From Being Unemployed To Managing Billions
He is the Co-Founder and the Chairman of The Carlyle Group, an investment firm that manages $221 billion from 31 offices across 6 continents, employing more than 1,800 professionals worldwide. His net worth exceeds $3 Billion. For a child whose parents did not graduate high school, he has come a long way.
Rubenstein was born on August 11, 1949, his family lived in a low-income community in Baltimore, Maryland. The family income was no more than $7,000 a year. After watching the now-famous statement from JFK, ‘‘Ask not what your country can do for you, ask what you can do for your country’’ he wanted to serve in public office. As Rubenstein puts it, his parents were supportive of him, even when they knew he was wrong they would still cheer him on.
After graduating from high school, Rubenstein applied to a number of schools for financial assistance and graduated from Duke University, following Duke he ended up at the University of Chicago’s Law School, with a scholarship where he graduated with a degree in law, and immediately joined a New York-based law firm. Working at the law firm his clients made it clear that he was not meant to be a lawyer, so after working for two years Rubenstein left and started to question his career path.
Thinking long and hard, Rubenstein decided to work for the government. Between 1975–76, Rubenstein served as chief counsel to Senator and also got a position in the Jimmy Carter campaign; he was the Deputy Assistant to the President. Four years later Rubenstein, was out of a job as President Carter’s term came to an end.
Rubenstein with no job started to apply, and continue applying for six months, tired Rubenstein eventually went back to practicing law. Days went by and he soon realized why he left law, in the first place.
One day as he was reading a newspaper, Rubenstein came across the concept of the leveraged buyout. A leveraged buyout is when a company goes through an acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. Rubenstein read how Wesray Capital purchased Gibson Greeting Cards for $80 million. Wesray financed with $1 million in cash, and the rest was borrowed by issuing junk bonds. Interestingly a year and a half later, Wesray sold Gibson Greeting Cards for a whopping $220 million. This article was ah-ha! moment, for Rubenstein learning about the concept of leveraged buyout was life-changing. He now knew he wanted to go in the world of finance.
“My view on reading is that it’s one of the best ways to improve one’s chance of succeeding in life” -David Rubenstein
And so in 1987, The Carlyle Group (CG) was launched. The plan was simple, raise money by telling investors that Carlyle would be acquiring businesses heavily affected by the government. Carlyle was able to raise $5 million and continued raising until 1990, Carlyle raised money on a deal-by-deal basis. Their first buyout fundraised $100 million, funds were used to acquire more businesses, and the process kept repeating. Their portfolio included more than 200 companies and about $147 billion in assets under management. In 2011, Carlyle earned $1.36 billion in revenue. And then in 2012 CG went public, by offering 30.5 million units at a price of $22. CG was now worth $671 million. Rubenstein pretty much made his fortune by collecting management fees from investors who gave him money to invest on their behalf.
Rubenstein is much more than just the co-founder of The Carlyle Group. With a vision to teach others from the stories of financially successful individuals, he started interviewing famous people in the business world. He is the host of congressional dialogues, and the David Rubenstein Show, his interview style is very unique, he once said that
“What I do, when I do an interview, is I always read the book or do a lot of research in advance. I write down the questions and then I kind of memorize the questions” -David Rubenstein
If it was not for the article that Rubenstein read, he would not have had the lifestyle he has today.
