Conversations with Tyler David Rubenstein on Private Equity, Public Art, and Philanthropy
Nov 17, 2021
David Rubenstein, co-founder of The Carlyle Group and a notable philanthropist, shares his insights on private equity, discussing the enduring '2 and 20' fee structure and why he passed on a young Mark Zuckerberg. He evaluates the challenges of modern philanthropy, contemplating a $200 million donation to revitalize Baltimore. Rubenstein also highlights the necessity of art museums amid funding struggles and reflects on the complex interplay of wealth and happiness, urging caution with cryptocurrency as an investment.
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Private Equity Value Creation
- Private equity firms add value to underperforming companies through expertise and experience.
- They improve management, incentivize employees, and implement strategic acquisitions and divestitures.
2 and 20 Fee Structure
- The 20% performance fee in private equity has historical roots in carried interest practices.
- Its persistence is driven by market forces and the perceived value added by private equity firms.
Missed Facebook Opportunity
- Rubenstein missed the Facebook opportunity, initially viewing it as a dating service with limited potential.
- He underestimated Mark Zuckerberg's vision and the platform's capacity to expand beyond colleges.
