In the early 2000s, when I was a reporter covering the private equity market for a trade publication, I had the opportunity to interview Blackstone co-At the time, Blackstone had only just begun opening offices overseas. I was surprised when Schwarzman said the decision to finally add far-away offices had a lot to do with advances in video-conferencing technology. He said he would have felt uncomfortable having billion-dollar conversations with people over the phone. But with a video hook-up, he had the ability to visually observe employees and potential partners, and in particular to zoom in on their eyes.
Success in business depends largely on people, and in no industry is this more the case than private equity, where parties “get married” for years and years with the hope of jointly creating value. Limited partners agree to have their capital locked up in GP-controlled funds for 10 to 15 years. Private equity GPs structure multi-year incentive plans with portfolio company management. No wonder people in this industry are maniacal networkers and conference-goers—their success is based on meeting and “marrying” the right people.
These professionals spend their days in an endless procession of meetings, speaking face to face with potential fund managers, advisers, intermediaries and portfolio company executives. Why all the meetings? Because no matter how much due diligence material you pile into a data room, no one will commit to a multi-year, big-dollar business relationship without personally meeting their potential partners. Humans learn valuable things about other humans by watching them.