Why Culture is The Basis of Building & Investing: What Carlyle Group’s Example Holds for CEOs

Billionaire buy and hold investor Ron Baron says he invests in people, not companies. Before he opens his investment war chest, he dives deep into a company, actually meeting the leadership and seeing the tone they set from the top. No matter how “successful” a company looks on paper, it’s the meet and greet and getting to know the people involved in the organization and their culture that seals the deal for him. Peeling back his 25 billion investing portfolio, one of his investing jewels is The Carlyle Group.

April 8 2014 by Lori Ann LaRocco


Baron started investing in Carlyle before its IPO on May 3, 2012. But it wasn’t the possibility of getting in on the ground floor of the IPO that appealed to him, it was the company’s co-CEO and co-founder David Rubenstein.

Culture starts at the top of an organization. It is cultivated and nurtured and examples are made from the corner office to instill and fortify. Managing around $190 billion from 32 offices around the world it is imperative for Rubenstein to have a culture that can withstand spanning oceans and bridge the cultural divide that could exist amongst its foreign offices. After all, a company’s culture is the essence of how managers and employees approach and execute plans. And for a detail-oriented Rubenstein, to help connect his teams from all corners of the globe, he says the secret to having strong culture comes from what they proudly call the “One Carlyle” culture.

“We have a ‘One Carlyle’ culture, which means everyone is truly a member of one firm and they are incentivized to make sure they work as one firm, or they will be penalized if they don’t,” Rubenstein explains. This framework provides the comfort of inclusion and the guidelines employees need to thrive. The result of this framework he says is a culture that fosters innovation and performance the same way in every Carlyle office around the globe.

Longtime employees attest to this. No matter who an employee was or what his or her position was within the organization they say you could hear Rubenstein’s (and fellow Carlyle co-founder Daniel D’Aniello’s) long-term philosophy in their investment discussions. Little reminders of the company’s long-term philosophy are also sprinkled in all of the offices around the world.

“We want to remind employees that they’re all in this together.” stressed Rubenstein. From visual reminders like the chotskies on employees’ desks to posters in the lunchrooms. One longtime employee told me this “reminds us [what] we stand for.” I have been told it brings employees who visit the various offices around the world a nice source of comfort and camaraderie.

The firm emphasizes the culture by awarding one employee in the world each year with a “One Carlyle” award. I have been told it is considered the highest honor that can be bestowed on an employee. And even outside the office, their culture and values influence discussions. At the Baron Investment conference in November 2013, Glenn Youngkin, COO of Carlyle, discussed culture and business etiquette off camera. He said, “We have two rules—always return your calls and walk people to the elevator.” The Carlyle team makes a mental note of those rules when other companies they are looking to invest in don’t have such common courtesies. In the end, it can influence if Carlyle takes the plunge or not.

In the classic rule of threes, Rubenstein hits on the three essential pieces he personally lives by and has woven into the Carlyle fabric:

* A person’s greatest asset is his or her reputation.

* Skills of communicating well, through written or spoken means, are rarer than they should be; therefore, spending time on trying to communicate well will usually help with the achievement of desired goals.

* Little can be attained by one person; a team is needed for real success and accomplishment.

Culture is a conduit to both business investment and business expansion. Rubenstein gave two examples of how the One Carlyle Culture was instrumental in these areas. “When Carlyle was considering investing in Italian sportswear company Moncler, central to the investment thesis was global expansion. So we brought together our Italian team – who knew the family-owned company – with our NY-based consumer/retail experts and our Beijing team. Working together, the company has expanded dramatically, and now Moncler’s largest store is in Beijing.”

Evaluating culture is equally important when it comes to mergers and acquisitions. When Carlyle was expanding their own platform of investment solutions, culture was first and foremost on their minds when they acquired private equity fund of funds firm AlpInvest, real estate fund of funds Metropolitan and hedge fund of funds DGAM. “The culture with these acquisitions were incredibly important because we were folding in three free-standing companies.”

To emphasize the team in the organization, a newsletter highlighting the achievements of Carlyle professionals associates is sent out daily and training sessions on One Carlyle way are conducted at every level of the company.

Since a company’s culture is the essence of how managers and employees approach and execute plans, it is imperative that culture comes from the top. For value investing investors like Baron who invest in people, not companies – a company’s culture is key.


Lori Ann LaRocco (LoriAnn.Larocco@nbcuni.com) is the Senior Talent producer on CNBC Squawk Box (NBC Universal) and the author of “Opportunity Knocking: Lessons from Business Leaders“, “Dynasties of the Sea: The Ships and Entrepreneurs Who Expanded the Era of Free Trade” and “Thriving in the New Economy: Lessons from Today’s Top Business Minds.


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