King of Capital:
The Remarkable Rise, Fall, and Rise Again
of Steve Schwarzman and Blackstone
By David Carey and John E. Morris
Crown Business, 400 pp, $27.50
Steve Schwarzman "was also something of a ladies' man," write David Carey and John E. Morris. Here it comes, the reader thinks, 84 pages into their exhaustively detailed biography: Tawdry stories from Yale classmates about the young man who would be King of Capital and eventually build the $14.5 billion private equity empire known as Blackstone (BX). "Schwarzman started a club, the Davenport Ballet Society, and arranged for its members to see a dress rehearsal of the Nutcracker Suite at Lincoln Center," they write. "Later that year, Schwarzman staged a dance festival at which students from nearby women's colleges performed. [Friend] Jeffrey Rosen...suspects Schwarzman started the club primarily as an excuse to meet girls."
This is high-quality dirt by the standards of King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone. Unfortunately, it's about as deep into Schwarzman's personal life as the authors are comfortable delving. It's a useful reminder to readers of the mogul cannon: Books for which tycoons grant access are often short on things one might actually want to know about them.
What King of Capital does deliver is a diligent—and relentless—focus on the transactions that have shaped Blackstone. Carey and Morris, two veteran private equity reporters, march through virtually every deal the firm has ever worked on, dating to 1985 when co-founders and Lehman veterans Pete Peterson and Schwarzman went door to door raising money. The authors also provide a detailed summary of the deals their competitors worked on, and almost worked on, and paused momentarily to think about working on.
While some dealmaking biographies reflect the singular obsessiveness of their subject's personality, Schwarzman is a more complex character—and that's the problem. Readers looking for insight into the financial guru's personality are greeted with disinterested explanations; even more than loving money, we're told, Schwarzman "hated to lose it." The deepest drilling into Schwarzman's left brain occurs when the authors describe his falling out with Larry Fink. In 1992, Fink, who then ran BlackStone Financial Management, told Schwarzman he wanted to award shares to new hires—a move that would have lowered Blackstone's stake in the division. Schwarzman rebuffed him in a decision that ultimately led Fink to demand a sale of his unit, which became investment management giant BlackRock (BLK). Why did Schwarzman make this costly call? The authors suggest he may have been driven by divorce proceedings with his first wife, Ellen. "When money is as important to you as it is to Steve, and you think you're going to lose 50 percent of your savings," says a former colleague, "you become more difficult." Absent any other examples, readers are left to presume that the breakup with Fink is the singular "fall" of Schwarzman's brilliant career alluded to in the book's subtitle.
A welcome respite from the dealmaking barrage comes in the form of a story told by the head of a rival private equity firm. While walking the beaches of St. Bart's in the '90s, he spotted a massive yacht coming into the harbor. Then, the executive recalls, "two Jet Skis piloted by crew members emerged from the boat and motored in with a cargo of folding tables and chairs, a big umbrella, tableware, a wine bucket, and fancy food. After laying the table, the crew members went back to the yacht to retrieve a tall and striking woman and a shorter man," who—surprise!—turn out to be Mrs. and Mr. Schwarzman on their way to a cozy lunch. "I'm not pleading poverty here," says the executive," but I really did feel like there should be a revolution."
It's an anecdote that acknowledges Schwarzman's love of the luxe life. While his proclivity for $400 crab legs and the $3 million 60th birthday party he threw himself in 2007 are fairly well known, the authors don't drop any hints about whether a more modest 65th birthday is in store. Carey and Morris conclude King of Capital with a list of all the investments Blackstone currently holds and a rosy prognosis for its future. The firm came out of the financial crisis "better than many of its competitors," they write (though its stock is down nearly 25 percent over the past year). It has "by far the most diversified mix of business," thanks to Schwarzman's knack for "finding and supplying capital—and for spotting ways to get Blackstone its cut." Steve Schwarzman couldn't have asked for a more respectful book—though he surely warrants a more revealing one. Not to worry: With everything running so smoothly over at Blackstone, Schwarzman should soon be able to carve out time to write his memoir. Perhaps he can answer all the questions King of Capital leaves hanging.