Skip to main content

Steve Schwarzman Is "Still Upset" About This One Time He Lost Money On A Deal, Twenty-Four Years Ago

  • Author:
  • Updated:

Do you remember what you were doing in June 1986? Steve Schwarzman does. He was sitting in his office at Blackstone asking two employees with divergent opinions on the firm's third-ever potential investment, Tulsa steel distributor Edgcomb, if they should do the deal. Steven Winograd had pushed hard for a buyout while David Stockman had argued against it, worried that as Edgcomb's profit margins were linked to steel prices, a downturn in business could result in the company selling inventory at a loss and its cash flow disappearing. "I had them both in my office," Schwarzman says in King of Capital.

"Winograd argued that the company's profits were of a repeat nature and that it had very interesting expansion prospects. Stockman said it was a dangerous deal to do and it wasn't worth the price. I could see both sides, and I voted with Winograd." The decision ultimately proved misguided, and the fund's investors lost $32.5 million of the $38.9 million they'd put up. Shirley Jordan, the CIO of Presidential Life Insurance, called Schwarzman "a complete idiot" and told him, "I never should have given you a dime!"

A painful moment to be sure, but as it was nearly a quarter century ago and Schwarzman has since made his clients and himself very rich people many times over, one might assume he'd be over it. Well one would assume wrong. Speaking with Becky Quick for CNBC's latest "Worst Trade Ever/Don't Be Afraid To Open Up" series, Schwarzman said that not only his he "still upset about losing that money" but that he forces himself to think about it every single day.

"I made a tombstone of that deal," Schwarzman told Becky, in a deadly serious tone. "I purposely paid the money to have a Lucite plaque in the form of a tombstone and instead of just the normal white background with letters on it, I decided to make it black. And I keep it on my windowsill where I can see it. Every day. As a reminder."

This would be in addition the morning ritual of wrapping a cilice around his thigh and alternating between shouting out "Edgcomb!" and "You suck, Schwarzman!" with each tightening of the wire, and forcing Tony James to descend on his office shouting "You know nothing!" while wearing a Kravis mask.

Because you can never forget. Ever.

Related: Larry Fink: The Biggest Mistake I Ever Made Was Doubting My Own Sheer Fucking Awesomeness



Everyone Can Relax, Steve Schwarzman Made Money Last Year

The tax cuts he helped to create are definitely going to help him hold on to a lot of the $1 billion he pulled down last year.

Bernie Sanders Not Sure That Steve Schwarzman Understands How The Stock Market Works

We're starting to think that Bernie might not be a Blackstone investor.

By Lishabai Yi (Middle Kingdom Media Ltd.) [CC BY-SA 4.0], via Wikimedia Commons

Steve Schwarzman Apparently Not Supposed To Do His Job Anymore

What's the use of being besties with the president if you can't help out shareholders in the process?


Steve Schwarzman And Trump Have An All-Star Team Of CEOs

Never let it be said that the President-Elect doesn't enjoy name-dropping.