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November 28, 2007 |
Media-Coaching Mr. Schwarzman
Nearly five months after the Blackstone Group went public, Stephen A. Schwarzman finally spoke out in defense of his firm and the private equity industry. But at least a few observers thought that the speech was a little too defensive and more than a little too late.
So what could Mr. Schwarzman do differently to burnish his image? DealBook asked Michael W. Robinson, senior vice president at Levick Strategic Communications and a former head of public affairs and policy at the Securities and Exchange Commission, for pointers for the private equity industry.
Read the Q&A after the jump.
What did you think of Mr. Schwarzman’s speech?
I thought it was a good first step. But I would like to have seen it a year or two ago. When you’re building a brand, you need to do it before there’s any controversy. You have to do it prior to any negativity. Otherwise, it looks like you’re trying to explain away something.
He needs to keep doing it on a regular basis, and ideally do it in good times and bad. If you think about Bill Gates and Melinda gates, they did it first during the antitrust trial. Most people looked at it with jaundiced eyes. But in fact they came to see it as a force for good.
Can he ever live down the $5 million birthday party?
Every era has a picture or an anecdote associated with it. Before, it was K.K.R. and Barbarians at the Gate. Now it’s the party. It has become more or less the anecdote. That increase in profile will never go down, and I don’t see that trend reversing.
But I do see a way forward for them. They have to be the best of the best. Don’t make one speech, make a hundred speeches.
The remarks I read dealt with globalization. He should be a part of that debate in Davos, in Washington, in tons of conferences. I’d tell him, you can be a force for good. Use that as an opportunity.
Hindsight is always 20-20. Shoulda woulda coulda. Again, I think the way forward is to be a force for good and really embrace it.
There’s certainly a need in the global marketplace today for a sage counsel who can talk about the global issues.
So should he focus on Blackstone’s charity, which it mentioned when it filed for its I.P.O. and then that’s it?
It doesn’t have to be charitable, but it does have to be about broader issues. Whether it’s about globalization or R&D or the technology sector, it has to be beyond the industry. Look at [former Treasury Secretary Robert E.] Rubin, look even at Pete Peterson [Blackstone’s co-founder and chairman emeritus]. There are ways to move forward.
This is obviously not going to be built up overnight. It takes sustained progress and sustained commitment.
What about the increased opposition that private equity is facing, from unions to politicians?
I think the industry should be inclusive in its remarks, not exclusive. They have the opportunity to make longer term investments. There’s a lot of good that private equity does, but they should not talk about them on a one-off basis. This has to be a sustained effort, over time.
They’re starting that now, but they really have to emphasize the jobs private equity helps create, the companies they help grow. They’re slowly becoming positioned to do it.
How do private equity firms address issues like the size of their executives’ paychecks?
They’ve helped companies grow, helped create important technologies. Talk about the future, not the past. Got to be about more than making money. Got to be more than you and your colleagues.
It’s not about you. It’s what you do. In some ways, private equity firms aren’t unlike Nasdaq or the NYSE. They help provide capital to help companies grow, help them create jobs.
Those firms would be making a wrong decision to talk just about how it affects them. There is a very good case and an important case to talk about what they have enabled in their economy. But they have to position the public policy argument.
I think the way to think about this is to use words like “conduit” and “enabler.” It’s not about lining their own pockets. It’s about growth and opportunities.
And as I understand it, a lot of their gains are based on investment returns. If their companies don’t make money, they don’t get paid. They should emphasize that.
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