David M. Rubenstein, '73: "David Rubenstein's Monopoly Money"

It would have been a mistake to assume I understood David Rubenstein’s approach to money from playing Monopoly with him. He built houses on every property he owned, regardless of the neighborhood. “I buy everything,” Rubenstein, co-founder and co-CEO of private equity firm Carlyle Group, told me.

We were seated in an airy loft in Manhattan’s Chelsea neighborhood, shooting an interview as part of Institutional Investor’s “War Stories over Board Games” video series, in which financial titans recount the most memorable moments of their careers over a board or card game. Rubenstein may have seemed like he’d be a natural at the famous property-­trading game, but he failed to double-check how much money I doled out at the beginning of the game, and he never asked to get paid after passing Go.

Such indifference hardly would have powered Carlyle, which Rubenstein, 67, co-founded in 1987, to amass $158 billion in private equity, real estate, infrastructure, energy and credit investments. But observing Rubenstein’s gaming strategy did provide a few hints as to what’s behind his success. When I told him that as a kid I always questioned whether I should build houses on the cheap properties rather than Boardwalk, he quickly answered that I should buy something cheap and let it appreciate. He offered another lesson when he pulled a card from Community Chest and was dunned $40 for street repairs. “I don’t think that’s fair,” he said, adding that he would go straight to the tax assessor. “Always hire a good lawyer,” he quipped. Rubenstein was once one himself. After graduating from the University of Chicago Law School in 1973, he practiced law privately for two years before joining the government as chief counsel to the Senate Judiciary Committee’s subcommittee on constitutional amendments. By 1977 he had worked his way up to the job of deputy assistant to president Jimmy Carter, but that stint ended when Ronald Reagan took office in 1981.

Rubenstein then joined a big law firm, but his heart and mind were elsewhere. Inspired by William Simon’s 1981 leveraged buyout of Gibson Greetings, which turned $1 million into $80 million in two and a half years, Rubenstein began thinking about how to start a different kind of private equity firm. He thought a Washington-based firm that invested in companies influenced by the federal government could be a good bet, particularly if it attracted people who knew how the state worked. His preoccupation with this idea was a sign, in his mind, that he wasn’t cut out for the law. “If you’re good at what you do, you don’t have time to think about something else,” he says.

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