Stephen Schwarzman: Going Big in Business, Investing, and AI | Lex Fridman Podcast #96 | Transcription
Transcription for the video titled "Stephen Schwarzman: Going Big in Business, Investing, and AI | Lex Fridman Podcast #96".
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The following is a conversation with Stephen Schwartzman, CEO and co-founder of Blackstone, one of the world's leading investment firms with over $530 billion of assets under management. He's one of the most successful business leaders in history. I recommend his recent book called What It Takes that tells stories and lessons from his personal journey. Stephen is a philanthropist and one of the wealthiest people in the world, recently signing the Giving Pledge, thereby committing to give the majority of his wealth to philanthropic causes. As an example, in 2018, he donated $350 million to MIT to help establish his new college of computing, the mission of which promotes interdisciplinary, big, bold research and artificial intelligence. For those of you who know me, know that MIT is near and dear to my heart, and always will be. It was and is a place where I believe big, bold, revolutionary ideas have a home, and that is what has needed artificial intelligence research in the coming decades. Yes, there's institutional challenges, but also there's power in the passion of individual researchers, from undergrad to PhD, from young scientists to senior faculty. I believe the dream to build intelligent systems burns brighter than ever in the halls of MIT. This conversation was recorded recently, but before the outbreak of the pandemic. For everyone feeling the burden of this crisis, I'm sending love your way. Stay strong, we're in this together. This is the Artificial Intelligence Podcast. If you enjoy it, subscribe on YouTube, review it with 5 stars and app of podcast, support on Patreon, or simply connect with me on Twitter, @lexphreadman, spelled F-R-I-D-M-A-N. As usual, I'll do a few minutes of ads now and never any ads in the middle that can break the flow of the conversation. I hope that works for you and doesn't hurt the listening experience. Quick summary of the ads. Two sponsors, Masterclass and ExpressVPN. Please consider supporting the podcast by signing up to Masterclass@masterclass.com/lex and getting ExpressVPN at expressvpn.com/lexpod. This show is sponsored by Masterclass. Sign up at masterclass.com/lex to get a discount and support this podcast. When I first heard about Masterclass, I thought it was too good to be true. For $180 a year, you get an all-x's pass to watch courses from to list some of my favorites. Chris Hadfield on Space Exploration, Neil Luegrasse Tyson on Scientific Thinking and Communication, Will Wright, Creator of SimCity, Simms on Game Design, Carlos Santana on guitar, Gary Kasparov on chess, Daniel Negrono on poker and many, many more. Chris Hadfield explaining how rockets work and the experience of being launched into space alone is worth the money. By the way, you can watch it on basically any device. Once again, sign up at masterclass.com/lex to get a discount and support this podcast. This show is sponsored by ExpressVPN. Get it at expressvpn.com/lexpod to get a discount and support this podcast. I've been using ExpressVPN for many years. I love it. It's easy to use, press the big power on button and your privacy is protected. And if you like, you can make it look like your location is anywhere else in the world. I might be in Boston now, but I can make you look like I'm in New York, London, Paris, or anywhere else in the world. This has a large number of obvious benefits. Certainly, it allows you to access international versions of streaming websites like the Japanese Netflix or the UK hula. ExpressVPN works on any device you can imagine. I use it on Linux, shout out to Ubuntu, 2004, Windows, Android, but it's available everywhere else too. Once again, get it at expressvpn.com/lexpod to get a discount and support this podcast. And now, here's my conversation with Stephen Schwartzman. Let's start with a tough question.
Insights Into Business And Technological Innovation
Going big in business (04:17)
What idea do you believe, whether grounded in data or in intuition, that many people you respect disagree with you on? Well, there isn't all that much anymore since the world's so transparent. But one of the things I believe in and put it in the book, What It Takes, is if you're going to do something very consequential, do something that's quite large, if you can, that's unique. Because if you operate in that kind of space, when you're successful, it's a huge impact. The prospect of success enables you to recruit people who want to be part of that. And those type of large opportunities are pretty easily described. And so not everybody likes to operate at scale. Some people like to do small things because it is meaningful for them emotionally. And so occasionally you get a disagreement on that, but those are life choices rather than commercial choices. That's interesting. What good and bad comes with going big? See, we often in America think big is good. What's the benefit? What's the cost in terms of just bigger than business, but life, happiness, the pursuit of happiness? Well, you do things that make you happy. It's not mandated. And everybody's different. And some people, if they have talent like playing pro football, other people do things like throwing the ball around, not even being on a team. What's better? It depends what your objectives are. It depends what your talent is. It depends what gives you joy. So in terms of going big, is it both for impact on the world and because you personally give you joy? Well, it makes it easier to succeed, actually. Because if you catch something, for example, that's cyclical, that's a huge opportunity, then you usually can find someplace within that huge opportunity where you can make it work. If you're prosecuting a really small thing and you're wrong, you don't have many places to go. So I've always found that the easy place to be and the ability where you can concentrate human resources, get people excited about doing really impactful, big things, and you can afford to pay them, actually, because the bigger thing can generate much more in the way of financial resources. So that brings people out of talent to help you. And so altogether, it's a virtuous circle, I think. How do you know an opportunity when you see one in terms of the one you want to go big on?
How to recognize an opportunity (07:34)
Is it intuition? Is it facts? Is it back and forth deliberation with people you trust? What's the process? Is it art? Is it science? Well, it's pattern recognition. And how do you get to pattern recognition? First, you need to understand the patterns and the changes that are happening. And that's either it's observational on some level. You can call it data or you can just call it listening to unusual things that people are saying that they haven't said before. And I've always tried to describe this. It's like seeing a piece of white lint on a black dress, but most people disregard that piece of lint. They just see the dress. I always see the lint. And I'm fascinated by how did something get someplace it's not supposed to be. So it doesn't even need to be a big discrepancy. But if something shouldn't be someplace in a constellation of facts that sort of made sense in a traditional way, I've learned that if you focus on why one discordant note is there, that's usually a key to something important. And if you can find two of those discordant notes, that's usually a straight line to someplace. And that someplace is not where you've been. And usually when you figure out that things are changing or have changed and you describe them, which you have to be able to do because it's not some odd intuition. It's just focusing on facts. It's almost like a scientific discovery, if you will. When you describe it to other people in the real world, they tend to do absolutely nothing about it. And that's because humans are comfortable in their own reality. And if there's no particular reason at that moment to shake them out of their reality, they'll stay in it even if they're ultimately completely wrong. And I've always been stunned that when I explain where we're going, what we're doing, and why almost everyone just says, "That's interesting." And they continue doing what they're doing. And so I think it's pretty easy to do that. But what you need is a huge data set. So before AI and people's focus on data, I've sort of been doing this mostly my whole life. I'm not a scientist. I'm not a level owner, computer scientist. And you can just hear what people are saying when somebody says something or you observe something that simply doesn't make sense. That's when you really go to work. The rest of it's just processing. You know, on a quick tangent, pattern recognition is the term often used throughout the history of AI. That's the goal of artificial intelligence is pattern recognition, right? But there's, I would say, various flavors of that. So usually pattern recognition refers to the process of the -- we said dress and the lint on the dress. Pattern recognition is very good at identifying the dress. It's looking at the pattern that's always there, that's very common and so on. You almost refer to a pattern that's like what's called outlier detection in computer science, right? The rare thing, the small thing. Now AI is not often good at that. Do you just almost philosophically the kind of decisions you made in your life based scientifically almost on data? Do you think AI in the future will be able to do? Is it something that could be put down into code or is it still deeply human? It's tough for me to say, since I don't have domain knowledge in AI to know everything that could or might occur. I know sort of in my own case that most people don't see any of that. I just assumed it was motivational. But it's also sort of -- it's hard wiring. What are you wired or programmed to be finding or looking for? It's not what happens every day. That's not interesting, frankly. I mean, that's what people mostly do. I do a bunch of that too because that's what you do in normal life. But I've always been completely fascinated by the stuff that doesn't fit. Or the other way of thinking about it, it's determining what people want without them saying it. It's a different kind of pattern. You can see everything they're doing. There's a missing piece. They don't know it's missing. You think it's missing given the other facts you know about them. You deliver that and then that becomes sort of very easy to sell to them. To linger on this point a little bit, you've mentioned that in your family when you're growing up, nobody raised their voice in anger otherwise. And you said that this allows you to learn to listen and hear some interesting things. Can you elaborate as you have been on that idea? What do you hear about the world if you listen? Well, you have to listen really intensely to understand what people are saying as well as what people are intending because it's not necessarily the same thing. And people mostly give themselves away no matter how clever they think they are. Particularly if you have the full array of inputs, in other words, if you look at their face, you look at their eyes, which are the window on the soul, it's very difficult to conceal what you're thinking. You look at facial expressions and posture. You listen to their voice which changes. You know, when you're talking about something you're comfortable with or not, are you speaking faster? Is the amplitude of what you're saying higher? Most people just give away what's really on their mind. You know, they're not that clever. They're busy spending their time thinking about what they're in the process of saying. And so if you just observe that, not in a hostile way, but just in an evocative way and just let them talk for a while, they'll more or less tell you almost completely what they're thinking. Even the stuff they don't want you to know. And once you know that, of course, it's sort of easy to play that kind of game because they've already told you everything you need to know. And so it's easy to get to a conclusion if there's meant to be one, an area of common interest since you know almost exactly what's on their mind. And so that's an enormous advantage as opposed to just walking in someplace and somebody telling you something and you believing what they're saying. There are so many different levels of communication. So a powerful approach to life you discuss in the book on the topic of listening and really hearing people is figuring out what the biggest problem bothering a particular individual group is and coming up with a solution to that problem and presenting them with the solution, right?
Solving problems that people have (16:00)
In fact, you brilliantly describe a lot of simple things that most people just don't do. It's kind of obvious, find the problem that's bothering somebody deeply. And as you said, I think you've implied that they will usually tell you what the problem is. But can you talk about this process of seeing what the biggest problem for a person is trying to solve it and maybe a particularly memorable example? Sure. You know, if you know you're going to meet somebody, there are two types of situations. It's meetings and you know the second is you know you're going to meet somebody. So let's take the easiest one, which is you know you're going to meet somebody. And you start trying to make pretend you're them. It's really easy. What's on their mind? What are they thinking about in their daily life? What are the big problems facing it? So if they're to make it a really easy example, you know, and make pretend you know they're like president of the United States. Doesn't have to be this president. It could be any president. So you sort of know what's more or less on their mind because the press keeps reporting it. And you see it on television, you hear it, people discuss it. So you know if you're going to be running into somebody in that kind of position, you sort of know what they look like already. You know what they sound like. You know what their voice is like and you know what they're focused on. And so if you're going to meet somebody like that, what you should do is take the biggest unresolved issue that they're facing and come up with a few interesting solutions that basically haven't been out there or that you haven't heard anybody else I was thinking about. So just to give you an example, I was sort of in the early 1990s and I was invited to something at the White House which was a big deal for me because I was like you know a person from no place and you know I had met the president once before because I was president Bush because his son was in my dormitory so I had met him at parents' day. I mean it's just like the oddity of things. So I knew I was going to see him because you know that's where the invitation came from. And so there was something going on and I just thought about you know two or three ways to approach that issue and you know at that point I was separated and so I had brought a date to the White House and so I saw the president and we sort of went over in a corner for about ten minutes and discussed whatever this issue was and I later you know went back to my date it was a little rude but it was meant to be confidential conversation and I barely knew her and you know she said what were you talking about all that time? I said well you know there's something going on in the world and I've thought about different ways of perhaps approaching that and he was interested and the answer is of course he was interested. Why wouldn't he be interested? There didn't seem to be an easy outcome and so you know conversations of that type when somebody knows you're really thinking about what's good for them and good for the situation. It has nothing to do with me. I mean it's really about being in service you know to this situation that then people trust you and they'll tell you other things because they know your motives are basically very pure. You're just trying to resolve a difficult situation and help somebody do it. So these types of things you know that's a planned situation that's easy. Sometimes you just come upon somebody and they start talking and you know that requires you know like different skills you know you can ask them. What have you been working on lately? What are you thinking about? You can ask them you know is anything been particularly difficult and you know you can ask them most people if they trust you for some reason. They'll tell you and then you have to instantly go to work on it and you know that's not as good as having some advanced planning but you know almost everything going on is like out there and people who are involved with interesting situations they're playing in the same ecosystem they just have different roles in the ecosystem and you know you can do that with somebody who owns a pro football team that loses all the time. We specialize in those in New York and you know you already have analyzed why they're losing right inevitably it's because they don't have a great quarterback. They don't have a great coach and they don't have a great general manager who knows how to hire the best talent. Those are the three reasons why a team fails right because they're salary caps so every team pays us some amount of money for all their players so it's got to be those three positions. So if you're talking with somebody like that inevitably even though it's not structured you'll know how their team's doing and you'll know pretty much why and if you start asking questions about that they're typically very happy to talk about it because they haven't solved that problem. In some case they don't even know that's the problem it's pretty easy to see it. So you know I do stuff like that which I find is intuitive as a process but you know leads to really good results. Well the funny thing is when you're smart for smart people it's hard to escape their own ego and in the space of their own problems which is what's required to think about other people's problems. It requires for you to let go of the fact that your own problems are all important and then to talk about your I think well it seems obvious and I think quite brilliant it's a difficult leap for many people especially smart people to empathize with truly empathize with the problems of others. Well I have a competitive advantage which is I don't think I'm so smart. It's good. So you know it's not a problem for me. So the truly smartest people I know say that exact same thing. Being humble is really useful competitive advantage as you said. How do you stay humble? Well I haven't changed much since I was in my mid teens you know I was raised partly in the city and partly in the suburbs and you know whatever the values I had at that time those are still my values. I call them like middle class values that's how I was raised and I've never changed why would I? That's who I am. And so the accoutrement of the rest of your life has got to be put on the same like solid foundation of who you are because if you start losing who you really are who are you? So I've never had the desire to be somebody else. I just do other things now that I wouldn't do as a middle class kid from Philadelphia. I mean my life has morphed on a certain level but part of the strength of having integrity of personality is that you can remain in touch with everybody who comes from that kind of background. And you know even though I do some things that aren't like that you know in terms of people I'd meet or situations I'm in. I always look at it through the same lens and that's very psychologically comfortable and doesn't require to me to make any real adjustments in my life and I just keep plowing ahead. There's a lot of activity in progress in recent years around effective altruism.
I wanted to bring this topic with you because it's an interesting one from your perspective. You can put it in any kind of terms but it's philanthropy that focuses on maximizing impact. How do you see the goal of philanthropy both from a personal motivation perspective and a societal big picture impact perspective? Yeah I don't think about philanthropy the way you would expect me to. Okay I look at you know sort of solving big issues, addressing big issues, starting new organizations to do it much like we do in our business. We keep growing our business not by taking the original thing and making it larger but continually seeing new things and building those and sort of marshalling financial resources, human resources and in our case because we're in the investment business we find something new that looks like it's going to be terrific. When we do that and it works out really well. All I do in what you would call philanthropy is look at other opportunities to help society and I end up starting something new, marshalling people, marshalling a lot of money and then at the end of that kind of creative process says somebody typically asks me to write a book, I don't wake up and say how can I give large amounts of money away, I look at issues that are important for people. In some cases I do smaller things because it's important to a person and I can relate to that person. There's some unfairness that's happened to them and so in situations like that I'd give money anonymously and help them out. It's like a miniature version of addressing something really big. At MIT I've done a big thing helping to start this new school of computing and I did that because I saw that there's sort of like a global race on in AI, quantum and other major technologies and I thought that the US could use more enhancement from a competitive perspective and I also because I get to chime a lot and I travel around a lot compared to a regular person, I can see the need to have control of these types of technologies so when they're introduced we don't create a mess like we did with the internet and with social media, unintended consequence that's creating all kinds of issues and freedom of speech and the functioning of liberal democracies. With AI it was pretty clear that there was enormous difference of views around the world by the relatively few practitioners in the world who really knew what was going on and by accident I knew a bunch of these people who were like big famous people and I could talk to them and say why do you think this is a force for bad and someone else why do you feel this is a force for good and how do we move forward with the technology but at the same time make sure that whatever is potentially sort of on the bad side of this technology with for example disruption of workforces and things like that that could happen much faster than the industrial revolution. What do we do about that and how do we keep that under control so that the really good things about these technologies which will be great things not good things are allowed to happen. So to me this was one of the great issues facing society the number of people who were aware of it were very small I just accidentally got sucked into it and as soon as I saw it I went oh my god this is mega both on a competitive basis globally but also in terms of protecting society and benefiting society so that's how I got involved and at the end the right thing that we figured out was double MIT's computer science faculty and basically create the first AI enabled university in the world and in effect be an example a beacon to the rest of the research community around the world academically and create a much more robust US situation competitive situation among the universities because if MIT was going to raise a lot of money and double its faculty you could bet that in a number of other universities we're going to do the same thing at the end of it. It would be great for knowledge creation you know great for the United States great for the world and so I like to do things that I think are really positive things that other people aren't acting on that I see for whatever the reason first it's just people I meet and what they say and I can recognize when something really profound is about to happen or needs to and I do it at the end of the end of the situation somebody says can you write a check to help us and then the answer is sure I mean because if I don't the vision won't happen but it's the vision of whatever I do that is compelling. And essentially I love that idea of whether it's small at the individual level or really big like the the gift to MIT to launch the College of Computing it starts with the vision and it you see philanthropy as the biggest impact you can have is by launching something new especially on an issue that others aren't really addressing and I also love the notion and you're absolutely right that there's other universities Stanford CMU I'm looking at you that would essentially your the seed will will will create other it will have a ripple effect that potentially might help us be a leader or continue to be a leader in AI this potentially very transformative research direction just a link on that point a little bit what is your hope long term for the impact the college here and MIT might have the next 510 even 20 or let's get crazy 3050 years well it's very difficult to predict the future when you're dealing with knowledge production and creativity MIT has obviously some unique aspects you know globally and you know there's four big sort of academic surveys I forget whether it was QS there's the times in London you know the US news and whatever and
Hope for the new College of Computing at MIT (32:51)
one of these recently MIT was ranked number one in the world right so so leave aside whether you're number three somewhere else in the great sweep of humanity this is pretty amazing yeah right so so you have a really remarkable aggregation of of human talent here and where it goes it's hard to tell you have to be a scientist to have the right feel but but what's important is you have a critical mass of people and I think it breaks into two buckets one is scientific advancement and and if the new college can help you know sort of either serve as a convening force within the university or help sort of coordination and communication among people that's a good thing absolute good thing the second thing is is in the AI ethics area which is is in a way equally important because if if the science side creates blowback so so that science is is is you know a bit crippled in terms of going forward because society's reaction to knowledge advancement in this field becomes really hostile that then you've sort of lost the game in terms of scientific progress and innovation and so the AI ethics piece is super important because you know in a perfect world MIT would would serve as a global convener because what you need is you need the research universities you need the companies that are driving AI and quantum work you need governments who will ultimately be regulating certain elements of this and you also need the media to be knowledgeable and trained so so we don't get sort of over reactions to to one situation which then goes viral and it ends up shutting down avenues that are perfectly fine you know to be walking down or running down that avenue but but if enough discordant information not even correct necessarily you know sort of gets you know sort of pushed around society then you can end up with a really hostile regulatory environment and other things so you have four drivers that that have to be sort of integrated and and so if if if the new school of computing can be really helpful in that regard then that's a real service to science and it's a service to MIT so so that's that's why I wanted to get involved for both areas and the hope is for me for others for everyone for the world is for this particular college of computing to be a beacon and a connector for the for these ideas yeah that's right I mean I think MIT is perfectly positioned to do that so you've mentioned the media social media the internet as this complex network of communication with with flaws perhaps perhaps you can speak to them but it you know I personally think that science and technology has its flaws but ultimately is one sexy exciting it's the way for us to explore and understand the mysteries of our world and two most perhaps more importantly for some people it's a huge way to a really powerful way
Unintended consequences of technological innovation (37:32)
to grow the economy to improve the quality of life for everyone so how do we get how do you see the media social media the internet as a society having you know healthy discourse about science first of all one that's factual and to one that's science exciting that invest in science that pushes it forward especially in this science fiction fear field field of artificial intelligence well I think that's a little above my pay grade because you know trying to control social media to make it do what you want to do sure appears to be beyond almost anybody's control and and the technology is being used to create what I call the tyranny of the minorities okay a minority is defined as you know two or three people on a street corner doesn't matter what they look like doesn't matter where they came from they're united by that one issue that they care about and their job is to enforce their views on the world and you know in the political world people just are manufacturing truth and they throw it all over and it affects all of us and you know sometimes people are just hired to do that I mean it's amazing and you think it's one person it's really you know just sort of a front you know for a particular point of view and this has become exceptionally disruptive for society and it's dangerous and it's undercutting you know the ability of liberal democracies to function and I don't know how to get a grip on this and I was really surprised when we you know it was up here for the announcement last spring of the college of computing and they had all these famous scientists some of whom were involved with the invention of the internet and almost every one of them got up and said I think I made a mistake and as a non-scientist I never thought I'd hear anyone say that and what they said is more or less to make it simple we thought this would be really cool inventing the internet we could connect everyone in the world we can move knowledge around it was instantaneous it's a really amazing thing he said I don't know that there was anyone who ever thought about social media coming out of that and the actual consequences for people's lives you know so there's always some some younger person I just saw one of these yesterday reported on the national news he killed himself when people use social media to basically you know sort of ridicule him or something of that type this is dead this is dangerous and you know so so I don't have a solution for that other than going forward you can end up with this type of outcome using AI to make this kind of mistake twice is unforgivable so so interestingly at least in the West and parts of China people are quite sympathetic to you know sort of the whole concept of AI ethics and what gets introduced when and cooperation within your own country within your own industry as well as globally to make sure that the technology is a force for good. In that really interesting topic since 2007 you've had a relationship with senior leadership with a lot of people in China and an interest in understanding modern China their culture their world much like with Russia I'm from Russia originally Americans are told a very narrow one-sided story about China that I'm sure misses a lot of fascinating complexity both positive and negative what lessons about Chinese culture its ideas as a nation as future do you think Americans should know about deliberate on think about.
Education systems in China and United States (42:24)
Well it's sort of a wide question that you're you're asking about you know China is a pretty unusual place first it's it's huge you know you got it's physically huge it's got a billion three people and the character of the people isn't as well understood in the United States Chinese people are amazingly energetic if you're one of a billion three people one of the things you got to be focused on is how do you make your way you know through a crowd of a billion two point nine nine nine nine nine other people now the word for that is competitive yes they they are individually highly energetic highly focused always looking for some opportunity for themselves because they need to because there there is an enormous amount of just literally people around and so you know what I've found is they'll try and find a way to win for themselves and their country is complicated because it basically doesn't have the same kind of functional laws that we do in United States in the West and the country is controlled really through a web of relationships you have with other people and the relationships that those other people have with other people so it's an incredibly dynamic culture where if somebody knocks somebody up on the top who's three levels above you and is in effect protecting you then then you know you're like a you know sort of a floating molecule there you know without a tethering except the one or two layers above you but that's going to get affected so it's a very dynamic system and getting people to change is not that easy because if there aren't really functioning laws it's only the relationships that everybody has and so when you decide to make a major change and you sign up for it something is changing in your life there won't necessarily be all the same people on your team and that's a very high risk enterprise so when you're dealing with with China it's important to know almost what everybody's relationship is with somebody so when you suggest doing something differently you line up these forces in the West it's usually you talk to a person and they figure out what's good for them it's a lot easier and in that sense in a funny way it's easier to make change in the West just the opposite of what people think but once the Chinese system adjusts to something that's new everybody's on the team it's hard to change them but once they're changed they are incredibly focused in a way that it's hard for the West to do in a more individualistic culture so so there are all kinds of fascinating things you know one thing that might interest you know the people who are listening were more technologically based than some other group that was with one of the top people in the government a few weeks ago and he was telling me that that every school child in in China is going to be taught computer science now imagine 100% of these children this is such a large number of human beings now that doesn't mean that every one of them will be good at computer science but if it's sort of like in the West if it's like math or English everybody's going to take it not everybody's great at English they don't write books they don't write poetry and not everybody's good at math you know somebody like myself I sort of evolved to the third grade and I'm still doing flashcards you know I didn't make it further in math but imagine everybody in their society is going to be involved with computer science I just even pause on that I think computer science involves at the basic beginner level of programming and the idea that everybody in the society would have some ability to program a computer is incredible for me it's incredibly exciting and I think that should give the United States pause and consider what talking about sort of philanthropy and launching things there's nothing like launching sort of investing in young the youth the education system because that's where everything launches yes well we've got a complicated system because we have over 3,000 school districts around the country China doesn't worry about that as a concept they make a decision at the very top of the the government that that's what they want to have happen and that is what will happen and we're really handicapped by this distributed you know power in the education area although some people involved with that area will think it's it's great but you know you would know better than I do what percent of American children have computer science exposure my guess no knowledge would be 5 percent or less and if we're going to be going into a world where the other major economic power sort of like ourselves is it's got like a hundred percent and we got five and and the whole computer science area is the future then then we're purposely or accidentally actually handicapping ourselves and our system doesn't allow us to adjust quickly to that so you know the issues like this I find fascinating and you know if you're lucky enough to go to other countries which which I do and you learn what they're thinking then it informs what what we ought to be doing in in in the United States so the current administration Donald Trump has released
American AI Initiative (50:22)
the an executive order on artificial intelligence not sure if you're familiar with it in 2019 looking several years ahead how does America sort of we've mentioned in terms of the big impact we hope your investment in MIT will have a ripple effect but from a federal perspective from a government perspective how does America establish with respect to China leadership in the world at the top for research and development in AI yeah I think that you have to get the federal government in the game in a big way and that this leap forward technologically which is going to happen with or without us you know really should be with us and and it's an opportunity in effect for another moonshot kind of mobilization by the United States I think the appetite actually is there to do that at the moment what's getting in the way is the kind of poisonous politics we have but but if you go below the lack of cooperation which is almost the defining element of American democracy right now in the Congress if you talk to individual members they get it and they would like to do something another part of the issue is we're running huge deficits we're running trillion dollar plus deficits so how much money do you need for this initiative where does it come from who's prepared to stand up for it because if it involves taking away resources from another area our political system is is not real flexible to do that if you're creating this kind of initiative which we need where does the money come from and and trying to get money when you've got trillion dollar deficits in a way could be easy what's the difference of a trillion and a trillion little more but but you know it's it's hard with the mechanisms of Congress but what what's what's really important is this is not an issue that is unknown and it's viewed as a very important issue and there's almost no one in the Congress when you sit down and explain what's going on who doesn't say we've got to do something let me ask the impossible question so if you didn't endorse Donald Trump but after he was elected you have given him advice which which seems to me a great thing to do no matter who the president is to contribute positively contribute to this nation by giving advice and yet you've received a lot of criticism for this so on the previous topic of science and technology and government how do we have a healthy discourse give advice get excited conversation with the government about science and technology without it becoming politicized what's very interesting so when I was young before there was a moon shot we had a president named John F. Kennedy from Massachusetts here and in his inaugural address as president he has not what your country can do for you but what you can do for your country you know we had a generation of people my age basically people who grew up with that credo and you know sometimes you don't need to innovate you can go back to basic principles and that's a good basic principle what can we do you know Americans have GDP per capita of around 60 thousand dollars you know not every it's not equally distributed but it's big and you know people have I think an obligation to help their country and I do that and apparently I take some grief from people you know who project on me things I don't even vaguely believe but I'm like quite simple you know I tried to help the previous president president President Obama he was a good guy and he was a different party and I tried to help president Bush and he's a different party and you know I sort of don't care that much about what the parties are I care about even though I'm a big donor for the Republicans but it's it's what motivates me is what are the problems we're facing can I help people get to you know sort of a good outcome that will stand any test but we live in a world now where you know sort of the filters and the hostility is is so unbelievable you know in the 1960s when I went to school in the university I went to Yale and we had like like so much stuff going on we had a war called the Vietnam War we had you know sort of black power starting and you know we had a sexual revolution with the birth control pill and you know there was one other major thing going on and right the drug revolution there hasn't been a generation that had more stuff going on in a four-year period than my era yet there wasn't this kind of instant hostility if you believed something different everybody lived together and and you know respected the other person and and I think that you know this type of change needs to happen and it's got to happen from the leadership of our major institutions and I don't think that that leaders can be bullied by people who are against you know sort of the classical version of free speech and letting open expression and inquiry that's what universities are for among other things socratic methods and so so I have in the midst of this like onslaught of oddness I believe in still the basic principles and we're going to have to find a way to get back to that and that doesn't start with the people you know sort of in the middle to the bottom who are using you know these kinds of screens to to shout people down and and create an uncooperative environment it's got to be done at the top with core principles that are articulated and ironically if people don't sign on to these kind of core principles where people are equal and and you know speech can be heard and you know you don't have these enormous shout down biases subtly or out loud then they don't belong at those institutions they're violating the core principles and and you know that that's how you end up making change and but you have to have courageous people who are willing to lay that out for the benefit of not just their institutions but for society as a whole so I believe that will happen but it needs the commitment of senior people to make it happen courage and I think for such great leaders great universities there's a huge hunger for it so I'm too very optimistic that it will come I'm now personally taking a step into building a startup first time hoping to change the world of course there are thousands maybe
Starting a business is a rough ride (59:53)
more maybe millions of other first-time entrepreneurs like me what advice you've gone to this process you've talked about the suffering the emotional turmoil in all my entail what advice do you have for those people taking that step I'd say it's a rough ride and you have to be psychologically prepared for things going wrong with frequency you have to be prepared to be put in situations where you're being asked to solve problems you didn't even know those problems existed you know for example renting space it's it's not really a problem unless you've never done it you have no idea what a lease looks like right you don't even know the relevant rent and you know in a market so everything is new everything has to be learned what what you realize is that it's good to have other people with you who've had some experience in areas where you don't know what you're doing unfortunately an entrepreneur starting doesn't know much of anything so everything is is something new and I think it's important not to be alone because it's sort of overwhelming and you need somebody to talk to other than a spouse or a loved one because even they get bored with your problems and and so you know getting a group you know if you look at Alibaba you know Jack Ma was telling me they went they basically were like a financial death store at least twice and you know the fact that there it wasn't just Jack I mean people think it is because of you know he became the you know the sort of public face and the driver but but a group of people who can give advice share situations to talk about that's really important and that's not just referring to the small details like renting space no it's also the psychological yes word yeah and you know because most entrepreneurs at some point question what they're doing because it's not going so well or they're screwing it up and they don't know how to unscrew it up because we're all learning and it's hard to be learning you know when there are like 25 variables going on if you you know if you're missing four big ones you can really make a mess and so the ability to to in effect have either an outsider who's really smart that you can rely on for certain type of things or other people who are working with you on a daily basis it's in most people who haven't had experience believe in the myth of the one person one great person you know makes outcomes creates outcomes that are positive most of us it's not like that if you look back over a lot of the big successful tech companies it's not typically one person it's you know it's and you will know these stories better than I do because it's your world not mine but even I know that almost everyone of them had two people I mean if you look at Google you know that's what they had and that was the same at Microsoft at the beginning and you know it was the same at Apple it you know people have different skills and they need to play off of other people so so you know the advice that I would give you is make sure you understand that so you don't head off in some direction as a lone wolf and find that either you can invent all the solutions or you make bad decisions on certain types of things this is a team sport entrepreneur means you're alone in effect and that's the myth but it's mostly a myth yeah I think and you talk about this in your book and I
Personal Life And Relationships
Love and family (01:04:26)
could talk to you about it forever the harshly self-critical aspect to your personality and to mine as well in the face of failure it's a powerful tool but it's also a burden that's that's very interesting very interesting to walk that line but let me ask on the in terms of people around you in terms of friends in the bigger picture of your own life what do you put the value of love family friendship in the big picture journey of your life well ultimately all journeys are alone it's great to have support and you know when you you you you go forward and say your job is to make something work and that's your number one priority and you're going to work out it to make it work you know it's like superhuman effort people don't come become successful as part-time workers doesn't work that way and if you're prepared to make that 100 to 120 effort you're going to you're going to need support and and you're going to have to have people involved with your life who understand that that's really part of your life sometimes you you're involved with somebody and you know they don't really understand that and that's a source of you know sort of conflict and difficulty but if you if you're involved with the right people you know whether it's a sort of dating relationship or you know sort of a you know spousal relationship you know you you have to involve them in your life but not burden them with with every you know sort of minor triumph or mistake they they actually get bored with it after a while and and so you have to set up different types of ecosystems you have your home life you have your love life you have children and and that's like the enduring part of what you do and then on the other side you've got the you know sort of unpredictable nature of of of this type of work what would I say to people at my firm who were younger usually well everybody's younger but but you know people who are of an age where where you know they're just having their first child or maybe they have two children that it's important to make sure they go away with their spouse at least once every two months it's just some lovely place where there are no children no issues sometimes once a month if if they're you know sort of energetic and clever and that escape the craziness of it all yeah and and reaffirm your your values as a couple and you have to have fun if you don't have fun with the person you're with and all you're doing is dealing with issues then then that gets pretty old and so you have to protect the fun element of your life together and the way to do that isn't by hanging around the house and dealing with you know sort of more problems you have to get away and and reinforce and reinvigorate your relationship and whenever I tell one of our younger people about that they sort of look at me and they're it's like the scales are falling off of their eyes and they're saying jeez you know I hadn't thought about that you know I'm so enmeshed in all these things but that's a great idea and that something as an entrepreneur you also have to do you just can't let relationships slip because you're half overwhelmed beautifully put and I think there's no better place to end it Steve thank you so much I really appreciate it it was an honor to talk to you my pleasure thanks for listening to this conversation with steven Schwartzman and thank you to our sponsors express vpn and masterclass please consider supporting the podcast by signing up to masterclass and masterclass.com/lex and getting express vpn and express vpn.com/lexpod if you enjoy this podcast subscribe on youtube review it with five stars and apple podcast support on patreon or simply connect with me on twitter @lexfreetman and now let me leave you with some words from steven Schwartzman's book what it takes it's as hard to start and run a small business as it is to start a big one you'll suffer the same toll financially and psychologically as you bludgeon it into existence it's hard to raise the money and to find the right people so if you're going to dedicate your life to a business which is the only way it will ever work you should choose one with a potential to be huge thank you for listening and hope to see you next time