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Good morning to all new and old readers! Here is your Saturday edition of Faster Than Normal, exploring the stories, ideas, and frameworks of the world’s most prolific people and companies—and how you can apply them to build businesses, wealth, and the most important asset of all: yourself. 

Today, we’re covering Blackstone and their journey to becoming the world’s largest alternative asset manager, growing from a small startup with a big vision to a $100 billion powerhouse.

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What you’ll learn:

• How Blackstone built an investment empire by seizing opportunities in crisis

• Lessons on making your culture your competitive edge, turning your size into an advantage, not a hindrance, and building a data moat

Cheers,

Alex

P.S. Send me feedback on how we can improve. We want to be worthy of your time. I respond to every email.

Blackstone

The Blackstone Story: From $400,000 to $100 Billion

In 1985, two men sat in a small office with a big idea. Steve Schwarzman and Pete Peterson had just left Lehman Brothers. They had $400,000 between them and a vision to create something new in finance. This was the humble beginning of Blackstone.

"We started Blackstone when I was 37. We had no investors and no track record. We just had an idea that there was an opportunity to create an advisory and investment firm," Schwarzman recalls.

Their idea was to combine M&A advisory services with private equity investing. It was a novel approach at the time. But convincing investors to trust them with their money proved challenging.

The early days were tough. Schwarzman and Peterson worked long hours, often sleeping in the office. They faced skepticism from potential clients and investors. Many doubted that two relative unknowns could compete with established Wall Street firms.

"Every day was a crisis," Schwarzman says. "We were always on the verge of going out of business".

The turning point came in 1987. Blackstone raised $800 million for its first private equity fund. It was a significant achievement for a new firm. This success allowed them to start making investments and building a track record.

Initial success bred more success. Blackstone's deals started making headlines. Their advisory business grew. By the early 1990s, they were becoming a force on Wall Street.

But the 2008 financial crisis posed a major challenge. The value of Blackstone's investments plummeted. Critics questioned whether the firm would survive.

Schwarzman took decisive action. He focused on preserving capital and finding opportunities in the chaos. "You want to wait until there's really blood in the streets," he said, paraphrasing Baron Rothschild.

This strategy paid off. Blackstone not only survived the crisis but thrived in its aftermath. They bought distressed assets at low prices, setting the stage for huge profits as markets recovered.

The firm continued to grow and diversify. They expanded into real estate, credit, and hedge fund solutions. Each new business line added to Blackstone's scale and profitability.

Today, Blackstone is the world's largest alternative asset manager. It has $1 trillion in assets under management. Its market capitalization stands at over $100 billion.

Schwarzman attributes this success to Blackstone's culture. "We believe in meritocracy and excellence, openness and integrity," he says. "We are fixated on managing risk and never losing money".

As Schwarzman puts it: "It's just as hard to achieve big goals as it is small ones. The only difference is that bigger goals have much more significant consequences".

Lessons

Lesson 1: Make your culture your competitive edge. Blackstone's culture isn't an afterthought. It's their secret weapon. "Our employees are our most valuable asset," Schwarzman insists. They don't just hire smart people. They hire people who fit their mold - driven, meticulous, slightly obsessive. This creates a unified force that moves faster and more decisively than competitors. It's hard to replicate. Culture isn't just about ping pong tables and free snacks. It's about shared values and goals that become ingrained in every decision.

Lesson 2: Turn your size into an advantage, not a hindrance. As Blackstone grew, they didn't slow down. They sped up. Their scale lets them see patterns across industries and geographies that smaller firms miss. "We have assembled an extraordinary team at Blackstone, driven by a common mission to be the best in the world at whatever we choose to do," Schwarzman boasts. This bird's-eye view informs their strategy and gives them first-mover advantage on emerging trends. Big can be nimble if you structure it right.

Lesson 3: Build a data moat. Blackstone's success isn't just about smart people making good deals. It's about creating an information advantage. They own 230 companies and 12,500 real estate assets. That's a lot of data. They've hired 50 data scientists to make sense of it all. When Blackstone does a deal, they're not just guessing. They're using insights from their vast data trove. As Stephen Schwarzman puts it, "Our access to information is an enduring competitive advantage here at Blackstone, and this advantage grows as we grow larger."

Lesson 4: Diversify, but stay focused. Blackstone started in private equity. Now, 70% of their assets are in other areas. They've expanded into real estate, credit, and hedge funds. But they didn't just throw darts. They carefully chose areas where their skills could transfer. Jon Gray, Blackstone's President, explains: "We look for what we call good neighborhoods, where there looks like there's growth built in for that industry and for that company."

Lesson 5: Multiple revenue streams. Blackstone's business model is genius. They make money from management fees, incentive fees, performance allocation, and their own investments. This mix provides stability and upside. In tough times, management fees keep the lights on. In good times, performance fees provide a boost. It's like having multiple engines on a plane. If one fails, you keep flying.

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Further Readings

• Insights - Blackstone

• The Blackstone Group: Buyout Success and Growth through Alternative Investments (PDF)

• How Blackstone Became the World's Biggest Landlord

• Blackstone's $1 Trillion Milestone Caps Stunning Growth

• The Blackstone Group: A Case Study

• Blackstone's Big Bet on the Future of Life Sciences

• How Blackstone Became an $800 Billion Juggernaut

• Blackstone's Stephen Schwarzman on Hiring Extraordinary People and Building an Enduring Business

• Blackstone's Jon Gray: The Future of Real Estate and Beyond

That’s all for today, folks. As always, please give me your feedback. Which section is your favourite? What do you want to see more or less of? Other suggestions? Please let me know.

Have a wonderful rest of week, all.

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