Blackstone Videos Show Two Sides of Firm
At 40, transition from Schwarzman to Gray
One of the big business stories of the year is the leadership handoff in progress at Blackstone—which manages $1.2 trillion—to Jon Gray from Steve Schwarzman.
Bloomberg last month had a long piece about it, illuminating and entertaining in its own way.
Also illuminating are a couple of videos.
The first is a conversation between Gray and Schwarzman about the firm’s 40-year history, culture, and traditions. Schwarzman: “you’re going to have to maintain the culture that we have, you have to maintain the openness, inclusiveness, the meritocracy.”
Gray: “When people show up here, they are surprised now because they expect sort of this big, successful company where people are self-satisfied and so forth, and they get here, and they’re like, you folks are nuts. You work like animals, you care so much. You’re actually nice to each other, which is always surprising, but you have this drive and this push. And that is this special sauce, that, the amazing people, the sense of meritocracy…”
“Work like animals” is a reminder that capitalism cultivates the virtue of industry, of hard work. It reminds me of Michael Steinhardt’s comments in the 1969 book New Breed on Wall Street, by Martin Mayer, with photographs by Cornell Capa: “we work harder, until eight or nine at night.” Or of the Silicon Valley “hustle culture” trend of working “996,” “9 a.m. to 9 p.m., six days a week,” as a New York Times article described it. (The flip side of it is Blackstone cofounder Peter G. Peterson’s memoir describing, as I put it in a 2009 review, “two divorces resulting from his workaholism.”)
The second video is Blackstone’s 2025 holiday video, which is intended to be humorous. Midway through is a mock Blackstone commercial featuring “Jersey Mike’s” pitchman Danny DeVito saying, “Are you sick and tired of the volatility and lack of diversification associated with the public markets? Of course you are…Blackstone may have the nonlisted, semiliquid institutional-quality perpetual products you’ve been looking for,” DeVito says, wearing a Blackstone bucket hat as the words “Private Equity, Real Estate, Credit, Infrastructure” show on-screen.
It may be funny as long as it lasts for the managers of the government pension and sovereign wealth funds—Singapore, South Dakota—who are invested.
Yet plenty of sophisticated investors with their own money at risk understand that the lack of volatility and the semiliquidity are closely related. If you needed to sell at a market-clearing price, the money you wind up with might reflect the volatility that the “nonlisted” aspect otherwise hides. See Cliff Asness on “volatility laundering.”
Blackrock (BLK), known for low-expense exchange-traded funds, has roughly ten times the assets under management of Blackstone (BX). Some investors are willing to accept volatility in exchange for liquidity, higher long-term returns, and real price transparency. You might make more money owning Blackstone, the “alternatives” business, but you might be better off as a customer of Blackrock.
That’s not to be dismissive of what Blackstone has accomplished. The “meritocracy” stuff is real, as is the “work like animals” stuff. There are a lot of companies competing in the alternatives business, and not all of them have done as well over the past 40 years as Blackstone. And it is some impressive display of marketing savvy to understand that streaming video is the contemporary mass communication method, and to use it at Blackstone is doing. The firm weathered a deadly, terrible, shooting attack earlier this year.
Yet meritocracy applies not only to hiring and promotions inside an organization, but to investor decisions about what to invest in.
The market for “nonlisted, semiliquid” investments for those “tired of the volatility” exists, and it probably includes plenty of the viewers of the Blackstone holiday video. It may be a growing pool. Regulatory shifts at the request of the companies are going to make it easier for a lot of ordinary Americans, rather than professional managers, to buy these products for their retirement accounts.
The Bloomberg article includes a chart with the returns of BREIT, a Blackstone real estate fund. It reported losses of half a percent in 2023, and a gain of 2 percent in 2024. It reports a year-to-date return of 6.8 percent, and it’s real estate, so the marks may be up for a bit more discussion than a share of IBM stock. The Bloomberg article paraphrases Gray: “Everything, he says, boils down to returns.”
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As you might guess from the names, Blackrock is a breakaway from Blackstone. One of the factors in Blackrock's success was how well it had done risk management at the time of the 2008 market drop.