Business Breakdowns
· Hunter Hopcroft, Matt Reustle
[00:00:00] S1: Yeah. So they all want to grow. And again, it's hard for private general partners to necessarily raise money for platform expansion. So, to your point, access to equity and debt capital markets allows them to go out and spin up new platforms, spin up new strategies, and I think that's a big part of what you see as the growth following the GFC. But I do also think that, as a currency for talent, this is a key element in why it makes sense for these companies to be public. [00:00:00] S0: So I'll skip ahead a bit here. Towards the end of the decade, the early 2000s, we have the transition of the business away from Leon Black, and we can touch on those headlines, but really focus on Marc Rowan as the chosen one taking the reins of Apollo. Can you walk through that timeline in terms of how this all played out and that shift towards Rowan?
· Matt Reustle, Hunter Hopcroft
[00:00:00] S0: So I'll skip ahead a bit here. Towards the end of the decade, the early 2000s, we have the transition of the business away from Leon Black, and we can touch on those headlines, but really focus on Marc Rowan as the chosen one taking the reins of Apollo. Can you walk through that timeline in terms of how this all played out and that shift towards Rowan? [00:00:00] S1: Sure. While Leon Black is certainly seen as the key man at Apollo, this triumvirate of Black, Rowan, and Harris remains very much visible in Apollo's life. In 2021, news breaks of Leon Black's involvement with Epstein, and, right on the heels of that, additional sexual assault allegations emerge. And Black basically accelerates his departure. Even before these stories started coming to the headlines, Josh Harris was presumed to be the heir apparent and the next CEO. He's buying the 76ers; he's buying the New Jersey Devils. Eventually, he comes to own the Washington Commanders, previously the Redskins. So Josh Harris is very much involved, but he's also starting to do a lot on his own. And, based on FT reporting, I don't know if we'll ever know what happened internally in these discussions. But after the allegations and headlines about Leon Black come to light, Harris becomes a very vocal critic of Black, and apparently that ices him out at the firm, leaving an opening for Rowan to ascend, which ultimately happens. Josh Harris steps down, stays on the board, but Black is out and Rowan ascends to the CEO position.
· Matt Reustle, Hunter Hopcroft
[00:00:00] S0: One of the interesting things about Harris you mentioned is that he's buying the 76ers and the Devils. Well, before this all plays out with Black, would you say that this is just normal private equity, major wealth-type behavior that we have certainly seen elsewhere? Milwaukee Bucks had a few backers, so it's not uncommon to see such behavior. But it felt way more operationally focused, platform focused in terms of what he was doing. So I'm just curious if that felt out of what you would traditionally see in someone who already has at least a portion of their foot out the door or if I'm reading too much into that. [00:00:00] S1: Well, I would just be speculating as well. But I also think that one of the reasons Harris ultimately doesn't ascend is related to the personalities of these founders. Josh Harris's reputation was as a real-deal guy, and I think his attraction to these sports deals was that this is the type of deal he wanted to be doing. And Apollo was increasingly moving in this credit direction—that wasn't really aligned with his background or appetite. And so, as Rowan ascends, it becomes clear that the firm is going to continue to make this shift towards a credit focus. And so I think Josh Harris is just the deal guy; he's attracted to these big acquisitions, which Apollo was doing less and less of. [00:00:00] S0: Yeah, he remains a deal guy. It's been fun to watch him negotiate for the new stadium in Philadelphia. And he was bringing some of the Apollo tactics with him, that's for sure.
· Matt Reustle, Hunter Hopcroft
[00:00:00] S0: Yeah, he remains a deal guy. It's been fun to watch him negotiate for the new stadium in Philadelphia. And he was bringing some of the Apollo tactics with him, that's for sure. [00:00:00] S1: I do think we need to keep drawing parallels to these top-tier alt managers that were all founded in the '70s and '80s and have an original old guard that is starting to come to the end of their careers. And again, this is a business that relies so much on reputation, talent, and how they have handled succession planning. I think Blackstone is probably the exemplar here of really elevating Jon Gray's profile ahead of that transition. KKR goes with co-CEOs, which has seemed to work okay, but they have a lot less visibility than Gray. And then, on the other side, you have Carlyle, who fumbled their succession planning. Apollo was very close to falling into that bucket. But to me, if you go back to this era—2021, 2022—you have this big headline risk of Black. He leaves, there's a brief spat over whether it is going to be Harris or Rowan, and then when Harris eventually steps away, you have this very de-risk situation. Okay, it's going to be Marc Rowan. And that's where we get to the modern day and what I call "Marc Rowan Unleashed."
· Matt Reustle
[00:00:00] S0: Yes, he is putting his stamp on the company in a way that feels different. I think the comparisons that you made there are perfect. You take someone like Jon Gray with Blackstone, where he is leaving his stamp on the company, but to me it's mostly in the form of creative social media videos or an effort to be more playful with the general public. Marc Rowan seems to be taking an almost capital-allocator type approach, where it's very interesting when you have somebody who's running a business who is also a really thoughtful investor because it turns your presentations, your remarks, and the way you think about the business into a language that resonates with some of the people on the other side of the table. So I always find it interesting when you get situations like this. Bring us just into the early days of Rowan and some of the evolution that he's made for this business and what you think entails. Rowan unleashed.
· Hunter Hopcroft, Matt Reustle
[00:00:00] S1: And you bring up a good point. Jon Gray has become a personality that has softened and humanized Blackstone's image to a degree, especially recently. If you look at how Marc Rowan has taken on the role, he's become a preacher, an evangelist for what they're doing in a way that Jon Gray hasn't. So Rowan ascends to CEO. Mid-'21, Apollo does an investor day in December of 2021. That investor day—and the deck, which is still available online—really redefines Apollo and the industry around this idea of asset origination. This is a five- to six-hour investor day with a 300-page deck that accompanies it. It clearly reflects decades of thought and vision by Rowan about what he wanted to make Apollo. It's around this time that Apollo is beginning to socialize the idea of merging with Athene. This is really where we get into Apollo today as an alternative asset manager with an insurance arm that is fully on the balance sheet. [00:00:00] S0: What that immediately brings to mind with insurance—and how valuable that business can be—is Berkshire. So, with just the very cheap seats take, is Apollo taking the Berkshire approach to running a business and having this float? What does that mean? And just a little bit more backstory because it goes back well beyond the 2021 timeframe. This is a long historic relationship that they've had.