Blackstone Inc. (BX) Earnings Call Transcript & Summary

Good morning. For those of you that don't know me, I'm Patrick Davitt, and I cover the U.S. asset managers here at Autonomous Research. It's a pleasure to welcome a man that probably needs no introduction to most of you, Blackstone Chairman, CEO and Co-Founder, Steve Schwarzman. This is our first asset manager discussion of the conference, so looking forward to having a nice discussion. I'm sure most of you know this, but Blackstone is the largest alternative asset manager in the world with $916 billion in assets under management across real assets, private equity, credit and hedge fund solutions. So Steve, thank you so much for joining us this morning.

Thanks for the invitation, and thanks for showing up.

Maybe to start, given everything going on in the world and your position as one of the largest owners of assets in the world, I think it is best to start with a macro discussion. So the Federal Reserve has never been able to tackle inflation like this without causing a recession. The market is clearly saying they see some outcome like that. But your portfolio continues to perform well. And through that lens, can you frame what you are seeing on the ground in your own portfolio and how you expect this all to play out?

Well, it's a complicated time because, obviously, the economy was overstimulated, and it's created extremely high levels of inflation, much stronger than the reported inflation. And one of the reasons, for example, is, I guess, we reported somewhere around 8.3%, 8.5% of -- but about 30% of the index is real estate, and they have it in at 5%. And that's at least 10% wrong -- not 10% of 5%, but 10% absolute. And so we're probably running real inflation in the 12s. And we haven't been fully hit yet by the wage price spiral because people are going to be pretty desperate to catch up from purchasing power. But because we have so much savings from, ironically, people working at home -- if 90% of Americans were paid as if they were working at the office and then they worked at home, they had almost no expenses. You weren't wearing suits. You weren't going to restaurants. You weren't using your car that much. There was no place to go. So there was a huge increase in people's after-tax purchasing power being paid the exact same thing. By the way, that's one reason why it's hard to get people to come back to work because they view it as a huge pay cut. They want to be made whole. Well, that costs too much. And so you have that negotiation going on. At the same time, the Fed really continued stimulating the economy. I was watching TV this morning, and Mohamed El-Erian was commenting from Cambridge. And he said they were still stimulating the economy with 7.5% inflation already reported by them. So we've got to really get this under control. The way you typically do that is raising interest rates, slowing the economy down. We're not seeing too much impact on that yet. But what we are seeing is that input costs for companies generally, if it costs you x to manufacture something or provide services a year ago, with inflation at these levels, it just makes it more expensive to make that. You try and pass it on. Not all companies can pass on all costs. So I think you'll probably see some margin squeeze, and some of that is a little visible. But the growth of the economy is still pretty strong because of all that savings. And that should last probably at least another year. And then we'll see what happens as a function of what the Fed does. And nobody knows exactly what will happen with all those factors, but you should get a slowdown. And the Central Bank's obviously pretty sensitive about how much they try and reduce inflation and how much they really slow the economy. So it's a bit of a very high-wire act that they have to do. And at the moment, things seem to be holding up. In the future, they should change a bit to the downside.

Got it. Another topic that's come up more recently given the war in Ukraine is deglobalization. How do you see this issue playing out? And do you think it's a problem or opportunity for Blackstone?

It's really a trend now because if you can't get goods shipped to you, it makes you rethink. And COVID has really made that possible. We have just-in-time delivery for the world. It was very finely balanced. And when you can't get parts, you can't make products. And we just had another round of this with China not being able to ship because of COVID regulation. So it provides some winners and losers in the economy. I mean we're huge in the warehouse business. And what will happen is we're going to get, I think, a surge in demand. It's already red hot in that sector. But what happens with any kind of deglobalization, companies have to just inventory more parts, usually, those who are in a different country. Now all of a sudden, you'll have that need. So it will be very good for, we believe, for that business. Overall, it should raise cost to customers because you don't get the efficiencies of the global market.

Got it. So let's move to Blackstone. You've been a clear leader in the industry, now approaching $1 trillion in AUM. You have leading investment verticals across multiple asset classes, something that's proven difficult for others to achieve. I've covered the company for many years, and I've seen it evolve, multiply in size. What do you think your secret to success is relative to the industry that's driven this growth and there's still remarkable returns for investors?

Yes. Well, I started at Lehman Brothers, of blessed memory. And I noticed that whenever we would introduce a new product, I was involved doing the first interest rate swap. We got a 1% fee. I thought this was the most amazing thing because these were big, these interest rate swaps. And like in a few years, people were doing them for a few basis points. So there are no patents in finance, regrettably, for those of us who invent things. Anybody can copy anybody. So what you have to do, as a theory of the case, is you always have to be developing new products where the margins are greater and you can take the leading market share. And if you really execute well on that, it's very difficult for others to actually be as successful because the early fruit is very tasty. After the tree has been picked, it's a little mangy. So much for white space for everyone else. But -- so we basically started our business as an innovation machine, not to be clever, but just to survive and thrive. And so we started in the advisory business to get some cash and put no money up. And then we went into private equity, and we announced this all when we formed the firm in 1985. And then we were going to see where the world was providing great opportunity and go into those new businesses. We couldn't tell the world what they would be because it's the markets that provide that opportunity. When you see one of those opportunities like real estate in 1991, '92, the whole country was illiquid, and somebody brought us a deal. We priced it as a 16% unlevered yield, and we ended up making 64% because you can leverage it at the bottom. So 16% becomes like 23%. And then you fill up the units that were vacant, which happens with the economy swinging. And that gets you to like a 45% compound rate of return. And then when the country gets really tight, you raise the rent. So we ended up earning 64%. Now if you do that as your first deal, you decide this is perhaps an interesting field to be in. And now we're the largest in the world. And you just move from asset class to asset class. And if you go into a new area, you must do it with somebody who's a 10 on a scale of 10. And the opportunity has to be so fantastic that you can't screw it up. Nobody could screw it up. But if you have a wonderful person leading that charge, recruiting their friends, then you get into a remarkable position. And then when that starts really rolling, you just don't do what you thought you would do. You'll see other opportunities within that. So what we do is once a year, each of our verticals, areas within the firm, have to come to a meeting with the Management Committee, which are a few of us. And they all have to have 3 new business ideas, why we should go into that area, should step out and do some new things. And it's all costed out, and then we only allow them to do one because if you do more, it's too hard. It's always too hard to start new things, harder than you ever think. And that's why a lot of research reports, when they say, "So and so is going into this. It's going to be successful," if you do an audit, you'll find out they're not very successful because you have to pick the timing right. You have to get the person right. And then you keep seeing new areas. And if everyone is trained within a group to always come up with new things, then you'll end up with new things. And you don't do all of them. You just do the ones that are easy winners for customers because that's what powers it. So this is a system for us. And what it does also, which explains the growth of the firm, is you don't have to have internal politics because everybody can be a winner because we're always expanding. And we like taking our best people and molding them to help go into these new areas. And so everyone can be a winner at the firm. There's no glass ceiling, and you don't have to kill off your competitor to your left and your right. It's just like a pie that just keeps growing. So it's fun. I mean I really enjoy it. I still enjoy it.

I think that dovetails well with the question I was going to ask later on innovation. Obviously, Blackstone, to the point you made, is well known for its innovation, the ability to step out into new adjacencies and strategies that quickly become $10 billion, $20 billion-plus strategies.

Yes.

So with that said, you've layered on a lot over the years. I think a lot of investors I talk to, the only kind of pushback you get on Blackstone is it's getting so big in all these businesses, what's next. So as we evaluate an investment in Blackstone, do you still think that innovation aspect is a part of the thesis? How much low-hanging fruit do you think there still is to kind of layer on these new businesses you're talking about?

Well, there's been so much money that's been printed. In the last year, 1.5 years, the U.S. has printed $10 trillion of new money. My goodness. We should find something we can do with it. This is never -- finance is so interesting because first, it's global, so you could always figure out what you can do in other countries. It's segmented by return. So one of the things I learned, which was a complete shock, is that people will give you less money for high returns than they will for low returns. So whatever you think about finance, that's not how it works. And we spend probably 15 years just doing super high-return stuff. And I was at a Board meeting of a pension fund, and I asked what else are they approving that day because they wanted to just -- we had lunch together. So what do you talk about? So they were talking about -- it just happened to be real estate, where they were giving something called Core+, like, 4x the money they were giving us. So I said, "What's Core+?" They said, "Well, that's like 12% return." I said, "But we're earning like, that point, 22%. Why would you give somebody money for 12% if you could get 22%?" They said, "Because we like the 12%." I said, "But this is a simple math problem. Why wouldn't you like 22%?" They said, "Because you're much more risky." I said, "Why are we more risky?" Well, they said, "Well, you have more leverage than they do." I said, "We've never ever lost money. So doesn't it matter that we've never lost?" It's like -- they said, "Well, we're very happy with the 12%." So I couldn't believe it. So we went into Core+, and now we have huge amounts of money doing that instead of just the other. So what we do is we segment returns with separate pools of capital. And then we do the same thing all over the world. And we're doing it with each one of our businesses. So the lower the return, the more money you can raise. It's like a conundrum. I -- they don't teach that at business school, right? Blinding insight. So we have so many opportunities for expansion because we're already global with all of our basic products. And then we go into new fields altogether managing money for insurance companies. They're somewhere around $40 trillion. Insurance companies generally have been under-earning because they have restrictions on what they can do. And we can -- within those restrictions, because we're so integrated, we can produce products for them that increase their returns without more risk. And so then they can be more competitive in terms of pricing their products. They can give their customers higher returns and beat their competitors. And so this is an area, $40 trillion, where we've -- in like 2, 3 years, I think we've sort of positioned somewhere around $200 billion. And there's a lot more we can do there. We've got retail, which is really -- you talk about exciting. I don't know how many of you are affiliated with sort of retail investors. There's -- what is the number, Weston, on that?

$80 trillion.

$80 trillion. And there's almost no one buying our types of products. Our type of products really make a lot of money. Like in the first quarter, almost every strategy we had made money. I don't remember the exact disaster of the first quarter, but I don't think there's hardly anybody who was making money. We were, right? So why wouldn't those people like to buy our products? And the answer is they sort of didn't get around to it. But now as the environment becomes more difficult for money management generally, we're finding enormous receptivity to what we do. And the receptivity is not only coming from customers, but it's coming from the managements of those firms because they want their customers to get those returns. So as we look at the scale of what we can do -- and we're the clear #1. We made a decision 10 years ago to set up a sales service business at our firm, we were the only people in our industry. And I hate losing money. So when you have a service center, I view that as losing money. But I also thought that this whole area was going to explode over time. And now we've got like -- we sort of are the first, the biggest. We keep producing new products that will be invented. Most of the sales forces only take on 2 or maybe a maximum of 3 people selling products. So we should be everywhere first. And we're finding enormous take-up of these kind of products. So if you think we're done, that's a wrong thought.

Fair enough. I'm sure you're probably tired of talking about the rising rates question. I feel like we've been talking about it for a while now. But there's still a view in the marketplace that private equity and alternatives, more broadly, are negatively exposed to interest rates, negatively exposed to inflation, negatively exposed to recession. Pick your poison. They think you're negatively exposed to everything. Can you help us understand what all of these things really mean for your business, higher discount rates, lower multiples, and what we're missing here in terms of that exposure?

Well, it depends who you're talking about doing things. So in other words, if you're sort of a fixed rate debt investor and rates go up, you'll lose money. Our debt business is close to 100% floating rate. So we look at the world and we say, "Okay. Let's premise that series of things you're talking about. How do we benefit for our customers as opposed to just being a professional victim?" Because a professional victim just does the same thing they did the day before. The world changes and bad things happen to them. So we take the position that we accept exactly that scenario that you're talking about. And so we exit from things. We basically don't own office buildings, which is the equivalent of long-term bonds, fixed rate. What we do in real estate, for example, is we have like 80%, 85% of our real estate that you can price up, so you don't have that bond-like effect. So you can do that with warehouses that tend to have pretty short-term leases. You can do that with multifamily. I remember when I was young, I rented an apartment every year. The thing would come up, and you can put more price to index to inflation so you don't get hurt with that. And what we do is we repositioned our liquids portfolio. So we didn't lose money in the first quarter. Imagine that. You just do different types of things. So the world that you're talking about will exist for sure. But if you can change what you're doing, avoid businesses, we decided about 1.5 years ago, 2 years ago because we knew inflation was coming. We knew it was not transitory. We thought people were sort of like completely wrong. And we just turned down investment opportunities that had high input costs as a percentage of what they do. And so that kind of margin squeeze, which even we see a little of, for people who didn't reposition, would really get hurt. And in the private equity, we call it classic private equity area, we'll see -- with higher rates, you tend to get lower multiples, and lower multiples really aren't so wonderful if you play -- paid sky-high prices like a lot of people did. So that's a correct thing unless you had a lot of investment discipline. And the way we tried to solve that is to buy fast-growing companies. So in our first quarter, our average revenue growth for our companies was 22%. You can do a lot of offset of higher interest rates or lower multiples if you grow at very high rates. So this was pretty conscious by us. We didn't find ourselves where we are by accident. In that way, you minimize any of those bad things. And in fact, you can benefit from inflation.

On the real estate point, I think this dovetails nicely. That's clearly been a part of your business that's generated a lot of ballast during this period. And you're raising rents, I think you said in some places, 50% year-over-year. Could you walk through kind of the exposures and dynamics in that business that are driving this outperformance and, maybe more specifically, how sustainable these rent growth trends are, particularly if we have lower economic growth?

Yes. Well, I think each -- in real estate, it's really just supply and demand. And in warehouses, you've had enormous growth by Internet shopping and now onshoring. And rent -- vacancies are almost nonexistent. And it's hard to get the land closer to cities to build these. And so -- and also warehouses are very small percentage of the company's distribution cost. And so you're not exposed to the input cost that I was just describing, the squeeze margins. I mean it's just like a building that's hardly anybody in it. So that kind of business in an inflationary world is really terrific. And in terms of housing generally, there's a crisis in the world that after the global financial crisis, housing production went down enormously, close to half of what we needed on a replacement sort of measure. So that's created a real squeeze, and it was exacerbated with 0 rate. So that will slow down a bit over time because as rates go up, it's harder for people to afford that. It will be harder over time to raise rents in that, and that's okay. When you have inflation, the cost of building new things becomes so expensive. If any of you have tried to renovate your houses or do anything, what happens is the problem and effect for society gets worse because people can't afford, with higher rates and higher costs, to build. So if you own a big base of assets in that field, you'll do fine over time. So we try to construct our assets for this new world. It's -- I don't want to sound ridiculous, but it's not new for us. I mean I went into finance somewhere in the middle ages, 1969. I've seen lots of cycles. And you know when it's coming, and you know how you have to be positioned. So it's not a mystery. And avoiding things like going to an investment committee, I'm sure you've all been there, where somebody says, "Well, this is like an amazing investment because you can buy it at 8x revenues, and the market's trading at 12." But when the market goes back to onetime revenue, you are extinguished. And if you hadn't seen this numerous times, as soon as the metrics -- as soon as the world's inventing new metrics that don't really -- don't make any sense but everybody adopts them, then you know you're about a year to 2 years from the end. It's not that I'm smart at all. I've just seen this stuff so many times that you say, "Well, yes, you can make money on there if you're in that window. And if you can't get out, you're going to own this thing for a very long time underwater." So we try and have enormous discipline at the firm. It's not that much fun to go through enormous discipline. It sounds better in a presentation like this where the stuff comes in and you say, "I'm sorry, we're just not doing that." And they say, "But everybody loves what they bring to an investment committee," but you have to be pretty strong about what you will do and won't do.

That point dovetails nicely with the question I was going to ask later. But you have a lot of dry powder. Your competitors have a lot of dry powder. And given the headlines, it seems like deal activity is still quite strong after a little lull in 1Q, but you can speak to that. So how do you navigate this crowded market? What are the big themes guiding your investment process?

Yes. The -- what typically happens when you have a market -- I guess, you call it liquids drawdown. I call it losses. When that happens, the people who are selling real assets make pretend it didn't happen, right, because why would you ever recognize that you should have sold something and you didn't? So they don't change the price. And you know the price is lower. And they say, "Well, that's what I want." And you say, "It's not what I want." So the cycles are always the same. All of a sudden, deal activity slows down for 6 months to a year. And the reason it does is there's a gap. After about a year of seeing everything down, the sellers realize they have to reprice. In liquid markets, that happens instantaneously, which is why it's so much fun to watch television every day to see whose ox is being gored. In the private world, it happens slower. But it happens. And when the prices go down, things tend to be repriced. Now there's always been a lot of money around. What happens is usually there are victims, regardless of whether they have money or not, who've got a portfolio that really gets hurt. And so unlike liquids where you just sell them, here, you're stuck with them. So your people spend time on their troubled investments rather than -- that's one of the advantages of not having troubled investments. When you get to that lower stage in the economy, all your people are basically free to do new things. Whereas if you have a terrible portfolio, your people are working the portfolio to try and save their money, plus their spirit is somewhat broken. Because if you thought you were smart and you made that investment and it's turned out to be really tragic, then your appetite for taking new risk is down. So the key to managing a firm is to make sure you're conservative. We have at our place -- we're sort of like doctors, do no harm. And we don't take risk if we think we can lose money regardless of how much money we can make on the upside. So if you start out not losing money as a core value -- every once in a while, you make a mistake but not very often in that you're always ready to take advantage of these changes in the cycle. So sometimes people have money, but they just won't deploy it. I know that sounds a little weird, but they're busy doing something else, repair work.

Is there not too much dry powder chasing too few deals? Like at what point do the IRRs come in a lot? And how do you avoid that?

I don't know. I've been asked that question since 1992. And we've compounded after fees at 16%, basically, across the firm. There's always something to do. One way we differentiate ourselves is, in almost every business we're in, we tend to be the biggest in the world. So what happens when there's opportunity and we're going to go into a cycle where there will be more opportunity, that if you can write the biggest check, you have very little competition. It doesn't matter how much the aggregate capital is if you try and find a place, either because of scale or because of knowledge. We also -- because we're sort of getting pretty close to everywhere, we can see places where there are trends, where we see them in one country and we know they're going to go to other countries. And we can be there before people because the people in that country, they don't know this is going to happen to them, right? So this knowledge base is of enormous value, and so there's always been too much money.

Got it. I want to move to private credit a bit, which is the latest bug of, I feel like, in the press. It's obviously been a great success story for you guys, everyone else as well. As more financing goes to the private markets, are you concerned that there's too much risk building up in these vehicles?

No. And let's use a little history for the moment. Global financial crisis, there was almost no trouble with private credit, right? So what is private credit? What we're doing is we're lending senior secured to companies that need it. Some of them are doing buyout deals. Our leverage point in the capital structure gets down on average to about 43%. So if you're lending to good companies and you're senior secured and you're down at 43% cover, that means that over half of the equity has to be wiped out of the obligor. And if you're any good at credit, we spend our lives typically at the bottom of capital structures where the risk is. If you have trouble making senior secured loans, you're not much of a credit analyst, are you? It's tough to do that. And if you ever had a bad outcome, which has almost never happened to us, that you then end up owning a company that at least you thought was worth over double in -- when the cycle swings, you'll theoretically get your money back and more. So these types of loans and the way we do them, they're all floating rate, right? So if you're floating and the Fed is increasing interest rates, your customer should be doing -- our customer, who gave us the money to buy these, should be doing really well. So there should be -- this should be a favored asset class. And we look at it and shock test the obligor to make sure that they can live through that. And if you looked at who got in trouble in the financial crisis, they were fundamentally banks, not private credit. So for some reason, journalists like writing this. It's sort of unsupported by any fact. That is not a reason to not want to write about it, apparently. You got to write about something. So -- but I think this has proven it can stand the test of time. If you are lending very deep in a capital structure, you can always get in trouble, right? I mean that happens. So avoid it.

On that point, it's not just the press. Obviously, everybody seems to have this blanket term shadow lending or shadow banking, and that's where the risk is now. So if it's not kind of what you're doing, where do you think the real credit risk is right now? Where is the excess leverage?

Most credit risk -- most risk is in the sort of illiquid venture area. And for those of you who weren't around in 2001, and I see there are some people here who have been around that -- I remember that somewhere between 98% and 99% of venture deals went busted. And the venture people weren't the glamor people that they are. Now we're seeing signs of a return to that. Technology is a fundamental change agent. There is no doubt that the world's moved dramatically. It's a question of what you pay for that. And if you pay unsustainable prices, multiples go down. And then all of a sudden, instead of being a darling, you're the opposite. And people won't reload all these funds, and those negative cash-flowing companies need continued financing. And if you go through a credit cycle that ends up being most unfortunate for those kind of companies, then you'll have real dislocation. And I think that's where the risk is now. The global financial system -- this wasn't really meant to be -- I was here to talk about Blackstone, but I love talking about this other stuff, too. The global financial system really was hit with very severe capital growth requirements. And consequently, the system globally is really in terrific shape unlike when we went into the capital -- the global financial crisis. I mean there's like 4x the amount of equity underlying financial institutions than there was going into the global financial crisis. And so I think the banking system and so forth will hold up quite well in this down cycle.

Great. I'll speak to fundraising. You've touched on a few things throughout this conversation. But what do you see as the biggest drivers of Blackstone's AUM growth in both the near term and longer term from here?

This is almost like Johnny Carson and Ed McMahon. I was waiting for that question. We're really going through enormous growth cycle. We've told the public that just our drawdown funds over the next year to 1.5 years, we should raise in the $150 billion area for that. That's excluding all the growth in insurance, all the growth in retail, that a lot of people who invest in our asset classes are reducing the number of firms they do business with because of reasons of complexity, limitations of their own staff. And so we're a huge beneficiary at Blackstone of that trend because they can give us money across all of our products. Not everybody does, but they should. And our job is to convince them to do that, and they're doing it increasingly. So there's more money going secondly into the overall alternative area that we talked about, retail. That could be a huge area for growth. And in fact, each one of our areas is getting increasing allocation. There's a little difficulty in the U.S. where the asset class was so successful that pension funds became accidentally overallocated to the asset class. So it's a little more difficult to raise money there. But there are other places around the world that are being literally flooded with money. And so we're finding that to be very hospitable. So I wish the world was always like this. I mean I started out with no assets and no experience and getting turned by everybody all the time. And if we got like a $10 million circle, I'd fly across a country for that. Now people give us $2 billion or more, just like one entity. I'll tell you something on a personal basis, begging for dimes and getting hit with billions over a career is like transformational. It really is transformational. I'm just grateful for every one of those 10s. And I can tell you everybody who gave it to us. All you people who are in the audience who manage money or make presentations, anybody who trusts you, it's like a super big deal, super big deal. And you never forget them because without them, you can't do what you want to be doing. And so now the scale of what people have -- because we've been printing money for 36 years since I've been doing this really aggressively. There's so much money around. It's got to go somewhere. And we're a wonderful place to put it, at least we think so and they think so, right? So you can ask me 5 more questions on money raising.

I got a couple more. You mentioned the crowded pension -- you mentioned the pension fund kind of denominator issue. We've heard that the calendars are quite full. So how do you think about Blackstone's ability to raise money in that environment?

Well, I think we'll do fine because we're global. And not only global, we have way more money than we raised outside the United States than other people do in those markets. And so sometimes there's a little tightness in one area. Okay. You go other places where, for example, with oil prices, where they are now, there are very substantial flows in the oil-producing countries. And we've had 30-year relationships in those places. And so there's just much more money to offset what's happening in some other places in the world.

Okay. Maybe to end, let's hit a topic that's near and dear to your heart, the stock price. Performance has obviously been extraordinary over the last few years, been a little bit weaker this year. So what's the bull case for the stock from here? Why should the people in this room be buying more Blackstone stock?

That really is an Ed McMahon question. So well, you'll never meet anybody who's affiliated with the company who thinks that they're fairly treated. We -- both cases is that the asset class is exploding with growth. The performance has been vastly superior to what's going to happen in this downside. There's enormous consistency of performance. More and more people want to be in the asset class. They want to be with reliable people. In retail, for example, brand name performance, reliability, that's a big deal, and we're a clear #1 in that area. You may have some -- a few fun facts. I was meeting with Weston Tucker, who a lot of you know, before they actually rehearsed me, even though I don't follow directions on this type of stuff. But we had some -- I said, "Weston, let me have some fun facts just to make it easy." So I'll give those to you. Our market growth -- our earnings growth in the last 10 years has been double the stock market. And of the 100 largest market cap companies, Blackstone is #14. And then that includes all the great companies. Whether there are Microsofts, Amazons or some of these people had a bad week or 2, but still, if you take these wonderful companies, we're really right at the top of that. And we're not regarded in the same way because we're not as much of a consumer company, but that's what the numbers say. Our dividend yield is twice the market yield. We're yielding 3.8. S&P is 1.5. We've grown our AUM 10x since we went public in the last 15 years. I don't even know what growth rate that is when you do stuff like that. We've got huge markets to raise money from. Our stock has compounded at 16% since our IPO. We did the IPO like 2 weeks before the credit crisis started and the world collapsed. So we had sort of like a -- from a performance thing, that's not a great time to start, and we've still done extremely well. Our FRE, that's a funding measure we have with fee-related income. It's like management fees, something like that, is up 225% since our Investor Day 3.5 years ago. We told the world we're going to get to $1 trillion in 8 years. We sort of will be there in 4 years. And our perpetual capital products, as we have more and more management fees and more stability -- most of the companies where you work, people actually can get their money back. Not so much a good idea, right? So we're introducing these new products. And we've more than doubled in the last year from $149 billion to $338 billion in a year. So there are so many things going right with our company. I'm just really excited about it. And when I do my little thing on earnings report, we go over all these drafts, and the lawyers are all over us and so forth. And at the end of it, I always say in my portion, when I feel that way, I've never been more optimistic about the prospects for the firm. And the reason I say that is it's true. So we all have a lot of fun. One of our partners retired, who was my #2 person now, Tony James. And he was replaced 3 years ago by Jon Gray. You should invite Jon or you should meet Jon. He is amazing, really amazing as a manager, as a marketeer, as an investor. So we have enormous continuity at the firm in terms of senior management. But we were all talking about what it's like to be part of this unbelievably exciting adventure of creating -- I think we're like the #5 market cap company in finance, like certainly in the United States, maybe globally. And it was a start-up. A lot of you people work in places that were start-ups or you remember when they were one size. We remember when there was nothing. And we still think the same way. If we don't do the right thing, it could go back to nothing. And so we have a really unique culture of excellence, meritocracy, openness, invention, integrity, customer service. We actually -- nobody writes that c*** for us. Like this is what we think, and this is what we talk about all the time. And so our culture is very strong, and what protects a financial institution from mediocrity and problems is culture. And in our place, people have to believe the same culture. It's -- you can have your own political parties, you can like certain films. By the way, I recommend you all go to see Top Gun. Holy s***. This thing is amazing. It is amazing. The photography is brilliant. The pacing of it, it's so tight. I haven't seen a movie this much fun. So if you get nothing else out of this, other than you should buy Blackstone stock, do Top Gun.

Well, on that note, thank you. That was great. Thanks, Steve.