Synopsis
King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone by David Carey and John E. Morris chronicles the transformative journey of Steve Schwarzman and the Blackstone Group, a private equity firm that redefined the financial landscape. The narrative begins with Schwarzman’s early career, detailing his time at Yale University and his initial role at Lehman Brothers, where he honed his financial acumen. In 1985, Schwarzman, alongside co-founder Pete Peterson, established Blackstone with modest beginnings—just two partners and a secretary. The book traces the firm’s evolution from a fledgling operation to a global powerhouse, emphasizing Schwarzman’s ambition, strategic foresight, and ability to navigate complex financial markets. It explores how Blackstone capitalized on leveraged buyouts, initially facing challenges but gradually building a reputation through early deals like the acquisitions of Transtar and UCAR, which showcased its potential as a credible player in the private equity space.
The book delves into Blackstone’s rapid growth during the 1990s and 2000s, a period marked by significant expansion into real estate, credit, and hedge funds. Carey and Morris highlight key investments, such as Celanese and Nalco, which yielded substantial profits, as well as missteps like the ill-fated German cable systems deal that cost the firm hundreds of millions. A critical turning point comes with the 2007 initial public offering (IPO), a bold move that thrust Blackstone into the public eye, amplified by Schwarzman’s lavish sixtieth birthday celebration at the Park Avenue Armory, which became a symbol of the era’s financial excess. The IPO, coupled with a $3 billion investment from the Chinese government, underscored Blackstone’s immense clout, with shares soaring on debut. The narrative also examines the firm’s resilience during the 2008 financial crisis, attributing its survival to Schwarzman’s cautious approach and disciplined risk management, in stark contrast to the reckless leveraging of traditional banks like Citigroup and Lehman Brothers.
Beyond Schwarzman’s personal story, the book serves as a broader commentary on the private equity industry’s transformation. Carey and Morris argue that firms like Blackstone evolved from being perceived as aggressive “barbarians at the gate” to becoming prudent, risk-conscious investors. They detail how Blackstone outpaced rivals like KKR and Carlyle, managing $564 billion in assets by 2020 and diversifying into infrastructure and insurance. The authors also explore internal dynamics, such as the hiring of Tony James as CEO to share leadership responsibilities and the contentious split with BlackRock, which grew into a $6.3 trillion asset manager. While the book is not a definitive biography of Schwarzman, it weaves his personal life—his philanthropy, controversies, and relationships—into the firm’s saga, offering a nuanced portrait of a man whose ambition mirrored Blackstone’s meteoric rise.
Carey and Morris provide an accessible yet detailed account, drawing on extensive research and rare access to Blackstone’s inner circle. They dissect the firm’s signature deals, from successes to costly failures, to illustrate the high-stakes world of private equity. The book also addresses criticisms of the industry, questioning whether private equity firms extract value at the expense of companies or strengthen them for long-term success. Ultimately, King of Capital portrays Blackstone as a trailblazer that not only reshaped corporate America but also challenged Wall Street giants like Goldman Sachs and Morgan Stanley for dominance. Insightful and even-handed, the narrative captures the interplay of personality, strategy, and market forces that propelled Blackstone to the forefront of global finance, positioning it to drive economic trends in the years ahead.