A Conversation with Stephen Schwarzman

Sometimes potential takes a while to get noticed. It certainly appears to be the case with Schwarzman Scholars, a graduate scholarship aimed at strengthening ties between East and West. When I first wrote about Schwarzman Scholars for the St Andrews Foreign Affairs Review in October 2013, I was struck by the general paucity of media coverage attending its early progress. And it was a most curious thing. Both the scheme and its namesake, Stephen A. Schwarzman, are not exactly subjects that deserve glossing over. With a stated ambition of becoming the Rhodes of the twenty-first century, Schwarzman Scholars is a timely and forward-thinking initiative, launched by one of the world’s most high-profile business magnates.

In recent months, however, the early media silence surrounding Schwarzman Scholars has been supplanted by extensive coverage in the pages of The New York Times and Fortune, to name just the most prominent examples. It appears, then, that the schemes’ potential has finally been recognized. So what exactly has happened since October 2013? Well for starters, the endowment, having reached its original $300 million target, has been pushed upwards to a new target of $400 million. Offices have sprouted up in New York and Beijing; staff and faculty hires have been made, and speculative press releases have made way for live applications. But what lies behind this rapid progress? In order to answer this question I went straight to the primary source and asked Mr. Schwarzman himself.

The Schwarzman Scholars program is built around the idea of relationships, specifically the relationship between China and the US. From your experience in the business world what is the value of relationships, and what is the most valuable one you have had?

Relationships are key, not just within the business world, but in any career that one chooses. It’s important to seek out and build relationships with mentors who can help you to learn and progress professionally. It’s also important to establish relationships of trust with the people you work with as well as suppliers and customers. Over long periods of time, difficult situations will inevitably occur. Relationships, in effect, are the glue that enable people to work together in spite of that.

The most valuable relationship I had was with my founding partner at Blackstone who was 21 years older than I am. We developed our business together for approximately 20 years and he retired about ten years ago. Together we managed to complement each other’s skills and developed a major business together.

Can you outline the thought process behind getting Schwarzman Scholars up and running? How did it proceed from an idea into something concrete, and what was the timeframe/back-story behind its evolution?

The Schwarzman Scholars came about through a series of happy coincidences, which began when the Chinese government invested significantly in my company, Blackstone, during our initial public offering in 2007. Following those discussions, I was asked to be on the International Advisory Board of the Tsinghua University School of Economics and Management, where I met President Chen, the President of Tsinghua University.

Tsinghua is one of China’s top institutions of higher learning, with a heavy concentration of its graduates in top leadership positions in China. For example, the current President of China, Xi Jinping, attended Tsinghua as did the previous President, Hu Jintao. The president of the university, in 2010, asked me to support a student exchange idea to be announced in 2011 at the celebration for the 100th anniversary of Tsinghua. Unfortunately, due to the consequences of the global financial crisis, I was unable to meet that deadline – but in 2012 President Chen visited me in Europe to ask me to seriously focus on this potential project.

I had the time to consider what would be the best type of program and what my objectives for it would be, as a simple student exchange program was not a high priority for me. I was interested in developing a group of future global leaders who could learn about China in such a way that they would be equipped to interpret China’s actions in their own countries after they returned from the program. I realized that the Rhodes Scholars program provided a terrific model of this type of student who I wanted to recruit as a future leader.

Looking toward the coming decades and the sort of challenges these future leaders would face, I also decided that the program should not be restricted to just China and the United States. In fact, it was important to broaden the participation among nations globally to have a much greater impact. Consequently we settled on a ratio of 45% American students, 20% Chinese students and 35% from the rest of the world.

We’re now into the implementation stage of the project, which is very exciting, including the construction of Schwarzman College, inspired by the Oxford-Cambridge residential college model, which should be completed at the beginning of 2016.

At the most recent CPE you presented to the Education Pillar. Out of your discussions at the conference, where is Schwarzman Scholars placed in the larger picture of Chinese-US education initiatives? And what is the main finding that you’ve taken away from these discussions?

I’ve been very pleased to participate in the CPE educational discussions. I realize that the Schwarzman Scholars has a major potential impact on U.S.-China educational relations. The program itself was formally endorsed by President Xi of China, as well as President Obama. At the announcement of the program at the Great Hall of the People in April 2013, Secretary of State John Kerry provided a video with his endorsement of the program as well as former Secretary of State Henry Kissinger, among others. In effect, the program aspires to positively impact Chinese higher education by bringing “the best from the West” in terms of best practices, curriculum and pedagogy. All of these aspects of the program potentially could be adopted by other Chinese universities, creating a win-win situation for both China on a long-term basis, as well as the United States.

You’re known for your competitive attitude (‘war not skirmishes’ being a popularly quoted phrase of yours). I’d like you to elaborate on how you reconcile this mentality with your philanthropic endeavours.

I’m basically a competitive person who believes in excellence and the sense of mission that goes with it. We’ve managed to achieve that balance at my firm, Blackstone, where we believe strictly in meritocracy, by attracting highly focused, gifted individuals. The benefits of cultivating this work environment and culture have not gone unnoticed – both Vault.com and Pensions & Investments have selected us as the “best place to work” in our industry.

I believe that these principles are not inconsistent with philanthropic endeavors. I’ve chosen to concentrate my major philanthropic giving, both at the New York Public Library, the parochial school system in New York, as well as the Schwarzman Scholars, in endeavors which help people achieve their goals through education and the opportunities that come with it. I also am involved with other cultural philanthropic activities which are also consistent with providing opportunities for many people, but doing so with the highest level possible of excellence for these organizations.

Do you have a specific intellectual influence from College or an educational mentor? What book, if any, has had the most influence on your attitude to work?

My intellectual influence from college stems from my major, which was in Social Science. I was part of a small seminar group which studied psychology, sociology, anthropology and biology. I was always drawn to trying to understand what makes people, either individually or in groups, behave the way they do. I was fortunate enough at Yale University in the 1960’s to have this unique integrated course available. I’ve used those types of perceptions regularly throughout my professional career.

The book I found most interesting form college was Erik Erikson’s Identity and the Life Cycle, in which he outlines the eight stages of each individual’s development. Erikson, one of the foremost developmental psychologists, provided the intellectual framework for what people are thinking about at different stages in their lives. I always viewed this book as extremely important because it enabled me to anticipate what people of certain ages would have as their principal concerns. As the Chief Executive of a very large organization, I’ve had the opportunity to witness how accurate Erikson’s perceptions were over forty years ago.