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David Bonderman, Founder of Texas Pacific Group, Visits HBS

It is hard to know what to expect when you meet someone whose net worth approaches $3.5 billion. At age 65, David Bonderman’s unassuming persona comes across as quite approachable, even sociable – rare qualities amongst the high-flying world of mega-billionaire financiers.

Contrast this with Bonderman’s large physical frame, sunken eyes and deeply receded hairline which all reflect countless hours of jet-bound travel, heated negotiations www.replicabestsale.co.uk, and headline topping dealmaking. Mr. Bonderman is an icon of his era, and his time with HBS students was used to share the wisdom of a lifetime with our aspiring HBS peers.

As one of the private equity industry’s legendary rainmakers, Mr. Bonderman exuded patience, confidence and command of his industry as he spent 25 minutes discussing questions posed by faculty representative Professor Bill Sahlman, followed by 35 minutes of student-led Q&A. Having arrived 45 minutes late due to weather concerns (note: weather affects private jets the same as commercial aircraft), the discussion kicked off in typical fashion with a recount of Mr. Bonderman’s background. A remarkable aspect was just how unremarkable his beginnings were. Public remarks noted Bonderman’s undergraduate time at the University of Seattle – Washington followed by Harvard Law School; however, a private conversation with Bonderman’s 90 year old uncle revealed the truth: “David did not demonstrate his potential until after he graduated from college. He was not a good student.” Comforting words for those of us not destined to become Baker Scholars.
Following stints as an assistant professor tag heuer replica for sale , Fellow in Foreign and Comparative Law with Harvard University, and Special Assistant to the U.S. Attorney General in the Civil Rights Division, Mr. Bonderman charged into the dealmaking world – as a lawyer. This unconventional start allowed him to leverage his strength of recalling nuanced details while arguing cases of corporate, securities, bankruptcy and antitrust litigation in U.S. courts, including cases tried in the Supreme Court.

It was this ability to recall detail, effectively communicate his case and convince others of his position that led Bonderman first to the level of partner at the prestigious Washington DC law firm Arnold & Porter, and later to the roll of COO at the Robert M. Bass Group (“RMBG”) in Fort Worth, Texas. In 1991, having developed the requisite skillset over the course of a decade in the buyout business, Mr. Bonderman left RMBG to begin the now legendary Texas Pacific Group (“TPG”).

From its humble beginnings as a “three-man shop” in Texas, TPG made its name by taking on some of the toughest buyouts in the business. The buyout of troubled airline carrier Continental Airlines was TPG’s inaugural transaction in which Bonderman demonstrated his ability to discreetly weave the “magic” of the deal breitling superocean replica: navigating complexities of intense competition, industry regulation, commodities pricing and organized labor negotiation. As proof that this was a particularly difficult and lucrative transaction, HBS still teaches a case on this matter (in addition to the recently added Burger King case).

TPG’s business now includes 400+ investment professionals scattered across 15 worldwide offices (10 in Asia alone). The firm has over $40 billion of capital under management, and portfolio companies controlled by TPG have combined revenues of over $115 billion, operate in over 120 countries and employ more than 580,000 people. Bonderman believes TPG’s ability to create value springs from its attitude, willingness to go against the grain, and global diversification across sectors. Bonderman noted that, in spite of tightening credit markets, today’s environment is ripe with opportunities for firms such as TPG: “The way you make lots of money is when you are buying at the bottom of a cycle when there is a lot of uncertainty”. He further remarked that he sees opportunities in today’s financial services sector and outside of the U.S. “This is bad for the people in this room [HBS students]. It is like the UK in 1916 – there will never be another decade as good as the last.”

Asked what makes for good employees, Bonderman noted that his best people were the ones that were stepping out of class at age 14 to call their stockbroker and place trades. He further noted the importance of personality: “You have to be smart, personable, have values, and overall be someone that people like.”

A student question prompted Bonderman on TPG’s relatively typical hiring process of selecting candidates from the same pools of human capital as its competitors. “We as an industry have not done a great job in candidate selection” bluntly shared Bonderman, further stating that “We aren’t that good at training our employees either. TPG’s training program is 1/2 day.”

Pressed on macroeconomic issues, Bonderman shared his insights on sovereign wealth and U.S. government policies towards the PE industry. While noting that most sovereign funds are relatively new to the space, Bonderman made clear that he views such vast pools of capital as direct competitors to his business. He further noted that their current lack of experience can be overcome, hinting that their sheer volume of capital will allow them to be incredibly competitive long into the future. Regarding sovereign wealth’s recent forays into the U.S. financial services sector, Bonderman remarked “The U.S. government cannot afford to let Citi fail. Abu Dhabi’s stake is a smart bet.”

Last, in standard HBS fashion, students questions led Mr. Bonderman to the topic of career selection and determining one’s own destiny. “My greatest ambition was to stay out of the army, and once I accomplished that, I thought I was set for life.” A comical start to the discussion, with a twist of irony layered in, as Bonderman later mentioned his firm’s recent interest in Vietnam as an area for investment. In his more serious remarks, Mr. Bonderman recommended that students not worry so much about what they will be doing when they are 55, as the only certainty is that things will change by then. For the near-term, Bonderman pointed in the direction of Wall Street, noting that these big institutions offer regimented training programs that build skills beyond those formally trained in the private equity industry, which has yet to institutionalize anything comparable.

Comforting words of advice for those of us bound for investment banking post-MBA, however, ironic given that the man who founded TPG never worked on Wall Street himself. Perhaps our opportunity for billions lies elsewhere, and we should follow the path of Bonderman with a year in Africa, a degree in Russian Studies and a disciplined following of our passion for Islamic law. Such are the activities pursued by this buyout legend, who today is better known as #105 on Forbes list of wealthy individuals and for playing host to a $7M Vegas birthday party featuring the Rolling Stones. Unconventional indeed.

February 25, 2008
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