0:02

This is Bloomberg Business Week from

0:04

Bloomberg Radio. Hi, I'm Jason Kelly

0:06

and I'm Carol Masser. Welcome to the Bloomberg

0:08

Business Week Extra. It's our weekly

0:10

podcast. This is where we give you one of

0:12

our full conversations from the week, and

0:15

this week Carol John Winkle read, the co CEO

0:17

of TPG. I got a chance to catch up with him

0:20

at the Bloomberg Equality Summit. It turned

0:22

out to be more timely than anyone

0:25

expected. TPG, of course, caught

0:27

up a couple of weeks ago in that college

0:29

admission scandal, one of their most

0:31

prominent executives leaving

0:34

the firm after being implicated. And

0:36

here's that full conversation. Let's start

0:38

on the news as we do here at

0:40

Bloomberg. UM. A couple of weeks ago,

0:42

one of your partner's, Bill McGlashen was

0:45

wrapped up in this now very

0:47

well known admission scandal. You

0:50

guys, I think it's fair to say louse

0:52

swiftly both internally and externally.

0:55

I want to ask you where you

0:57

stand now with your investors, because

1:00

notably, one of the decisions you made

1:02

was to go to investors in the New

1:04

Riots Fund and say, look, it's

1:07

all good. You can have your money back if you want.

1:09

How have they reacted? And then I want to talk to you

1:11

about what's going on inside the firm.

1:15

Well, I think, UM,

1:18

a couple of weeks ago, when this news

1:20

first broke, it was a as you might imagine,

1:23

it was pretty shocking. I mean, this is something

1:25

that we had no

1:27

knowledge of or had no idea this

1:29

was all happening. And

1:32

UM, so anytime something like this happens,

1:34

you know, you sort of takes your breath away for a minute.

1:36

UM. But we UM, you know,

1:39

we reacted as you describe, I mean, we tried

1:41

to react, you know, pretty in a pretty

1:43

focused way. And UM.

1:45

One of the things that I think we felt it was really important

1:47

to do was to make sure

1:49

that we were communicating and so we went out

1:51

to all of our stakeholders. And by the way,

1:54

that's both both externally

1:56

in terms of our investors r LPs, and also

1:58

internally because this is obviously

2:00

a very important thing internally as well with all our

2:02

people. But our investors,

2:04

I would say overall number one

2:06

are very supportive UM and

2:09

UM. They obviously understood the context

2:11

that UM. Unfortunately Bill

2:14

was engaged in this scheme UM

2:16

on a personal basis, UM,

2:19

and so our investors, Number one, we're very supportive.

2:21

Our investors understand what

2:23

we're trying to accomplish as a firm with respect

2:25

to the franchise that Bill was part of, which is our growth

2:27

equity franchise and also importantly our impact

2:30

franchise, which obviously has a lot to

2:32

do with why we're here today, UM

2:34

and UM. And but naturally

2:36

have a lot of questions. They have a lot of questions, UM

2:39

and UM. And so

2:41

what we've committed to our investors

2:43

is that we're UH. We

2:45

we've undertaken an investigation internally

2:47

to make sure that none of the things that

2:50

Bill was engaged and were in any way, shape or

2:52

form bleeding into the business. UM.

2:54

We owe that to our investors, and so we're working

2:56

on that. UM. We're gonna go back

2:59

to them and give them to read out when we're done

3:01

with that and when we finished with all of our work UH

3:04

and UH. And importantly

3:06

also I think our investors understand that you

3:08

know, our growth and our rise impact

3:11

franchise. You know, we're talking about a hundred

3:13

people, a hundred plus people. We

3:16

have a deep, broad team.

3:18

UM, we have our our

3:20

impact fund is now made close

3:23

to thirty investments over about

3:25

a billion one of capital UM.

3:27

And so when you actually look at the companies we've invested

3:30

in and the work these companies are doing, I

3:32

think they all realized that there is a bigger there's

3:34

something bigger here than just one individual.

3:37

So they're very constructive the

3:39

you reference giving you know, us allowing

3:42

them to take their money back. What we

3:44

did, what we were in process,

3:46

we were beginning to raise the second fund,

3:48

so we had some we had done a first close

3:51

and we went back to our investors instead. Of course,

3:53

you'll have an opportunity to reevaluate UM

3:56

and so UM everybody is comfortable

3:59

with where we are right now. We'll have a

4:01

read out ultimately of the of of of

4:04

our internal work and you

4:06

know, then we'll go forward from there. So help

4:09

us understand this in the kind in

4:11

the broader context of the work that you are

4:13

doing inside TPG around diversity

4:16

and inclusion. This is something

4:18

that you really personally have

4:20

taken on since you arrived just a few years

4:22

ago. And we can go back to your history

4:25

at Goldman as well, But but I do want to understand

4:27

the current context and how

4:30

not just this latest news and

4:33

this in the lastin

4:35

situation, but but more generally, what

4:37

moment are you at in your

4:40

work internally? Well,

4:42

I think just just you know, the

4:45

broader context of why I feel

4:48

it's so important, and I think why we feel

4:50

it's so important is because, UM,

4:53

it's not just a question of diversity

4:55

is one aspect of it. I like

4:58

to view it as a much in a much broader context.

5:02

I think in the world that we live

5:04

in today, being

5:06

a fiduciary investing on behalf

5:08

of the stakeholders that we invest on, behalf

5:10

of, and also having an

5:13

organization that people feel they really

5:15

want to be part of, it's

5:17

really important in my view that

5:19

you have that that there's some expression

5:21

of values, like what do you stand for

5:23

as a company? What what what's important

5:26

to you? What are you trying to accomplish.

5:28

So it's not just diversity is one part

5:30

of it, UM, you know, I

5:32

like to start more from the perspective of,

5:35

UM, what are your what's what sort of your values?

5:37

As an organization? UM, how do

5:39

you think about just in the normal

5:41

course of your investing activities, how do you think

5:44

about what we're doing, why

5:46

we're doing it. Um. I'd like to

5:48

think about the environment at the firm. Um.

5:51

I start with kind of inclusivity,

5:53

and then that bleeds into the whole

5:55

idea of diversity. Um. Are

5:58

we an organization where people feel like

6:01

they really want to be part of this

6:03

kind of living, breathing organism that is our

6:05

that isn't that is a firm? And

6:07

so I feel like, UM,

6:10

when I got to the firm, I think

6:12

that we were sort of in the beginning stages of

6:14

sort of getting our heads around that. And

6:16

I think in the past couple of years in particular,

6:19

I think this whole concept of sort of value

6:21

orient or value orientation,

6:24

UM, what do you stand for? What are you trying to accomplish?

6:27

Um? I think that is accelerated in a big

6:29

way, not just a TPG just generally in the

6:31

market. Well, and I want to ask you about that because I

6:34

think it's fair to say. I don't think anyone in this room

6:36

would disagree. This is not something private

6:38

equity has been good at. It has been really

6:42

white, it's been male,

6:45

it's been bros So bros

6:48

bros. Um. So

6:51

why First of all,

6:53

I mean briefly, why, and

6:55

and second, do you have a legitimate

6:58

shot at changing that narrative quickly.

7:01

Well, Um, first of all,

7:04

why is because UM,

7:07

I think, Well, first of all, it's important to me.

7:10

UM. I think that when you when you

7:12

are part of an organization, and I learned this a little

7:15

bit in my past organization at Goldman Sacks.

7:17

I mean, when you're part of an organization that

7:20

is white, bro

7:24

homogeneous, you know, and

7:27

then you're then you have a set of experiences

7:29

where you kind of get out of that

7:32

that kind of that

7:35

that atmosphere, you realize the

7:37

difference. You realize the richness of being

7:40

in a much more heterogeneous environment. You

7:42

realize the richness of having a bunch of different

7:44

type of people sitting around. UM.

7:47

Some some of it's some of it's subtle, but some of

7:50

it's not that subtle, Okay, in terms of UM,

7:52

the idea flow, UM,

7:55

who you connect with externally, UM,

7:58

you know, and again going back

8:00

to kind of what you stand for. So I

8:03

feel like it makes you a much better,

8:06

much richer, much more interesting organization

8:09

and your ability in our in our world where

8:11

you're trying to actually invest in companies,

8:13

you're trying to you're trying to relate to

8:16

and connect to c e O S or you're trying

8:18

to relate to that are running other companies,

8:20

you're trying to relate to companies that are

8:22

prosecuting businesses where they're

8:25

dealing in a diverse world. I

8:27

think having an understanding of for that

8:29

having having a connection

8:32

in some way, shape or form because your organization

8:35

is trying to do some of the same things. To

8:37

me, that's a very important thing. So I

8:40

think that so just kind of level

8:42

setting. I think it's very important in that respect.

8:44

In terms of changing it fast um,

8:48

I think it depends on what your definition of fastest.

8:51

I mean, I think I think if you

8:53

look at because your LPs have made it

8:55

clear that this is something that's very important.

8:57

I think if you look at what we look like, I

9:00

I've been there for a little over three and a half years. If I

9:02

used that as a frame of reference, if you look

9:04

at where we were three and a half years ago versus where

9:06

we are today, I think we've have moved

9:09

the needle a lot. Do we have

9:11

to move it a lot more? We do, but I think

9:13

we've moved it a lot. Just I mean, just give you some examples.

9:15

I mean, you know we have we

9:18

have focused on UM

9:20

creating an environment that is more inclusive

9:22

and people feel more comfortable in things like we have

9:24

done. As an example, we we just

9:26

we just UM changed our family

9:29

leave policy. Our family leave policy

9:31

is UM is gender blind. It's

9:34

eighteen weeks UM for the

9:36

primary caregiver. It's four weeks for

9:38

the secondary caregiver. You can take

9:40

four of those weeks at any time during the course

9:42

of the year. We have undertaken

9:45

a program UM

9:47

two with and we think about this, by

9:50

the way, with respect to our broader ecosystem,

9:52

not just the thousand people at TPG. We

9:54

can we we have investments in almost two

9:57

companies. Of those two IT fifty

9:59

company, these we are actually on the board

10:02

and in some cases control, in

10:04

some cases don't control, but have influence.

10:07

A year ago, we set out to change the

10:09

composition of our boards for every

10:11

single company where we have control

10:14

or or significant influence UM

10:18

from a gender and UH and UH

10:21

diversity perspective. As an

10:23

example, in the last year we have made

10:25

we've changed the board gender composition

10:28

and over thirty of our companies and

10:30

we're going to continue until we have basically touched

10:33

them all. And in the process of doing that,

10:35

giving an example of sort of importance of this, kind

10:37

of the network effect of this and the process

10:39

of doing that, we put together a

10:42

listing of women who

10:44

could serve on boards. Believe

10:46

it or not, there's six hundred women

10:49

on that list that we have through our

10:51

network, have connected to and

10:53

basically are really um

10:56

incredible people who could play some

10:58

kind of role in helping us govern our

11:00

companies. UM. We changed

11:03

our bathroom signage in all of our offices

11:06

so people can use whatever bathroom

11:08

they want to depending upon how

11:10

they identify from a gender perspective.

11:13

These are little things, and I'll give you another example

11:16

that's a little thing, you know, But we

11:19

have a partnership with sf MoMA

11:21

where during Black History Month and

11:24

Hispanic Heritage Month and

11:26

um UH

11:29

and these various highlighted

11:32

UM diversity months throughout the year, we

11:34

have an installation of art in our

11:36

offices. So people walk around

11:38

and they see these placards and they see that we see

11:41

artwork by Black artists,

11:43

by Hispanic artists, by women, etcetera.

11:46

So we're trying to just

11:48

really take a very holistic perspective

11:50

in terms of how we're trying to do this to really

11:53

move the needle and I think we've moved the needle a lot

11:55

three and a half years. The hardest part of the needle

11:57

to move is population, right, because

11:59

you can do it on your incoming population staff,

12:01

the staff people. You can do it on your incoming

12:04

population very easily. So, for instance,

12:06

our two thousand and nineteen incoming

12:09

associate class is um

12:13

either women or minorities are

12:17

class coming in. We're getting close to that as well.

12:21

Where you have a harder time change moving

12:23

the needle is you know, the old white

12:25

bro guys that are sitting around that you talked

12:28

about, that have been there for a long time.

12:31

Moving that diverse population through

12:33

the organization is more of a challenge,

12:35

and we're trying to do that, but you

12:38

know, and I think it will take some time to do that, but

12:40

we're trying to do that. And do you feel pressure

12:42

from your limited partners?

12:44

You're talking to them all the time, you know, you were saying to

12:47

me, you're traveling later this week to meet with investors.

12:49

Is this coming up more? Are they

12:51

setting benchmarks? What's the tone and

12:54

what's the substance of the of those conversations.

12:56

I would say, you know, I would say that it

12:58

is coming up more I would say that

13:01

um, more of our limited partners

13:04

are getting more focused

13:06

on this question of diversity.

13:09

What does what does the organization look like? From

13:11

that perspective, I would say they've

13:13

been focused on things like E S G initiatives

13:15

for a long time. They

13:17

haven't been as focused on diversity. I

13:20

will say that in my first you know, a

13:22

year and a half, when I met with LPs. I

13:24

don't know if I ever mentioned this to you before, but I was kind of

13:26

surprised how how infrequent

13:29

it came up. I was surprised

13:31

how infrequent it came up. And is

13:33

that just because they're like, where are making money? Like it's

13:35

cool with us? You know, I don't

13:38

know. I I think I think

13:40

that again, I think it's sort of a

13:42

governance needle has moved everywhere now,

13:44

right, It's moved everywhere, you know, state pension

13:47

funds, state retirement funds. You know. I'd

13:49

have meetings with him and it barely

13:51

came up. It's coming up now. So

13:53

I think it definitely has The politics of the country

13:56

has lived right absolutely. I mean, the current

13:58

conversation is pretty

14:01

this is pretty laser focused on it, and so I

14:03

think that you know, that is definitely bleeding into

14:05

the conversation. And so when you talk to your former

14:07

partners, your former colleagues at a place like Goldman,

14:10

is is it a similar vibe? And we were

14:12

talking a little bit backstage about

14:16

without going into what we're talking about backstage,

14:18

but you know, David Solomon has been the new

14:20

CEO of Goldman. He's been pretty vocal about

14:22

this as well. You feel like he's moving the name. I

14:24

I think I think he is. I mean, I think

14:26

Goldman has been at this for longer.

14:29

Um. I think that. Um

14:32

it feels to me like when I look at Goldman,

14:34

and it's not exclusively the Goldman, but it's sort of like

14:36

you would kind of advance the ball and you get like

14:38

on a steep part of the curve in terms of making

14:40

some progress, and then all of a sudden kind of you level

14:42

out, and then you kind of get on it again and

14:45

you level out. And I think David is now

14:47

sort of steepening the curve again. I think

14:49

he is. I think it's clear that

14:51

it's something that he wants to talk about.

14:54

And so as a result of that, if the CEO

14:56

wants to talk about it, you

14:58

know a lot of other people are and start talking about

15:00

it. So before we wrap up, what hasn't worked,

15:03

like over your career and maybe

15:05

more recently at TPG. You know, I'm

15:08

guessing you know, you guys, our idea, Guys, you sit

15:10

around and you think, all right, let's do this. Has

15:12

there been anything where like huh wow,

15:15

I didn't go so well? Well,

15:17

I think a couple of things. I think what doesn't

15:20

okay, just in terms of doesn't work or as

15:22

not as effective. I think that

15:25

you can't just it can't

15:27

just be coming down

15:29

from the CEO UM.

15:32

You have to figure out ways of

15:35

holding people throughout the organization

15:37

accountable. So it's

15:39

very important that when you go through your meetings

15:41

at the end of the year with managers who are running

15:44

groups of people are running businesses, this

15:47

has to be part of the conversation. There

15:49

has to be a level of accountability, Like

15:51

it matters. And I know it's

15:53

crude, but in terms of you know, how people think about

15:55

their careers. If they don't think it's going to affect

15:58

their career, or if they if they don't think in some way it's

16:00

going to affect their financial well being, they

16:03

probably aren't going to focus on it. As much

16:05

as they should. So I do think you have

16:07

to do that. So that would be one thing. If you're not doing

16:09

that, it's probably not going to work as well.

16:12

Another issue is, um

16:14

do you this this whole concept of

16:17

as you try to accelerate um

16:19

and move um uh

16:22

diverse parts of the population through your

16:24

organization. Uh how

16:28

um how do you? How do you

16:30

quality control? In other words, you want to

16:32

make sure that as you move people through the organization,

16:34

you're you're bringing them along. They

16:37

need mentorship, they need sponsorship. But

16:40

what if they're not performing? And

16:42

so you have to make a tough decision.

16:45

And one of the things that I have found

16:47

is that in the process

16:50

of managing that, UM,

16:53

you can't you can't

16:55

just promote people or move people

16:58

along because a

17:00

are in a diverse part of the population

17:03

if they're also not being successful and

17:06

so then and when I remember

17:08

this was back when I was at Goldmen I remember the

17:11

prospect of having to let somebody

17:13

go who was in one of those who

17:16

was in a diverse part of the population. And

17:19

I remember frankly being scared, like,

17:21

you know, I've got to do this, and

17:24

this person is obviously viewed as diverse how

17:28

is the rest of the organization going to view it? And

17:31

so what I did is I actually got together

17:34

with a group of people who

17:36

were from the same part of the diversity

17:38

spectrum to talk to them about

17:40

it. And what I learned was

17:42

that they were as insistent

17:45

on me on me managing that

17:48

person out as

17:50

I thought it was necessary, because

17:52

they felt the last thing we want is

17:54

to have somebody who's just underperforming

17:56

or is viewed as being kind of put there

17:59

for the wrong reasons. And so

18:01

I ended up getting the support of that group.

18:04

So as far as sort of how it got

18:06

communicated through the organization, that

18:09

was very helpful. And so I think

18:11

that you have to you have to have performance

18:13

standards for everybody, right, and

18:16

changing those performance standards is not is

18:18

not a very good thing to do. Having said

18:20

that, what you do have to do is I think you

18:22

do have to in my view, have reached down in the organization.

18:25

Like one of the things that we're doing is when

18:27

we think about partner selection at TPG, we

18:30

are looking at um

18:33

women and minorities. We have

18:35

a special process to look at them and make

18:37

sure that we're we are

18:39

evaluating whether or not people at the

18:41

right point in their careers are getting vetted

18:44

so that you know, and we were we are going

18:47

as far in some cases as maybe vetting

18:49

someone a year early, are

18:52

year earlier than they otherwise would be

18:54

because we want to make sure that they're getting the proper

18:57

exposure. And um

18:59

at doesn't mean we're promoting them too

19:01

early. It just means we're creating

19:03

visibility in the organization. All right,

19:06

Before I let you go, got to ask what does success

19:08

look like ten years from now? For

19:10

for TPGs that different kinds of deals.

19:13

Obviously the firm looks different internally,

19:16

but what's the outcome? I

19:19

think I don't think it will be

19:21

different, well, only different kinds of deals

19:23

in the sense that if you have a diverse group

19:26

of people, you know, you may be identifying

19:28

different opportunities as a result of that, and so

19:30

that may change the composition of the portfolio a

19:32

little bit. I think what success looks like

19:34

is that if you looked at ultimately

19:37

the drivers of the business, people who are

19:39

running different businesses, running different strategies,

19:42

I think you're gonna it will look like

19:44

a more diverse set of people. There will

19:46

be there will be women, there will be black

19:48

professionals will be his latinos

19:51

running these different businesses, and

19:53

I think that's entirely possible. I think it's entirely

19:55

possible. And that's John Winkle Reed, the co CEO

19:59

of TPG, and Carol. What I found interesting

20:01

was certainly acknowledging a lot

20:03

of the challenges that private equity faces.

20:06

This was for a long time

20:08

a very insular industry,

20:11

small, tight and candid leaves. You heard us

20:13

talk about, very white and very male.

20:16

They're trying to change that, and they're trying to change

20:18

in part because they're getting a lot of pressure from their own investors.

20:20

Yeah, very revealing conversation. We started

20:22

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