WEBVTT 00:00:00.000 --> 00:00:02.060 Welcome back to the Deep Dive. It is Friday, 00:00:02.259 --> 00:00:06.299 February 6th, 2026. It is. Today, we are looking 00:00:06.299 --> 00:00:09.740 at a figure who, well, he's not just a person, 00:00:09.800 --> 00:00:12.119 really. He's more like a gravitational force. 00:00:12.419 --> 00:00:14.380 That's a good way to put it. A center of gravity 00:00:14.380 --> 00:00:17.280 for money and power. Exactly. We are examining 00:00:17.280 --> 00:00:19.719 a figure who, you could argue, has done more 00:00:19.719 --> 00:00:23.719 to reshape the physical, financial, and political 00:00:23.719 --> 00:00:27.000 landscape of the last 40 years than almost anyone 00:00:27.000 --> 00:00:29.120 else you might just pass on the street. And it's 00:00:29.120 --> 00:00:30.859 a name that... Even if you don't know the man, 00:00:30.940 --> 00:00:33.259 you definitely know the name. You see it chiseled 00:00:33.259 --> 00:00:36.000 into the marble of our most hallowed public libraries. 00:00:36.219 --> 00:00:38.280 Oh, yeah. It's engraved into the foundations 00:00:38.280 --> 00:00:41.679 of Ivy League universities. And as of just a 00:00:41.679 --> 00:00:44.079 few months ago, it's now intimately tied to the 00:00:44.079 --> 00:00:45.840 very architecture of the White House itself. 00:00:46.140 --> 00:00:48.500 We are talking, of course, about Stephen A. Schwarzman, 00:00:48.679 --> 00:00:50.939 the co -founder of Blackstone, a man worth upwards 00:00:50.939 --> 00:00:54.420 of $40 billion. Though, I mean, frankly, those 00:00:54.420 --> 00:00:56.820 net worth estimates feel like they change by 00:00:56.820 --> 00:00:59.820 the hour with him. They really do. And he's a 00:00:59.820 --> 00:01:03.020 figure who sits at this incredibly complex intersection 00:01:03.020 --> 00:01:07.439 of Wall Street money, geopolitical power, and 00:01:07.439 --> 00:01:09.780 that kind of high society philanthropy that gets 00:01:09.780 --> 00:01:12.079 your name on buildings. And the timing for this 00:01:12.079 --> 00:01:14.719 deep dive really couldn't be better. We have 00:01:14.719 --> 00:01:17.540 a massive stack of sources here. I mean, a comprehensive 00:01:17.540 --> 00:01:21.579 biography, financial reports, a whole slew of 00:01:21.579 --> 00:01:23.599 news clippings leading right up to the end of 00:01:23.599 --> 00:01:26.129 2025. Right. And the reason we're talking about 00:01:26.129 --> 00:01:27.689 him today is that he's having a bit of a moment. 00:01:28.349 --> 00:01:30.750 Again. It seems like he's always having a moment. 00:01:30.829 --> 00:01:33.269 A moment is putting it so lightly. I mean, just 00:01:33.269 --> 00:01:35.629 look at the notes here. October 2025. So just 00:01:35.629 --> 00:01:37.829 a few months back, he was named as the primary 00:01:37.829 --> 00:01:41.049 donor for a new 90 ,000 square foot ballroom 00:01:41.049 --> 00:01:44.030 at the White House. Literal ballroom. A ballroom 00:01:44.030 --> 00:01:46.370 in the People's House. The state ballroom expansion. 00:01:46.469 --> 00:01:48.969 Exactly. And it's not a small project. It's a 00:01:48.969 --> 00:01:51.609 massive undertaking. And then you fast forward 00:01:51.609 --> 00:01:54.189 barely a month and he's at a red carpet dinner 00:01:54.189 --> 00:01:57.170 with the crown prince of Saudi Arabia. It just 00:01:57.170 --> 00:01:59.489 feels like every time. you pull a thread in the 00:01:59.489 --> 00:02:01.650 tapestry of global power right now. You find 00:02:01.650 --> 00:02:03.670 Stephen Schwartzman holding the needle. Yes, 00:02:03.750 --> 00:02:05.890 that is the perfect image to start with. And 00:02:05.890 --> 00:02:07.969 the mission for this deep dive is really to look 00:02:07.969 --> 00:02:10.789 at that tapestry. We want to understand what 00:02:10.789 --> 00:02:14.129 it takes, which not coincidentally is the title 00:02:14.129 --> 00:02:17.349 of his memoir, to build an empire where you control 00:02:17.349 --> 00:02:20.349 over a trillion dollars in assets. A trillion 00:02:20.349 --> 00:02:23.530 with a T. I just want to pause on that for a 00:02:23.530 --> 00:02:25.229 second because that number is so big it becomes 00:02:25.229 --> 00:02:27.409 abstract. You can't even picture it. It is completely 00:02:27.409 --> 00:02:29.870 abstract. To put it in perspective for you, $1 00:02:29.870 --> 00:02:34.150 .1 trillion is larger than the entire GDP of 00:02:34.150 --> 00:02:37.009 Saudi Arabia. Wow. It's larger than the GDP of 00:02:37.009 --> 00:02:39.789 Switzerland. When you control that much capital, 00:02:39.949 --> 00:02:42.729 you aren't just a business owner anymore. You 00:02:42.729 --> 00:02:45.270 are, for all intents and purposes, a sovereign 00:02:45.270 --> 00:02:48.650 economic entity. And with that comes, well... 00:02:48.840 --> 00:02:51.439 Friction. We need to explore the controversies 00:02:51.439 --> 00:02:53.860 that inevitably follow. Because when one man 00:02:53.860 --> 00:02:56.479 has the power to shape economies, to direct the 00:02:56.479 --> 00:02:59.199 future of AI research at universities, and even 00:02:59.199 --> 00:03:01.300 change the layout of the president's home. It 00:03:01.300 --> 00:03:03.400 raises some massive questions. Huge questions 00:03:03.400 --> 00:03:06.060 about influence, democracy, legacy, everything. 00:03:06.610 --> 00:03:09.030 Absolutely. We need to analyze that intersection 00:03:09.030 --> 00:03:11.430 of private equity, which is his engine. It's 00:03:11.430 --> 00:03:13.849 the source of all the power in public policy. 00:03:14.430 --> 00:03:17.870 How does he navigate between making money and 00:03:17.870 --> 00:03:20.789 making history? Because as we'll see for Schwarzman, 00:03:20.830 --> 00:03:23.050 those two things are often the exact same transaction. 00:03:23.330 --> 00:03:26.080 OK, let's do it. Let's unpack this. And to understand 00:03:26.080 --> 00:03:28.259 the man who buys ballrooms for the White House, 00:03:28.340 --> 00:03:30.400 I think we have to go back to where it all started. 00:03:30.860 --> 00:03:33.639 Because the origin story here, specifically one 00:03:33.639 --> 00:03:35.979 story from when he was just 14 years old, is 00:03:35.979 --> 00:03:38.620 honestly the most on -the -nose foreshadowing 00:03:38.620 --> 00:03:40.939 I think I've ever read. It feels like it was 00:03:40.939 --> 00:03:42.879 written by a screenwriter, but it actually happened. 00:03:43.060 --> 00:03:45.740 It really is. It's almost too perfect. So let's 00:03:45.740 --> 00:03:49.699 set the scene. Schwarzman is born in 1947, grows 00:03:49.699 --> 00:03:52.099 up in a Jewish family in Huntington Valley, Pennsylvania. 00:03:52.900 --> 00:03:55.659 It's a... Comfortable suburban upbringing. And 00:03:55.659 --> 00:03:58.520 his father, Joseph, owned a dry goods store. 00:03:58.759 --> 00:04:00.639 Right. A linen and curtain store specifically. 00:04:00.639 --> 00:04:03.039 And his dad was a Wharton grad. Right. So there's 00:04:03.039 --> 00:04:04.860 already a business lineage there. It's not like 00:04:04.860 --> 00:04:07.860 he came from nothing. Right. But the key detail 00:04:07.860 --> 00:04:11.460 is that his father was very content with a comfortable 00:04:11.460 --> 00:04:14.800 middle class life. He had his one store. He had 00:04:14.800 --> 00:04:17.180 his family. He was happy. He had opportunities 00:04:17.180 --> 00:04:19.879 to expand, to open more stores. And he turned 00:04:19.879 --> 00:04:23.379 them down. He didn't have that. Hunger. He didn't. 00:04:23.379 --> 00:04:25.819 And Stephen, even as a kid, could not understand 00:04:25.819 --> 00:04:28.240 that. He looked at the store and saw limits. 00:04:28.519 --> 00:04:30.319 He looked at the world and saw opportunities 00:04:30.319 --> 00:04:32.699 to expand. And this comes out in a lawn mowing 00:04:32.699 --> 00:04:35.600 business. He starts at age 14. This is my favorite 00:04:35.600 --> 00:04:38.459 part. It's so telling. So most kids start a lawn 00:04:38.459 --> 00:04:39.980 mowing business and what do they do? They get 00:04:39.980 --> 00:04:42.839 sweaty. They push the mower. They get grass stains 00:04:42.839 --> 00:04:44.939 on their sneakers. They trade their time for 00:04:44.939 --> 00:04:48.439 five bucks. Not Stephen Schwartzman. No. He realizes 00:04:48.439 --> 00:04:50.639 very, very quickly that pushing a mower is a 00:04:50.639 --> 00:04:53.050 bottleneck. It's inefficient. You can only push 00:04:53.050 --> 00:04:55.129 one mower at a time. Your labor is the limiting 00:04:55.129 --> 00:04:58.310 factor. So what does he do? He recruits his younger 00:04:58.310 --> 00:05:00.889 twin brothers, Mark and Warren. Who were significantly 00:05:00.889 --> 00:05:03.430 younger, which gave him a bit of built -in authority, 00:05:03.509 --> 00:05:06.810 I'm sure. Of course. He pays them to do the actual 00:05:06.810 --> 00:05:10.709 mowing, the physical labor. Meanwhile, Stephen 00:05:10.709 --> 00:05:14.050 focuses entirely on client acquisition. He goes 00:05:14.050 --> 00:05:15.910 door to door, selling the service, getting the 00:05:15.910 --> 00:05:18.990 contracts, managing the books. His brothers are 00:05:18.990 --> 00:05:21.389 the ones doing the manual labor. And we have 00:05:21.389 --> 00:05:23.370 to pause there. We have to really look at the 00:05:23.370 --> 00:05:26.519 economics of what a 14 -year -old just did. Because 00:05:26.519 --> 00:05:29.199 that isn't just a smart kid move. That is the 00:05:29.199 --> 00:05:31.980 entire private equity model in miniature. How 00:05:31.980 --> 00:05:34.120 so? I mean, to me, it just sounds like he's being 00:05:34.120 --> 00:05:36.480 a classic older brother bossing his younger brothers 00:05:36.480 --> 00:05:38.660 around. Well, sure, on a sibling level, that's 00:05:38.660 --> 00:05:41.259 part of it. But economically, what he discovered 00:05:41.259 --> 00:05:44.860 was labor arbitrage. He realized that the value 00:05:44.860 --> 00:05:46.980 of the service to the client. let's say it's 00:05:46.980 --> 00:05:49.759 $10 for a lawn, was higher than the cost of the 00:05:49.759 --> 00:05:51.759 labor required to perform it. The money he paid 00:05:51.759 --> 00:05:53.560 his brothers. Let's say he paid his brothers 00:05:53.560 --> 00:05:56.000 $5. So he pockets the difference. He pockets 00:05:56.000 --> 00:05:58.920 the spread. He recognized that the real leverage, 00:05:59.120 --> 00:06:02.040 the real way to scale, isn't in doing the work. 00:06:02.180 --> 00:06:05.139 It's in structuring the deal. He owned the client 00:06:05.139 --> 00:06:07.500 relationship. He owned the brand, Schwarzman 00:06:07.500 --> 00:06:09.639 Mowing. His brothers were just the machinery. 00:06:09.980 --> 00:06:13.019 It's brilliant, but it's also a little... Cold. 00:06:13.240 --> 00:06:15.699 I mean, I do wonder how Mark and Warren felt 00:06:15.699 --> 00:06:18.519 about their profit margins. Did they know they 00:06:18.519 --> 00:06:21.180 were being arbitraged by their own brother? I'm 00:06:21.180 --> 00:06:23.540 sure they were paid a market rate for a kid pushing 00:06:23.540 --> 00:06:27.480 a mower. But the surplus value, the profit, went 00:06:27.480 --> 00:06:29.519 to the person who organized the capital and the 00:06:29.519 --> 00:06:32.800 contract. That's the key lesson. Schwarzman wasn't 00:06:32.800 --> 00:06:35.839 a laborer. He was an aggregator of labor. It's 00:06:35.839 --> 00:06:37.779 just incredible that he had that instinct before 00:06:37.779 --> 00:06:40.160 he could even drive. He understood that you don't 00:06:40.160 --> 00:06:42.079 get rich by working, you get rich by management 00:06:42.079 --> 00:06:44.860 fees. Precisely. And that separation between 00:06:44.860 --> 00:06:47.519 the operator and the owner is the single defining 00:06:47.519 --> 00:06:51.180 characteristic of his entire career. So from 00:06:51.180 --> 00:06:53.579 there, he's on a very specific track. He goes 00:06:53.579 --> 00:06:56.660 to Yale, graduates in the class of 1969. The 00:06:56.660 --> 00:06:58.860 elite track. The absolute elite track. And he 00:06:58.860 --> 00:07:00.240 wasn't just hitting the books. He was in Skull 00:07:00.240 --> 00:07:03.120 and Bones, The Secret Society. Which is practically 00:07:03.120 --> 00:07:05.379 a prerequisite for a certain type of American 00:07:05.379 --> 00:07:07.860 power broker, isn't it? It's like Hogwarts for 00:07:07.860 --> 00:07:10.120 future presidents and Wall Street titans. It 00:07:10.120 --> 00:07:11.779 really is. It's a network that lasts a lifetime. 00:07:12.339 --> 00:07:15.100 But here's the curveball that I think softens 00:07:15.100 --> 00:07:17.399 the image a little. or at least complicates it. 00:07:17.680 --> 00:07:20.000 He also founded the Davenport Ballet Society 00:07:20.000 --> 00:07:22.980 at Yale. A ballet society. That does not fit 00:07:22.980 --> 00:07:25.100 the profile. And I think this is important. We 00:07:25.100 --> 00:07:27.500 often caricature these finance titans as just 00:07:27.500 --> 00:07:29.939 number crunchers or these ruthless corporate 00:07:29.939 --> 00:07:34.139 raiders. But Schwarzman has always had this deep 00:07:34.139 --> 00:07:36.519 affinity for high culture, for the arts, for 00:07:36.519 --> 00:07:38.959 aesthetics, for presentation. He likes the show. 00:07:39.120 --> 00:07:41.439 He loves the show. He understands that power 00:07:41.439 --> 00:07:44.529 is... partly about performance. It's about being 00:07:44.529 --> 00:07:46.389 seen in the right places with the right things. 00:07:46.509 --> 00:07:48.970 The Ballet Society then, the White House ballrooms 00:07:48.970 --> 00:07:51.209 now, it shows he cares about the aesthetics of 00:07:51.209 --> 00:07:53.689 high society, not just the bank account. So he 00:07:53.689 --> 00:07:55.610 wants the world to be beautiful. Provided he 00:07:55.610 --> 00:07:57.329 is the one curating it. That's a great point. 00:07:57.529 --> 00:08:00.110 So he does Yale, does a brief stint in the Army 00:08:00.110 --> 00:08:01.850 Reserve, then it's on to Harvard Business School, 00:08:01.930 --> 00:08:05.439 class of 72. He's just ticking every single box 00:08:05.439 --> 00:08:08.800 of the American elite establishment. He is. And 00:08:08.800 --> 00:08:11.680 his career trajectory reflects that speed and 00:08:11.680 --> 00:08:14.600 that pedigree. He starts at Donaldson, Lufkin 00:08:14.600 --> 00:08:17.079 and Jenrette, an investment bank. Then he moves 00:08:17.079 --> 00:08:20.319 to Lehman Brothers. And listen to this. He becomes 00:08:20.319 --> 00:08:23.300 a managing director at Lehman at age 31. 31. 00:08:23.500 --> 00:08:25.819 I was still figuring out how to separate my recycling 00:08:25.819 --> 00:08:29.060 properly at 31. He's running global M &A. Exactly. 00:08:29.240 --> 00:08:31.500 He was the head of global mergers and acquisitions. 00:08:31.579 --> 00:08:33.659 And we have to remember the context here. This 00:08:33.659 --> 00:08:37.220 is the late 70s, early 80s. The era of the corporate 00:08:37.220 --> 00:08:39.600 raider was just starting to heat up. This was 00:08:39.600 --> 00:08:41.960 the Wild West of modern finance. He was in the 00:08:41.960 --> 00:08:44.399 heart of it. But clearly, working for someone 00:08:44.399 --> 00:08:46.940 else, even if it was a giant like Lehman Brothers, 00:08:47.080 --> 00:08:50.159 wasn't enough. Because in 1985, he teams up with 00:08:50.159 --> 00:08:52.139 his former boss, Peter G. Peterson, and they 00:08:52.139 --> 00:08:54.480 go out on their own. And they found Blackstone. 00:08:54.620 --> 00:08:56.799 And this is the pivot point in the story. They 00:08:56.799 --> 00:08:59.600 started with just $400 ,000. It was a boutique 00:08:59.600 --> 00:09:02.320 M &A advisory firm initially. Just two guys and 00:09:02.320 --> 00:09:04.460 a phone. So they were advising other people on 00:09:04.460 --> 00:09:06.700 deals. Correct. But they quickly realized that 00:09:06.700 --> 00:09:09.320 advising on deals is nice, but owning the deal 00:09:09.320 --> 00:09:12.230 is better. We're back to the lawnmower. Why just 00:09:12.230 --> 00:09:14.250 tell the neighbor their grass needs cutting when 00:09:14.250 --> 00:09:16.769 you can own the mowing company? Exactly. Why 00:09:16.769 --> 00:09:18.669 just advise a company on how to sell itself? 00:09:19.490 --> 00:09:22.470 When you can buy the company, fix it up or strip 00:09:22.470 --> 00:09:25.809 it down and sell it for a massive profit. That 00:09:25.809 --> 00:09:28.049 is the birth of modern private equity for him. 00:09:28.129 --> 00:09:30.350 That's the leap. OK, I want to stop here and 00:09:30.350 --> 00:09:32.389 get technical for a minute because we throw around 00:09:32.389 --> 00:09:34.710 the term private equity or P .E. all the time. 00:09:34.970 --> 00:09:37.649 But if I'm listening to this on my commute, I 00:09:37.649 --> 00:09:40.690 want to know, how does a machine actually work? 00:09:40.809 --> 00:09:44.730 How do you turn a company into a check for Stephen 00:09:44.730 --> 00:09:46.750 Schwarzman? That's a great question. We need 00:09:46.750 --> 00:09:49.970 to break down the leveraged buyout or LBO. This 00:09:49.970 --> 00:09:52.309 is the engine of Blackstone's wealth. It's the 00:09:52.309 --> 00:09:54.629 core technology. Okay. Explain it like I'm a 00:09:54.629 --> 00:09:56.850 smart 14 -year -old who's good at math. Perfect. 00:09:57.330 --> 00:09:59.289 Imagine you want to buy a house that costs a 00:09:59.289 --> 00:10:01.809 million dollars, but you only have $200 ,000 00:10:01.809 --> 00:10:03.809 in your bank account. What do you do? I go to 00:10:03.809 --> 00:10:05.789 the bank and get a mortgage for the other $800 00:10:05.789 --> 00:10:09.370 ,000. Right. You use leverage. which is just 00:10:09.370 --> 00:10:12.750 a fancy word for debt, to buy the asset. Now 00:10:12.750 --> 00:10:15.870 imagine you do that, but with a company. Blackstone 00:10:15.870 --> 00:10:17.889 finds a company, let's say it's a hotel chain, 00:10:18.110 --> 00:10:21.429 that costs a billion dollars. Okay. They put 00:10:21.429 --> 00:10:24.129 down maybe $200 million of their own money, or 00:10:24.129 --> 00:10:26.669 their investors' money, and then they borrow 00:10:26.669 --> 00:10:29.990 the other $800 million from banks. Okay, so now 00:10:29.990 --> 00:10:31.750 they own a hotel chain, but they also have this 00:10:31.750 --> 00:10:36.129 mountain of debt. Who pays that back? Ah. Here 00:10:36.129 --> 00:10:37.669 is the magic trick, and this is where it gets 00:10:37.669 --> 00:10:40.309 so controversial. In a house mortgage, you pay 00:10:40.309 --> 00:10:42.220 the debt. It's your personal responsibility. 00:10:42.659 --> 00:10:45.860 In an LVO, Blackstone often transfers that debt 00:10:45.860 --> 00:10:47.840 onto the company they just bought. Wait a minute. 00:10:47.879 --> 00:10:50.019 So the hotel chain now has to pay off the loan 00:10:50.019 --> 00:10:52.460 that Blackstone used to buy it. Correct. The 00:10:52.460 --> 00:10:54.559 company is now saddled with this massive debt 00:10:54.559 --> 00:10:57.220 service. To pay it off, they had to become incredibly 00:10:57.220 --> 00:10:59.559 efficient very quickly. They might cut staff. 00:10:59.759 --> 00:11:01.320 They might sell off on profitable locations. 00:11:01.720 --> 00:11:03.740 They might squeeze their suppliers for better 00:11:03.740 --> 00:11:07.659 terms. That sounds incredibly risky for the hotel 00:11:07.659 --> 00:11:10.250 chain, for its employees. It is existential for 00:11:10.250 --> 00:11:12.309 the company. If they can't make the payments, 00:11:12.450 --> 00:11:16.409 they go bankrupt. But for Blackstone, their risk 00:11:16.409 --> 00:11:19.379 is limited to that initial down payment. If the 00:11:19.379 --> 00:11:21.360 company turns around and becomes more profitable, 00:11:21.620 --> 00:11:23.679 Blackstone sells it five or seven years later 00:11:23.679 --> 00:11:26.960 for, say, $2 billion. They pay off the original 00:11:26.960 --> 00:11:29.419 debt, and they keep the massive profit on their 00:11:29.419 --> 00:11:32.159 small initial investment. The returns are enormous. 00:11:32.539 --> 00:11:34.879 So they're essentially flipping houses, but the 00:11:34.879 --> 00:11:36.820 house has to pay its own mortgage while it's 00:11:36.820 --> 00:11:38.919 being renovated, and all the people living in 00:11:38.919 --> 00:11:40.659 the house might get kicked out to make it work. 00:11:40.860 --> 00:11:43.399 That is a perfect analogy. And when it works, 00:11:43.519 --> 00:11:46.330 the returns are astronomical. That is how you 00:11:46.330 --> 00:11:50.149 get from $400 ,000 to $1 .1 trillion in assets 00:11:50.149 --> 00:11:52.529 under management. And speaking of returns, we 00:11:52.529 --> 00:11:54.669 have to talk about how Schwarzman himself gets 00:11:54.669 --> 00:11:57.289 paid. Because it's not just a salary, right? 00:11:57.389 --> 00:11:59.970 The numbers we see are way too big for a salary. 00:12:00.129 --> 00:12:02.490 Oh, no. The salary is a rounding error. The real 00:12:02.490 --> 00:12:04.590 money comes from something called carried interest. 00:12:04.929 --> 00:12:07.029 This is the tax thing that everyone in Washington 00:12:07.029 --> 00:12:09.610 fights about constantly. It is. It's the holy 00:12:09.610 --> 00:12:13.370 grail. Typically, a private equity firm takes 00:12:13.370 --> 00:12:16.570 a 20 % cut of the profits they make for their 00:12:16.570 --> 00:12:20.049 investors. That's the carry. Now, normally, if 00:12:20.049 --> 00:12:22.570 you or I get a big bonus at work, we pay income 00:12:22.570 --> 00:12:25.950 tax on it, which can be nearly 40 % at the top 00:12:25.950 --> 00:12:28.309 bracket. Right. But because of the way the tax 00:12:28.309 --> 00:12:31.490 code is written, this carry is treated as investment 00:12:31.490 --> 00:12:35.250 income, not salary. Even though it's literally 00:12:35.250 --> 00:12:37.970 money they earn for doing the job of managing 00:12:37.970 --> 00:12:41.269 the money. Exactly. Long -term investment income 00:12:41.269 --> 00:12:44.610 capital gains is taxed at a much, much lower 00:12:44.610 --> 00:12:47.289 rate, usually around 20%. So he's keeping almost 00:12:47.289 --> 00:12:49.669 double what a high -salaried employee would keep 00:12:49.669 --> 00:12:52.289 on the same amount of earnings. That's it. This 00:12:52.289 --> 00:12:54.169 tax treatment is one of the main reasons the 00:12:54.169 --> 00:12:56.570 ultra -wealthy in finance are so much wealthier 00:12:56.570 --> 00:12:58.090 than the ultra -wealthy in other industries. 00:12:58.269 --> 00:13:00.669 It's a massive built -in advantage. And looking 00:13:00.669 --> 00:13:02.610 at the numbers here, it clearly works for him. 00:13:02.669 --> 00:13:05.769 The IPO in 2007 seems like a huge moment. That's 00:13:05.769 --> 00:13:07.370 when Blackstone went public. It was the peak. 00:13:07.769 --> 00:13:10.370 June 2007. I mean, the timing was just incredible. 00:13:10.409 --> 00:13:12.269 Right before the global financial crisis really 00:13:12.269 --> 00:13:14.350 took hold. Right before the floor fell out. Completely. 00:13:14.669 --> 00:13:17.789 Blackstone goes public. Schwarzman sold a portion 00:13:17.789 --> 00:13:21.509 of his stake and personally pocketed $684 million 00:13:21.509 --> 00:13:25.509 in cash. Wow. Just from the IPO. And he kept 00:13:25.509 --> 00:13:28.169 a stake that was worth over $9 billion at the 00:13:28.169 --> 00:13:30.450 time. Talk about selling at the top. He cashed 00:13:30.450 --> 00:13:32.809 out right before the world melted down. It was 00:13:32.809 --> 00:13:35.470 a master stroke of timing. But it also put a 00:13:35.470 --> 00:13:38.419 giant target on his back. Because while the rest 00:13:38.419 --> 00:13:40.320 of the world was losing their homes in 2008 and 00:13:40.320 --> 00:13:43.019 2009, he had just cashed out one of the biggest 00:13:43.019 --> 00:13:45.500 paydays in Wall Street history. And the paychecks 00:13:45.500 --> 00:13:47.039 didn't stop there. I'm just looking at these 00:13:47.039 --> 00:13:49.019 compensation figures from our sources. 2006, 00:13:49.539 --> 00:13:52.700 almost $400 million. 2008, the year of the crash, 00:13:52.779 --> 00:13:57.000 he gets over $700 million. Right. 2017, $786 00:13:57.000 --> 00:14:00.259 million. And then even as recently as 2022, he 00:14:00.259 --> 00:14:03.419 was the highest paid CEO in the U .S. with $253 00:14:03.419 --> 00:14:06.559 million. It's just accumulation on a scale that 00:14:06.559 --> 00:14:09.559 separates him from even the normal rich. He isn't 00:14:09.559 --> 00:14:11.820 just wealthy. He is a different species of economic 00:14:11.820 --> 00:14:14.399 actor. And he has a philosophy that matches that 00:14:14.399 --> 00:14:16.600 aggression. There's a quote here from 2007 that 00:14:16.600 --> 00:14:18.299 I highlighted because it really just strips away 00:14:18.299 --> 00:14:20.440 the polite veneer. Oh, I know the one. This is 00:14:20.440 --> 00:14:22.299 the one that always gets quoted. He said, I want 00:14:22.299 --> 00:14:25.179 war. Not a series of skirmishes. I always think 00:14:25.179 --> 00:14:27.340 about what will kill off the other bidder. What 00:14:27.340 --> 00:14:29.399 will kill off the other bidder. Just think about 00:14:29.399 --> 00:14:32.340 that language. Kill off. It's so visceral. It 00:14:32.340 --> 00:14:34.720 sounds like a line from Game of Thrones, not 00:14:34.720 --> 00:14:37.179 the Wall Street Journal. It's not outperform 00:14:37.179 --> 00:14:40.519 the other bidder or win the deal. It's kill. 00:14:40.759 --> 00:14:43.960 It is. And it contradicts the polished diplomatic 00:14:43.960 --> 00:14:48.639 arts patron image he tries to project now. But 00:14:48.639 --> 00:14:50.139 you have to understand in the world of private 00:14:50.139 --> 00:14:53.519 equity. especially in the 80s and 90s. That was 00:14:53.519 --> 00:14:56.159 the mindset. It's a zero -sum game. If I buy 00:14:56.159 --> 00:15:00.460 this asset, you don't. If I win, you lose. He 00:15:00.460 --> 00:15:04.039 treats business as combat. Which makes his transition 00:15:04.039 --> 00:15:07.340 into the world of politics and diplomacy so fascinating. 00:15:07.799 --> 00:15:10.259 Because killing off the bitter works in a boardroom, 00:15:10.340 --> 00:15:12.179 but it doesn't necessarily work when you're dealing 00:15:12.179 --> 00:15:15.340 with presidents and prime ministers. Or maybe 00:15:15.340 --> 00:15:16.879 he does. That's the billion dollar question, 00:15:16.980 --> 00:15:18.480 isn't it? Let's move to that. Section three, 00:15:18.639 --> 00:15:21.120 the kingmaker, because this is where Schwarzman's 00:15:21.120 --> 00:15:24.440 story gets really, really complex. OK, so politically, 00:15:24.679 --> 00:15:27.240 he's a Republican. That's not a surprise. Not 00:15:27.240 --> 00:15:30.059 at all. Low taxes, low spending, less regulation. 00:15:30.379 --> 00:15:32.980 It's the classic wish list for a man with his 00:15:32.980 --> 00:15:36.279 bank account. But he identifies as a pragmatist. 00:15:36.600 --> 00:15:39.299 A center right guy. He's donated to Mitt Romney. 00:15:39.379 --> 00:15:41.879 He's donated to Marco Rubio. He even had some 00:15:41.879 --> 00:15:43.879 positive things to say about Hillary Clinton 00:15:43.879 --> 00:15:47.120 back in 2016. He's not an ideologue in the sense 00:15:47.120 --> 00:15:49.840 of a culture warrior. He's an ideologue for capital. 00:15:50.360 --> 00:15:53.820 His one core belief is stability for his investments. 00:15:54.200 --> 00:15:57.039 If a Democrat offers a stable, predictable environment 00:15:57.039 --> 00:15:59.759 for business, he'll work with them. If a Republican 00:15:59.759 --> 00:16:02.610 does, great. But then... Enter Donald Trump. 00:16:02.789 --> 00:16:05.490 Yes. And this is a relationship that has more 00:16:05.490 --> 00:16:07.850 twists and turns than a roller coaster. It's 00:16:07.850 --> 00:16:09.549 fascinating. They've been friends for a long 00:16:09.549 --> 00:16:11.210 time, right, from the New York social scene. 00:16:11.710 --> 00:16:14.110 Decades. They ran in the same Palm Beach and 00:16:14.110 --> 00:16:15.889 Manhattan social loops. They know each other 00:16:15.889 --> 00:16:19.230 well. So when Trump wins in 2016, Schwartzman 00:16:19.230 --> 00:16:21.730 isn't on the outside looking in. He's right there 00:16:21.730 --> 00:16:24.129 from day one. He chairs the Strategic and Policy 00:16:24.129 --> 00:16:26.970 Forum. He's the one rounding up CEOs like Jamie 00:16:26.970 --> 00:16:29.230 Dimon of J .P. Morgan and Bob Iger of Disney 00:16:29.230 --> 00:16:32.269 to come advise the new president. And he defended 00:16:32.269 --> 00:16:34.110 that involvement really heavily, didn't he? I 00:16:34.110 --> 00:16:36.169 remember there was a lot of backlash from academics 00:16:36.169 --> 00:16:38.509 and other business leaders. Oh, yeah. And his 00:16:38.509 --> 00:16:41.049 argument was basically, look, having influence 00:16:41.049 --> 00:16:43.129 is a good thing. Right. If I'm in the room, I 00:16:43.129 --> 00:16:45.549 can give sound, rational advice. The classic 00:16:45.549 --> 00:16:48.350 adult in the room theory. Exactly. You're better 00:16:48.350 --> 00:16:50.190 off with me whispering in his ear than someone 00:16:50.190 --> 00:16:53.590 else. But that forum fell apart pretty quickly. 00:16:53.610 --> 00:16:56.960 August 2017. After the Charlottesville protests, 00:16:57.360 --> 00:17:01.200 CEOs started resigning en masse and Trump disbanded 00:17:01.200 --> 00:17:03.679 it before it could collapse entirely. But Schwarzman 00:17:03.679 --> 00:17:06.019 didn't cut ties. That's the key part. He didn't 00:17:06.019 --> 00:17:08.960 walk away. No, he kept donating. In the 2020 00:17:08.960 --> 00:17:12.920 election cycle, he gave $33 .5 million to Republicans. 00:17:13.220 --> 00:17:15.940 He was all in. But then came January 6th, and 00:17:15.940 --> 00:17:18.180 the sources say he called it an insurrection 00:17:18.180 --> 00:17:20.960 and an affront to Democratic values. He did. 00:17:21.019 --> 00:17:23.180 He put out a statement. But notice what he didn't 00:17:23.180 --> 00:17:26.319 do. He didn't burn the bridge. He condemned the 00:17:26.319 --> 00:17:29.180 specific action. But he was very careful not 00:17:29.180 --> 00:17:32.200 to excommunicate the leader, Trump himself. He's 00:17:32.200 --> 00:17:34.160 a hedge better pun, very much intended. He always 00:17:34.160 --> 00:17:36.359 keeps his options open. Well, the bridge looked 00:17:36.359 --> 00:17:39.519 a little shaky in 2022. This is the part that 00:17:39.519 --> 00:17:42.019 fascinates me. He came out publicly and said 00:17:42.019 --> 00:17:44.180 he would not support Trump in the 2024 election. 00:17:44.460 --> 00:17:47.680 He called for a new generation of leaders. Right. 00:17:48.009 --> 00:17:49.950 That felt like a breakup. That felt like the 00:17:49.950 --> 00:17:52.529 entire business establishment with Schwartzman 00:17:52.529 --> 00:17:55.309 as its spokesman saying, we are done with the 00:17:55.309 --> 00:17:58.130 chaos. We want someone predictable. It did. It 00:17:58.130 --> 00:18:00.289 felt like Wall Street was placing a big public 00:18:00.289 --> 00:18:03.329 bet on Ron DeSantis or Nikki Haley or someone 00:18:03.329 --> 00:18:05.890 else, someone who wouldn't tweet the market into 00:18:05.890 --> 00:18:08.950 a tailspin at 3 a .m. But and here is the key 00:18:08.950 --> 00:18:10.710 to understanding how Stephen Schwartzman operates. 00:18:10.849 --> 00:18:12.930 When it became clear that Trump was going to 00:18:12.930 --> 00:18:16.269 be the nominee. What did he do in 2024? We reversed 00:18:16.269 --> 00:18:18.890 course. Completely backed Trump. He called it 00:18:18.890 --> 00:18:21.309 a vote for change. And you just have to ask, 00:18:21.369 --> 00:18:25.690 why? What changed? What changed is that the new 00:18:25.690 --> 00:18:28.529 generation lost. And Stephen Schwarzman does 00:18:28.529 --> 00:18:31.930 not bet on losers. It's not about liking Trump 00:18:31.930 --> 00:18:34.710 personally or even agreeing with him ideologically. 00:18:35.029 --> 00:18:37.210 It's about recognizing that if Trump is going 00:18:37.210 --> 00:18:39.410 to be the president, Stephen Schwarzman needs 00:18:39.410 --> 00:18:42.130 to be on the winning team to protect his interests 00:18:42.130 --> 00:18:45.509 and his investors' interests. It's pure pragmatism 00:18:45.509 --> 00:18:47.990 over principle. And that bet seems to have paid 00:18:47.990 --> 00:18:50.029 off, judging by where we are now in our timeline 00:18:50.029 --> 00:18:53.769 early 2026, because late 2025 was an incredibly 00:18:53.769 --> 00:18:57.259 busy and... influential period for him. It has 00:18:57.259 --> 00:18:59.660 paid off massively. Let's just look at the Harvard 00:18:59.660 --> 00:19:03.019 dispute in the fall of 2025. This was a huge 00:19:03.019 --> 00:19:04.920 story that I think a lot of people missed the 00:19:04.920 --> 00:19:06.880 nuance of. Refresh my memory. This was the big 00:19:06.880 --> 00:19:09.240 standoff over federal research funding. Right. 00:19:09.319 --> 00:19:11.240 So you have the Trump administration fresh into 00:19:11.240 --> 00:19:13.680 the second term, and they're threatening to pull 00:19:13.680 --> 00:19:16.819 billions in federal research funding from Ivy 00:19:16.819 --> 00:19:18.880 League schools over what they call ideological 00:19:18.880 --> 00:19:21.700 noncompliance. Basically, a culture war attack 00:19:21.700 --> 00:19:24.359 on university endowments and what they saw as 00:19:24.359 --> 00:19:27.380 woke curriculum. Exactly. And this would have 00:19:27.380 --> 00:19:29.559 decimated Harvard's research budget completely. 00:19:29.859 --> 00:19:32.059 And on the other side, you have Harvard, the 00:19:32.059 --> 00:19:34.059 ultimate establishment institution. They were 00:19:34.059 --> 00:19:36.299 at a total stalemate. The White House wasn't 00:19:36.299 --> 00:19:38.160 taking their calls. The academics didn't know 00:19:38.160 --> 00:19:40.319 how to speak the administration's language. So 00:19:40.319 --> 00:19:44.119 who steps in? The Yale guy. The Yale guy, Stephen 00:19:44.119 --> 00:19:46.680 Schwartzman. But he's the perfect intermediary. 00:19:46.740 --> 00:19:49.140 He speaks the language of the Ivy League. I mean, 00:19:49.160 --> 00:19:51.220 he's got buildings named after him there. And 00:19:51.220 --> 00:19:53.759 he speaks the language of Trump and transactional 00:19:53.759 --> 00:19:56.220 politics. So how did he fix it? Did he give a 00:19:56.220 --> 00:19:58.940 big speech about academic freedom? No, of course 00:19:58.940 --> 00:20:01.660 not. According to the reports we have, he went 00:20:01.660 --> 00:20:04.339 in and he structured a deal. He treated it like 00:20:04.339 --> 00:20:07.519 a merger negotiation. He essentially brokered 00:20:07.519 --> 00:20:10.680 a treaty where Harvard agreed to certain administrative 00:20:10.680 --> 00:20:13.339 changes, things the White House wanted regarding 00:20:13.339 --> 00:20:16.279 curriculum oversight and transparency in exchange 00:20:16.279 --> 00:20:18.500 for the funding remaining intact. He treated 00:20:18.500 --> 00:20:20.519 the Department of Education and Harvard University 00:20:20.519 --> 00:20:23.670 like two companies in a distressed merger. Exactly. 00:20:23.750 --> 00:20:26.049 He viewed it as a transaction. He didn't get 00:20:26.049 --> 00:20:27.970 emotional about the politics. He just asked, 00:20:28.009 --> 00:20:30.589 what does site A need to walk away happy? What 00:20:30.589 --> 00:20:32.589 does site B need? How do we clear the market? 00:20:33.250 --> 00:20:35.630 To be able to do that, to be the bridge between 00:20:35.630 --> 00:20:37.970 the populist executive branch and the intellectual 00:20:37.970 --> 00:20:41.250 elite, that is a position of almost unbelievable 00:20:41.250 --> 00:20:45.089 power. And then, almost as a victory lap, we 00:20:45.089 --> 00:20:47.650 get the ballroom announcement in October 2025. 00:20:48.410 --> 00:20:51.369 He's named as the key donor for the massive expansion 00:20:51.369 --> 00:20:53.680 of the East Wing. I mean, just think about the 00:20:53.680 --> 00:20:56.000 symbolism there. He isn't just visiting the White 00:20:56.000 --> 00:20:58.380 House for a meeting. He is physically building 00:20:58.380 --> 00:21:00.440 the room where the state dinners will happen 00:21:00.440 --> 00:21:02.960 for the next century. He's constructing the stage 00:21:02.960 --> 00:21:05.500 upon which American diplomacy is performed. It's 00:21:05.500 --> 00:21:08.039 a permanent physical footprint in the seat of 00:21:08.039 --> 00:21:10.339 American power. It's the ultimate access. And 00:21:10.339 --> 00:21:12.299 that access is what allows him to navigate these 00:21:12.299 --> 00:21:15.119 tricky geopolitical situations. Like in November 00:21:15.119 --> 00:21:18.900 2025, Crown Prince Mohammed bin Salman MBS comes 00:21:18.900 --> 00:21:21.269 to the White House. This is his first official 00:21:21.269 --> 00:21:23.869 U .S. visit since the Khashoggi killing in 2018. 00:21:24.230 --> 00:21:26.809 A huge geopolitical moment, a normalization of 00:21:26.809 --> 00:21:28.609 relations that was very controversial. Very. 00:21:29.009 --> 00:21:30.950 And Schwarzman is there at the red carpet dinner. 00:21:31.109 --> 00:21:33.990 Of course he is. Because the Saudi Public Investment 00:21:33.990 --> 00:21:36.750 Fund is a massive player in the world of private 00:21:36.750 --> 00:21:38.710 equity. They are one of his biggest clients. 00:21:38.910 --> 00:21:41.730 Schwarzman has to be there. He's arguably one 00:21:41.730 --> 00:21:44.150 of the few people in the world who can seamlessly 00:21:44.150 --> 00:21:47.329 move from a boardroom in Riyadh to a ballroom 00:21:47.329 --> 00:21:50.619 in D .C. It's interesting, though, because he's 00:21:50.619 --> 00:21:53.940 so global. But then in 2025, he was also arguing 00:21:53.940 --> 00:21:56.240 that the U .S. tariff situation actually gave 00:21:56.240 --> 00:21:59.380 Europe a unique investment advantage. That was 00:21:59.380 --> 00:22:02.420 a fascinating bit of economic 4D chess. He was 00:22:02.420 --> 00:22:04.220 basically telling his investors, look, the U 00:22:04.220 --> 00:22:05.799 .S. is locking down with tariffs. It's becoming 00:22:05.799 --> 00:22:07.839 more protectionist. So the smart money should 00:22:07.839 --> 00:22:09.680 be flowing to Europe right now. He just plays 00:22:09.680 --> 00:22:12.119 all sides of the board. He does because he isn't 00:22:12.119 --> 00:22:14.930 loyal to a nation state's policy. He's little 00:22:14.930 --> 00:22:17.069 to where capital can flow most efficiently and 00:22:17.069 --> 00:22:19.589 generate the highest return. He represents a 00:22:19.589 --> 00:22:21.609 layer of global capital that views presidents 00:22:21.609 --> 00:22:24.470 and prime ministers as sort of temporary managers. 00:22:24.750 --> 00:22:28.009 The money remains. The institutions remain. And 00:22:28.009 --> 00:22:30.529 Stephen Schwarzman sees himself as the custodian 00:22:30.529 --> 00:22:33.069 of that continuity. Which brings us to the other 00:22:33.069 --> 00:22:36.750 way he ensures his continuity, his legacy, putting 00:22:36.750 --> 00:22:39.269 his name on literally everything. Section four, 00:22:39.509 --> 00:22:43.170 monument building. The edifice complex. Is that 00:22:43.170 --> 00:22:46.440 a real term? It is now. It's the desire of the 00:22:46.440 --> 00:22:48.960 ultra wealthy to leave a physical legacy that 00:22:48.960 --> 00:22:51.980 outlasts their biological life. A building with 00:22:51.980 --> 00:22:54.579 your name on it is a form of immortality. So 00:22:54.579 --> 00:22:57.299 he signed the giving pledge back in 2020, promising 00:22:57.299 --> 00:22:59.579 to give away the majority of his wealth. Great. 00:22:59.859 --> 00:23:02.799 But his giving. It usually comes with a chisel 00:23:02.799 --> 00:23:05.339 and a stonemason. It does. It's rarely anonymous. 00:23:05.779 --> 00:23:07.619 Let's just look at the portfolio of buildings. 00:23:07.680 --> 00:23:09.480 The New York Public Library, the main branch 00:23:09.480 --> 00:23:11.940 on Fifth Avenue, the one with the iconic lions 00:23:11.940 --> 00:23:14.519 out front. It's now officially the Stephen A. 00:23:14.539 --> 00:23:16.319 Schwarzman building. That costs for that $100 00:23:16.319 --> 00:23:18.220 million. Which is a lot of money, obviously. 00:23:18.359 --> 00:23:21.000 An incredible gift to the city. But also, to 00:23:21.000 --> 00:23:23.279 have your name on one of the most famous, most 00:23:23.279 --> 00:23:26.660 beloved public buildings in New York City forever. 00:23:26.799 --> 00:23:29.829 It feels like a bargain. It is a massive bargain. 00:23:29.970 --> 00:23:32.269 Think about it. That building will stand for 00:23:32.269 --> 00:23:35.589 another 100, 200 years. For $100 million, which 00:23:35.589 --> 00:23:38.089 for him is maybe a few months of income, he bought 00:23:38.089 --> 00:23:41.170 a specific kind of immortality. Every single 00:23:41.170 --> 00:23:43.849 person who walks past 42nd and 5th reads his 00:23:43.849 --> 00:23:46.109 name. And then you have the universities. An 00:23:46.109 --> 00:23:48.930 empire of Schwarzman -funded buildings. MIT, 00:23:49.390 --> 00:23:53.309 $350 million for the Schwarzman College of Computing. 00:23:53.369 --> 00:23:56.529 Oxford, $150 million for the Schwarzman Center 00:23:56.529 --> 00:23:59.609 for the Humanities. Yale. $150 million for the 00:23:59.609 --> 00:24:01.910 Schwarzman Center, a campus hub. What stands 00:24:01.910 --> 00:24:04.829 out to me is the mix. He's funding AI and computing 00:24:04.829 --> 00:24:07.609 at MIT, the future, the cutting edge, and he's 00:24:07.609 --> 00:24:10.289 funding the humanities at Oxford, the past, the 00:24:10.289 --> 00:24:12.849 culture, the classics. It's a portfolio approach 00:24:12.849 --> 00:24:14.890 to legacy. He wants to own the future of technology 00:24:14.890 --> 00:24:16.950 and be the great preserver of Western civilization 00:24:16.950 --> 00:24:19.890 at the same time. Exactly. But the most interesting 00:24:19.890 --> 00:24:22.250 and by far the most controversial of his philanthropic 00:24:22.250 --> 00:24:24.769 projects is the Schwarzman Scholars Program. 00:24:25.029 --> 00:24:29.250 The program in China. Yes, a $100 million personal 00:24:29.250 --> 00:24:32.250 gift to create a program at Tsinghua University 00:24:32.250 --> 00:24:35.269 in Beijing. He explicitly modeled it on the Rhodes 00:24:35.269 --> 00:24:38.170 Scholarship at Oxford. The stated goal was to 00:24:38.170 --> 00:24:41.009 build a network of future global leaders who 00:24:41.009 --> 00:24:43.630 understand China. Which sounds noble on paper. 00:24:43.750 --> 00:24:46.250 I mean, building a bridge of understanding between 00:24:46.250 --> 00:24:49.170 the East and West, especially now when geopolitical 00:24:49.170 --> 00:24:52.480 tensions are so high. It does. But there's a 00:24:52.480 --> 00:24:54.579 pretty significant catch. The source material 00:24:54.579 --> 00:24:56.920 we have notes that the program has documented 00:24:56.920 --> 00:24:59.240 ties to the United Front Work Department. And 00:24:59.240 --> 00:25:01.279 you should explain what that is for us. The United 00:25:01.279 --> 00:25:03.539 Front is an agency of the Chinese Communist Party, 00:25:03.660 --> 00:25:07.140 the CCP. And its job is explicitly to conduct 00:25:07.140 --> 00:25:10.160 influence operations abroad, to co -opt foreign 00:25:10.160 --> 00:25:12.920 elites and promote the CCP's worldview. So there's 00:25:12.920 --> 00:25:16.150 this deep tension. A huge one. Is he fostering 00:25:16.150 --> 00:25:18.829 open dialogue and mutual understanding? Or is 00:25:18.829 --> 00:25:21.309 he creating a prestigious Western -branded program 00:25:21.309 --> 00:25:24.210 that operates under the thumb of the CCP and, 00:25:24.410 --> 00:25:27.069 critics would argue, helps to legitimize a regime 00:25:27.069 --> 00:25:29.349 that is increasingly authoritarian? And Schwarzman 00:25:29.349 --> 00:25:31.549 would probably argue that engagement is always 00:25:31.549 --> 00:25:35.049 better than isolation. Of course. I want war, 00:25:35.230 --> 00:25:38.910 not skirmishes in business, but engagement and 00:25:38.910 --> 00:25:43.210 dialogue in geopolitics. And why? Because a hot 00:25:43.210 --> 00:25:45.819 war is bad for business? especially if it's between 00:25:45.819 --> 00:25:48.799 nuclear powers. He wants a stable, predictable 00:25:48.799 --> 00:25:52.099 China because Blackstone has billions and billions 00:25:52.099 --> 00:25:54.619 of dollars invested in Asia. Now, we have to 00:25:54.619 --> 00:25:56.519 talk about the one time this monument building 00:25:56.519 --> 00:25:59.480 didn't go so well, the Abington High School controversy. 00:25:59.740 --> 00:26:02.200 This is his alma mater, a public high school 00:26:02.200 --> 00:26:03.940 in Pennsylvania. This is such a telling story 00:26:03.940 --> 00:26:06.359 because it shows the limits of what money can 00:26:06.359 --> 00:26:10.019 buy. He offered a $25 million donation. Now, 00:26:10.059 --> 00:26:11.980 for a public school, that is transformational 00:26:11.980 --> 00:26:14.480 money. We were talking new science labs, new 00:26:14.480 --> 00:26:17.140 computer labs, a whole new technological wing. 00:26:17.200 --> 00:26:19.220 It's a game changer. But there were strings attached. 00:26:19.480 --> 00:26:22.119 Heavy strings. He wanted the naming rights, not 00:26:22.119 --> 00:26:24.039 just for a stadium. He'd already done that back 00:26:24.039 --> 00:26:26.599 in 2004. He wanted the entire school named after 00:26:26.599 --> 00:26:28.440 him. Abington Senior High School would cease 00:26:28.440 --> 00:26:30.519 to exist. It would become Stephen A. Schwarzman 00:26:30.519 --> 00:26:32.539 High School. And the community said, wait a minute. 00:26:32.880 --> 00:26:35.220 They revolted. There was a massive public backlash. 00:26:35.519 --> 00:26:39.019 Alumni, parents, students, teachers. They felt 00:26:39.019 --> 00:26:41.539 that a public institution shouldn't be rebranded 00:26:41.539 --> 00:26:43.240 for a billionaire just because he wrote a check. 00:26:43.559 --> 00:26:46.900 It blurred the line between charity and privatization. 00:26:47.380 --> 00:26:49.819 It felt like he was buying the town's identity. 00:26:50.140 --> 00:26:52.960 Which is so different from the NYPL or Yale. 00:26:53.220 --> 00:26:55.319 Totally different. Those are private institutions 00:26:55.319 --> 00:26:57.759 for the most part. This was a public school funded 00:26:57.759 --> 00:27:00.559 by taxpayers. And he backed down. He did. They 00:27:00.559 --> 00:27:02.420 eventually reached a new agreement. The school 00:27:02.420 --> 00:27:05.420 got to keep the $25 million donation, but the 00:27:05.420 --> 00:27:07.680 renaming condition was removed. That has to be 00:27:07.680 --> 00:27:10.660 rare for him to lose a negotiation like that. 00:27:10.779 --> 00:27:12.500 I think it was a real reality check. You can 00:27:12.500 --> 00:27:14.200 buy a ballroom at the White House, apparently, 00:27:14.440 --> 00:27:16.400 because that's a transactional environment where 00:27:16.400 --> 00:27:19.420 everyone understands the game. But touching a 00:27:19.420 --> 00:27:22.680 community's identity, a public school, that's 00:27:22.680 --> 00:27:25.160 where people draw the line. It was a fascinating 00:27:25.160 --> 00:27:28.349 and very public check on his influence. It really 00:27:28.349 --> 00:27:30.349 is. So we have the business empire, the political 00:27:30.349 --> 00:27:32.450 influence, the monuments. But then there's the 00:27:32.450 --> 00:27:35.269 lifestyle, Section 5. Because you can't have 00:27:35.269 --> 00:27:38.210 $40 billion without living a little differently 00:27:38.210 --> 00:27:40.210 than the rest of us. Differently is the polite 00:27:40.210 --> 00:27:41.970 word, yeah. Let's talk real estate for a second. 00:27:42.210 --> 00:27:45.369 He owns the duplex at 740 Park Avenue in Manhattan. 00:27:45.710 --> 00:27:47.750 Which was formerly owned by John D. Rockefeller 00:27:47.750 --> 00:27:51.190 Jr. Again, he is literally inhabiting the shells 00:27:51.190 --> 00:27:53.190 of the previous generation of rubber barons. 00:27:53.309 --> 00:27:56.630 He sees himself as the new Rockefeller. And then 00:27:56.630 --> 00:27:59.250 there's Miramar in New Court, Rhode Island, one 00:27:59.250 --> 00:28:01.690 of the great Gilded Age mansions, bought for 00:28:01.690 --> 00:28:05.309 $27 million. And the plan is to turn it into 00:28:05.309 --> 00:28:08.329 a museum after he dies. Yes, a monument to his 00:28:08.329 --> 00:28:11.150 own taste and his own life. He wants to leave 00:28:11.150 --> 00:28:14.190 a Gilded Age mansion behind for posterity. But 00:28:14.190 --> 00:28:16.329 it's the resource usage that really gets people 00:28:16.329 --> 00:28:18.630 riled up. We need to talk about the water. The 00:28:18.630 --> 00:28:20.690 water controversies are where the Bond villain 00:28:20.690 --> 00:28:23.650 comparisons really start to gain some traction. 00:28:24.029 --> 00:28:26.630 I honestly gasped when I read the details on 00:28:26.630 --> 00:28:28.769 the UK incident. So let's set the scene. It's 00:28:28.769 --> 00:28:32.089 2025. The UK is in the middle of a severe drought. 00:28:32.250 --> 00:28:36.450 A very severe drought. Hosepipe bans are in effect 00:28:36.450 --> 00:28:38.630 across the country. People can't water their 00:28:38.630 --> 00:28:41.109 gardens or wash their cars. It's a national conservation 00:28:41.109 --> 00:28:44.529 effort. And Schwarzman owns Conholt Park, a 2 00:28:44.529 --> 00:28:48.289 ,500 -acre estate in Wiltshire. And on this estate, 00:28:48.490 --> 00:28:52.269 he has a private lake. A man -made ornamental 00:28:52.269 --> 00:28:54.869 lake. And it was getting low because of the drought. 00:28:55.190 --> 00:28:57.430 So what does he do? He doesn't wait for rain. 00:28:57.609 --> 00:29:00.069 He hires a fleet of commercial water tankers. 00:29:00.130 --> 00:29:03.069 Like big semi -trucks. Massive industrial tankers. 00:29:03.130 --> 00:29:05.190 He had them driving back and forth from Hampshire, 00:29:05.410 --> 00:29:07.829 a neighboring county that wasn't under the same 00:29:07.829 --> 00:29:10.329 strict restrictions, siphoning water from their 00:29:10.329 --> 00:29:12.450 supply to truck it over to Wiltshire to fill 00:29:12.450 --> 00:29:14.670 his private lake. He trucked in a lake. While 00:29:14.670 --> 00:29:16.390 the locals were watching their vegetable patches 00:29:16.390 --> 00:29:19.369 die. I mean, just imagine the visual. You are 00:29:19.369 --> 00:29:21.589 a local resident. You're doing your civic duty 00:29:21.589 --> 00:29:24.309 by conserving water. And you watch a convoy of 00:29:24.309 --> 00:29:27.150 heavy duty trucks rumble past your house day 00:29:27.150 --> 00:29:30.029 after day, burning diesel just so a billionaire's 00:29:30.029 --> 00:29:32.390 view remains picturesque. It feels like a caricature 00:29:32.390 --> 00:29:35.029 of a supervillain. Why do it? Why not just let 00:29:35.029 --> 00:29:37.349 the lake level drop for a few months? It's just 00:29:37.349 --> 00:29:39.609 a view. Because to a man like Stephen Schwartzman, 00:29:39.730 --> 00:29:43.190 a dropping lake level looks like mismanagement. 00:29:43.630 --> 00:29:46.329 It looks like a failure of control. His entire 00:29:46.329 --> 00:29:48.390 life is built on controlling the environment, 00:29:48.549 --> 00:29:50.170 whether it's the financial markets, the political 00:29:50.170 --> 00:29:53.630 landscape, or the view from his window. Accepting 00:29:53.630 --> 00:29:55.869 the drought means accepting that nature has power 00:29:55.869 --> 00:29:58.410 over him. And I don't think he accepts that. 00:29:58.589 --> 00:30:00.869 It's the God complex applied to landscaping. 00:30:01.109 --> 00:30:05.369 It is. And it backfired spectacularly. The local 00:30:05.369 --> 00:30:07.700 water authority, Southern Water. had to step 00:30:07.700 --> 00:30:10.019 in and explicitly ban the tankers from taking 00:30:10.019 --> 00:30:12.099 the water. It wasn't just a regulatory move. 00:30:12.259 --> 00:30:14.920 It was a public shaming. It was society saying, 00:30:15.039 --> 00:30:17.400 there are some things you cannot buy. The water 00:30:17.400 --> 00:30:19.720 table is not a private asset. But this wasn't 00:30:19.720 --> 00:30:23.019 a one -off, right? Earlier, in 2011, he did something 00:30:23.019 --> 00:30:26.529 similar in Palm Beach. used 7 .4 million gallons 00:30:26.529 --> 00:30:29.309 of water in a single year during a drought. Which 00:30:29.309 --> 00:30:31.670 was 70 times the average resident. It just shows 00:30:31.670 --> 00:30:34.250 a consistent mindset. Resources are there to 00:30:34.250 --> 00:30:35.930 be acquired. If you can pay for the water, why 00:30:35.930 --> 00:30:37.730 shouldn't you have it? It's a market -based approach 00:30:37.730 --> 00:30:40.630 to nature. Which puts him directly at odds with 00:30:40.630 --> 00:30:43.230 the concept of the public good, which views water 00:30:43.230 --> 00:30:45.769 as a shared essential resource. And speaking 00:30:45.769 --> 00:30:49.039 of things that don't look good... We have to 00:30:49.039 --> 00:30:51.039 address the Epstein connection. The source material 00:30:51.039 --> 00:30:53.660 is very specific here. His name appears in Jeffrey 00:30:53.660 --> 00:30:57.559 Epstein's files 179 times. Right. And we have 00:30:57.559 --> 00:31:00.259 to be extremely precise here. Being in the flight 00:31:00.259 --> 00:31:03.400 logs or the contact books does not prove a specific 00:31:03.400 --> 00:31:06.059 crime. It does not mean he was a co -conspirator. 00:31:06.140 --> 00:31:08.799 Still not a conviction. Absolutely not. But the 00:31:08.799 --> 00:31:12.740 sheer volume, 179 times, indicates a significant 00:31:12.740 --> 00:31:15.579 degree of social and professional overlap. It 00:31:15.579 --> 00:31:17.140 wasn't just meeting him once at a fundraiser. 00:31:17.240 --> 00:31:19.480 No. It places him firmly in that social circle 00:31:19.480 --> 00:31:21.579 of the ultra -wealthy where Epstein operated 00:31:21.579 --> 00:31:24.299 for decades. It suggests that Epstein was a part... 00:31:24.299 --> 00:31:26.599 of the ecosystem that Schwarzman inhabited. Right. 00:31:26.740 --> 00:31:28.579 And it's a stain that no matter how many libraries 00:31:28.579 --> 00:31:31.039 you build or universities you fund, it's hard 00:31:31.039 --> 00:31:34.200 to scrub out entirely. It lingers. It adds a 00:31:34.200 --> 00:31:36.519 deep shadow to the legacy. And then there are 00:31:36.519 --> 00:31:39.700 the gaffes, the verbal missteps. We mentioned 00:31:39.700 --> 00:31:41.019 the kill the bitter quote, but there was another 00:31:41.019 --> 00:31:43.140 one in 2010 that was even worse. This one actually 00:31:43.140 --> 00:31:45.559 made me cringe when I read it. The infamous war 00:31:45.559 --> 00:31:48.519 analogy. Yeah. He was talking about President 00:31:48.519 --> 00:31:51.599 Obama's plan to raise taxes on carried interest, 00:31:51.740 --> 00:31:54.160 that tax loophole we discussed earlier. And he 00:31:54.160 --> 00:31:57.160 compared it to, well, can you read the quote? 00:31:57.380 --> 00:32:00.000 He said, it's a war. It's like when Hitler invaded 00:32:00.000 --> 00:32:03.799 Poland in 1939. Comparing a proposed tax hike 00:32:03.799 --> 00:32:06.339 to the invasion of Poland, to the start of World 00:32:06.339 --> 00:32:09.059 War II. It was incredibly tone deaf and offensive. 00:32:10.170 --> 00:32:13.170 He apologized later profusely, but it revealed 00:32:13.170 --> 00:32:15.509 something deep about his psyche. It revealed 00:32:15.509 --> 00:32:18.329 how existentially threatened he felt. You have 00:32:18.329 --> 00:32:19.890 to understand that carried interest loophole 00:32:19.890 --> 00:32:22.569 is the golden goose. It is the fundamental mechanism 00:32:22.569 --> 00:32:25.230 of his wealth. Obama threatening that felt to 00:32:25.230 --> 00:32:27.869 Schwarzman like an attack on his entire way of 00:32:27.869 --> 00:32:31.349 life. So his brain went to the most extreme hyperbolic 00:32:31.349 --> 00:32:34.190 metaphor possible. Right. It showed a shocking 00:32:34.190 --> 00:32:37.529 lack of perspective. But here is the ultimate 00:32:37.529 --> 00:32:40.930 irony. Two years later, in 2012, President Obama 00:32:40.930 --> 00:32:43.890 is facing the fiscal cliff budget crisis. He 00:32:43.890 --> 00:32:46.369 needs to broker a deal with Republicans. And 00:32:46.369 --> 00:32:49.069 who does he call for help? He calls Stephen Schwartzman. 00:32:49.150 --> 00:32:51.069 He calls the guy who compared him to Hitler. 00:32:51.250 --> 00:32:54.369 And why? Because at the end of the day, money 00:32:54.369 --> 00:32:57.890 talks louder than gaffes. Obama needed Wall Street 00:32:57.890 --> 00:33:00.809 on board to get a deal done, and Stephen Schwartzman 00:33:00.809 --> 00:33:03.380 is Wall Street. That is the recurring theme here, 00:33:03.460 --> 00:33:05.519 isn't it? No matter what he says, no matter how 00:33:05.519 --> 00:33:07.839 much water he uses, no matter who he supports 00:33:07.839 --> 00:33:10.980 politically, the phone keeps ringing. The powerful 00:33:10.980 --> 00:33:12.839 keep calling him. Because he has made himself 00:33:12.839 --> 00:33:15.599 indispensable. He has woven Blackstone and his 00:33:15.599 --> 00:33:17.940 own personal influence into the fabric of the 00:33:17.940 --> 00:33:20.140 global economy so tightly that you can't really 00:33:20.140 --> 00:33:21.880 pull him out without unraveling the whole thing. 00:33:22.160 --> 00:33:24.859 So as we wrap up this deep dive, how do we synthesize 00:33:24.859 --> 00:33:27.160 this? We have a man who facilitates cutting edge 00:33:27.160 --> 00:33:30.000 AI research and restores beautiful public libraries. 00:33:30.299 --> 00:33:32.960 And we have a man who trucks in water for private 00:33:32.960 --> 00:33:35.480 lakes and compares tax policy to World War II. 00:33:35.619 --> 00:33:38.519 A man who advises Donald Trump, dines with MBS 00:33:38.519 --> 00:33:41.980 and helps Barack Obama avoid a financial crisis. 00:33:42.339 --> 00:33:44.619 He's all those things at once. He is the ultimate 00:33:44.619 --> 00:33:46.920 fixer for the status quo. That's a great way 00:33:46.920 --> 00:33:49.920 to put it. He isn't a disruptor, really. He's 00:33:49.920 --> 00:33:53.119 a stabilizer. He works with whoever is in power, 00:33:53.240 --> 00:33:57.380 be it Trump, Biden, Obama or the CCP, to ensure 00:33:57.380 --> 00:33:59.619 that the environment remains favorable for capital 00:33:59.619 --> 00:34:01.740 accumulation. He's the ballast in the ship of 00:34:01.740 --> 00:34:04.359 state. Exactly. And sometimes that ballast is 00:34:04.359 --> 00:34:07.000 ugly. Sometimes it's heavy. Sometimes it feels 00:34:07.000 --> 00:34:11.000 deeply unfair. But the ship relies on it. He 00:34:11.000 --> 00:34:12.900 embodies the central contradiction of modern 00:34:12.900 --> 00:34:15.460 capitalism. It produces incredible wells that 00:34:15.460 --> 00:34:17.760 can build universities and cure diseases, but 00:34:17.760 --> 00:34:19.840 it also concentrates power in the hands of people 00:34:19.840 --> 00:34:21.780 who think they can buy the weather. It's a lot 00:34:21.780 --> 00:34:23.739 to process. You know, you look at the Stephen 00:34:23.739 --> 00:34:25.380 A. Schwarzman building at the New York Public 00:34:25.380 --> 00:34:27.920 Library, and on the surface, it looks like a 00:34:27.920 --> 00:34:30.719 simple, generous gift to the city. But after 00:34:30.719 --> 00:34:32.599 today, I think I'll look at those engraved letters 00:34:32.599 --> 00:34:34.340 a little differently. You should. You should 00:34:34.340 --> 00:34:36.920 look at them and ask, what was the trade? What 00:34:36.920 --> 00:34:39.440 was the deal? Because with Stephen Schwarzman, 00:34:39.869 --> 00:34:42.349 There's always a deal. And here's where it gets 00:34:42.349 --> 00:34:44.769 really interesting for you, the listener. We've 00:34:44.769 --> 00:34:46.909 talked about the billions, the ballrooms, the 00:34:46.909 --> 00:34:49.690 controversies. But here is a final thought to 00:34:49.690 --> 00:34:52.670 chew on as we close out. We spend so much of 00:34:52.670 --> 00:34:55.769 our time, our energy arguing about red versus 00:34:55.769 --> 00:34:58.710 blue, Democrats versus Republicans, the culture 00:34:58.710 --> 00:35:00.690 wars on the left versus the culture wars on the 00:35:00.690 --> 00:35:03.849 right. Right. But Schwarzman's career suggests 00:35:03.849 --> 00:35:06.829 that those distinctions are surprisingly fluid. 00:35:07.519 --> 00:35:10.199 Almost irrelevant when you get to the very top 00:35:10.199 --> 00:35:12.659 of the pyramid. He moved from potentially supporting 00:35:12.659 --> 00:35:15.260 Hillary to funding Trump, from condemning January 00:35:15.260 --> 00:35:18.820 6th to backing the GOP again, from warning about 00:35:18.820 --> 00:35:21.519 U .S. tariffs to profiting from them by pivoting 00:35:21.519 --> 00:35:24.480 to Europe. Exactly. So the provocative thought 00:35:24.480 --> 00:35:27.639 is this. In a world of intense political polarization, 00:35:27.920 --> 00:35:30.639 is the party of money the only true consistent 00:35:30.639 --> 00:35:33.300 political party, the one party that transcends 00:35:33.300 --> 00:35:36.320 all others? And if so, are we all just living 00:35:36.320 --> 00:35:38.559 in their world, renting space in their ballrooms? 00:35:38.739 --> 00:35:40.500 Something to think about the next time you walk 00:35:40.500 --> 00:35:42.400 past a building with a billionaire's name on 00:35:42.400 --> 00:35:45.159 it. Look deeper. Look for the deal that put it 00:35:45.159 --> 00:35:47.500 there. That's it for this week's Deep Dive. Thanks 00:35:47.500 --> 00:35:49.820 for listening. Thanks, everyone. Keep asking 00:35:49.820 --> 00:35:50.179 questions.