WORTH REPEATING: I Was A Vampire Capitalist


CNN: “I made most of my money from buying and selling a dozen or so companies with other people’s money; mostly uninteresting mid-sized companies that nobody particularly wanted; and I got to keep 20% of the difference between the purchase and sale price plus any cash I could take out while I owned them.

“And I now recognize that this short-term buying and selling made me about as knowledgeable about business as George Steinbrenner was about playing baseball. I was an expert at telling business people how to do what I’d never done myself. And to tell you the truth, back when I was in private equity most ‘real’ businessmen — the people running our largest companies and the entrepreneurs starting new businesses — had about as much respect for money guys like me as Dave Winfield had for George — close to zero. […]

“While experts disagree about whether I created any lasting value, there is no doubt that I extracted it wherever possible. Private equity guys are always on the lookout for opportunities to extract value from customers (can we charge more for less?), from vendors (can we pay them later?), from employees (can we outsource to India!), from sellers (can we partner up in the next auction?) and from buyers (can we push the accountants harder?). Extraction probably makes things more efficient, and I got to my keep 20% of the extract, but it can be a nasty business. […]

“One last thing you probably already know: I wasn’t very nice. I always acted in my own economic interest, I quantified everything, I thought creatively about what could be done (not what should), I treated people as means not ends, and I regularly did to others what I would never want done to myself, my friends or my family. You’ll have to ask the secretaries, middle managers, nannies and limo drivers what kind of man I really was or how I compared to the other effortlessly superior hotshots who roamed private equity’s hallowed halls. But I did some things I’m now ashamed of (the picture with dollars overflowing my pockets) and I still have the habit of saying things I probably shouldn’t – ‘let’s make a $10,000 bet,’ ‘I enjoy firing people’ and ‘I’m not concerned about the very poor.’ MORE