If you walked into the Blackstone offices back in 1985, you wouldn't have seen the trillion-dollar behemoth that exists today. You would’ve seen two guys, Stephen Schwarzman and Pete Peterson, sitting in a relatively empty room with a phone that wouldn't ring. They had $400,000, some fancy business cards, and a massive amount of rejection heading their way.
Honestly, the story of what it takes according to Stephen Schwarzman isn't a fairy tale about being the smartest guy in the room. It's actually about being the most persistent person in the room—and maybe the one with the thickest skin. People see the $40 billion net worth and the buildings at Yale or Oxford with his name on them and think it was a straight line. It wasn't.
The Reality of Starting from Zero (Even When You’re an Elite)
Most people assume Schwarzman had it easy because of his Yale and Harvard pedigree. But when he and Peterson tried to raise their first $1 billion fund, they were laughed at. They went to 19 of their "best friends" in the industry. Every single one said no.
It's kinda wild when you think about it. These were the heavy hitters of Wall Street, and they couldn't get their buddies to write a check. This is where the core lesson of What It Takes: Lessons in the Pursuit of Excellence actually begins. Schwarzman argues that if you’re going to dedicate your life to a business, you might as well go big. Why? Because the stress of running a small lemonade stand and a global private equity firm is basically the same. You're going to lose sleep either way. You might as well play for higher stakes.
The "10" Rule
One thing Schwarzman is obsessed with is hiring. He doesn't just want "smart" people. He wants "10s."
In his world:
- 8s are great at executing. They do what they're told.
- 9s are exceptional. They make the business run smoothly.
- 10s are the ones who sense where the world is going before it gets there. They bring in new business without being asked.
If you hire a bunch of 8s, you end up doing all the work yourself. If you hire 10s, they build the empire for you. It sounds simple, but most managers are too insecure to hire people who might be smarter than them. Schwarzman’s whole model is built on the idea that he shouldn't be the smartest person at the table.
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What It Takes Stephen Schwarzman: The Infamous Edgecomb Deal
You can't talk about Schwarzman’s success without talking about his biggest failure: Edgecomb Steel.
Back in the late 80s, Blackstone made an investment that nearly sank the firm. Schwarzman pushed the deal through despite a junior analyst having major reservations. He ignored the "quiet voices" in the room because he was caught up in the excitement of the deal. The company went south. Blackstone lost money.
Schwarzman was devastated. But instead of just firing people or blaming the market, he changed how Blackstone makes decisions. Now, no single person can "greenlight" a deal. Everything is debated in a room where even the youngest analyst is encouraged to find the flaws.
"Finance is full of people with charm and flip charts who talk so well you can't keep up. You have to stop that show." — Stephen Schwarzman
This "democratization of risk" is why Blackstone survived the 2008 crisis while others crumbled. They don't look for reasons to say yes; they look for every possible reason to say no.
The "Friend of the Situation" Philosophy
Schwarzman uses this phrase a lot: "Becoming a friend of the situation."
It basically means that in any negotiation, you shouldn't be trying to "win" in a way that makes the other person lose. You need to find out what their biggest headache is. If you solve their problem, they’ll give you what you want.
It's not about being nice; it's about being effective. When Blackstone was trying to buy Equity Office Properties for $39 billion in 2007—the biggest leveraged buyout ever at the time—Schwarzman wasn't just throwing money around. He was looking at the macro cycles. He knew the top of the market was coming. He moved fast because "time wounds all deals."
Why He Thinks Markets Are Like Seasons
One thing Schwarzman is freakishly good at is spotting cycles. He treats the economy like weather.
- Winter: Prices are low, everyone is scared. This is when you buy.
- Spring: Things start looking up, but people are still hesitant.
- Summer: Everything is booming. This is when the "smart money" starts to sell.
- Autumn: Prices are peaked, and the "dumb money" is just getting in.
Most people get emotional and buy in Autumn and sell in Winter. Schwarzman does the opposite. He’s often criticized for being a "vulture," especially with Blackstone’s massive real estate holdings and the rent hikes that followed the 2008 crash. Critics like Senator Elizabeth Warren have pointed out that Blackstone becoming the world’s largest landlord has made housing unaffordable for many.
Schwarzman’s defense is usually that they provide capital to distressed sectors that no one else will touch. It’s a tension that exists in almost every move he makes: the pursuit of maximum returns versus the social impact of those moves.
The 25 Rules for Success (Simplified)
In his book, he lists 25 rules. We don't need all of them to get the gist, but a few stand out as genuinely different from the usual corporate fluff:
- Don't Lose Money: This is Rule #1 for a reason. You can't compound zero.
- The Harder the Problem, the More Limited the Competition: If something is easy, everyone is doing it. If it’s a nightmare, you’re the only one there.
- Write or Call the People You Admire: Schwarzman literally called the Dean of Admissions at Harvard when he was on the waitlist. He didn't get in that way, but he learned that "no" is often just a starting point.
- Impressions Matter: He’s big on the "whole picture." Be on time. Be prepared. Don't have a messy desk. It sounds old-school, but he believes it signals how you handle a billion dollars.
What Most People Get Wrong About Success
We like to think success is about a "Big Bang" moment. A genius idea.
Schwarzman would tell you it’s actually about "the grind of the phone call." He spent years just being a "switchboard"—connecting people who had money with people who had ideas. He realized that information is the most valuable asset in the world. The more people you talk to, the more patterns you see.
Blackstone isn't just a fund; it's an information machine. They own so many companies in so many sectors that they can see a recession coming in the shipping industry before the government even has the data.
Actionable Steps to Apply the Schwarzman Mindset
If you want to actually use what it takes Stephen Schwarzman-style in your own career or business, don't just read the biography. Do these three things:
1. Audit Your Circle for "10s"
Look at the people you work with. Are they people who wait for instructions, or are they people who create the path? If you're surrounded by "8s," you're capped. You need to find or hire people who intimidate you slightly with their competence.
2. Seek Out the "Ugly" Problems
Stop looking for the "clean" opportunities. The biggest wins in Schwarzman's career came from buying real estate when the world thought it was dead (1991) or investing in China when others were terrified of the risk. Find the problem everyone else is running away from. That's where the margin is.
3. Practice the "Post-Mortem" Before the Deal
Whenever you’re making a big decision—buying a house, starting a business, quitting a job—don't just list the pros. Sit down and argue against yourself. Find the analyst in your head who hates the idea and let them speak. If your plan survives that internal "stress test," it’s probably solid.
The reality is that what it takes Stephen Schwarzman is a mix of extreme preparation and the guts to act when everyone else is frozen. It's not about avoiding risk; it's about knowing exactly how much risk you're taking and making sure the reward is big enough to justify the headache.