Thirty Minute Mentors Podcast Transcript: Apollo Co-Founder Art Bilger

I recently interviewed Art Bilger on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: Our guest today is the co-founder of one of the leading private equity firms in the world. Art Bilger is the co-founder of Apollo, which has close to $90 billion under management. Art is also a VC who has invested in a number of different companies, including Akamai Technologies, which has a market cap of $18 billion, and is the founder and CEO of the nonprofit Working Nation focused on mitigating the growing employability gap in America. Art, thank you for joining us.

Art: Well, delighted to be here with you.

Adam: You broke into the world of Wall Street as a runner when you were in high school and your first full-time job was working for none other than Michael Milken at Drexel Burnham. What sparked your interest in finance? And what were the best lessons you learned from your time at Drexel and your time working with Mike Milken?

Art: Well, you made reference to my job as a runner, I was 16 years old. My father got me a summer internship at the securities firm, not that big, but a very notable one in the company, and a guy named Max Hyena ran it. And I was the youngest runner, I think, by 50 years. And this was back in the days we had to deliver checks and securities and all and I met a lot of really interesting people. But I also read Max's trading tickets each morning from the day before. And it was fantastic. He was buying, you know, this- it's been a long time since then- who's buying the mirror oil like crazy. And I remember that. Anyway, I went back to high school and I went to public school, not private school, and I told my guidance counselor how interested I was in Wall Street after this summer experience. And he said to me, if you're interested in Wall Street, then you know, your application to college ought to be to the Wharton School. Fast forward. I did apply to the Wharton School and was admitted and did attend and it was a fabulous experience. But the summer between my sophomore and junior years, I worked at Chase Manhattan Bank and a guy, I think he headed up Latin America. He took me out to lunch at the end of the summer and said, aren’t you fantastic, but bad news for you. You want to be an investment banker, you know, you've got to get an MBA. This was back in the days where there were no such things as analyst positions. Now I've got my MBA from the University of Chicago, and Fred Joseph at Drexel Burnham. We ran corporate finance at that time, subsequently ran the whole firm. He offered me a job, and I had other job offers, but I just was really intrigued by Fred. And this is 1977. You know, there was a guy named Mike Milken, who I hadn't met, but we could already hear Fred and Mike being significantly connected. Anyway, I decided to join and accept Fred's offer. I was the 21st person in the corporate finance department at Drexel Burnham. I joined them in New York. When Drexel went out of business in February of ‘90, we had 600 investment bankers. When I moved to LA in sort of ‘82-ish there was one other investment banker, a fella named John Kissick. And I moved out there and by the time when we went out of business, we had 89 investment bankers in Los Angeles. I didn't work directly for Mike, I wasn't on the sales and trading side of the firm. I was on the corporate finance side, but those two groups were, you know, around the clock together. One of the stories- I think it's written up in one of the Drexel books... I was waiting around for Mike one afternoon for a good while. We had to make a decision on something. Anyway, he finally came out of the conference room at six o'clock. He said, “Art I apologize, but Laurie and the kids are waiting for me. Can we meet first thing tomorrow morning?” I knew the game already. So I said sure. Like, what time do you want to meet? He said, “Art, can we meet at 4:30AM?” and I said, “Sure, Mike.” What am I supposed to do between 1AM and 4:30? So it's written up in one of the Drexel books. True story.

Adam: What were the best lessons you learned from your time at Drexel and your time working with Mike Milken?

Art: I think, to think outside of the box, you know, come with an open mind. I also related to that. I very much believed in luck. I believe I was lucky to have had that job as a runner on Wall Street, I was lucky to have a guidance counselor sent me off to the Wharton School, and I can keep going through. But then it's a matter of how you take advantage of luck. There are loads of lucky people out there. But I think one of my strong points, I don't mean to brag, but is taking advantage of luck. Even though in some cases, it's at least initially isn't all that obvious, or maybe isn't working to my strong suit initially.

Adam: And I don't know if you'd call this taking advantage of luck or taking advantage of bad luck. But the downfall of Drexel, which must have been an extremely challenging period for you, personally and professionally. But it ultimately prompted the launch of Apollo. Can you talk about that period in your life, and what it ultimately led to how Apollo came together, and what your key takeaways were, from that set of experiences?

Art: Well, you are correct, that it was definitely a very dramatic time, from a work engagement - work to me was a lot more than just show up in an office and dollars and cents. And so the end of Drexel in February of 1990, was a dramatic thing for me, and obviously many, many others, I had been approached by a number of, I think a couple of different investment banking firms about getting involved with them as an investment banker, and I decided I had done pretty much that same thing for about 13 years, and I wanted to move on to something. The private equity world was a world that we at Drexel we're becoming familiar with, as we watched various other organizations develop. And so a very natural flow for me, as well as others at Drexel, who were a whole group of us came together was to create a private equity firm. And so yes, an extension of our efforts at Drexel, but now in somewhat of a different format. And what happened was, I think, second quarter of 1990, an affiliate of credit, Lyonnais offered Apollo think, was $800 million of potential capital to invest. And a group of us came together and said, Let's go for it. And there were some in New York and then others of us like myself in Los Angeles, that began building this out, and the timing, I hate to say it, but my timing was, was good. Because, unfortunately, the primary market maker in the junk bond world had gone out of business. Plus, unfortunately, there was a reasonably hard recession at that time. And what it did was create real opportunity for those who had knowledge like we did, to basically go into the market and buy up all kinds of interesting securities, and ultimately get deeply involved in the businesses themselves, not just ownership of securities.

Adam: From your experience building Apollo, growing Apollo, helping Apollo position the firm to become the success that it is today- what lessons do you have for listeners on how to grow and scale companies? You not only invested in businesses but ultimately helped businesses that you invested in, go to that next level. What tips do you have for listeners who are trying to figure out how to take their companies to the next level?

Art: You know, we were very much focused on the securities markets and buying and selling. But because of the nature of the companies we were working with, we as bankers- and I'll speak for myself- got pretty involved in the operating side of their businesses. I was very much a believer, I still am a believer, in recognition of the true talents of management, and the people that you can bring to the table. And when I, you know, brought people to the table at New World, for example, and I was involved in other things, which I'm happy to speak about, I always thought about that. Not, Art, yes, you're the guy who gets to make all the final decisions. But your brain, you have the opportunity to bring together people who probably know a lot more than I do, specifically about the individual pieces of it. And I'll be very honest with Working Nation. Yes, this all came together in my head. But the talent that we have brought together, and really what drives Working Nation is incredible. And you know, just renowned award-winning people. And just because I had the idea, doesn't mean anything. The other thing I also did is I recognized that if you really want to get something done if you're going to have 15 people employed by an organization, 12 of them should be women. That is the employee base of Working Nation. 12 women and three guys,

Adam: Why is diversity, in your experience, so important to building and running a successful company?

Art: Because it's a matter of looking for true talent. And I'm just, I guess, because of a lot of my experiences talent comes in all shapes, sizes, and colors.

Adam: Your jobs in hiring have been a central theme of your career, from your time at Drexel Burnham, to your time at Apollo, to your time running different companies. And now your time at Working Nation. You're putting out so much great content around how to close the jobs and skills gap. What skills do you believe are most important to you relevant and valuable in today's and tomorrow's workplace? And what are the best ways to develop them?

Art: Well, I think it depends on what you're referring to as a workplace. You know, if you're broadly speaking about the workplace, then you have to, you know, I'll broadly use the word education. And I'll broadly use the word training. But that covers an incredible range of possibilities at Working Nation. We told the story of my academy, which, you know, educates very well-educated people in cybersecurity skills. Unfortunately, it is one of the fastest-growing jobs in this country. This optimizer works with well-educated people. At the same time, we told the story of the last mile. Last Mile was a program in San Quentin Prison that trained inmates in entrepreneurship and in coding, things like that, the purpose being that when they are released from prison, it reduces the probability of them going back to prison. And that's a very important strategy here in this country. At the time we did the story of the Last Mile at that time- at least, I think it was about five years the program was in place. No one had been readmitted to prison, but gone through that program. I know the program has since been spread out to other locations in the US. So when I talk about education, and when I talk about training, we're a working nation covering a very broad spectrum of those subjects.

Adam: From your research, what are the fastest growing areas and industries, and what should listeners of this podcast be thinking about in terms of industries to be looking at?

Art: Green jobs we had with working nations are digging very deeply. And we've done stuff before. But now we're digging very deeply into the whole concept of green jobs. And I'm not just talking about windmills or things like that. We're talking about very broadly speaking, green jobs in this country. Everyone, one way or another talks about the environment. But few talk about the jobs, but it's one of the fastest-growing job areas in this country. Healthcare jobs, we've done, we've done, we've done stuff, but I want to do a lot more. And it's not about doctors and nurses, you know? No one needs Work Nation to talk about that. But how about home health care workers? You're talking about one of the fastest-growing job areas in this country, we're having trouble filling that and then courtesy of that pandemic, we probably will have an acceleration in need in those areas as people are more hesitant about nursing homes, stuff like that. Another area, telemedicine is going to be a fantastically fast-growing job area. So we are in discussion with and working with major healthcare institutions on coming up with the content for that subject area. Diversity, inclusion are major themes. We've done a lot on Black people and women, Hispanic workforce, something you don't hear anything about on your Sunday morning talk shows the last five weeks. I like to feel a little bit like an idiot that we haven't done much at Working Nation. Like I bought up the majority of the bankrupt debt of Telemundo in ‘92. Anyway, Hispanic workforce-related issues, opportunities are going to be an important theme, older workers, very important things for us. We've worked closely with the Milken Institute on this subject area, we're gonna do a lot more, you know, of the good news. And if we keep people alive longer, we also have to keep them engaged. And I'm going to come back to an important theme in a moment- internships, apprenticeships, and even national service- we've done plenty of stuff on that and we're going to do a lot more. One of the things I believe is that other people are gonna have a harder time getting employed courtesy of the pandemic, and thus, the idea of internships, apprenticeships and national service. And I'm not talking Israel style, you know, going into the military- I'm talking about on a more localized type basis. So that's an important theme. And then my favorite, you're talking about industries, employment in the not-for-profit world. When you aggregate the not-for-profits in this country, you're talking about one of the fastest-growing in one of the largest employers in this country. And then I believe it could be one of the fastest-growing job areas in this country for one good reason. And not two good reasons. The good reason is over the next 20 to 25 years, there will be a massive transfer of wealth taking place in this country. Yes, a lot to, you know, current family members, but I think the not-for-profit will be a significant beneficiary of that massive transfer of wealth. The two bad reasons that that employment area is going to grow is one; aging of the population, and also the squeeze on the middle class. The aging and the squeeze in all classes just going to require a lot more not-for-profit efforts. And I think about the government's efforts. One other reason that I believe is such an important area, one of our major themes is the link between employment and purpose in life. You know, I don't care who you are whether you are an artist or assembly line worker or the not-for-profit worker- whoever is employed dollars and cents. Economics is very important. But the purpose in life is also very, very important. I started thinking about this fourth quarter of my 50’s, thinking about my own life, and then a woman who I’m very close with, she’s on the Working Nation Executive Committee, Zell Fernandez, she came to me with the movie rights to Victor Frankel's book Man's Search for Meaning. I had no interest in making a movie. I was busy with Working Nation. I was aware of the book but had never read it. I read it and it just put the purpose and life and employment idea together in my head, cemented it, and as it acknowledge I'm one of the largest purchasers in the world of the book because whenever I raise the whole idea of purpose in life, and then talk about the book and ask people have they read it. It’s in the Library of Congress's, I think, 10 or 20 most influential books ever published in the US. But nine out of 10 times when I asked, people haven't read, and I'm talking about heads of foundations, stuff like that. So the next day, they get a copy of the book. So, Adam, let me ask you, have you read the book? 

Adam: I have. I read it in college.

Art: Okay, so then I'm not sending you.

Adam: Art, I want to ask you a couple of business-related questions. But before I do, how can listeners live a more meaningful life?

Art: Probably by thinking more deeply about what they're doing and who they're doing it with. You know, in most instances, you're working as part of a team, and you're part of the community. And I think sometimes that's not recognized, and couldn't be. But then the other thing is, I do think, you know, go back to the subject I was just talking about, there is so much need for people who have experience running giant organizations, but, you know, also experienced doing lots of other things, and understanding these issues that you and I are talking about, and then stepping up and helping audiences out there and organizations out there. Yes, in some cases, it could be about writing a check. But a lot of it isn't about writing a check. It's bringing your experience to the table. So for example, I sit on a number of not-for-profit boards, where, you know, some cases were created 25 years before I ever heard of it. But the role I play on those, yes, my wife and I who act as funders, in many cases, we’re not the largest one. But whenever I go on one of those boards, I really get into the operating side of things, as well as the strategy side of things. So in terms of your listeners, there's so much. Yes, there's wealth. But there's also so much knowledge and talent that can be brought to the benefit of other organizations throughout this country.

Adam: Art, I love it. And something that I try to share with audiences that I speak to is, first and foremost, we are all bad at so many things in life, we're good at a few things. And we all have that one thing that makes us special. The more quickly, you can figure out what it is that makes you special, the more successful you'll be in life, the more successful you'll be in business, the more successful you'll be as a leader. And once you can figure out what your superpower is, that will allow you to take your superpower into your point and spread it. It will allow you to spread it to the people who need it to the people who can benefit from the skill that you have. And whether that is joining nonprofit boards. And not only investing money, but investing time and investing time in a way that will actually lead to a significant ROI because you're investing your meaningful talent to an organization that could really meaningfully benefit from it. So to that end, I want to ask you about a topic that is near and dear to your heart, which is investment. You are one of the great investors of this country. What do you look for in companies that you invest in and what tips do you have for number one, fellow investors? And number two, for entrepreneurs who are seeking investment?

Art: Well, the interesting question, the thing that immediately comes to mind is related to some of the stuff I spoke about earlier, is I very much look outside the box for investment opportunities. You know, going back to what I talked about earlier, I tried to join Drexel Burnham in 1977. I did a lot of stuff with Ted Turner when he was just literally in the early stages. Another great example of where I was looking outside the box. It ties in with my not-for-profit while I was literally attending a not-for-profit board meeting, about a year after we sold New World communications. And I've been looking for about a year and a half. What am I going to do next? And one of the areas I was very focused on was the infomercial world. I'd learned a lot about that in my TV days, and it wasn't something that was added to the box. Anyway, it was something I was looking for anyway. I was at the not-for-profit board meeting in September of ‘98 and a guy leaned over and said, aren't you not doing anything? I'd like you to come to Cambridge and meet the smartest human being you'll ever meet in your life. And I said, sure, I'll do that. Next week, I fly to Boston and go to MIT. I knew nothing about technology. I didn't even own a computer. The women who worked for me had computers, but that was it. And at MIT, I got a whiteboard session from a young PhD student at MIT on how he and his professor were designing algorithms to speed up the internet. And I barely knew what the internet was. But I did know what local distribution was, because I had run TV broadcasting companies. And that was all about local distribution. Anyway, that young fella was phoning Danny Lewin, and we just honored his memory on 9/11. Danny was the first person to die on 911. I was actually waiting for him in California, because I did get deeply involved with his company Akamai Technologies, which is a key part of the backbone of the U.S. I know the global internet, he and his professor Tom Leighton, got me. I became one of the original investors. And I was the guy who wanted to open many of the doors to the media world, which I did. So go back to your question about investing. That was my introduction to technology investing. And that did okay. Not too bad. It also led to me doing a lot of investing in the tech world. And that really opened my eyes to how fast technology was changing the world, including jobs. So the optimized piece I talked about as a key thing that also led to a working nation coming together in my head, and another investment that goes into your question, an ode to a starting investment, Mike Milken called me up and asked me to invest in an online education company. And I was already thinking about my kids. They were going to the finest private schools in Los Angeles, I was already thinking how am I going to deliver that education? The other kids who are 100 miles, 1,000, 10,000 miles, and I had no idea if I'd make money, but I told Mike, I would do it, but only if I got on the board and on the executive committee because I wanted to learn. I did make money. And I stayed on the board six years until we filed to go public. But that opened a whole other investment area for me. And today, one of my most prominent, you know, early-stage investment areas is edtech. When you think about the needs in this country, and why central motivations at Working Nation, yes, the slope of the curve of the change in jobs and skills, when measured against time, has never been so steep. Second, yes, this time, it's about the heart of America. The examples I've always used are driverless vehicles. I don't know if in the next 5, 10, 15 years it will- but those jobs are disappearing, and those middle-class jobs in this country that are driving for a living. The other example I've always used is, how would data and analytics work? We’ll take a marketing department of 10 down to a marketing department that has terrific white-collar, middle class and upper middle-class jobs. At the same time, data and analytics is one of the fastest-growing job areas. And that's coming to you from the founding funder of the Wharton School whole data and analytics program, dating back to ‘08. So they're focused on but then going back to my comment about continuing to invest in ed-tech. Never before have we had to rescale and re-educate all the 48-year-olds. And when I say 48 I'm talking about people outside normal academic years- 30’s, 40’s, 50’s, 60s you're not putting them back in a classroom. And ITT tech can be a very effective way. It can be very effective for people in their academic years, but for people outside their academic use, it can be a very effective way to basically educate and skill people for the future.

Adam: What are your best tips for fellow investors? And what are your best tips for entrepreneurs who are seeking investment?

Art: For investors; look for the things that aren't so obvious. Yes, many times, you'll find yourself wrong by not investing in what's obvious. But some of the things that are not so obvious are, you know, I'm comfortable with that type of strategy. Best tips for entrepreneurs, really, I think goes back to something talked about already, and that is, it's all about the people. Yes, it's about a big idea; but then it's about execution. And having the right personnel in place increases the probabilities of extending that into something that can turn into something very real. I really believe it's about the team.

Adam: How can anyone listening to this conversation become a better leader?

Art: Well, I think one way to become a better leader is to look out and engage in an informal but also on a formal basis with other leaders. Have a very diversified nature, and try to learn from them. You know, I gave my example earlier about my deep involvement in the not-for-profit world. Not necessarily being the biggest funder, but getting deeply involved. I've learned so much from, you know, other people on it from an operating standpoint- or the boards, or, in two cases, the founders of incredible not for profits, where I'm still on the board. So it's a matter of, I think, just an open mind and an open heart. Open eyes to try to learn from others. We really appear to be making a difference.

Adam: Thank you for all the great advice and thank you for being a part of Thirty Minute Mentors.

Art: Glad to be speaking with you. Thank you very much.


Adam Mendler is the CEO of The Veloz Group, where he co-founded and oversees ventures across a wide variety of industries. Adam is also the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal winning athletes, political and military leaders - for intimate half-hour conversations each week. Adam has written extensively on leadership, management, entrepreneurship, marketing and sales, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities and non-profit organizations.

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