Robert F. Smith

Throughout his career, Smith has collected many achievements, working as an intern at Bell Labs when he was below the minimum age requirement, becoming the first Goldman Sachs employee to focus solely on M and A in the tech sector, and surpassing Oprah Winfrey as the wealthiest African American were the net worth of three billion dollars according to Bloomberg calculations.

Smith is also a prolific philanthropist, giving generously to Cornell University, the Smithsonian's National Museum of African American History and Culture, and Carnegie Hall, where he serves as chairman of the board. Smith recently sat down with Carlisle Group co founder David Rubinstein. They spoke on David Rubinstein's Bloomberg television program Peer to Peer Conversations. When you were growing up in Denver, the sun of school teachers, did you ever think you would

become the wealthiest African American in the United States. I was basically raised in a family of of i'll call it achievers. You know, my mother and my father both had UH doctorate degrees in education, and they emphasized not only to my brother and I, but to the rest of the family importance of really you know, a becoming educated, be working really hard, and and you know, see trying to become the pinnacle of success in in in one's community.

And you know, when I look back at those days and the formative elements of who we were in our communities, I saw parents who gave generously of time, energy, effort, and intellectual capacity uh to our to our community. And I think what that led me to do was always think about striving for excellence. Talk about your background at a moment, but I'd like to now just explain to people what you actually did that made this great fortune. What we did and what I was able to do

was was bridge a couple of ideas. You know, software is truly still the most productive tool introduced in our business economy over the last fifty years. And through my work when I was early as an investment banker, I got to see a number of software companies and how they operated and I ran across one that turned out to be a client and ultimately the owner of that business that that that that trust ended up being my

first investor. And that particular business had a set of practices that they used, business practices that that helped them run that business more efficiently than any other software company that I that I had seen. And so in essence, you know what I what I'll say, you know, took some of the kernels of those best practices and said if you took them and as an engineer and create a process around delivering those best practices across the world

of enterprise software, you could do quite well. When you grew up in Denver, was there a lot of discrimination then against African Americans. I grew up at a time when when desegregation was just starting, and so prior to that. You know, like all cities in American large cities, you know, there's there're segregated communities, and there still are for the most part. And it's unfortunate I grew up in a

predominantly African American community. We all lived in that community for the most part, because you still had redlining, you still had an accessibility to capital to buy homes which created in essence, the basis of a lot of the wealth in America. So it was a time, uh, in growing up that I really understood the importance of community. And it was pretty much a segregated community I grew up in until we started bussing and force busting created

the desegregation lease in the school systems. When you were very young, your mother brought you to the march in Washington when Martin other King maybe his famous speech, and I think the impact of her bringing me and my brother here not only was you know, for the summer, but for us to understand that our community stood for something, Our community was striving for something, and it was important

that we were a part of it. And I think that's part of the lifelong, uh, you know, part of my soul, which is I have to give back and help my community move forward in in this in this wonderful country called America. Now as we have this discussion, now we're in the African American History and Culture Museum,

to which you're one of the largest donors. This is very near where Martin Luther King gave a speech and your mother was living in Denver at the time that you correct, we're brought here, but she grew up in Washington. She didn't point out, and your grandparents, what did they do? My grandfather actually was the postmaster general for three post offices here, uh in the d C. Area, And before that, when he was in high school, he actually worked in

the Senate building. And what he did was he actually worked in the Senate lounge and he served coffee and tea and and you know, took you know, hats and coats from various senators as they came in. When President Obama was first inaugurated, I brought my grandfather, who was

ninety three at the time. And while we were sitting there and in our seats and you know, really really understanding and feeling the majesty of the moment for him, he said, he granted you look up there in that Senate building and he pointed to a window above one of the flags. He said, I used to work in that in that in that room, and he said, I remember looking out that window when FDR was being inaugurated, and he said, I remember there wasn't a black face

in the crowd. And here we are, and I'm sitting with my grandfather saying the for black president being inaugurator. He said, America is a great place as long as you're really in to work hard and and and drive forward on a set of principles and ideals that that that are important and frankly authentic. So that sticks with me to this day. So you went to Cornell a new major in engineering, did chemical engineering, and now the school at Chemical Engineering is now named after you as

a result of gifts that you've given. How about that you graduate from Cornell and then your first job is a good year Yeah, good year time rubber right, And you went to Air Products and Chemicals right when the air Products and Chemicals and worked in applied research and development and had some wonderful experiences there. I developed some a line of products will not call fresh back that

actually extended the shelf life of foods. And then from there I went into craft uneral foods and there I had product equipment and process development, um and for me my whole life. And at that point I was all about, you know, how do you create a solution and unique solutions and no one else had come up with create ideas that no one else are you know that had had ever come up with and solve problems how did you go from working in the engineering partners of these

various companies to a financial engineering of Goldman Stocks. Sure is actually quite an interesting story. I I had done very well, the top student for our first year in business school, so I had to come back for the summer graduation to get this award. And as they went through my background, there was a gentleman by name of John uton Dall, who ran his own investment bank at the time, who was a keynote speaker, and he comes over to me after the they give him my reward.

He is a speech and say, you have really interesting background. Have you ever thought about a career in investment banking? And I said, well, I said, there's a bunch of former investment bankers in my class. I don't like any of them, and he says, well why not. I said, well, they think they know everything, and they're pretty arrogant. I said, you gotta understand, I'm an engineer. We do know everything.

It bothers us and he chuckled, and I was happy that that he didn't take offense to to my joke. But what I did was I said, you know, honestly, I don't understand what investment bankers. Do you know I was a scientist, I was a technologist. I you know, I thought about the world through that lens. And this is another case where someone extended themselves for me, which is why it's important that I continue to pay that full word. And he says, why don't you come to

my office and let's talk about it. So he invites me down and we sit down and we have lunch. He picks up the phone and David calls people like stand O'Neil Okay at the time was the CFO of Maryland cultimately ran Mary Lynch and kin China and as they're all prominent African American African American business leaders, and all of them took the meetings and from there they

introduced me to other people to take meetings. I literally had over a hundred interviews in the fall of my second year in business school and figured out that mergers and acquisitions was the only business I wanted to be in. Uh an investment banking. And I said, because with the exception of warfare, it's how assets get transferred on this planet.

It's a CEO level discussion, it's a board level discussion, is a strategic discussion, and that was quite interesting to me, and I thought I could add particular value and insights into into that particular business. Three jobs you had before you went to business school. Did you feel any discrimination against you because you're African American? Yeah, I mean I I it's one of those in America I have and

still do you know. I remember a time when I was at ship Air Products and I was invited to give a talk in California, in San Francisco at one of the big conventions, and this this you know man comes over and he asked questions about, well, how does it work in the extension of shelf life of rice and cooked rice? And I'm telling you how what the you know explained that the dynamics, the biology, and the organ and elliptic uh issues you have to think about

in addition to the microbiological issues. The guy said, you know, you're a very smart guy. You just have your heritage to overcome in order to be successful in business. And you know, that kind of stuck with me at a time that you know, after all of this wonderful work that I'm doing, that he still viewed me through that lens as opposed to the work that I had done he went to Columbia Business School, and I assume he did pretty well there because you went to Goldman Stocks afterwards. Right,

but what year did you join Goldman? So you worked there for a while and then had you decide to you wanted to go into technology banking. Right, So like all things, you know, Land of the Blind one, iron Man is king And at the time technology for us was it was defense contractors. We had another company we took public when called Microsoft. We had this other company we called on called IBM, and that was the world

of technology. As far as Goldman was was concerned. Were there a lot of African Americans in the technology area at that time? Very few, very few ours. Our first eminent bank around the ground in San Francisco focused on tech, and then we decided to form a tech group and so that created the whole, another whole, another nexus and dynamic of of of opportunity. Your job is to convince clients to hire Goldman. You've gotten to give them good advice.

Did you meet Steve Jobs? I didn't meet Steve Jobs personally, but I was on the team that we actually got engaged. We had to at the time. You may not remember this Apple was under assault, Steven said I'm not coming back unless there's a different board. So we fired the board, got rid of the CEO, and invited Steve to come back. All right, so you're doing very well out there, you're now living in San Francisco area, you're making a big success,

you're by investment banking standards. I presume you're you know, highly compensated. So forth, what propelled you to say I'm going to give all this shop and go start my own come penny? Right? So the interesting thing that occurred, as you know, again as an engineer, the thing I realized way back in my goodyear, entire and rubber days the impact that software really had on businesses. The thing that I noticed that there's very few software companies were

actually efficiently run. Well. Why Um, The big part was most executives who started software companies, well, they wrote code or they knew a market opportunity, and they sold the code. There was never anyone who taught them how to run software companies. So I then run into this the small company i'll say small in in Houston, Texas that is the most efficient software company I've ever seen. They had some very basic things that they just did extremely well.

And I said, well, if you took those basic things and and actually applied them ultimately to other enterprise software companies, you could run those businesses very similar to the way they ran their's and would create tremendous value in those companies. That that was the idea. That was a conceit, And

they said, that's a good idea. Why don't you do it? Well, yeah, in essence, I said, well, if you actually thought about taking some of these best practices and putting them buying enterprise software companies and driving them forward, you could actually do pretty well. And I said that's a great idea. Would you do that? And I said, well, you know, they gave me one of those offers that looked quite interesting, and I remember my lawyer said, this is a bad deal, Robert,

but you should take it. Right. So you went to Goldman and said, I'm leaving that they try to talk about. Of course they made the pitch against it, but you know, I like all things, David, at some point in time in your life, you know, you've got to look yourself in the mirror and said, you know, you have to take a little risk and go see if this is something for you. When you took this, I was thirty nine years old, and it's it's so interesting, So of

course I started doing research. It was the same age that others left what they were doing to go start their businesses. I said, well, let's go give it a run, all right. So you started buying companies with the money that from the Houston Company. How many deals have you now done if you look at it today, it's a little over three hundred. One of the things you did that was unique. Many people think that buy out people.

What they do is they lever up a company, borrow a lot of money, tell the CEO do the best job you can, and then they hope for the What you actually did was something different. You actually put a system together to make sure every one of your companies was going to follow the system. Can you explain that? Sure? And it's important. You know, early on in the world of software you couldn't borrow money and software companies anyway.

It wasn't until probably six o seven uh two you could actually level up software companies, so there was no debt available. So the only value, the value that you could create had to be inherent in the business. You had to now improve the operations so what we now do. We took, you know, these kernels of best practices and in essence of now developed a whole systemic approach. Here's how you use this best practice to improve the the the the efficacy of whatever that functional area is within

a within a within that company. We then have a group now called this the consulting group that delivers over a hundred people in that group that actually delivered these best practices with them to the management team, and the management team adopts those best practices. The way I like to think about it, we install the best practices in those businesses that actually cracks the Rubik's Cuba pro sortable growth.

Not only are we increasing the profit margins of those businesses, but we actually can accelerate the growth in those businesses at the same time. Let's describe Vista today. How many employees has fished to have We have about three hundred, so call it a hundred or so in my investment team, hundred and so a VCG and call it a hundred so an administration, So three hundred people in the core of what is Vista. At what point did you realize

you were pretty good at this? It was the first year the second year or third year, when did you realize, hey, I'm really good at this. It took a while, believe it or not. It wasn't until we really finished our first fund. We actually closed out the last deal in the first fund and said we actually are pretty good at this. When you became very wealthy, which is in the last few years or so, um, you became very

involved in philanthropy. Much of your giving has related to African American related projects or causes, And I'd like to just talk about a couple of that. The African American History and Culture Museum where we're now at. What attracted you to that? Uh cause sure there are two elements. We have been staying by the history of slavery and and and still staying by the part of you know,

of racism. But what we need to do is make sure we have a monument to the people who have actually, you know, put their blood into this soil that could create it. What is the best country in the world. So that's point number one. Point number two. I think it's important that the people, African American people have a place to come to feel ausens of pride of who we are and where we're going. And also contribute their story. The majority of my gift is actually the digitization of

the African American experience. So any family can now digitize their photographs, their narrative, their their you know, their their their videography, whatever it might be, and it's now part of this museum and people will be able to learn about their family histories in in ways that come alive. It's just something that your parents are instilled a new or why do you decide to become such an active

philanthropist in just a few years. I saw my mother right at twenty five dollar check to the United Negro College every month growing up, and even when I wanted a new pair of you know, Converse all Stars, she said, go earn the money to get them yourselves. As you wrote that twenty five dollar check, which I could have bought two pairs with. Uh, you know, she she instilled

in me the importance of giving to the community. I saw my father who was on the board and ran you know the local y m c as the East Denver y m c A and you know how he contributed time and energy and intellectual capacity on raising funds so the kids in our neighborhood could go UH and spend you know, camps or summer camp and and enjoy the outdoors and understand the importance of the outdoors and

building one sense of spirit and one soul. So all through my life growing up, you know, philanthropic endeavors were part of my family, my family dynamic. You signed the giving pledge was not a hard to do, which says you're gonna give away half your wealth. It was not hard, you know. It's it's it's it's so interesting, you know I And it's wonderful that you know, the Bill and Warren and folks like you are actually out there having

UH and being in evangelists for what this is. One thing we have to do is ensure that our society is a just society. Our society has the ability, uh to actually cure its own problems. And you know, while we accumulate wealth on the one hand, you know, we need to also solve the problems that we that are facing us today while we're alive. Part of what I think about is I know today the problems that are facing the communities I care about, and if I have

the capacity to do something about them. Frankly, it's on me to do something about them, and the giving pledge is a is a good way to put a signal out there that say, listen this, this is the right thing for anyone who accumulates wealth of any size. I respective whether you sign the pledge, um to actually care about the community in very meaningful ways. You have another very interesting philanthropic UH project. You have a ranch that

you have converted. It's called Lincoln Hills. It's actually the oldest African American resort community founded by African Americans, and it was founded as a place where African Americans could buy a plot of lion land for twenty five dollars, build a cabin, and that's where they would come in summer and spend a vacations. I went up there the first time when I was just six months old. So

it goes way back in history. Everyone from Duke Ellington to Zoro, Neil Hurston to Langston Hughes, and Count Basie all come there. They stayed there because they could not stay in the hotels in Denver during that that that period of history. So over time is you know, after desegregation, like a lot of the African American institutions kind of fell in disrepair and got sold off in different parts, and now we've developed a wonderful program that serves our

community in so many different ways. Six thousand inner city kids every summer come to the ranch. We also get to about two to three hundred wounded veterans every year in the winter though, um, when the ranch is pretty much shut down. One of the things that we identified, my my wife identified this was um that there are programs once called Together we Rise, and we partner with

that actually handles aging out foster kids. So now we have built at the ranch a sixteen bedroom ranch house and we can host up the thirty kids during the during the holiday. So we host them and do all sorts of fun activities with here a big fly fisherman. I love it. Yes, I'll tell me what the appeal is. Because you have a big brain and you're trying to outsmart a small brain. So why is that so comfident?

It's it it because those little brains are are are actually focused on outsmarting you because you're in near territory. But the beauty of it, honestly, David, is nature. You're standing I think about you know, all things in this world that we live in today depend upon water. In order to live. I think about water is being, in essence, the literal life blood of this planet. And you're standing in this water with your feet on the soil, and

the water is resting around you. And at some point in time, if you open yourself to it, all things become one and you stand there and you start to realize that you are part of this greater this greater consciousness of existence. And this is the fly Fishing is just a way to stand in the water without looking ridiculous. Now your parents are alive. My my there still is. She's and she must be extremely proud of what you've achieved.

Does she call you all the time to tell you how great you She usually calls me to tell me what I need to do a little better. Her thoughtfulness about what our community needs, uh is still very relevant, invalid, and so she identifies areas that she says, you know, Robert, you need to think about this, and how can you help this one kid or these hundreds of kids in certain ways? So what is the greatest pleasure of your life pleasing your mother or making a great dale of money,

giving away money, catching a thirty inch rainbow? Okay, all right, now the greatest pleasure in all honesty, David is Frankie, just to to liberate a human spirit. And when you're able to liberate a human spirit and see that spirit really become its best self and that person become its bet So that is the greatest thrill on the planet. So what would you like to be? How people say as your legacy? Eventually you might slow down, you might

do something else. Would you ever go into government? You know, I don't know, you know, And like all things, you look for areas that you can bring a unique alution to and and solve a problem. I think the problems I want to solve now are an equalization of opportunity for African Americans to help them on board into what is the the commercial enterprise that is America. You know, how do we create sustainable career opportunities for people, not just a job um or not just a place to

go work. And I think it's through the education, It's through internships. So I hope that I'm able to establish and build a sustainable fabric to identify, uh, these folks, get them educated in in in you know, a series of schools, get them the right internships and put them on a path to not only be creative business leaders, but also creative engineers and technologists that contribute to what is the fabric of America. Robert Smith, it's a great story,

a great American story. Congratulations and what you've achieved, and thank you very much. Thank you, David, thank you,