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- [00:00]
Indiana University Announcer
Indiana University is shaping the future of healthcare. Advancing discoveries that become treatments for Alzheimer's, obesity, cancer and rare diseases. And training the providers trusted to deliver them from the lab to the clinic. IU powers medical breakthroughs and the talent behind them. See how IU solves. What's next? Iu. Edu Impact.
- [00:25]
Bloomberg Audio Studios Announcer
Bloomberg Audio Studios, Podcasts, Radio News.
- [00:30]
Interviewer (Danny)
Thank you both for sitting down with me. And first of all, congratulations. I know people will be viewing this after the race, but you've got collectively a poll and a sprint win a second pole together.
- [00:41]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
It's amazing.
- [00:42]
Interviewer (Danny)
There you go. How was it to see the car yet again with the Carlyle name on it?
- [00:46]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Just every time it's exciting. It's like a kid opening a gift. And there it is. There's your toy. Except this is an extraordinary toy that they spend years building, and then they just keep winning and winning and winning.
- [00:58]
Interviewer (Danny)
And it's a big toy, an expensive toy. And I have to say, it does have this element that it feels like a different Carlyle. Typically a Carlyle that operates behind the scenes, working with institutional investors. But this is big. This is splashy, not to mention expensive. Why put yourself out there like this?
- [01:15]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Well, if you think about the evolution of finance, the last 30 years, you've seen a remarkable development of private markets. Private markets are really the primary source of capital for many companies. As that capital continues to grow, the market has just evolved to a place where wealth, retail, the breadth of what we do globally, is just evolved also. And this is just part of the natural evolution. While it might feel unique now, I think it's actually not revolutionary at all. It's really just quite evolutionary.
- [01:48]
Interviewer (Danny)
And why move that way? With Red Bull specifically, that was pretty easy.
- [01:54]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Everything about Oracle Red Bull racing is about performance, execution, excellence. So that part was very easy to see and very easy to relate to as a firm. The sport, F1, is also global and growing dramatically, as we know as our private markets. And so that all aligned. What made this really special was when Laurent and I spent time together, the team spend time together, and it was almost like this sort of very, I don't know, uniquely natural affinity where we all just became best friends really quickly. And so, hey, it's got to be fun, too. But it is about performance excellence first and foremost.
- [02:33]
Interviewer (Danny)
I was going to say Laurent, given what Harvey is saying, that the finance world in general has been more interested in sport, more interested in F1. Have you been fielding a lot of calls before this partnership from Harvey's peers who wanted to get in like he.
- [02:45]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
Did you know, in reality? No, it felt, it felt very natural straight away with Carlisle, with Harvey, you know, it's this moment where you realize that as a person you are talking with are the best at what they do in the world. And you know, we feel we are quite good at what we do and what we see with our partners is that we go and try to partners with companies that are the best at what they do. And we had a lot more points of connections. We were, we had these performance obsessions. We have this data driven approach in our very different business. Business, but, but together with that quest for perfections in everything we are doing, it felt like a very, very natural connections.
- [03:24]
Interviewer (Danny)
To be fair, Harvey. There have been some outspoken critics about the move for private capital to do sponsorships to get invested in sports. Josh Easterly of 6th street said at a conference a couple of weeks ago, it's representative to him that firms are more concentrated on fine tuning their brand than on the returns themselves. What do you say to that criticism?
- [03:45]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Our business is exactly the way Laurent just described it. It's first and foremost always about performance. Performance drives everything. If you have performance, you have success. Again, you think about everything they do at Oracle, Red Bull Racing, it's all oriented around success. When he references data, we think about data. It's different data. But these are organizations driven around performance excellence. If you don't have performance, you don't have success. In terms of the partnership here, yeah, this is important to be able to reach a global audience. You know, you mentioned sport before. There's a real desire in the world for people to come together around sport. And this is truly one of the fastest growing sports in the world. And so it's all very synergistic. But you don't have success without performance. You can't sacrifice it. It has to stay number one.
- [04:31]
Interviewer (Danny)
Well, the concentration of the sport, it's growing quickly. Apple now a US partnership with F1. But again, there is so much in institutional money coming in, whether it be Carlyle, a sponsorship, whether it be other private capital firms taking investments in the team itself. What has that money done to change this sport?
- [04:49]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Laurent?
- [04:49]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
You know, I think as a sport we have spent years and decades to try to have a more global reach. You know, we, we, we have been trying to reach out to our funds, we've been trying to reach out to the businesses. And finally it seems that we are now having that incredible growth. Year after year we reach more fans, more global audience. We have now 40% of our global audience in Formula One. That is female, 40%, that is under 35 years old. And you know, we also had that common points of connections with Carai and with Harvey. They are trying to get private markets to have that broader reach. And Formula one is also trying to get that broader reach towards a bigger fan base. And we are enjoying that because we worked a lot to, to to be closer to our fund. And you are right. There is so much more coming. We feel we are only at the beginning, especially in the US in terms of reaching out to the wider audience.
- [05:47]
Interviewer (Danny)
It's a fair point. This growth is happening to both of your industries at the same time, Harvey. That growth also coincides with you taking over the leadership of Carlyle in early 2023. It does feel like a different mindset coming from people, institutions coming to you to buy funds versus you now having to sell them as well to a broader audience. Is this a big cultural shift you think that you're leading at Carlyle? Is this a Carlyle 2.0?
- [06:13]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Well, I think again, if you think about it's an incredibly competitive world out there. All organizations have to go through constant processes of self analytics, really being humble, asking themselves, hey, what can we do better tomorrow? What can we do better for any client we serve around the world, Whether it's a wealthy individual outside the United States or a future retirement, an individual planning for retirement in the United States when all those rules change. And so no, I don't know if you're ever through your 2.0s. I think as a leader of any organization, you constantly have to be working with your teams to say, hey, on any given day, what can we learn? What can we do better and who can we serve better? And so again, I don't view any of that as revolutionary. I just think of that as evolutionary. Now, the firm, as you point out, has been on a strong growth trajectory since I've shown up. The team's really rallied. They've done an extraordinary job. I'm really quite proud of everything they've done.
- [07:12]
Interviewer (Danny)
Is it a cultural shift, though, to go from institutions to have to think about retail and wealth?
- [07:17]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
I wouldn't say it's a cultural shift because at the core of everything that is culturally relevant is performance. What I would say is understanding that end client. You see a lot in the news today about retirement. It's not really even a sensible question to me whether retirees in the United States should have access to private markets, firefighters, millions of them, to teachers, millions of them have had access to these solutions through their pension plans. What is Relevant is how do you structure them, how do you work with regulators to get it correct? So the real issue about extending private markets more broadly around the world to different clients is just getting it right. But it makes total sense. Since 2000, we've lost half the public companies in the world. So private markets are the market that people want to allocate capital to and they shouldn't, they shouldn't be denied that opportunity. We just as an industry have to be really thoughtful about how we deliver it.
- [08:14]
Interviewer (Danny)
Right. Well, you coming in as leader, maybe there are some things that also mirror each other. Coming in when there's some tumult at the top, when there's maybe questions of leadership. Laurent, you've had to do that this year as well. Has Harvey given you any advice of what it's like to come in as leader when there are questions surrounding past leadership?
- [08:32]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Of course. Indeed.
- [08:33]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
Of course. Absolutely. And you know, it even goes beyond, you know, when we say why do we, why do we partner with Carla? We partner with, with companies so that we can have that challenge, we can have that exchange about leaderships, about.
- [08:45]
Interviewer (Danny)
Well, we have to know what the advice was. We need to see behind the scenes.
- [08:49]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
You know, the behind the scene advice is as simple as that. You know, it's all about performance and performance only comes from people. So get your people in the right conditions to work, give them the possibility to express their talents, make sure they have the right working environment for them to, to operate. At best, that's what they do, that's what we do. That was one of his first advice. All of that is happening in an incredibly technological environment and data driven world.
- [09:16]
Interviewer (Danny)
To be fair, you were also coming from racing bowls where you were having a lot of success with the team, even outperforming the parent team at certain points too. Was it a hard decision to make to come over to Red Bull or was it even a choice at all?
- [09:31]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
You know, I think it was an incredible honor to receive that call. The first feeling you get is it is Red Bull asking you to step up there. There is a sense of loyalty towards the company. So of course it was a big news and a big surprise. But it's also something that you know, you have to jump into as part of the loyalty you have with the group. And you know, it's an incredible honor and privilege to be part of a team that has been winning so much in such a competitive environment in the last two decades.
- [10:05]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
You know, as leaders, we can all learn from each other. What he just talked about was really about Talent. And talent drives everything. We're in a people business. No matter how much data we collect, no matter how much technology we implement, we're in a data business. He didn't want to get into too much detail. He has called me about tire selection, and I did call him for advice during the government shutdown. I said, hey, should we brainstorm about these issues? But anyway, that's really just between him and me as leaders, so.
- [10:28]
Interviewer (Danny)
So for the sprint, you were hard, Soft, medium. You were there every call.
- [10:31]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
He doesn't call me live. We usually talk a couple days before a race, and then, you know, I'll talk to him, like, leading up to the government shutdown. But once it happens, I'm doing my thing, he's doing his thing.
- [10:39]
Interviewer (Danny)
Well, maybe you're the right person for this, Harvey, because I was really struck by something you said last week at a conference. You called yourself, as part of being the top of Carlisle, also the chief worry officer.
- [10:48]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Sure.
- [10:49]
Interviewer (Danny)
What is your chief worry right now as the chief worry officer?
- [10:52]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Well, the important thing about being the chief worry officer is there's no list of things that one doesn't worry about. But I think that part of my role, and primarily really what drives my role, is exactly what Laurent just said about enabling the team, motivating the team, bringing the team together, ensuring that the team feels good about success, but not too good. Always staying hungry, but at the same time, humble. They've had really remarkable success since he stepped in. I mean, it is extraordinary with this man, leader and friend and the whole team and Max have achieved. It's really needs to be underscored, I think, in terms of worries. The key things about worrying is anticipating things that may happen, but allowing your teams to really digest that information. So at this particular point in time, as we sit here, there's a lot of people talking about markets being priced for perfection or geopolitics or basically the way governments are relating, and trends that have existed for 30, 40, 50 years that are somewhat reversing. I would put all these things sort of on my list of things I focus on, but there's nothing as I sit here this morning that I'm worried about, you know, other than that, you know, we're going to win every race for the rest of the season, which also, I will now say, was part of our contractual agreement. Yeah.
- [12:14]
Interviewer (Danny)
Oh, wow. Okay. Well, if something goes wrong and you don't win, we're going to check in on this. None at all. To that point, Max has been closing the gap. What needs to go Right. In order for that gap not only to be closed, but to be surpassed.
- [12:27]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
Look, we take it race by race. As much as the world would like us to talk about the World Championships, because, yes, mathematically it has been reopened thanks to the string of success we have been having. The truth is we take it race by race. We even take it day by day, session by session. That's how we keep the right focus, the right intensity in every decision we make. And that's, you know, the rest will be the consequence of that level of change.
- [12:54]
Interviewer (Danny)
2026 must be on your mind. And especially the second seat, I think, is on a lot of people's mind. You take it day by day, but at what point do you think you'll have the information you need to make that decision for the second seat next year?
- [13:06]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
You know, we are in a very comfortable situation. We have, we have the contracts on our side for all of our drivers. They are great kids. We want to give them as much time as possible to show us what they want to show us. So of course we don't want to wait until the last race because if somebody loses seat, we need to be fair with this person. But we think another couple of races will probably make a call.
- [13:31]
Interviewer (Danny)
And what are you focusing on? On the priorities for making that decision.
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Laurent (Laurent Mekies, Red Bull Racing Team Principal)
It's super simple. It's the same for everything in our business. It's performance. Performance only.
- [13:38]
Interviewer (Danny)
Performance only. Harvey, in thinking about where the world goes from here, I'd be remiss if I didn't bring up the chief worry of the moment, and that is concern about credit conditions. You've made it very clear that some of the issues, be it first brands, be it some of the regional banks, more recently, if it is a cockroach, it's not termites that are destroying the foundation of the building. They might be a one off. At what point do you start to get concerned that, that maybe it doesn't necessarily show that the whole thing's going to crumble, but it's a late cycle and there have been mistakes made that might pop up more frequently.
- [14:11]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Well, I think a lot of the questions that are being asked make a lot of sense. You know, since the financial crisis, we've had, generally speaking, very stimulative policy in all respects, quantitative easing, fiscal policy through the pandemic and beyond. And so it's unsurprising when you look back, of course, surprising when we came out of the financial crisis, but unsurprising when you look back the trajectory of markets that we've experienced Any time you're very late cycle like this, any news item could be disruptive to a market on any given day. I think that we haven't had really a credit recession driven credit cycle in a very, very, very long time. And so people are right to be concerned when they see credit underperformance. Having said that, the bigger questions around systemic risk or when you say, will things crumble? Just because we haven't had a credit cycle in a long time doesn't mean if we go through a credit cycle, which inevitably we will, that's a certainty that things will crumble. I think the market structure is such today that it's pretty resilient. And when we look at our data across our portfolio companies, as we've talked about, and there are 700,000 employees in our portfolio companies around the world, there are 2,400 at Carlyle Driving all this activity. When we look at that data today, that data suggests that companies are growing, employment is steady, inflation's a little sticky, but there's nothing in the immediate horizon that suggests that, as you would say, things are crumbling. Having said that, late cycle, it should be on a worry list.
- [15:37]
Interviewer (Danny)
Okay, makes sense. As chief worry officer, what specifically is the worry then if it's not a systemic issue?
- [15:44]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Well, whenever you get to a point where markets are, let's say, very stretched, credit spreads are very tight. It's about how you deploy marginal capital from our perspective. And so when we think about it again, we're not in the business of avoiding risk. That's not the business we're in. We're in the risk taking business. We have to be in the business of pricing it correctly. So anytime you're late cycle, you want to be very, very thoughtful about that marginal risk deployment. Last year we deployed billions of capital, sometimes in Europe, sometimes in the US, sometimes in Asia. But you have to be looking around the world for the capital with the right risk return. And that's what we do on behalf of all of our clients.
- [16:21]
Interviewer (Danny)
Just to bring this back around, there have been some concerns that with the amount of money coming in from wealth that that gets harder to do just because there's that much more money that needs to be deployed. And maybe you go into things that you otherwise wouldn't have because that money needs to be put to work. Is that a fair concern?
- [16:38]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Well, I think it's a, it's a fair concern if you're not thoughtful about deployment. In the history of cycles, what you tend to see is you tend to see too much capital coming into a space chasing too little return. It's our responsibility to manage that capital thoughtfully. That's our obligation. That's how we think about it.
- [16:57]
Interviewer (Danny)
Is there a concern that others aren't doing that as this money is coming in?
- [16:59]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
I think anytime you go through a long cycle, you're going to see marginal participants who may not make the best judgments. But again, your point is whether or not really what you're getting is whether or not it's systemic or not. I don't see that right now.
- [17:12]
Interviewer (Danny)
Well, just before we let both of you go, the first big splashy sponsorship, more, more to come between you two, between Carlisle and other sports.
- [17:22]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Right now we're pretty thrilled with this partnership and, and we just continue to root for our friend here and the whole team and Max and so no, we're quite satisfied and you know, on.
- [17:31]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
Our side we are very proud that Carlisle is a few first ever global investment firms to partners in Formula one is the first time also for the sport to be connected with this part of the business. And we are very proud that they chose Oracle Red Bull Racing.
- [17:45]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Yeah, we're thrilled with it.
- [17:46]
Interviewer (Danny)
Well, we're all excited to watch watch the race today with the Carlisle sign zipping by. Good luck and congratulations already for this weekend.
- [17:53]
Laurent (Laurent Mekies, Red Bull Racing Team Principal)
Thank you.
- [17:54]
Interviewer (Danny)
Thank you both so much.
- [17:55]
Harvey (Harvey Schwartz, CEO of Carlyle Group)
Thanks, Danny.
- [17:56]
Indiana University Announcer
Indiana University is shaping the future of healthcare. Advancing discoveries that become treatments for Alzheimer's, obesity, cancer and other rare and complex diseases. And training the next generation of providers, doctors and nurses trusted to address health challenges with skill, compassion and purpose. From the lab to the clinic, from research teams to patient care, IU talent is driving medical innovation, improving health outcomes and strengthening communities. See how IU solves. What's next iu.
- [18:28]
Bloomberg Audio Studios Announcer
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