Book summary: What it takes, Stephen Schwarzman

Profile

  • Partner at BlackStone

Personal effectiveness

  • the bigger the goals the more significant the consequences
  • since you can only do one important thing at a time, always pick the most important one to start with
  • most important lessons are learned at inflection points between when failure turns into success
  • the best executives are made not born, they absorb info, study their own experiences, learn from mistakes and evolve
  • The goal of education (questioning and thinking) as a discipline is to learn how to think, it only ends when you die
  • there are as many realities as individuals, study more individuals
  • find a great mentor
  • Cultivate inner fortitude: Helps preserve morality and ethics in the face of fear and greed
  • The harder the problem the more limited the competition
  • The first job is foundational. Always look for one with a steep learning curve and strong training.
  • when caught in a tight spot, don’t become fixated on your own problem but on someone else’s
  • when seeing a huge transformative opportunity don’t worry that no one else is pursuing it.
  • never get complacent
  • make decisions when you are ready not under pressure
  • objectively assess the risks of every opportunity.

On finance and trading

  • master uncertainty:¬†finance is a dynamic world where you will need to adjust to situations, people and new information quickly
  • build a model to explain a certain phenomena and then test it
  • do not mistake interest in making money versus interest in psychological comfort
  • market tops
    • loose credit conditions and a rising tide
    • buyers generally overconfident
    • number of people you know who become “accidentally” become rich
    • number of IPOs increase at the top, so does the valuations and size
  • market bottoms
    • very hard to bring companies to IPO
    • difficult to detect
    • markets are declining and economy weakens
    • most buy too early or under-estimate the severity of recessions
    • usually takes a year or two for market to get out of recession. even then asset value takes time to recover
    • risk is the least after a crash
    • best time to enter is after position has experienced 5-10% recovery from a crash
  • practice discipline and sound risk assessment
    • wait till the cycle fully plays out
  • Cycles are powered by supply and demand characteristics
    • understand and quantify them
    • e.g. real estate top is when building is valued significantly above replacement cost
  • Sometimes a trend especially negative ones will exhibit symptoms spread across various territories (escalating land prices Spain, India and US prior to 2008)

On building a company

  • fund raising from an LP for a new fund you are starting yourself will be harder than the prior company whom the LP already has a relationship with.
  • make sure there is not sole decision maker for important decisions to avoid getting blind sided
  • Accessing an idea
    • big enough for you to devote your life
    • unique enough as an offering that people will want it
    • timing must be right
  • transition from gut to system during the middle of the life cycle to continue further scaling
  • a business is an integrated system. Understand how one part works by itself as well as in relationship with other parts. Information is the most important asset in business

On management

  • being a strong and accurate accessor of talent is the most critical skills of entrepreneurship.
  • look for cultural fit.
  • Get the candidate into conversation mode
  • its as hard to start and run a small business versus a big one. Choose one with potential to be huge. Why waste time asking for 5-10 million USD when you can ask for 50-100 million USD?
  • find people who sense problems, design solutions and takes the business in new directions
  • be proactive in addressing personal differences over day to day operations

On deal making

  • ultimately comes down to a few key critical points
  • clear away the clutter and focus on these points to be effective
  • learn to slow things down
  • practice intense listening

Related readings

  • Outliers, Malcom Gladwell

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