The Exchanges

Q So how did you decide what to do when you knew that investment banking probably wasn't your calling?

A Well, the thing about investment banking is it does introduce you to a lot of different areas on Wall Street, right? So you have your traders that are pricing stuff when you're doing initial public offerings or debt offerings. You have the bankers who are relationship driven, but very creative in terms of trying to help Institutions accomplished their financial objectives. You had economists that you were getting information from. You had people who worked in accounting. You had investment managers that were buying things that we were distributing. So it was a great place to be trained, but also a good place to kind of get a window into how all these other areas kind of fed into what we'll call Wall Street. And so I looked over at investment management and said, wow, that seems like A pretty nice lifestyle. You still get paid pretty well, but every year you're not starting at ground zero. You accumulate assets, you get paid a fee on those assets, which effectively becomes an annuity stream. For individuals and firms, as opposed to banking, where every year you start at ground zero, and you got to make transactions happen. And I would say that business to me seemed far more cyclical. Asset management seemed like a place where I could really have longevity.

AI assessment note: “I looked over at investment management and said, wow, that seems like A pretty nice lifestyle.”

Q And what was the step you took out of Lehman?

A So out of Lehman, I actually took a step into government. I worked for a guy named H. Carl McCall, who was the controller of the state of New York. And he ran the then fifty six billion dollar New York state common retirement fund. And so I was his right hand helping him oversee and manage the pension fund. And so I was involved in a selection of investment managers, brokers who did execution, consultants that helped us do due diligence. And then I think back then my wife and I, we got married while I was in that job. And before we knew it, we were pregnant. She was working in government at the DA's office, and I was working in government in the comptroller's office, and between the two of us, I think we were making 50 grand. And so someone had to go back to the private sector, and I kind of raised my hand and said, it's what I want to do anyway. Why not now? So I transitioned from the state comptroller's office to working at, at Morgan Stanley Asset Management. So that was my first real asset management Job. And so I think it was 1994. I went to work at Morgan Stanley Asset Management, and I was employee number one 86. And back then the firm was all about Barton Biggs and his macro views. You had Stephen Roach and Byron Wien, also very well known strategists and economists. But on the asset management side, Barton was the king. And so I went to work in Barton's asset managemen…

AI assessment note: “So out of Lehman, I actually took a step into government.”

Q I want to talk about the lawsuit. Before we do that, let's touch on blueprint. What was the original model and how has it evolved over the last five years?

A So the original model really was all about getting investors to think differently about how they were allocating To alternatives. Really with a view towards bringing down the costs of investing in alternatives. We went around and analyzed investor portfolios, and believe it or not, Ted, despite some of the world's largest institutions being invested in hedge funds and other types of alternative products, they were paying full fees. The overwhelming majority of the industry was paying full fees, and we knew that wasn't sustainable, and so if we could wedge ourselves in between the institution and the managers in a very creative way, it created a business opportunity for us. When we started, the world was still pretty smitten with hedge funds, and Over time, I think hedge funds became less of a priority for institutions. They became a headache for a lot of institutional decision makers, given the performance relative to the fees. And so to be successful in the asset management business, you have to be able to read the tea leaves. And so I think one of the things that we did well was we saw the opportunity emerging in Niche private credit strategies. And so we pivoted well, began to apply our research to looking into niche private credit strategies, and felt like we had developed a universe that could be considered the new absolute return. I mean, you remember what absolute return…

AI assessment note: “So the original model really was all about getting investors to think differently”

Q How will you view success in the resolution of this, however it plays out?

A So we've already had success. We were very clear with New Jersey that we were going to litigate and New Jersey has already approved another black owned manager. They did that just prior to us filing our lawsuit. New Jersey has changed its website. They originally told us, quote unquote, it was against their fiduciary responsibility to invest with women and minority-owned firms. Their website now says women and minority-owned firms, we're open for consideration. They still have to take action, but at least they're telling people they're open now. In the case of BlackRock, as I mentioned, we told them when we were going to file. And it was no surprise to us that Larry's announcement took place on the very date that we were going to file, arguably to try to get in front of the news cycle. And so, I'd like to think that, that, along with my testimony before the New Jersey Senate in early January, where I highlighted the economic disparities between whites and blacks in New Jersey, two weeks later, the governor in his State of the Union address formed a task force to investigate the economic disparities that exist between blacks and whites in New Jersey. So, Ted, we've already had success, but we're not done yet. If you go back in African American history, there was a time period in which blacks came up with inventions, the pacemaker, the doorknob, the traffic light. They could not …

AI assessment note: “So we've already had success... but we're not done yet.”

Q And so what were some of those great lessons you learned along the way?

A So let's take Peter Cohen, for example. The reason why Peter does so many deals or has done so many deals is because he's looked at so many deals. And the thing that he taught me was that Jake, it never hurts to have a conversation. You'll learn something, you'll meet somebody, but you may also be introduced to an opportunity. And so it sounds simple, but it's something I learned a lot from with Ken Griffin. I realized that there's a guy who is so passionate about what he does, he'll probably do it until he's 85, and his track record won't suffer. That you have to find what you truly love doing day in and day out and apply yourself to it. And if you do, it really doesn't feel like work. And what he also taught me is surround yourself with the best people you possibly can. Whether that's a board, advisory board, employees, don't think that you have all the answers. Another thing he taught me is don't be afraid to make the hard decision, whether it's moving on from an asset class or moving on from people. Robert Smith taught me about team building. It's important to know when to get the right people on the bus, but it's also important to know when to get the right people off the bus. Bill Stone from SS&C has taught me, think about yourself as a general, and you're going to get to the top of that hill, and you have to explain to your troops that you're going to get to the top of t…

AI assessment note: “The thing that he taught me was that Jake, it never hurts to have a conversation.”

Q Did you get to a point where you felt like your path was impeded just because of race?

A Yes. Wall Street's about classes. Like, when did you start as an analyst? When did you start as an associate? And so you can look to your left, look to your right, and you can do your own assessment of kind of who's really smart and who's just getting opportunities just because their dad was connected. And that happens very regularly, that people who had connections were staffed on certain transactions. You know, they were traveling much sooner than the rest of us, and the cumulative effect of all of those experiences and all of that exposure put them ahead of the class. I rarely ever saw an African American have their career advanced by virtue of the fact that they were considered to be one of the favorites, and we worked as hard as everybody. We came from the same schools as everybody, with the exception of myself. We put the weekends in, We raised our hand when someone said they needed something done, but it never quite worked out the same way it did for some other people. And so you could see people's careers advancing at a much faster rate than those of us who viewed ourselves, quite frankly, as equals when we started. I mean, there were guys hopping on airplanes two or three weeks on the job, and it's like, where are you going? You realize that there was a connection there. And then at the end of the day, Wall Street's a meritocracy. And I always say the numbers don't lie…

AI assessment note: “Yes. Wall Street's about classes.”

Q When you showed up at Lehman, as you mentioned, you came out of left field back in 1990 to get into one of those programs. What did it feel like and what did it look like when you were there?

A It was very different from anything I had experienced in my life. So I grew up in a small town. I went to a public school, and then I went to a public university, and then I end up on Wall Street. And that route is very different from the kids who were in my analyst training program with me. They had grown up wealthy. They were all going to private schools and boarding schools. I couldn't even name a boarding school. They went to Ivy League institutions. And really by virtue of family connections ended up in that analyst training program. And so when I got there, I realized about the only thing I had in common with the people who were in my analyst training program was the fact that we were all working for Lehman. It felt very different. Outside of those of us that came through some type of diversity program, everyone else was white. But having said that, very friendly, very open-minded, everyone got along really well. We were all young then, naive, and just knew that we wanted to be hotshot managing directors and occupy a corner office someday. So back then, we ate three meals a day at our desk. We always had dinner together, and occasionally we'd get a weekend where we'd go spend time in someone's, like, eight-bedroom country house, which was, for me, like, just out of this world. Like, you mean the house that you stay in 25 days a year is five times the size of the house I g…

AI assessment note: “It was very different from anything I had experienced in my life.”

Q So what did you learn through that hyper growth stage in those couple of years that stayed with you?

A It was a really interesting time. Morgan Stanley back then was sort of on the cutting edge of international investing, really viewed as one of the true kind of global firms. I mean, you had like Bear Stearns, which was primarily domestic. Even Lehman was primarily a domestic shop back then. And so working at Morgan Stanley really gave me a window into the global nature of markets. What I also learned at Morgan Stanley, because it was one of the white shoe firms, was a sense of pride that people put into the work that they did every day, and how the firm really differentiated itself based on its preoccupation with quality. Quality in terms of the people they hired, quality in terms of the work that they did, and quality in terms of the clients that we served. Back then it was kind of Morgan and Goldman always in a foot race for the bluest of the blue chip clients. And so you just had this tremendous sense of pride belonging to what we would consider to be number one or number two in terms of investment banks back then, depending upon the day of the week that changed.

AI assessment note: “What I also learned at Morgan Stanley, because it was one of the white shoe firms”

Q Why don't you go ahead and touch on what the lawsuit is?

A We're alleging that they conspired with the state of New Jersey to take the program that Kerry and I developed. Which we originally called FAIR, and they've shamelessly taken credit for it, including receiving industry nominations without giving us credit for it. We were all set to do FAIR on behalf of New Jersey, and New Jersey wanted to be the first in the nation to adopt this FAIR program. We gave them thousands of pages of documents, Spreadsheets, models, legal structure, vendors, you name it. They were so interested in it that they said, we want to take a revenue share. And in exchange for the revenue share and the ability to be first, we're going to allocate a significant sum of capital to you. And we went through all of the paces that we needed to go through. We inked term sheets and we got to the point where we went and met the chairman and all was signed off on. And then somehow The approval never occurred, and we were told the agenda's full. We can't get it on the committee agenda. And then the next time around, the agenda's full. At that point, we had spent millions of dollars, and we were, like, getting a little concerned. As it turns out, they were negotiating with BlackRock. To actually implement the FAIR program.

AI assessment note: “We're alleging that they conspired with the state of New Jersey to take the program”

Q What teaching from your parents has most stayed with you?

A That's an easy one. So watching them start a business in a black community and watching them always stress to us, not just through their words, but through their actions, that it's always bigger than you. Always think about what you can do for someone else. Do something every day that you don't get paid for. Was their thing. And so when I think about my days, I try to spend a portion of my day doing something I don't get paid for, and usually that something is trying to help someone think through a problem, help someone kind of secure something they need, access to something. It's donating my time to a non-profit. It's doing the things that I can do to help make the world a better place just as, as they did, right? So I would say the lesson is, you know, do something every day you don't get paid for.

AI assessment note: “Do something every day that you don't get paid for.”

Q So I'm going to filter through this, some of the conversations we've had about diversity into in those first call it 10 years of your career. What were the, either the obstacles that you faced or the obstacles that people that were working alongside you faced as a African-American black man rising up in that first decade of your career?

A So you want to talk about diversity and financial services? They really don't go together, Ted. It's like, you know, ketchup and peanut butter. You can't put them on the same sandwich, right? I came onto Wall Street, as I said earlier, through a program that was specifically designed To try and diversify the employee base of Wall Street, sponsors for educational opportunity, and great organization, probably responsible for 60 to 70% of the African American population on Wall Street at one point. And so I knew there would be challenges going in. And they had a training program, really, that was designed to help us deal with what I'll call would be potential cultural friction. So we learned how to respond to different scenarios. And so I would say that was a lot like boot camp. Like, what do you do if someone says this to you? What do you do if you feel this way? And so I would say that I kind of entered eyes wide open to what African Americans experienced on Wall Street. I would say it didn't take long before I had my first experience. I think it was actually, I was at my first closing dinner. You remember back then when a transaction closed, there'd be this big closing dinner. And so I was at a closing dinner and I remember a senior banker making a comment about a club. I don't recall the specific name of the club, but the club back then Was all white. And then it was integrate…

AI assessment note: “I kind of entered eyes wide open to what African Americans experienced on Wall Street.”

Q to circle back to kind of where we were with your career, because after Morgan Stanley, I know you spent the better part of the last two decades in and around the hedge fund space in a whole bunch of different seats. In that path for those 15 years in between Morgan Stanley and Blueprint, what were the key things you learned and embraced in how you think about investing?

A So I made decisions a little differently than most people. I never really left a job to take another job for money. Like, I'm a really intellectually curious person. I love to read. I love to do my own independent research. I'm always trying to think about, like, how to put more up here in my head. Because I think that that truly, at the end of the day, is one of my edges. It's how I take all that information, synthesize it, and express it in a decision or a recommendation. So, I always wanted to work for people. Who I thought were really smart. So when I went to work at ATOS, Ann Cassells was this legendary allocator who came from Stanford University. One of the thought leaders in the endowment and foundation space, and let's face it, you know, over the course of my career anyway, the smartest people worked for endowments and foundations. And so, I really wanted to understand how she thought about making investment decisions. When I went to work for Citadel, it was an opportunity to go work for a guy who I think Holds the title world's best moneymaker, Ken Griffin, and a chance to understand how he put that organization together, how he managed to just print money for a longer period of time than anybody else. When I went to work for more capital, I was going to work for the world's largest hedge fund, and this legendary investor, Louis Bacon, Who no one knew anything about. W…

AI assessment note: “I really wanted to understand how she thought about making investment decisions.”

Q As you look back now, at least in that early part of someone's career, how do you think change needs to happen to balance that out, even if it's just on Wall Street and investment banking?

A So even though the question really revolves around what needs to happen at the bottom, I think the solution comes from the top. So often on Wall Street, I mean, you've seen this, Ted, in your career, we get these fads where people jump on things. Climate change might be a good example of them, and people always want to be positioning themselves to be on the right side. Especially on the right side of how clients are thinking. And so today you're seeing people openly embrace Black Lives Matters, right? Six months ago they weren't, a year ago they weren't, now they are. The climate is now centered around social and racial justice. And so out of a lot of C-suites, you're seeing announcements about how they're engaging the firm in open dialogue around diversity, And race, specifically as it relates to African Americans. You're seeing people talk about hiring more, the need to do more. The question I have is, are we really reading from the talking points and trying to pacify what's of interest today to the consumer marketplace? Or do we really fundamentally in our heart of hearts Want change. Really feel like we can improve lives if we open up Wall Street to be in an equal opportunity industry. Until people truly understand the impact that racism has on Not just on an individual's career, but on that individual's family and that individual's community, they won't really understand w…

AI assessment note: “I think the solution comes from the top.”