Goldman Sachs Exchange's Great Investors Podcast featuring Joe Baratta

Introduction

• Host: Alison Mass, Chairman of Investment Banking at Goldman Sachs
• Guest: Joe Baratta, Global Head of Private Equity at Blackstone
• Discussion Topics:
  • Evolution of the private equity industry
  • Current investment environment
  • Building a large private equity business

Joe Baratta's Early Life and Career

• Background:
  • Grew up in Sacramento, California
  • Son of a bodybuilder who opened one of the first health clubs in California
• Influence of Father:
  • Instilled passion and optimism
  • Encouraged following passions and hard work

Education and Early Career

• College: Georgetown University, majored in Finance, minored in Government
• Early Career:
  • Worked as an analyst for Morgan Stanley in the M&A group
  • Transitioned to private equity, attracted by proximity to business operations

Transition to Private Equity

• Joined Blackstone in 1998
• Role in Europe:
  • Established Blackstone's private equity business in Europe (2001)
  • Focus on buy-and-build strategies

Evolution of the Private Equity Industry

• 1990s vs Today:
  • Initial cottage industry, now a trillion-dollar industry
  • Previously fewer firms and less access to capital markets

Leadership at Blackstone

• Global Head of Private Equity (2012):
  • Faced challenges integrating back into U.S. markets
  • Focused on growing Blackstone's already large platform

Operational Focus

• Strategy: Emphasis on operational improvements in portfolio companies
• Importance of Control: Hiring best talent, improving board structures
• Example: Use of capital markets expertise to place $5 billion in debt

Shift to Growth-Oriented Investing

• Strategic Shift:
  • Moved from value to growth investing, focusing more on high-tech sectors
  • Avoidance of industries facing significant technological disruption

Private Equity and Retail Investment

• Potential: Significant growth potential in retail investment
• Challenges: Designing attractive products with liquidity for retail investors

Macroeconomic Perspectives

• Economic Observations:
  • Slowing growth globally, bright spots in India and Japan
  • Demand for electricity rising due to AI, data centers, electric vehicles

Investment and Negotiation Approach

• Negotiation: Prioritize reasonable, fair deals; maintain good relationships
• Investment Discipline: Importance of valuation discipline to avoid overpaying

Leadership and Culture

• Building Culture: Emphasis on teamwork, truth-seeking, and shared success
• Initiatives: Blackstone Career Pathways to bridge opportunity gaps

Personal Insights

• Investment Advice: Avoid FOMO, long-term perspective, mean reversion
• Personal Interests: Cycling, skiing, family

Conclusion

• Future Outlook: Optimistic about the ongoing technology revolution

Contact Details & Disclaimer

• Podcast Release Date: June 3, 2024
• Disclaimer: Views expressed are not necessarily those of Goldman Sachs; informational purposes only.