Podcast Summary: Goldman Sachs Exchanges – Great Investors
Episode: The Business Builder: New Mountain Capital's Steve Klinsky
Date Recorded: Feb 18, 2026
Host: Alison Mass, Chairman of Investment Banking, Goldman Sachs
Guest: Steve Klinsky, Founder & CEO, New Mountain Capital
Episode Overview
In this episode of the "Exchanges: Great Investors" series, Alison Mass interviews Steve Klinsky, founder and CEO of New Mountain Capital. They discuss Klinsky’s journey from family business roots to private equity pioneer, his philosophies around business building versus financial engineering, what makes a great investor or CEO, current sector trends, and the ongoing evolution of the private markets. Klinsky also shares insights into his philanthropic work in education and what he predicts for private equity’s future.
Key Discussion Points and Insights
1. Early Influences and Career Path
- Family Business Origins:
- Grew up influenced by his family's clothing business in Detroit.
- “My grandfather and grandmother had a store in Detroit for 30 years selling women's coats and women's clothes...that's where I first saw business.” (01:06)
- Originally intended to become a constitutional lawyer, but was drawn into private equity as the industry emerged in the late ‘70s (01:44).
- Grew up influenced by his family's clothing business in Detroit.
- Private Equity Beginnings:
- Wrote his JD/MBA thesis on buyouts just as the first public company LBO occurred (02:22).
- Joined Goldman Sachs in 1981 and co-founded its first LBO group when PE was a niche field (02:22).
2. Private Equity: Then vs. Now
- Early Days of PE:
- In the 1980s, private equity was small-scale and debt-focused:
- “There were only 20 private equity firms in the world back then...we put in a half a million dollars of Goldman Sachs partners money.” (04:21)
- High inflation and low prices fueled returns mostly through leverage, not growth (05:01).
- In the 1980s, private equity was small-scale and debt-focused:
- Evolution to Business Building:
- Today’s private equity is about sector expertise, growth, and operational improvement:
- “It’s gone from a form of finance into a form of business...really knowing industries, building business after business.” (05:19)
- Framed New Mountain as “business builders” rather than financial engineers (09:10).
- Today’s private equity is about sector expertise, growth, and operational improvement:
3. Forming New Mountain Capital
- Leaving Goldman & Starting Anew:
- Moved from Goldman to Forstmann Little to take principal risk and help own businesses (05:53).
- Left Forstmann Little in 1999 after a successful tech exit (General Instrument) and time spent launching NYC’s first charter school (07:41).
- Naming the Firm:
- Settled on “New Mountain” after finding “Mountain” was already trademarked; sought symbolism of permanence and upwardness (09:53):
- “…new century, new firm, New Mountain.” (10:53)
- Settled on “New Mountain” after finding “Mountain” was already trademarked; sought symbolism of permanence and upwardness (09:53):
4. New Mountain’s Philosophy and Strategy
- Focus on Defensive Growth:
- “It’s always been about picking non-cyclical growth sectors. We call those defensive growth sectors…becoming deeply advantaged in those.” (09:10)
- Business Building Approach:
- Details how Blue Yonder grew from $600M to over $8B through “24 ways” of operational value creation (11:22):
- “It’s the pricing, it’s the sales force, it’s add on acquisitions, it’s international expansion, it’s getting better management.” (13:23)
- Details how Blue Yonder grew from $600M to over $8B through “24 ways” of operational value creation (11:22):
- Sector Selection:
- Annual firm-wide sector review eliminates outdated markets and identifies winners (15:34).
- Recent focuses include infrastructure services, accounting, insurance services, healthcare tech, life sciences, and value-priced software (15:49).
5. Identifying Leadership and Great CEOs
- Choosing CEOs:
- Value on previous success and reputational signals, while acknowledging it’s a difficult, high-value decision (13:56):
- “When someone has good luck all the time, you’re not quite sure what they did… but past success means a lot.” (14:56)
- Likes backing established teams, but often needs to recruit new leadership for carve-outs or founder retirements.
- Value on previous success and reputational signals, while acknowledging it’s a difficult, high-value decision (13:56):
6. AI and Technology Trends in PE
- Approach to AI:
- Major task force to implement AI in every portfolio company function (17:45):
- “…just trying to go business function by business function. And what can we improve with AI either to raise the margin or…do better audits than you used to do, that sort of thing.”
- Applies AI both for operational excellence and to avoid technological obsolescence.
- Major task force to implement AI in every portfolio company function (17:45):
7. The Macro Environment and Asset Management
- Current Private Equity Headwinds:
- Reduced deal flow and cash back; some peers “stuck” with overvalued 2021 deals (19:31).
- Why PE Still Makes Sense:
- Private equity continues as a top-performing, but volatile, asset class (20:10).
- “…within private equity with 5,000 firms, it’s like…what does restaurant food taste like? There’s 5,000 restaurants and it’s up to the chef.” (21:20)
- Private equity continues as a top-performing, but volatile, asset class (20:10).
- Private Credit:
- New Mountain leverages PE expertise for credit investing, preferring “family business theory” over portfolio theory (21:35).
- Flexibility to move between equity and credit based on where value is found (23:43):
- “If another firm paid 20 times for it and we didn’t want to pay 21, we’re happy dropping down to 6 times debt with 14 parts equity.” (22:35)
8. Philanthropy and Education
- Educational Reform:
- Deep involvement in after-school programs and charter schools, inspired by his late brother and mother’s teaching background (24:22).
- “I had an older brother named Gary who...would give me school after school...so when I made partner at Forceman...I created an after-school center in his name.” (25:03)
- Deep involvement in after-school programs and charter schools, inspired by his late brother and mother’s teaching background (24:22).
- Modern States Initiative:
- Modern States is disrupting college costs by providing free online courses and paying for CLEP exam fees, helping over 800,000 students (26:29).
9. Looking to the Future: Private Equity’s Next Chapter
- Ongoing Evolution:
- Predicts more focus on true value creation, business building, and continuation vehicles (27:58):
- “You don’t have to sell your best company in five years, you can continue it… I think that’s a very, very important and proper evolution if you do it right.”
- Predicts more focus on true value creation, business building, and continuation vehicles (27:58):
Memorable Quotes & Moments
- On the arc of private equity:
- “It’s like going to Silicon Valley the year transistors were invented...very early.” (02:22)
- On checking references:
- “If someone has good luck or bad luck, it turns out if they have good luck all the time, you’re not quite sure... But past success means a lot.” (14:56)
- On the variety in PE:
- “It’s like, well, what does restaurant food taste like? There’s 5,000 restaurants and it’s up to the chef.” (21:20)
- Best career advice:
- “The best advice I ever got was get a bigger briefcase.” (31:09)
- Story of leaving secret client documents on a plane, but was forgiven by John Weinberg with this practical advice (30:41-31:09).
Notable Segment Timestamps
| Segment | Topic | Timestamp | |---------|-------|-----------| | Career influences & family business | 01:06–02:01 | | Goldman Sachs and PE’s early days | 02:22–03:54 | | Evolution of private equity | 04:21–05:45 | | Move to principal side & Forstmann Little | 05:53–07:36 | | Starting New Mountain & founding story | 07:41–09:53 | | Naming New Mountain | 09:53–11:11 | | Blue Yonder case study & approach | 11:22–13:43 | | CEO/Management selection | 13:56–15:20 | | Sector selection—past & present | 15:34–17:27 | | Approach to AI | 17:45–19:20 | | PE market headwinds & asset class views | 19:31–21:31 | | Private credit strategy | 21:35–24:12 | | Education philanthropy & Modern States | 24:22–27:45 | | The next era of private equity | 27:58–28:47 | | Hiring philosophy (reading/interviews) | 28:51–29:33 | | Lightning round (strengths, advice) | 29:42–33:32 |
Language & Tone
- Candid, reflective, pragmatic
- Anecdotal and detailed, with humility and humor
- Focuses on practical wisdom rather than self-aggrandizement
Summary Value
This episode is a rich exploration of the transformation of private equity, through the eyes of a key founder and industry chair. Steve Klinsky brings deep historical context, practical examples, and a clear philosophy focused on defensible growth and leadership. His stories—ranging from losing secret papers to redefining college affordability—ground abstract investment trends in memorable experience.
For listeners (and readers), it’s a master class in business building, adaptive leadership, and the lasting value of purpose-driven investing.