Blackstone's Peterson Flopped at MIT, Rose on Dumb Luck: Books
June 12, 2009
From Bloomberg.com
Peter G. Peterson's life has been nothing if not diverse.
Born to Greek immigrants on the Nebraska plains, he was briefly expelled from the Massachusetts Institute of Technology for copying a term paper, procured components for the Manhattan Project, and wound up rising through careers as varied as advertising (McCann Erickson), manufacturing (Bell & Howell) and finance (Lehman Brothers Inc.)
All of this, and more, can be found in his disarming memoir, "The Education of an American Dreamer."
Peterson, 83, is best known today as the co-founder of Blackstone Group LP. Yet what comes through in this melange of telling anecdotes and family history is the man’s humor, determination and sheer dumb luck.
How many university students take a job in a radiation lab that turns out to have been part of the Manhattan Project, which built the world's first atomic bomb? And how many people wind up attending the University of Chicago Graduate School of Business just because it happened to be near their workplace?
Luck comes to those who persevere, of course, and there's plenty of evidence here that Peterson was no quitter, though he can come across as a good-humored Mr. Magoo, failing to do adequate due diligence before joining Lehman and missing the racism and anti-Semitism right in his own backyard.
24-Hour Diner
Peterson came from the town of Kearney, Nebraska — halfway between Boston and San Francisco, as he says — where his father ran a 24-hour diner. Georgios Petropoulos had grown up barefoot poor on the Peloponnesian Peninsula, worked in a meatpacking plant in Milwaukee and changed his name to Peterson when he got a job on the railroad. His work ethic, frugality and stoicism left an imprint, good and bad, on his eldest son Pete, who at eight was counting out the change at the cafe's cash register.
Driven by a hunger to please his parents, Peterson got top grades and pushed himself from one achievement to the next. By 27, he was running McCann Erickson's Chicago office. At 34, he was offered the presidency of Bell & Howell, where he sheepishly admits he inspired the invention of the boom box.
"The rest is history, or at least a loud footnote to history," he writes.
Peterson went on to become secretary of commerce in the Nixon administration, and he gives us glimpses inside the White House in the bracing days of the opening to China. He also recalls Richard Nixon's black funk on the morning after his landslide re-election in 1972.
Nixon Slouches
"He was slouched as he walked in, his shoulders hunched, his neck thrust forward so that he seemed to be looking out from a dark corner," Peterson writes.
As for the Watergate affair, Peterson says he knew nothing about it. "That inside information was for the Palace Guard, not us outsiders."
Leaving Washington for New York, Peterson landed at Lehman, where his luck ran out. It was June 1973, and Peterson joined as vice chairman and one of the four-member executive committee.
"I had not been at Lehman a month when a bombshell fell," he writes.
The company's government bond traders had lost between $15 million and $20 million before taxes, at a time when the firm's equity stood at about $17 million, he says. Peterson — "a Wall Street greenhorn" — became the chairman and chief executive officer. Over the next 10 years, he would lead Lehman back from the brink, only to see it begin to implode after he left.
He still had more to achieve. Peterson and fellow Lehman alum Steve Schwarzman went on to found Blackstone, conceived as a boutique investment bank focusing on private equity. The idea for the firm's name came from Schwarzman.
What's in a Name?
"Pete," he said, "schwarz is German for 'black,' right? And Peter translated to Greek is petros, which means 'stone.' If we put them together we get 'Blackstone.' What do you think?"
The narrative hums along as Peterson skims over the years with memorable anecdotes, often at his own expense. He describes, for example, how some young associates at a Blackstone Christmas party poked fun at his books on the federal deficit by playing a game of "Here are the answers. What are the questions?"
The answers were: 1,000,000; 999,999; 1; and 0.
The questions: How many books did Peterson print? How many did he give away? How many were purchased? And how many were read?
He'll surely sell more this time around.
