Jonathan S. Lavine on Private Equity Investing (Podcast)

Really an interesting um history. He is extremely knowledgeable about all sorts of different aspects of private equity and aware, very aware of how there is a spill over from the equity markets as well as the impact of alternatives like bonds and and how that's given rise to different types of private equity. We we talked about everything from operating on during the pandemic to what is going to happen as rates rise, what that might mean for private

equity and for credit spreads. I found this conversation to be absolutely fascinating and I think you will also with no further ado. My interview with Jonathan Levine, co managing partner at Bain Capital. This is Masters in Business with Very Results on Bluebird Radio. My extra special guest this week is Jonathan Levine. He is the managing partner at Bain Capital, which manages about a hundred and fifty five

billion dollars. He is also the chief investment officer at Bain Capital, credit about fifty eight billion dollars in assets. He is the co chair of the board of Trustees of Columbia University, where he got his undergraduate degree before going on to earn an m b A. At Harvard. Jonathan Levine, Welcome to Bloomberg. Thank you very much. I'm glad to be here. So so, given your background, you study economics undergrad, you get an m b A. How did you find your way to Wall Street? What what

did you do? Uh between your undergraduate and your m b A. Interestingly enough, I actually didn't study economics as an undergrad. I studied political science and English literature, and I took one economics course. I think that that's why I'm so good at always reducing things to basic supply

and demand, because that's how far I got. And I was into Columbia Law School and I was planning on attending, and a friend of mine said, Uh, you know, these investment banks now have analyst programs and they claim they're just looking for smart people and you don't need to know anything. And I thought I was smart, and I still wasn't sure. I said, well, I'm going to law school and I'll never forget. You said to me, well, there's free food, and I said, well, free food, I'll

definitely show up. And I literally showed up, interviewed with a few places, was fortunate enough to get some offers, and I decided to go to Drexel Burnham and I worked at Drexel Burnham for the UH just short of two years between business business School and college because obviously Drexel didn't make it the full two years. But it was an amazing experience before I went to business school, really really intriguing. I never knew that uh NBA programs

came with free food. Otherwise I might not have gone to law school had I known that. That's a that's really interesting. So so you go from Drexel UH, which you're primarily known as an M and A shop, to Mackenzie the big consultancy. What was that transition, like, how did you find yourself operating when you were no longer you know what was essentially was one of the hottest and in a shops on the street. So when I

went to business school, a couple of things happened. One is, because I didn't have you know, traditional undergraduate economics or finance or accounting, I really only knew about finance because that's where I wound up, and so I learned so

much more about the strategic aspects of business. Second of all, I met my wife the third day of business school and we discussed where we wanted to be, and we wanted to be in Boston, and at the time, there weren't a lot of finance jobs in Boston, and I had the good fortune of meeting the people from the mckensey Boston office, which was quite small at the time.

I was able to go there at the summer. Really found the work interesting, and probably even more so, the people were truly extraordinary people, great teachers, really you know, intellectually curious. And the second year of business school, because my clients were local, I was able to actually work part time in that office. The second year of business school and I had accepted the offer, I went back there. My wife actually was working at a different consulting firm.

She was at BCG, but there was part of me that always thought I would get back to some form of finance or investing and uh staying capital in early was raising its first institutional fund historically. We were less than ten years old and historically had basically had high net worth UM funds, and we were jumping from a hundred and twenty million dollars UH fund to a three hundred million dollar fund, which at the time seemed enormous.

And I got a call from somebody I knew here and she said, we're trying to quote beef up a little bit. I think the firm had fewer than twenty investors, and we want somebody with consulting and banking experience. Are you interested in talking to it? And I literally came over on a Friday met virtually everybody came back the following Monday. Mitt Romney interviewed me and made me an offer, and I tell people I accepted it because it felt right. Huh,

really really interesting. So So let's talk a little bit about UM about that experience. Well, is it just that simple? There wasn't anything else that that made you say, yes, I want to move to away from consultancy and towards private equity. It just was a gut Hey, this feels right. I think it did in my heart. I think there were two things. I think it played better to my skill, a certain entrepreneurial bent, uh the ability to combine what I had learned at Wreckvil and as a consultant, and

that is the heritage of the firm. Obviously, the the firm started as a spinoff from the consulting firm Bain and Company. It's so the approach to investing made sense to me. It made sense to me on a fundamental basis how you think about looking at companies. And it was also differentiated because at the time nobody was approaching investing that way. And while the firm was quite small, there was an energy and aspiration and the hunger that

really really appealed to me. And I said, I think this group is going to go somewhere and I can help make that happen. And one thing that I'm really really proud of is that even today, with a hundred and fifty billion dollars under management and a hundred and fifty partners in twenty one offices throughout the globe, I'm still proud we have that hunger and we have that int intellectual curiosity in the aspiration to do more and do better. So five years later you found Sancity Advisors,

which eventually morphed into being Capital Credit. Tell us about what you were thinking, UH, creating a new credit division, and especially in light of you know, late nineties, the equity markets were they were on fire. Why start a credit focused investment farm? And the firm believed that what we did, our approach to investing was applicable to multiple asset classes, and we made the strategic decision in the mid nineties to expand both across asset classes and geographies,

not all at once. So in the mid nineties we founded a public equity business and I founded the credit business. And the general belief was that we had been successful in investing in the equity of leverage companies, and therefore you would think that we would be able to apply to skill to the depth of LeVert companies. My experience from Drectful and the fact that I had worked on a bunch of our financings UH previously at ben Capital made me a logical choice to to start that business.

At the time, there were really no other A few of our peers or competitors were doing the same thing. But we were one of the first to do this, and although the equity markets were hot at the time, we invest for very long periods of time and therefore it wasn't like we saw a two year window or at any time one asset was better than the other. We thought that we had a sustainable advantage in this space. The market was changing profoundly at the time. The concept

of a syndicated bank loan was very very new. Clos weren't even around yet. We did one of the first clos and and uh we decided that institutionally it was worth doing that. Said, it was so unusual for a private equity firm to have, particularly a debt firm, and we didn't want people to misread when we were buying the debt of of l b O s sponsored by

other sponsors. We put a different name on it. It's always been part of bing capital um, but Thankity is a lighthouse in Massachusetts, and we thought stability it was a good a good, a good symbol, and we kept that name for a while because we weren't sure how people would think about buying their debt. Ultimately, obviously, firms like ours having debt affiliates became quite mainstream, and UH in about seven years ago, we changed the name UH

to ban Capital Credit. Our public equity business had the name Brooks. We changed the name of that to Bank Capital Public Equity. And you know, I joked that that is the official story, the unofficial story for why they picked me, as I think Mitt thought that I was senior enough to be credible and young enough to be expendable if it didn't work. But fortunately we never had to test that hypothesis. That's very funny, So so let's

let's stay with that. Given what subsequently happens a few years later with the dot com implosion in the market crash, how did that spill over to the credit markets. It's interesting. So I still remember the first bond trade I did. I bought Riverwood bonds at about cents on the dollar and they went up to about a hundred and five, and I said, Wow, this is going to be an easy business. There were several things I did not realize at the time. One, I knew nothing about trader trading.

And the first thing we did in our first year is higher a great trader, a guy named Jamie Kellogg, who was with us for twenty years and two. People forget that. In August Russia defaulted and that put a shock wave through the bond markets. So we were already dealing with turbulence when the dot com bubble hit um and then shortly after the dot com bubble, obviously we

had nine eleven. And what we learned learned through that period of time is actually one of the important things in credit is you get paid back at the end if you made good selections. Nobody likes price volatility, but I highlight that all those things I just described had no impact on how much pizza people were buying. And therefore we lent money to a pizza company and those bombs and loans went up and down, But at the end of the day, that company went public and we

got paid back. And realizing too to filter out the signal versus the noise, or filter out the noise versus the signal is a really really important part of credit investing. When we do distress investing, that's more of a hybrid and you think more about enterprise value and what does it take to get paid back. But in the part of our business that's a lending business, and back then

we had mostly just the lending business. It was all about did we picked good credits, were they paying their interests? And would they ultimately be capable of paying back when they were supposed to. So, so let's talk a little bit about your role at bin UH and what you do, starting with what what does the co managing partner do? Is that like a CEO or a CEO role? How do you how do you define that? The co managing partner role is the equivalent of being the co CEO.

But our firm is partnership and we chose not to put the title CEO on the leaders of the firm because it is a partnership. We are lead partners. We do not run the firm top down. We are an old fashioned partnership where the voices of all the partners matter. Everybody is a leader and everybody needs to contribute. That said, it falls on myself and my co managing partner, John Connaughton, to help drive strategy at the firm, to help make sure that our expansion is being done in a in

a thoughtful way. There's um standards across the firm and as a real organizing force among our partners as we deliver great results for our investors and drive the business forward. So it's really a reflection. Sorry, it's good. It's really a reflection of our culture. So let's talk a little bit about how that culture manifests itself in your investment strategy. And this is a loose quote from you. Your investment

strategy is described as thoughtful, not aggressive, not cautious. Explain that a little bit, and and how does that reflect the culture of the farm. I use a driving analogy a lot to try to explain what we mean about this. You can cause as many accidents going fifteen miles an hour in the right lane on a highway as you can driving a hundred and twenty five in the left lane.

You have to know when to put on the gas, when to slow down, and you drive differently on different stretches of highways at different times during the day, and that applies to investing. You have to know that sometimes you have a view of the market that may be different than others. You have confidence to that view is well considered and analyzed, and therefore you might choose to put on a little more risk. You may choose to

lean in um when everybody else is running away. There are also other times when we may decide, you know what we need time diversity or industry diversity, or we're not entirely certain what uh what the vision ahead is, and we will slow down a little bit. And I think what we do really well philosophically is we understand

the difference between pricing risk and understanding uncertainty. There's a famous economists, um Then Knight, who who wrote back in the twenties and thirties about understanding that trying to quantify the difference between risk and uncertainty. And you can price and quantify risk, you have to learn to live and mitigate uncertainty, and you need to understand that difference between the two. Really really interesting, let's let's stick with that.

Given how fast the recession was in equity markets plunged and then came back very strongly, Um, did you see something similar in the credit markets? How did they behave over that time? So the credit markets were as volatiled for a while as the equity markets, although I only remind people volatility implies going up and down, and they

were going straight now, um. And it's at that time that as a leader of firm and the managing directors who had seen different cycles before had to make sure that the team focused on first principles, what would happen over the long run, would these companies be able to pay us back? How much cash could they burn? How long could this last? And we were able to find opportunities and had near record deployment during that period of time.

Because the recovery was industry specific, so not everything came back at the same time. As you know, indussease, stock market, induscries, credit indusseries lie because their averages um. Secondly, there were different needs by geography and those those needs continue today. Where in Europe in particular, banks still had to shed lots and lots of bad assets and it became increasingly

important to clean up their balance sheets. UH In the US there were a lot of industries, airlines, restaurants that did not recover the same way. We obviously made a very high profile airline investment with Virgin Australia UH in Australia, which we bought in partnership with our private equity team out of out of bankruptcy. And while there was a recovery, there was some sense that people did not fully believe it was over and therefore there was a reticence to

deploy a new capital. We saw periods of time where the safer assets were way over priced at the expense of riskier assets. And if you got the default picture correct, which fortunately we did, and the team did a great job thinking about how much money companies would need and how they would access cash if they needed it, and we UM we said we could take a little more risk. We are not going to just buy double bees and ride the interest rate decline waves, and that was was

the right decision. And then lastly, events like oh a like, like the dot com boom, they leave some scars, and we saw a lot of companies that had just gotten through that wanted to shore up their capital structures and said, you know what, having too much senior bank at with covenants or not enough equity, or perhaps they wanted preferred to doc But we spent a lot of time working with companies all over the globe on very structured sources of debton capital to help them make sure that they

could ride through a second wave a third wave. Really really intriguing. UM, did you see as much distressed debt opportunities that you thought initially when when the pandemic really took root and we started to see all sorts of economic dislocations or was that recovery just shockingly quick? So we clearly didn't see as much distressed as we thought we were going to see because we thought everything was

going to be distressed. I mean, when you put yourself back in you know, March of nobody had any idea what was going on. I remember being on debate where we were wondering whether we would have our offices closed until Memorial Day or Labor Day, and we were right, we just had the wrong years. Uh. And but that said, there was a lot of uh. There was a lot of distressed opportunities and rescue opportunities that available that we

could do. The footprint that we operate with the twenty one offices throughout the globe also made a big difference because being proximate to so many different geographies and being able to participate in um so many different ways. We were able to do business locally as different geographies were opening and closing, and we could visit real estate sites some places in in Ireland or in Greece, or in uh In in Spain because we had a presence there.

When we were looking at Virgin Australia. We have two offices in Australia, so we were able to UM do analysis US and have a view that others weren't able to have because you couldn't get to Australia. So we really felt the value of our platform during that period of time. And and let's stick with the idea of value. A lot of people of the equity markets as let's call them fully valued and or or more. Uh, does any of that spill over to the credit markets? What

do you see in terms of private credit investments? Are are things available at the same sorts of valuations that you like to see? I would say that what we're seeing is once again more bespoke opportunities. On the one hand, in our special situations business that you know, there's no cookie cutter solutions out there, and access to capital um is still in some segments still pretty tight. I think that there are some people who own a lot against enterprise value, and we will do that a little, but

we're not comfortable relying on getting paid back. We're okay taking returns from the equity markets, but we need to believe we're going to get paid back on debt instruments. In traditional debt ways UH preferred stock and structured equity and things like that are are a different story. And that's obviously where equity valuations make a difference. On the

lending side of our business. In our private credit business and our cello business and our bank loan and bond business, default rates are incredibly low, and the economic outlook vise are the default vise are. The company's ability to access

traditional capital markets is pretty good. And when you make a credit investment, when you make a loan, you look at the spread you're getting and then you always net out what you presume you're gonna lose um in default over a period of of the next two or three years. And I think not enough people look at loss adjusted spread that in bad markets, people probably underestimate what the losses would be, and in good markets they probably overestimate

what they're going to lose because of defaults. And just like during we correctly thought that the whole world wasn't done a default and at a three percent four percent default rate, wasn't the end of the world. The default rate year to date is less than one percent, so it is well below average. And when default rates are below average, you would expect the spreads that people are lending money at to be below average, which is what we're seeing. So so let me flip that question over

a little bit. A lot of what has made private credits so attractive, at least for the past decade anyway, has been that interest rates have really been so low and the yields from fixed income has in less attractive. What does that mean in terms of rising rates these days? If we continue to see um Man yields tick up, if the FED is early in their rate hiking cycle, and we could see you know, four or five six rate increases over the next two years, what does that

do to your expectations for the private credit sector. Our expectations actually go up in that scenario for two reasons. One is, most of the way we loan in private credit is through floating rate instruments, and therefore, as rates go up UH, the amount of interest we received goes up. There's very little fixed rate in UH in the private credit space. Now. Secondly, you have to step back and

ask yourself why are rates going up? And they're going up, yes, because there's some inflation, but also because the economy is growing and the economy is doing well. And the FAD needs to tap the brakes a little bit, and that would suggest that there will be fewer defaults, so it would be a good market to lend private credit. Let's talk a little bit about Baine because they really are kind of an interesting um private equity shop. Uh, they have employees across the US and around the world. How

did they manage this during the lockdown? Were you able to deal with this or did you go into the pandemic semi virtual anyway? So, because we have such a big global footprint and such a diversity of businesses from life sciences to obviously private equity and credit and check ropes and venture capital and uh, you know many others, we were used to working across our platform and how

do we activate our platform when we're looking at various situations. Now, we obviously had never encountered anything like we saw in March, but we had the technology and play in huge credit to our technology team that everything worked. We decided early on that we were going to make sure everybody from the most junior analysts to the most senior people in the firm had any technology they needed at their homes, if they needed routers, if they needed their internets be

sped up, new laptops, screens. A lot of firms spent a lot of time figuring out what they were going to do, and we made the concerted effort to enable people as fast as possible. In Boston, we even had a group going around with literally a pickup truck and they moved our trade stations, our trader stations and reset them up in their homes. Within the first week of

the pandemic. We never missed in an hour. But when I stepped back and I reflect on that period of time and what we've learned over the last two years, it really has brought out the entrepreneurial spirit that defines us, and it has brought us closer together. People hop on a zoom with colleagues in Mumbai with more ease and more comfort today than they used to, you know, go from the thirty seventh floor to the thirty eight floor

to ask somebody a question. It's just been amazing to see the resourcefulness that individual people have brought to to to this situation, and the aggregation of that and the sharing of learnings has made a huge difference in our ability to be effective. We've hired hundreds of people during the pandemic, We've continued to increase our assets under management. We have found great investment opportunities across all of our

business units. And you know, while I never would like to do it again, I am just incredibly proud of what the team has accomplished and to be part of it. And I know that may sound corny, but it truly has been the finest hour for our people, and the compassion and resourcefulness people have shown has been amazing. Sure, it's a baptism of fire. It's similar to what UM people when the Armed services go through, where everybody has to pull together and and rise to the challenge of

a of a common enemy. I could certainly understand that. Let's talk a little bit about your overseas business. You you guys have fairly substantial investments both in Europe and and UH Asia and the Pacific. Tell us a little bit about what the challenges are of UH private investments outside of the US and does your thought process differ when you're considering those sorts of opportunities. So we view

ourselves as a global firm. One of the things culturally is we don't view London or Hong Kong or Melbourne as overseas because to them at home, and in fact, about half our partners are outside the United States now. And so we have learned a lot from our global expansion over the last twenty two years, and one is that each market there are some core principles of what makes a good company what makes a bad company. That does translate. Our investment style does translate. But there are

different norms, different ways people do business. There are different laws. Lending is different from uh from geography to geography, and you want to be sensitive to that, which is why all of our offices are predomina at Lee people who are from the local market. We didn't send a bunch of people over to London and say Hi, I'm from Boston and New York, You're happy to meet me. We

actually built a local team that um does business. It has participated in the market, but early on worked very closely with people who had moved over from Boston or they spent time in Boston, so that the culture of the firm could grow um as it um as as we moved across the globe. And I think that's really really important. Is the biggest challenge you have in these

types of situations when you are growing globally. You've been very successful in its single geography is just trying to replicate it without being sensitive to local norms and local networks. And what you need to do is find a way to maintain the core firm culture and the platform advantage that you bring your your reason for being, but make sure that you find ways to incorporate people with different experiences and people who know different markets better than we do. Uh.

Let's talk about diversity a little bit. Finance has been criticized for for lacking in diversity. We we tend to be a bit of a white male industry. There are signs that's improving, but finance still lags a lot of other industries. UH, tell us a little bit about what

pain is doing to address that issue. This is a huge issue in finance, in in a lot of industries across the US, and we recognize that we have to apply the esteem creativity we do to our investments in to our portfolio companies too, um to bringing a more diverse group of people in to the industry, obviously underrepresented groups, but also diversity of thought, diversity of geography, diversity of

socioeconomic backgrounds. And we also recognize that we can't solve it ourselves, and we have made sure to consult with expertise and partner with organizations like m LT and s CEO, and we have found that technology has really helped us reach a broader group of people. When you don't hire a lot of people in any given year, we have fifteen hundred people UM, and you know, we may hire twenty associates and analysts, maybe forty associates and analysts in

the United States a year. That's not a huge amount, and therefore it was really easy to just lapse into keep going to the same schools you're going to, and we recognize that that wasn't going to solve the problem. So we are you zoom to host informational forum UH two, teach people about what investing is, who we are UM, to coach people on the interview process, whether the interview with us or somebody else, and really start engaging with

larger groups UM across the country. And we think it's it's incumbent upon everybody in our industry to make the industry more accessible and not just think about what I want ten more recruits. And just the other day we did a a informational session on Zoom and had two hundred or three hundred students from colleges across the United States learning about what we do, learning about the case method of interviewing, and we're going to see how that works.

And you just have to keep experimenting, leaning in, and you know, be willing to take some risk, because doing the same thing over and over again and expecting a different outcome is definition of insanity. Really really interesting. I saw a really wonderful quote of yours before the pandemic began. It was it was around February four. Quote. I really

think nobody could possibly understand the impact. And until we see how it plays out, how the quarantine works out, and whether or not we can find some sort of a vaccine, We're going to study this very closely and look at it very carefully. Unquote that that was a solid month and change before the lockdowns began, And it very much tells as to your approach, uh, not too aggressive,

not too cautious, but really looking at things closely. Uh, tell us a bill a little bit about what you were thinking about a month before things really got bad here in the States. Investing is not the prediction business.

It's really about adapting. And I use a framework a lot with the team, all the Udha loop, which actually comes from the military, and how they would teach fighter pilots to orient themselves in a dog fight at time of high uncertainty, and it tells you that you need to orient yourself to where you are, you need to observe what's going on, then you need to decide, and then you need to act. And it's a loop because

you do it over and over and over again. And at that time, it was clear that we were in a situation where we were not being asked to price risk. We were being asked to price uncertainty. And we were humble enough to see that nobody had exactly gotten this right yet, and sensitive enough to recognize that there was a human tole that this was taking both in human life, and people were starting to die as well as fear.

And I thought at the time, and in my partner Um and I talked about it that boy, we don't really know what's going on. And sometimes people think you should zig or you should dad, but really what you should do when you don't know what's going on to stand still and watch. And that's what we did. We didn't panic, We didn't try to guess one way or the other. We set out a framework for how we were going to look at this, how we were going to think about the safety of our team as well

as the um security of our portfolio companies. And we're very fortunate at Bank Capital because we have a life sciences group with real doctors and people with pH d s who played a huge role at that time in trying to help us understand how this could play out and also what it took to develop a vaccine. And I had never put much thought into how developing vaccines work and how they worked and who would take them

um and that was incredibly helpful. And uh, that part of the firm continues to be incredibly helpful today to this point, to this day. So let's talk a little bit about some of the philanthropic work you do. You were a major supporter of of City Year, Lift, you Aspire, and you were one of the earliest donors to Brian Stevenson's Equal Justice Initiative. Tell us a little bit about what the connection is between all of these different clauses.

My wife and I both went to public high schools and had the ability to obtain incredible education, both undergrad and graduate, And at no point in my life when I was walking through the halls of my public high school in downtown Providence, did I ever question that there might be a ceiling on what I could do and what I could accomplish. And that's just not the case today. And we recognize that we have been incredibly, incredibly lucky.

There's a lot of people with the same skills I have that just never had the opportunities that I have had, and we focus a lot of our philanthropy on what we call leveling the playing field. So City Year was the UM, the organization that was used as the models for AmeriCorps, which is the National service organization UM. City Year when we started volunteering with City Year, they had

come to my Business school section. A friend of mine had helped them with their business plan, and they had a vision of putting near peer mentors and public schools across the United States and UM and using them to help UH students see their potential and help prevent the help prevent students from dropping out. We didn't have much money back then, but we gave them eighteen dollars, which was which is high in the Jewish faith, which stands for lock in life, and for some weird reason, I

kept the check. I still have that check and have been involved with City Or for more than thirty years. I chaired the board, I was on the I was on the board for fifteen years, and I've watched that organization grow to three thousand young core members volunteering in schools in thirty cities in the United States, London, UM,

Northern England and South Africa, and Johannesburg. And I've seen the power of UH commitment and idealism to help solve problems that the problems we have of opportunity aren't intractable UM And along that theme, we were introduced to smaller organizations at the time. You Aspire helps students find financial aid. The financial aid process in the United States is unbelievably complicated, and it started by helping Boston Public school kids just

learn how to apply for financial aid. It's one of the number one reasons that students don't apply to college is they just assume it's not accessible to them. People don't realize that even understanding financial aid is super complicated. One of the things the CEO did when I first met him. Is gave me three financial aid letters and asked me to read them and tell him what I

thought the best package was. And it was really hard, and he said, now, imagine your kid in South Boston whose parents didn't go to college and this arrives in the mail. How do we help explain that to them? And they now work UM once again using technology, with hundreds of thousands of kids across the country. UH and

LIFT Communities. UH was founded by a woman named Kirsten Lodel, who I met through an organization called New Profit here in Boston which does venture philanthropy, and Kirsten started LIFT for junior year at Yale and with the belief that people need a helping hand to it's not always people need money and money will will solve a problem. And effectively, what LIFT does is their life coaches. They help people budget, they help with financial literacy, they help people learn how

to take care of their health. And it's almost like life coaches for people who otherwise don't have it, how to do a resume, and it it follows the great line. You know, give a person a fish, you feed them for a day, teach them how to fish, and you feed them for a lifetime and LIFT has done just amazing work. They very much focus on underrepresented communities. It's generally mother and UM, they have had just amazing, amazing results. UM. It's now run by a woman named Michelle Roan Collins.

And then lastly, the several years ago, just when Just Mercy came out, the founder or co founder of City Or, Michael Brown, gave me Brian's book for Hanaka. He always sends me a book every year, and he had gone to law school with Brian. I had met Brian once briefly at a City Year event. And I don't know if you've read Just Mercy, but you're reading it, and

it's about how Brian Uh. One of his first major cases he got somebody off of death Row who was basically framed and it was completely and totally um racially motivated and uh discriminatory, and he did a There's a section in there about children who have been sentenced to life in jail and the horrible trauma that they've go through. And I read this and I, you know, UM humble enough to tell you I was shocked. I thought I

was pretty aware of what was going on. And this is years and years and years before uh, George Floyd, and I was like, how can this be happening in America? And I actually called Michael and said, can you introduce me to Brian Jennie and I would love to meet him? And um, we got to meet him. We've gotten to be friendly with him. UM. We gave him one of his largest early gifts. He had been around for a while,

but we gave him a substantial gift. And you know, I thought it was so important that people understand the top both the type of work that he is doing, but the need to do that type of work, which

is just incredible that that's still necessary in this country. Um. He and I actually did a joint to parents on ntr UM six years ago to talk about it, um and talk about how somebody like me had come across the work he's doing down in Alabama and how I just thought it was so important as an American to do whatever I could to help not just rectify these types of injustices, but actually make sure they stop happening. And that his book Just Mercy eventually became a film

with Michael Jordan and Jamie Fox. So so let's let's stick with that concept of social and economic mobility. Why do you think that there is a ceiling today in the United States that didn't exist decades ago? And what can we do about improving economic mobility? You know, if I had all the answers, uh, I hope it would be solved, because other people smarter than I am would have figured it out. But I do think it starts with the educational system and making sure that public school

was in the United States aren't just good, they're great. Um. The number of folks I went to public school with who now send their children to private school is staggering to me. And UM, So it starts with making sure that education in the United States works. Um. Secondly, I

think we've all got to recognize the problem. We've got to recognize, um uh, that people with different lived experiences do not have the same access to starting businesses, the same access to UM capital, the same access to all the resources that you might see you know more obviously in a traditional sense in Silicon Valley as an institution, we have committed ourselves to try to help improve that, um UH in in business equity in the City of Boston,

UM and many of us support other organizations across the country, which are all trying to to level the playing field, as I discussed, But the first thing is we've got to be aware of the disparity. You can't fix it until you name it and you own it, and then people have got to recognize that there's work to do. Quite quite interesting, you end up in a similar place to Joel Greenblatt, who also points to the education system

as the key to improving UH economic mobility. I think the book is something common sense, the guide, Investor's Guide to a quality opportunity in growth. You guys are very similar. Let me ask you about a different project that you were involved in. You helped to fund the teen uh ten part documentary series by Ken Burns and Lynn Novak The Vietnam War. Tell us how we're going to find the next great filmmaker like Ken Burns. So while Ken's film came out in seventeen, I had met him about

seven years earlier. One thing as I've become friendly with Ken over the years, and my my wife and I've become really good friends with him, is he starts thinking about his projects a decade out. He literally can tell you what he's going to do in and um when he approached me on the Vietnam War. It was very important to him that this have funding from people who would be associated with being Democrats and Republicans to immediately take away any possibility people would think that this had

a political agenda. He also, very purposely in the film does not interview John McCain or John Kerry because a lot of people reduce the um, you know, some of the Vietnam stories to two very famous people, both of whom are heroes, UM who served in What he wanted to do is tell the story of you know, a whole mix of Americans and what that story was. And that is the beauty of Ken's work and Um, as we've gotten to know each other, we helped fund a film.

He did a short film on the Holocaust um and he's actually got a multi part series on the Holocaust coming coming out um UH. Later this year, we um talked about the importance of who is the next Ken Burns? Burns and he came up with this idea and asked my wife Jeanie and I if we would join him in funding a prize given by the Library of Congress to emerging filmmakers. Because he remembered that when he started. The toughest thing he had was getting what's called the

completion grant. He could do all the raw filming, but really pulling it together in something that was production worthy. But so we agreed to sponsor and we do to this day a prize through the Library of Congress which provides completion grants not just to the winner of the of of the Content of the of the Award, but also to a couple of other runner ups. They are different size grants so that the next can Burns can

can have an opportunity. UM over the last couple of years can recognize that UM their diversity and documentary filmmakers, just like we talked about incindance, UM wasn't what it should be. And we came together with him and also fund a fellowship and mentorship program that he started to help UM UM mentor up and coming filmmakers from underrepresented groups.

And UM he's just an amazing person. Uh when you look at polls of people still trust his films and trust his storytelling and know that it's up the middle and in this time when people do not trust media for whatever reasons and people polarized to their networks, to know that there's people like Ken, and hopefully a generation behind Ken, who are presenting history in a really approachable and important way. I think is incredibly important to strengthening

some of the social fabric we've talked about. And one of the amazing things about the Vietnam War, where you would have thought everything that had been done and written in all that, is that was the first film I had ever seen that actually interviewed North Vietnamese soldiers and interviewed North Vietnamese citizens, and we forget that there were two sides in that war, both of which suffered incredible human loss, and learning the lessons of Vietnam applies to

so many things we're looking at today. Um and UM. I think that's true of almost alocains film. You mentioned he's working on a Holocaust film. Towards the end of his presidency, UH Barack Obama appointed you a member of the US Holocaust Memorial Museum Council. Tell us a little bit about that experience. It was an absolute honor to serve. It's a cause that really important to me and my wife. The Holocaust is not just a moment in history. It's not just uh A, you know, a a time of

a group was anti Semitic. It shows you that when you forget the lessons of history, those atrocities can be

repeated again and again and again. But there's also a lesson of the Holocaust, which Ken is gonna focus on in his film about what people didn't do and Um there's a whole section that was UM was opened while I was on the UM the Memorial Board, which is about America in the Holocaust and what we did or more appropriately, didn't do during the thirties and how easy it was to look away, say it was far away, and there are a lot of lessons to be learned

to see what happens when people, UM are bystanders and I think it's not their problem. And when you look at Charlotte's Felle, you know, I'm not sure people understood the symbolism of people with tiki torches chanting people Jews will not replace us, and that that comes from Nazi Germany. And UM. You know, there's an old adage that you know, when you forget the history, you're doomed to repeat it.

And there's just so many lessons to be learned, and the work, the educational work is more than a museum. The educational work that UM the Holocaust UM Memorial Museum Council does in the in the county, in the museum does UM not just on Holocaust, on the Holocaust, but on genocide more broadly. I think it's really really important, and I am incredibly proud to have served UM and UH continue to support support them because it's so important that we learned the lessons and that we do not

repeat them. Really really fascinating stuff. Let me throw you a little bit of a curveball here and talk about the Boston Celtics. You've been a member of that ownership group for a while. Tell us a little bit about that experience, how that came about, and what's it like being a Celtics owner. So with somebody who grew up in the Boston area, I grew up in Providence, Rhode Island, UH and went to games with my dad since I was little. UM. The opportunity to be part of the

investor group was, you know, so exciting. UM. The Steve Paluco, one of my partners, was friendly with Wick Rossback and UH Bob Epstein, and the three of them put together the group that that bought it a little more than fifteen years ago. Um, they had a vision of local business leaders, people who cared about philanthropy. UM, I cared about you know what the team meant to the city of Boston, and UM, you know it's been great. Uh

we you know. I was on the board for the worst season we ever had and on the board for a championship. So it's been UM, it's been amazing. They started out this season looking pretty strong. They have a better than record. What what do you think they have a shot at winning the East this year? I always believe that we not only have a shot, but will

win until um, events or otherwise proved me wrong. I'm a true believer and I think that the talent we have on this team is capable of winning any any day and if they get it all working, the beauty of basketball is the playoffs are like a second season. Um. And uh, as long as we make it into the playoffs, I think we can do anything. So I know I only have you for a limited amount of time. Let me jump to my favorite questions that I ask all of my guests, starting with tell us what you're streaming

these days? Give us your favorite Netflix or Amazon Prime. What's been keeping you entertained over the past two pandemic years. So besides ted Lasso, the morning show Shifts Creek, which I think everyone UM loves and and and people have really really taken to. I I think ted Lasso may go Down is one of the great philosophers of our time.

My wife and I actually, particularly with you know, all the difficult events that have been going on in the world, and you can focus so much on what's going wrong. We actually enjoy periodically just streaming comedy concerts, and Netflix and HBO have great a great array of comedy concerts where you can just laugh, because I do think we need to all laugh a little bit. Um. I Also, as we've talked about, I very much enjoyed documentaries, and not just uh Ken Burns stuff, but some more offbeat

stuff I really enjoyed on UM HBO. UH they had a documentary called mcmillions which was riveting, I believe it or not, which basically examined how the McDonald's Monopoly game UH in the mid nineties and late nineties was rigged and nobody realized it for a while, and that somebody had rigged the game, even Monopoly, I mean even McDonald's didn't know, and I'm not doing it justice, but it's fascinating and UM and I UH also very much enjoyed on Netflix the the documentary about the uh theest of

art from the Isabella Stewart Gardner Museum here in Boston. UM. It was the largest art heist in history and remains unsolved decades later, and it's called I think it's called this is a heist or this is a robbery. My wife and I saw that that was really quite fascinating, and I mean, the Isabel Stewart Gardner Museum is walking distance from our office, and it was just fascinating to watch and so much UM, I didn't I didn't know.

And then I'm a huge sports fan and I think the ESPN thirty for thirties are just absolutely fantastic and you can find all sorts of stuff that that that

can keep your interest. UH. I even watched to the hour long documentary on the Tuck Rule, which was that first UH that playoff game that made Tom Brady's career where there was a debate whether or not he fumbled the ball in the snow and UH and UH there was a little known rule in the NFL which they took away the next year called the tuck rule, and he had not tucked the ball back in and uh and he um, so it was ruled an incomplete pass. And because of that, the Patriots beat the Raiders and

went on to win their first Super Bowl. And I know that sounds crazy, but I watched it for an hour and I just thought it was fascinating to listen to Tom Brady and Charles Woodson, who had been a college teammate, who was the guy on the Raiders who knocked the ball out, relived that twenty years later. So I think that you can find lots of interesting things to do and things to watch, and UM, I don't

think it always needs to be business material. I listened to a lot of podcasts on politics, on um on um history, and UM, I think that we're so lucky to live in an age where we can where we can stream all that stuff. And of course, uh, I always make sure to listen to this business podcast. Well appreciate you say that. Lets let me skip over that

and and just ask you two uh more streaming questions. Um. The first is I assume you saw the Last Dance, the series about Jordan and the Bulls, believe it or not, I have not watched the whole thing because I couldn't get my wife to watch the whole thing. So um as travel is picking up that's on the stream it alone. Camp. I was a giant Knicks fan, and I have vivid recollections of that era in in the late eighties and nineties, just thwarted every time the Knicks ran into that buzz.

So you mentioned in stand up comedy on Netflix, UM, I'm curious any any couple in particular stand out? What what have you really enjoyed in terms of stand up Sure, there's this guy, Nate BARGOTSI. Um, he has the Tennessee Kid in the All American Average Guy or something like that. I mean, it's something funny like that, and you know, he's hilarious and his it's self deprecating humor. It's it's clean,

it's not political, it's he's really really good. And the beauty of Netflix is you find one you like and then you can watch two or three others because they probably have have UM have a whole library. And then UM Mike Rabiglia UM has some really really interesting, thought provoking UM thought provoking UM comedy specials there too that we really like. And then UM Aliza Slessinger who won Last Comics Standing on NBC. UM had gone to college

here in the Boston area. UM is hilarious and has a number of a number of interests of fun concerts on on on Netflix. The one of hers I remember was Elder Millennial and it it is hilarious. I'm gonna recommend to to you because I have a flavor of what you like. UM, I'm gonna go out on a on a llege with inside inside with Bo Burnham. It's a ethlectic and here's a guy just locked in an apartment making comedy all by himself in the early days

of the Lockdown. But the one that I'm I'm so that people either love or or completely perplexed by it. But the one that's a slam dunk is going to be the Tom Pappus comedy. He talks about his wife, his kids, and it's just your your You and I are about the same age, and that is right talking right to our generation. And it's also pretty hilarious. Awesome. I will definitely, I will definitely do that, all right, So let me keep working my win and my questions.

UM tell us about your early mentors who helped to shape your career. I'm really lucky that I showed up at a firm that really believes in partnership and mentorship. And we use the word sponsorship. It's more than just mentoring. It's it's we're responsible for each other's success. When we were quite small and early on, I worked with two partners really closely, guy named Mark Nunley and the guy

named Bob white Um. And Mark was from Kentucky, Bob was from Woburn, Massachusetts, had been a hockey goalie in college. And it's so reflective of who we are as a firm. Mark went to Center College and HBS. Bob went to Bowden Um played hot there and also went to HBS, so very very different background. They had very very different approaches to investing, and I learned with working with them

that one people really matter. People on your team and how you treat people at the various companies you're investing in, that makes a big difference. All money is green and people want to want to do business with you, and you've got to leave your values every day. Secondly, there's not only one way of doing it. Um. Mark was always a little bit more of an engineer and Bob was always a little bit more of an artist and

they recognize that in each other. And for me to become the third musketeer of that group early in my career really, uh really was was helpful. And um they've both since retired from the firm, but you know, I spoke to Bob last Sunday. Um he's teaching at HBS and Marx got an office right around the corner. And that's I think part of the beauty of the firm and how we grew up together. And also, honestly, being

in Boston, it's just a little bit smaller. And then my father in law has uh really helped helped me in my business career. He was a senior banker. He ran investment banking UM at Drexel Burnham. UM. I actually met my wife after I worked for him. UM so that was a little odd, but um so he understood, um, the choices that you make and um and um how

to think through things from review processes too. You know, how to compensate people fairly, how you've got your own career and um he always um made sure that you don't forget that you are measured not only by what you do, but what you choose not to do. UM. And I've always thought that that's incredibly good. UM, good advice. Let's talk about every buddy's favorite question books. Tell us

some of your favorites and what you're reading now. So we uh talked about Brian Stevenson's book and what an incredible, uh, incredible impact it had on me. Another interesting book. A woman who I become friendly with through the Holocaust Memorial named Sarah herwit Um was Michelle Obama's lead speech writer. But when she left government, she didn't write a book on politics. She actually had rediscovered her Jewish roots. She had been fairly non observant, and um reimagined religion and

seeing it as an adult. Um. You know, and somebody who who focuses on language reimagines or just or investigates her Jewish roots and the Jewish faith through the use of language, through the difference between what the values of the religion are versus the observances that you know, our

traditions that came along well afterwards. And while clearly it's about Judaism, you could apply this to any religion and just think about um, you know, the philosophical under pinnings of religion and when people move away from their faith, do they do so because of belief because it's unapproachable.

It's just brilliantly written. I I there's a chapter in there about imagining God, and she's like, you actually don't have to believe in God UM in any sort of traditional sense to UM to be a person of faith. And uh, She's like, I can't tell you what God is. I can tell you it's not an old man with a beard sitting on a chair. And it could be anything from the energy between us all as people to some concept of the force from Star Wars. And it's

just a fascinating book. And I also just finished Bob Iger's memoir The Right of a Lifetime, and I thought it's just a both a fascinating personal story as well as UM interesting thoughts on management. And I always try to read UM fiction and nonfiction. I have one going

of each at the same time. And UM. I discovered during the pandemic an author named Frederick Bachman who's a Swedish author UM and he wrote a book called UM A Man named Uva, which is ov so until I heard an interview with him I thought it was pronounced ov um and uh. And he also wrote a book called Anxious People in bear Town, and there he tells incredibly interesting stories. They're all very different. Um. They all

sort of have twists. Um. And they explore some some some really important and sometimes heavy topics, but with a humor and in approachability that is fascinating. And I just think his books are so incredibly well written and so readable that during the course of the pandemic I read three of them. Huh. Really interesting. And what was the full title of the first first book about faith? It went by too quick? A Sarah's. Sarah's book is called

here all Along, Here all Along. What she's saying is is that the religion in the belief existed all along. She just had to find it. It's been whether her. It's been here all along. Got it? Finding meaning, spirituality and a deeper connection to life. Got it. Um. We're down to our final two questions. What sort of advice would you give to a recent college grad who was interested in a career in investment management or finance or private equity. You know why you want to do it.

If you do it just for the money, at some point that won't be enough. And if you're only doing it for the money and not because you're interested in it, then the money won't be there UM. And I think with any any um, any career you choose, it's got to you've got to pique your interest. You've got to be good at it um and you want to make

sure you know why you're doing it. Good good advice, And our final question, what do you know about the world of investing and private equity today that you wish you knew thirty or so years ago when you were first starting out. I have an expression I use a lot with the team, which is it's never as good as it looks or as bad as it feels, and that when the markets are doing great, avoid the temptation

of enjoying it too much. And when the markets are bad, remember that markets operating cycles and there is another side. And for our twentieth anniversary a few years back, I wrote um a letter to investors, and I had three pictures that summed up of the things I had learned. One was a picture of clothing tag that said one size fits all, the other one was a picture of Roger Federer, and the last one was a picture of

the moon landing. And the point I was making was one we know that you never walk into a store and say I want a sweater? Do you have one that's one size fits all? That you can't be all things to all people. So um, no, what know what it is that you're doing and and and do that? Um too. I'm a huge tennis fan and um, and I should mention Christopher Clary's book on Roger Federer that just came out was was phenomenal. Um. But Roger Federer over the years, early on people thought I wasn't going

to make it. He insisted on playing with you know, a low technology, under sized racket when people were really turning to power games to just crank up their serves. Um. He continued to to to to focus on the techniques or that he has and he has a one handed backhand, and as everyone was trying to tell him to change his game and it was unsustainable. Um, he actually knew who he was and he knew what his game was,

and over time he's made tweaks. He did finally get a slightly bigger racket, but still not one of the huge ones, and he's added some things to his game. But at his core, he knows who he is, he knows what he's good at, and that is what has been the key to his success. He has focused on making that better rather than chasing the newest tennis fat. And then lastly, the picture of the moon landing is to remind people and this is really important and investing

in everything in life. Just because you've never seen it before doesn't mean it can't happen, and that, Um, you need imagination and you need to be able to adapt to new realities all the time. Huh, really really fascinating stuff. Do you remember, I don't know, maybe it was like fifteen twenty years ago there was a David Foster Wallace article on Roger Federer. Um, I'm sure I can find it in in Google. But it was essentially Federer as like a near religious experience experience and how there has

never been anybody like him. If I'm going to dig that up, because if you're I'm a tennis fan, I'm I'm late to the game. I started playing only over the past decade um, and have always been impressed just as a spectator of Federer. But if you read this um one piece, it's just a beautiful combination of writing and subject. Um, I think you'll find it, you know, absolutely intriguing. I will I will look that up. I think it was in the New York Times, and um,

I will definitely look that up. I do think, you know, there's so many metaphors that can translate from sports to life. UM and UM. I who think that his discipline and the class and grace of his game teach us a lot about how we can conduct our lives. But also when you look at Nadal, there's lessons from how, um, how he conducts himselves and he has a particular humility. And UM, I just think that, as we said, the metaphor does translate really really interesting stuff. Well, well, thank

you Jonathan for being so generous with your time. I really enjoyed this. We have been speaking with Jonathan Levine. He is the co managing partner of Being Capital. If you enjoy this conversation, be shure and check out any of our previous four hundred interviews. You can find those at your favorite podcast sources iTunes, Google, Bloomberg, Spotify, ETCETERA. Sign up from my daily reads at rialts dot com,

follow me on Twitter at Rihalts. I would be remiss if I did not thank the crack team that helps put these conversations together each week. My researcher is Sean Russo. Mohammed Ramaui is my audio engineer. Paris Wald is my producer ATKO val Bron is our project manager. I'm Barry Ritolts. You're listening to Masters in Business on Bloomberg Radio.