- 4 weeks ago
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00:00Thank you both for sitting down with me.
00:02And first of all, congratulations.
00:03I know people will be viewing this after the race,
00:05but you've got collectively a pole and a sprint win.
00:09A second pole together.
00:10It's amazing.
00:11There you go.
00:12How was it to see the car yet again with the Carlisle name on it?
00:16Just every time it's exciting.
00:19It's like a kid opening a gift, and there it is.
00:22There's your toy, except this is an extraordinary toy
00:24that they spend years building, and then they just
00:26keep winning and winning and winning.
00:27It's a big toy, an expensive toy.
00:30And I have to say, it does have this element
00:32that it feels like a different Carlisle.
00:34Typically, a Carlisle that operates behind the scenes,
00:37working with institutional investors.
00:39But this is big.
00:40This is splashy, not to mention expensive.
00:43Why put yourself out there like this?
00:45Well, if you think about the evolution of finance,
00:49the last 30 years, you've seen a remarkable development
00:52of private markets.
00:53Private markets are really the primary source of capital
00:55for many companies.
00:57As that capital continues to grow, the market
00:59is just evolved to a place where wealth, retail,
01:03the breadth of what we do globally is just evolved also.
01:08And this is just part of the natural evolution.
01:10While it might feel unique now, I think it's actually not
01:15revolutionary at all.
01:16It's really just quite evolutionary.
01:17And why move that way with Red Bull specifically?
01:20That was pretty easy.
01:22Everything about Oracle Red Bull Racing is about performance,
01:28execution, excellence.
01:31So that part was very easy to see and very easy to relate to as a firm.
01:36The sport, F1, is also global and growing dramatically, as we know, as our private markets.
01:43And so that all aligned.
01:45What made this really special was when Leront and I spent time together.
01:50The team spent time together.
01:51And there was almost like this sort of very, I don't know, uniquely natural affinity
01:56where we all just became best friends really quickly.
01:59And so, hey, it's got to be fun, too.
02:00But it is about performance excellence, first and foremost.
02:02I was going to say, Leront, given what Harvey is saying,
02:04that the finance world in general has been more interested in sport, more interested in F1.
02:09Have you been fielding a lot of calls before this partnership from Harvey's peers
02:13who wanted to get in like he did?
02:15You know, in reality, no.
02:16It felt very natural straight away with Carlyle, with Harvey.
02:21You know, it's this moment where you realize that the person you are talking with
02:25are the best at what they do in the world.
02:28And, you know, we feel we are quite good at what we do.
02:31And what we see with our partners is that we go and try to partners with companies
02:37that are the best at what they do.
02:38And we had a lot more points of connections.
02:41We had these performance obsessions.
02:43We have this data-driven approach in our very different business.
02:48But together with that quest for perfection in everything we are doing,
02:52it felt like a very, very natural connection.
02:54To be fair, Harvey, there have been some outspoken critics about the move
02:58for private capital to do sponsorships, to get invested in sports.
03:01Josh Easterly of Sixth Street said at a conference a couple of weeks ago,
03:06it's representative to him that firms are more concentrated on fine-tuning their brand
03:10than on the returns themselves.
03:12What do you say to that criticism?
03:14Our business is exactly the way Laurent just described it.
03:17It's first and foremost always about performance.
03:21Performance drives everything.
03:22If you have performance, you have success.
03:24Again, you think about everything they do at Oracle Red Bull Racing.
03:28It's all oriented around success.
03:30When he references data, we think about data.
03:32It's different data, but these are organizations driven around performance excellence.
03:36If you don't have performance, you don't have success.
03:39In terms of the partnership here, yeah, this is important to be able to reach a global audience.
03:46You mentioned sport before.
03:48There's a real desire in the world for people to come together around sport,
03:52and this is truly one of the fastest-growing sports in the world.
03:55It's all very synergistic, but you don't have success without performance.
03:59You can't sacrifice it.
04:00It has to stay number one.
04:01Well, the concentration of the sport, it's growing quickly.
04:04Apple now, a U.S. partnership with F1, but again, there is so much institutional money
04:10coming in, whether it be Carlyle, a sponsorship, whether it be other private capital firms taking
04:14investments in the team itself.
04:16What has that money done to change this sport, Laurent?
04:19You know, I think as a sport, we have spent years and decades to try to have a more global reach.
04:25You know, we have been trying to reach out to our fans.
04:27We have been trying to reach out to the businesses.
04:30And finally, it seems that we are now having that incredible growth year after year.
04:35We reached more fans, more global audience.
04:38We have now 40 percent of our global audience in Formula One that is female, 40 percent that
04:44is under 35 years old.
04:46And, you know, we also had that common point of connections with Carlyle and with Harvey.
04:51They are trying to get private markets to have that broader reach.
04:57And Formula One is also trying to get that broader reach towards a bigger fan base.
05:02And we are enjoying that period.
05:05We worked a lot to be closer to our fans.
05:08And you are right.
05:09There is so much more coming.
05:11We feel we are only at the beginning, especially in the U.S., in terms of reaching out to the wider audience.
05:17It's a fair point this growth is happening to both of your industries at the same time.
05:21Harvey, that growth also coincides with you taking over the leadership of Carlyle in early 2023.
05:27It does feel like a different mindset coming from people, institutions coming to you to buy funds
05:33versus you now having to sell them as well to a broader audience.
05:36Is this a big cultural shift you think that you're leading at Carlyle?
05:40Is this a Carlyle 2.0?
05:42Well, I think, again, if you think about it's an incredibly competitive world out there.
05:49All organizations have to go through constant processes of self-analytics, really being humble,
05:58asking themselves, hey, what can we do better tomorrow?
06:01What can we do better for any client we serve around the world, whether it's a wealthy individual
06:05outside the United States or a future retirement, an individual planning for retirement in the United States
06:13when all those rules change?
06:15And so, no, I don't know if you're ever through your 2.0s.
06:19I think as a leader of any organization, you constantly have to be working with your teams to say,
06:24hey, on any given day, what can we learn, what can we do better, and who can we serve better?
06:29And so, again, I don't view any of that as revolutionary.
06:33I just think of that as evolutionary.
06:34Now, the firm, as you point out, has been on a strong growth trajectory since I've shown up.
06:38The teams really rallied.
06:39They've done an extraordinary job.
06:40I'm really quite proud of everything they've done.
06:42Is it a cultural shift, though, to go from institutions to have to think about retail and wealth?
06:47I wouldn't say it's a cultural shift because at the core of everything that is culturally relevant
06:51is performance.
06:53What I would say is understanding that end client.
06:57So, you see a lot in the news today about retirement.
07:01It's not really even a sensible question to me whether retirees in the United States
07:06should have access to private markets.
07:09Firefighters, millions of them, teachers, millions of them have had access to these solutions
07:15through their pension plans.
07:16What is relevant is how do you structure them?
07:18How do you work with regulators to get it correct?
07:20So, the real issue about extending private markets more broadly around the world to different
07:25clients is just getting it right, but it makes total sense.
07:29You know, and since 2000, we've lost half the public companies in the world.
07:34So, private markets are the market that people want to allocate capital to, and they shouldn't
07:40be denied that opportunity.
07:42We just, as an industry, have to be really thoughtful about how we deliver it.
07:44Right.
07:45Well, you coming in as leader, maybe there are some things that also mirror each other.
07:49You coming in when there's some tumult at the top, when there's maybe questions of leadership.
07:54Laurent, you've had to do that this year, as well.
07:56Has Harvey given you any advice of what it's like to come in as leader when there are questions
08:00surrounding past leadership?
08:01Of course it is.
08:02Of course.
08:03Absolutely.
08:04And, you know, it even goes beyond.
08:05You know, when we say, why do we partner with Carlyle?
08:08We partners with companies so that we can have that challenge.
08:12We can have that exchange about leaderships, about culture, about people.
08:15Well, we have to know what the advice was.
08:16We need to see behind the scenes.
08:18You know, the behind the scenes advice was as simple as that.
08:23You know, it's all about performance, and performance only comes from people.
08:27So, get your people in the right conditions to work.
08:30Give them the possibility to express their talents.
08:33Make sure they have the right working environment for them to operate at best.
08:37That's what they do.
08:38That's what we do.
08:39That was one of his first advice.
08:41And all of that is happening in an incredibly technological environment and data-driven environment.
08:46Well, to be fair, you were also coming from racing bulls, where you were having a lot of success with the team.
08:50Even outperforming the parent team at certain points, too.
08:53Was it a hard decision to make to come over to Red Bull, or was it even a choice at all?
08:59You know, I think it was an incredible honor, you know, to receive that call.
09:05The first feeling you get is it is Red Bull asking you to step up there.
09:11There is a sense of loyalty towards the company.
09:14So, of course, it was, you know, it was a big news and a big surprise.
09:20But it's also something that you know you have to jump into as part of the loyalty you have with the group.
09:26And you know it's an incredible honor and privilege to be part of a team that has been winning so much in such a competitive environment in the last two decades.
09:34You know, as leaders, we can all learn from each other.
09:37What he just talked about was really about talent, and talent drives everything.
09:40We're in a people business.
09:41No matter how much data we collect, no matter how much technology we implement, we're in a data business.
09:46He didn't want to get into too much detail.
09:48He has called me about tire selection.
09:50And I did call him for advice during the government shutdown.
09:53I said, hey, should we brainstorm about these issues?
09:55But anyway, that's really just between him and me as leaders.
09:57So for the sprint, you were hard, soft, medium.
10:00You were there every call.
10:01He doesn't call me live.
10:02We usually talk a couple days before a race.
10:04And then, you know, I'll talk to him like leading up to the government shutdown.
10:07But once it happens, I'm doing my thing.
10:08He's doing his thing.
10:09Maybe you're the right person for this, Harvey, because I was really struck by something you said last week at a conference.
10:13You called yourself, as part of being the top of Carlisle, also the chief worry officer.
10:18Sure.
10:19What is your chief worry right now as the chief worry officer?
10:21The important thing about being the chief worry officer is there's no list of things that one doesn't worry about.
10:26But I think that, you know, part of my role and primarily really what drives my role is exactly what Laurent just said about enabling the team, motivating the team, bringing the team together, ensuring that the team, you know, feels good about success, but not too good.
10:45Always staying hungry, but at the same time humble.
10:48They've had really remarkable success since he stepped in.
10:51I mean, it is extraordinary with this man, leader and friend and the whole team and Max have achieved.
10:59Like it's really needs to be underscored.
11:02I think in terms of worries, the key things about worrying is anticipating things that may happen, but allowing your teams to really digest that information.
11:12So at this particular point in time, as we sit here, you know, there's a lot of people talking about markets being priced for perfection or geopolitics or basically the way governments are relating and trends that have existed for 30, 40, 50 years that are somewhat reversing.
11:27I would put all these things sort of on my list of things I focus on.
11:31But there's nothing as I sit here this morning that I'm worried about, you know, other than that, you know, we're going to win every race for the rest of the season, which also I will now say was part of our contractual agreement.
11:43Oh, wow. OK, well, if something goes wrong and you don't win, we're going to check in on this.
11:48None at all. To that point, Max has been closing the gap.
11:51What needs to go right in order for that gap not only to be closed, but to be surpassed?
11:56Look, we take it race by race as much as the world would like us to talk about the world championships, because, yes, mathematically, it has been reopened.
12:05Thanks to the strength of success we have been having. The truth is we take it race by race.
12:10We even take it day by day, session by session.
12:13That's how we keep the right focus, the right intensity in every decisions we make.
12:19And that's, you know, the rest will be the consequence of that level of intensity.
12:232026 must be on your mind. And especially the second seat, I think, is on a lot of people's mind.
12:28You take it day by day. But at what point do you think you'll have the information you need to make that decision for the second seat next year?
12:35You know, we are in a very comfortable situation. We have the contracts on our side for all of our drivers.
12:43They are great kids. We want to give them as much time as possible to show us what they want to show us.
12:49So, of course, we don't want to wait until the last race because, you know, if somebody loses seat, we need to be fair with this person.
12:57But we think another couple of places will probably make a call.
13:00And what are you focusing on and the priorities for making that decision?
13:03It's super simple. It's the same thing for everything in our business. It's performance. Performance only.
13:07Performance only.
13:08Harvey, in thinking about where the world goes from here, I'd be remiss if I didn't bring up the chief worry of the moment.
13:14And that is concern about credit conditions.
13:17You've made it very clear that some of the issues, be it first brands, be it some of the regional banks more recently,
13:22if it is a cockroach, it's not termites that are destroying the foundation of the building.
13:26They might be a one off. At what point do you start to get concerned that maybe it doesn't necessarily show that the whole thing is going to crumble,
13:35but it's a late cycle and there have been mistakes made that might pop up more frequently?
13:40Well, I think a lot of the questions that are being asked make a lot of sense.
13:43You know, since the financial crisis, we've had, generally speaking, very stimulative policy in all respects.
13:49Quantitative easing, fiscal policy through the pandemic and beyond.
13:53And so it's unsurprising when you look back, of course surprising when we came out of the financial crisis,
13:58but unsurprising when you look back, the trajectory of markets that we've experienced.
14:02Any time you're very late cycle like this, any news item could be disruptive to a market on any given day.
14:09I think that we haven't had really a credit, a recession driven credit cycle in a very, very, very long time.
14:16And so people are right to be concerned when they see credit under performance.
14:21Having said that, the bigger questions around systemic risk or when you say, will things crumble?
14:26Just because we haven't had a credit cycle in a long time doesn't mean if we go through a credit cycle, which inevitably we will.
14:31That's a certainty that things will crumble.
14:34I think the market structure is such today that it's pretty resilient.
14:37And when we look at our data across our portfolio companies, as we've talked about,
14:42Andy, there are 700,000 employees in our portfolio companies around the world.
14:46There are 2,400 at Carlyle driving all this activity.
14:49When we look at that data today, that data suggests that companies are growing, employment is steady,
14:55inflation is a little sticky, but there's nothing in the immediate horizon that suggests that, as you would say, things are crumbling.
15:01Having said that, late cycle, it should be on a worry list.
15:06Okay.
15:07It makes sense as Chief Worry Officer.
15:09What specifically is the worry then, if it's not a systemic issue?
15:13Well, I think whenever you get to a point where markets are, let's say, very stretched, credit spreads are very tight,
15:20it's about how you deploy marginal capital from our perspective.
15:24And so when we think about it, again, we're not in the business of avoiding risk.
15:29That's not the business we're in.
15:30We're in the risk-taking business.
15:32We have to be in the business of pricing it correctly.
15:34So anytime you're late cycle, you want to be very, very thoughtful about that marginal risk deployment.
15:39Last year, we deployed billions of capital, sometimes in Europe, sometimes in the U.S., sometimes in Asia.
15:45But you have to be looking around the world for the capital with the right risk return.
15:49And that's what we do on behalf of all of our clients.
15:51And to bring this back around, there have been some concerns that with the amount of money coming in from wealth, that that gets harder to do.
15:56Just because there's that much more money that needs to be deployed, and maybe you go into things that you otherwise wouldn't have because that money needs to be put to work.
16:04Is that a fair concern?
16:06Well, I think it's a fair concern if you're not thoughtful about deployment.
16:11In the history of cycles, what you tend to see is you tend to see too much capital coming into a space chasing too little return.
16:20It's our responsibility to manage that capital thoughtfully.
16:23And so that's our obligation.
16:25That's how we think about it.
16:26Is there a concern that others aren't doing that as this money is coming in?
16:29I think any time you go through a long cycle, you're going to see marginal participants who may not make the best judgments.
16:35But again, your point is whether or not really what you're getting is whether or not it's systemic or not.
16:40I don't see that right now.
16:41Well, just before we let both of you go, the first big splashy sponsorship?
16:46More to come between you two, between Carlisle and other sports?
16:50Right now, we're pretty thrilled with this partnership.
16:53And we just continue to root for our friend here and the whole team and Max.
16:58So, no, we're quite satisfied.
17:00And you know, on our side, we are very proud that Carlisle is the first ever global investment firms to partners in Formula One.
17:07You know, it's the first time also for the sport to be connected with this part of the business.
17:11And we are very proud that they chose Oracle Racing.
17:14Yeah, we're thrilled with it.
17:15Well, we're all excited to watch the race today with the Carlisle sign zipping by.
17:20Good luck and congratulations already for this weekend.
17:24Thank you both so much.
17:25Thanks, Danny.
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