Not that I sit around cackling at the idea of middle aged billionaires groveling for money, but, true or false: there’s something mildly amusing about the idea of a man who has pinchers where, anatomically speaking, hands should be, down on his crab hands and knees, begging for some clams?
Steve’s Sorry [NYP]
Stephen Schwarzman: “Private Equity Is Misunderstood And So Am I” [whispering] “The Only People Who Truly Get Me Are My Crabs”By Bess Levin
At a conference hosted by the Confederation of British Industry yesterday, a visibly shaking Stephen Schwarzman said that private equity is “a force for good” whose only goal is to help the children. Then he bemoaned the fact that his industry is seen as a “destructive force with a short-term perspective, levering companies and stripping their assets to enrich a few nasty people (like me), who then don’t even pay taxes on all that they get in such an unsavory manner,” just before yelling “good bye, cruel world” and throwing himself off a second-story balcony. (Schwarzman also offered this rave review of himself, courtesy of his own family, on the way down: “My wife and children were not ashamed to have me sit with them at the Thanksgiving table on Thursday.” You know what? Sold. I don’t even know what he’s selling, but sold.)
Stephen Schwarzman Speaks [DealBook]
Stephen Schwarzman threw his son Teddy and new daughter Ellen a lavish Jamaican wedding last weekend blah blah blah $20,000 barbecue blah blah blah$8,500 4-hour fireworks display blah blah blah bought up the entire hotel for a $50,000 flat fee blah blah blah $150,000 open bar blah blah blah $1,000 wedding cake blah blah blah that’s a lot of money for flour, eggs and milk blah blah blah. No. This little gathering was a drop in the bucket compared to the $3 million birthday party Stephen threw himself last year. The subtext here is that Schwarzman is a bad father. The excuse that Blackstone just lost $113.2 million holds no water because we hear Schwarzman has plans to put stone crabs on the endangered species list by the end of the year. (Last complaint, because we’re really not trying to be negative about the whole thing, it’s just happening organically but 4 hours of fireworks? Seriously? That’s like half the workday. Wouldn’t your neck start to hurt? Wouldn’t your ears start to ring? What am I missing here? I’m really asking. Educate me.)
Earlier: Crab Hands Jr. Is Off The Market
Like Pa, Like Son [NYP]
We’re on the record as being skeptics of the charity industry. But even we were surprised to read how little Blackstone’s Stephen Schwarzman gives away. The latest issue of Contribute magazine carries a story by Michael Gross describing the paucity of Old Crab Claws charitable donations.
Perhaps to get him started in that noble pursuit [of charitable giving], the venerable New York Public Library chose to honor him at its annual corporate dinner in June—prompting the usually businessman-friendly New York Sun to pointedly note that Schwarzman’s name appears nowhere on the Chronicle of Philanthropy’s list of the 61 most generous givers. Nor is it on BusinessWeek’s Top 50 Most Generous. And it’s no wonder: the 2006 tax return for his Schwarzman Charitable Foundation shows five-figure assets of only $63,424 and notes that only $991 of that is being held for charitable purposes.
Gross is shocked that Schwarzman gives so little to charity. “You’ve proven you can bring home the bacon better than anyone else right now. But so what?” he writes. “When are you and your colleagues going to start spreading around more of the pork?”
We had a different reaction. This is a man with a will of iron, we thought. Anyone with as much money as Schwarzman has is no doubt besieged by charity racketeers seeking to exploit feelings of charitable obligation to fund their favored causes. To stand up against this horde, to refuse to seek public approval lavished upon the likes of Warren Buffett, to turn a deaf ear on the mockery from media types like Gross, to resist the temptation to attempt to buy a VIP ticket through the pearly gates…well, it strikes as heroic.
But then again, maybe he’s just cheap.
Hoard The Bacon [Page Six]
Hedgehog Heaven [Contribute; pdf file]
Nah, we’re just kidding. But old crab hands *was* in fact nominated for AskMen.com’s Top 49 Men of 2007. Not necessarily something to write home about, but not something to scoff at, either, perhaps. The list of candidates campaigning for the title of “Top Man” all “found great success in the past 12 months and have carried themselves like true men’s men,” according to AM. (The inclusion of Pete Wentz and Ryan Seacrest is suspect.)
Obviously, Schwarzman will easily beat out Mark Wahlberg, Denzel Washington and Matt Damon, fellow nominees who don’t have crab hands. Also easily defeated will be Dane Cook, because Schwarzman’s standup routine is far superior, and that counts for a lot.
But others in the field could be tough contenders. Mark Zuckerberg? He’s already convinced 930,281 Facebook users to join the group “Zucks 4 Top Man.” David Chase is reportedly taking out hits on all the nominees. And Rupert Murdoch is just plain stunning and will clearly put up a good fight. Last year’s winner, trying to go 2 for 2, was George Clooney– not much competition there. If you care at all about Stephen, and shares of Blackstone, which are apparently predicted to spike up or down based on the results of this momentous poll, get out there and vote today.
Top 49 Men [AskMen.com]
Kids today. They all want jobs in hedge funds and private equity, and, what’s more, they don’t just want to work in the aforementioned fields—the little punks want to run them. They all want to be James Simons, they all want to be Steve Schwarzman; they all want wicked cool beards, they all want to tower over the crowd at a perch of 5’6”. Where do they get off?
There are two and a half reasons for the career aspirations of today’s youth. 0-1 is that Simons made $1.7 billion last year, with the combined income of the top 25 HF managers exceeding $14 billion. So that’s somewhat appealing. (Schwarzman also did okay for himself). 1-1.5 enables 0-1: favorable tax treatment, i.e. 35% v. 15%, the latter of which saved Simons a few hundge mill in taxes last year. If you’re a kid and you’re saying to yourself “15 or 35, what shall I do?” you probably don’t need much time to come up with an answer. (We know 15 is for carried interest and not total income, we’re just trying to make a point, so settle down trigger finger commenters and save your vitriol for whatever grammatical error is bound to come next).
1.5-2.5 boils down to stupidity and arrogance being a bad combination. Robert Frank writes that the market is a “winner-take-all market— essentially a tournament in which a handful of winners are selected from a much larger field of initial contestants.” Why is the field so overcrowded? Because people overestimate themselves and think that they, not the guy next to them or the guy next to him, have what it takes to earn $1.7 billion/yr. Apparently more than 90% of workers believe they are more productive than their average colleague.
It’s probably true that 90% of your colleagues are incompetent and lazy. But who’s reading Dealbreaker.com right now when you could be doing work? This “overconfidence bias,” according to Frank, puts talented people into an oversaturated field when their skills could be better used elsewhere (like I-banking!), adds no economic value and puts us further and further from achieving our goal of peace in the Middle East. That’s why he advocates making the “after-tax rewards…a little less spectacular,” so that less people want to work in hedge funds and P.E. and raises the attractive quotient of other fields, “ones in which extra talent would yield substantial gains.”
Raise the tax. Don’t raise the tax. Whatever. Let’s attack the problem at the root and lucky for us, the Wall Street Journal has a list of HF and PE enemies on hand. Who or what caused an entire generation to ballpark its earning potential at $1 billion-or-so/yr? Mr. Rogers.
That’s right—you can send your pipe bombs to the estate of late Fred Rogers, who told all small children that they were “special,” even the ugly ones.
“Mr. Rogers spent years telling little creeps that he liked them just the way they were. He should have been telling them there was a lot of room for improvement. … Nice as he was, and as good as his intentions may have been, he did a disservice.”
Indeed! Because of Mr. Self-esteem and that puppet king in the bizarre alternate universe, everyone thinks they can eat $40 crab legs. And you know who else is to blame? The parents. Too much “A for effort,” not enough “you’re a moron.” Too much “I believe in you,” not enough “You will fail.” Too much, “You can be Stevie Cohen when you grow up,” not enough “hopefully McDonald’s is hiring.”
The overcrowding of these fields as a result of coddling and child-rearing techniques that foster confidence and self-worth is a problem that must be stopped.
Blackstone closed at $30.75 yesterday, down 5.2% for the day and below its $31 initial offering on Friday; shares fell to $30.48 during pre-market trading. This is embarrassing. Nobody (here) knows for certain why life is being so god damn unfair to Stephen Schwarzman, 5’6”, but perhaps it could have to do with the Schwarz’s outrageous pay package, the nebulous amount of disclosure about the actual content of the Blackstone funds, or the fact that equity investors haven’t been duped into thinking they are LPs.
This also might have something to do with it:
One particularly risqué segment posed a personnel problem more pressing than a potential shunning at Shinnecock. “The kid, Dylan, was either going to hump a chair or hump the nanny’s leg,” Holly [Peterson, Peter’s daughter] said. “As a mother, I wasn’t going to ask my kids or my friends’ kids to do that.” Hence, the dwarf. Jay [Peterson, Peter’s nephew] recalled, “We thought, why we don’t hire a little person? That should get some good laughs.
For his part, and for Blackstone’s sake, the elder Peterson had the decency (and good sense) to appear embarrassed:
Pete Peterson has been trying to distance himself from the video, saying last week via e-mail that he would never have agreed to lend his apartment had he known that “The Manny” was going to be filmed there, rather than, as he thought, a taped interview of his daughter.”
Within Days, Share Price of Blackstone Is Below $31[New York Times]
Schwarzman Stake Sinks Like Blackstone [New York Post]
Making the Manny [New Yorker]