsider who's really smart that you can rely on for certain type of
things or other people who are working with you on a daily basis. Most people who haven't had
experience believe in the myth of the one person, one great person makes outcomes,
creates outcomes that are positive. Most of us, it's not like that. If you look back over a lot of
the big successful tech companies, it's not typically one person. You will know these stories
better than I do because it's your world, not mine, but even I know that almost everyone of them
had two people. If you look at Google, that's what they had and that was the same at Microsoft
at the beginning. It was the same at Apple. People have different skills and they
need to play off of other people. The advice that I would give you is make sure you understand that
so you don't head off in some direction as a lone wolf and find that either you can invent
all the solutions or you make bad decisions on certain types of things. This is a team sport.
Entrepreneur means you're alone in effect and that's the myth, but it's mostly a myth.
Yeah, I think you talked about this in your book and I could talk to you about it forever,
the harshly self-critical aspect to your personality and to mine as well in the face
of failure. It's a powerful tool, but it's also a burden that's very interesting to walk that line.
But let me ask in terms of people around you, in terms of friends,
in the bigger picture of your own life, what do you put the value of love, family, friendship
in the big picture journey of your life? Well, ultimately all journeys are alone.
It's great to have support and when you go forward and say your job is to make something work and
that's your number one priority and you're going to work at it to make it work, it's like
superhuman effort. People don't become successful as part-time workers. It doesn't work that way
and if you're prepared to make that 100 to 120% effort, you're going to need support
and you're going to have to have people involved with your life who understand that that's really
part of your life. Sometimes you're involved with somebody and they don't really understand that
and that's a source of conflict and difficulty. But if you're involved with the right people,
whether it's a dating relationship or spousal relationship, you have to involve them in your
life but not burden them with every minor triumph or mistake. They actually get bored
with it after a while and so you have to set up different types of ecosystems. You have your
home life, you have your love life, you have children and that's like the enduring part
of what you do and then on the other side, you've got the sort of unpredictable nature
of this type of work. What I say to people at my firm who are younger, usually,
well, everybody's younger, but people who are of an age where they're just having their first
child or maybe they have two children, that it's important to make sure they go away with their
spouse at least once every two months. It's just some lovely place where there are no children,
no issues, sometimes once a month if they're sort of energetic and clever and that
they escape the craziness of it all. Yeah and reaffirm your values as a couple
and you have to have fun. If you don't have fun with the person you're with and all you're doing
is dealing with issues, then that gets pretty old and so you have to protect the fun element
of your life together and the way to do that isn't by hanging around the house and dealing with
sort of more problems. You have to get away and reinforce and reinvigorate your relationship
and whenever I tell one of our younger people about that, they sort of look at me and it's
like the scales are falling off of their eyes and they're saying, jeez, I hadn't thought about that.
You know, I'm so enmeshed in all these things, but that's a great idea and that's something as
an entrepreneur you also have to do. You just can't let relationships slip because you're half
overwhelmed. Beautifully put and I think there's no better place to end it. Steve, thank you so much.
I really appreciate it. It was an honor to talk to you. My pleasure. Thanks for listening to this
conversation with Stephen Schwarzman and thank you to our sponsors ExpressVPN and Masterclass.
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or simply connect with me on Twitter at Lex Friedman. And now let me leave you with some words
from Stephen Schwarzman's book, What It Takes. It's as hard to start and run a small business
as it is to start a big one. You'll suffer the same toll financially and psychologically
as you bludgeon it into existence. It's hard to raise the money and to find the right people.
So if you're going to dedicate your life to a business, which is the only way it will ever
work, you should choose one with a potential to be huge. Thank you for listening and hope to see you
next time.