David Rubenstein, the billionaire entrepreneur and founder of The Carlyle Group.

Net worth: $4.5 Billion

How did he do it?

Let’s dissect his path better.

He was not happy being a lawyer. Worked in the White House for a while.

David decided to open a Private Equity firm, but didn’t have the knowledge. So, he went to the Secretary of Treasury that he met, and asked him to join him. It didn’t workout because he had other interests. I’ve tried this path myself. You want to get someone on board with you, but unless you pay him or her, this never works, because people have their own agendas, and you end up being stuck, dependent on them. That’s what happened. He said that for the first 3 years nothing was getting done. My question is : How do you stay at float during 3 years if the company hasn’t started yet? The only explanation is that he kept his lawyer’s position. It is my best bet.

As all great entrepreneurs, he didn’t quit, so he(based on my research) met Ed Mathias that was working at T. Row Price. Ed didn’t join him, bu he did refer some colleagues that could be interested. This was  Daniel A. D’ Aniello and  William E. Conway Jr. Rubenstein called and met them, and shared his idea. When you do this, usually 2 things happen: either people ask you how much will you pay them to do the work for you, since you are hiring, but if you are not hiring you have the risk of getting people out of your idea like the first attempt Rubenstein did. David said he didn’t have enough money to start the fund, but he did say he hired them. So here, either he didn’t hire them, but they wanted to go on board and together they raised the first fund, or he did hire them and later on they became partners. Don’t know this part, but this is important.

David said it took him 6 months to raise $6M. With very high probability, the funds came from the connections he had in the White House. Since he didn’t have a track record, he had to leverage on the knowledge of William Conway, it is my best bet. He did say that his first fund was filled with contingencies, so it makes sense he did persuade his connections and they looked at the experience from Conway.

This is how they got started, the rest is history. They did well, the company grew.

In Summary:

If you are looking to to create a company from scratch, with high barriers to entry, money or experience, you have buy your work. Buy the experience and get the connections.

Trying to get people to help you never works. If you are starting something that has high barriers to entry, and it is your passion,you have to pay. So, either you have the money or you need a biz plan that makes sense to the investors, because they will look at the numbers and invest, or not. Meanwhile you have to stay at float with what you have, because it always takes more time than you expect.

Good luck,

DM

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