Economics/Class Relations

Blackstone’s next big bet

August 28, 2023
Welcome back! The internet didn’t waste time having fun with former President Donald Trump’s mugshot.


In today’s big story, we’re looking at how PE giant Blackstone is making a big bet on a behind-the-scenes piece of the AI revolution.


What’s on deck:

  • Markets: Meet the people standing between you and a hedge fund or PE job.
  • Tech: Linda Yaccarino has the most difficult CEO job in the world.
  • Business: Cost of living in 10 of Florida’s major cities, ranked.
But first, it’s all about the data (center).
If this was forwarded to you, sign up here.

Blackstone’s AI play

Arantza Pena Popo/Insider


Blackstone’s getting in on the AI bandwagon … sort of. 

The world’s largest private-equity firm is going all-in on data centers, writes Insider’s Dan Geiger and Rebecca Ungarino. These non-descript buildings lack curbside appeal, but they’re vital to the AI community as they house critical infrastructure for high-compute needs.

It’s a classic pick-and-shovel play — a nod to companies that sold tools to prospectors amid the California gold rush. Why worry about building or investing in the next AI chatbot when you can sell companies the tools to do it themselves?

That approach has served Nvidia incredibly well, leading the AI chipmaker’s CEO Jason Huang to surpass Blackstone boss Stephen Schwarzman in net worth.

It also comes at a critical time for Blackstone.

The investing behemoth, which recently reached $1 trillion in assets, has historically found success in real estate. But Blackstone has felt the market downturn, specifically via BREIT, its $67 billion real-estate fund catering to small, individual investors.

BREIT, which launched in 2017, has struggled since late last year when anxious investors started pulling money out of the fund. Blackstone, in turn, limited redemptions. Still, the fund saw $9.4 billion in outflows to shareholders who wanted out.

BREIT holds a sizable chunk in a data center landlord it helped take private in 2021 that executives have big plans for. But it won’t be easy. Blackstone’s not alone in getting in on data centers, as investors have recognized it as a way to get exposure to the AI race.

There is also a reputational risk from data centers, which use an incredible amount of energy to keep up with the demands of AI. Take Amazon, which is building a data center empire in Virginia capable of using more energy than some major cities.

It will be interesting to see how Blackstone navigates public perception about its data center push.

The wider PE community has gone out of its way to distance itself from its old reputation of an industry full of cutthroat, sharp-elbowed dealmakers. Blackstone and fellow PE giant Apollo even have an annual holiday video.

But at the same time, Blackstone didn’t hesitate to raise rents and evict tenants when bans were lifted on those practices after the pandemic.


3 things in markets

Before the opening bell: US stock futures rose Monday, after ending last week higher as investors brushed off Jerome Powell’s warnings of possible rate hikes.
Arantza Pena Popo
  1. Looking for a job at a hedge fund or in PE? Start here. We mapped out 13 top recruiting firms working with the buy side. Whether you’re an aspiring dealmaker or a hopeful trader, brush up your résumé and reach out to these folks.
  2. Making sense of the Fed chief’s latest speech. Jerome Powell didn’t specify if the Fed was done raising rates. But he did say the central bank will “proceed carefully” and not look to “do unnecessary harm.”
  3. Zillow is offering homebuyers a 1% down payment option in a move that surely won’t backfire. The program, which currently is only offered to eligible borrowers in Arizona, is meant to be Zillow’s answer to the affordability crisis.
3 things in tech
Chelsea Jia Feng/Insider
  1. The most difficult CEO job on earth. Linda Yaccarino was tasked with fixing a product that Elon Musk seems to have intentionally broken. But to make her difficult job even harder, Musk is still involved with the company, limiting her power to change the company’s trajectory.
  2. Startups are still dying left and right. The IPO market is slowly coming back to life. But we’re still on the brink of a mass startup extinction since funding remains pretty dry. Some 50,000 startups are VC-backed, and many are going to have to decide soon: sell or shut down.
  3. Leaked recording: Amazon’s CEO won’t share data related to his controversial return-to-office mandate. Andy Jassy compared the move to prior company decisions not fully driven by data, such as launching AWS. Jassy added that this decision is more of a “judgment” call.
3 things in business
Arantza Pena Popo/Insider
  1. Women are always the wrong age. New research found a dismaying amount of age-based discrimination against women in top jobs. Many women surveyed shared that age-related judgments deemed them unfit for their jobs: possibly getting pregnant, being too old, or other slights.
  2. Ranking the cost of living in 10 of Florida’s major cities. Florida is the fastest-growing state in the US and popular with retirees — but it can be expensive. Insider utilized data to rank 10 of the biggest spots in the state, and found that the Miami area is the most expensive.
  3. The solution to burnout involves undoing 100 years of routine. Deloitte’s human-sustainability leader said we need to rethink our approach to work. And it’s going to take more than yoga classes and additional vacation time.

Tiny home, Instacart, & more


Tennis, iron, & birthdays

  • The US Open main draw starts today. Venus Williams, Coco Gauff, Frances Tiafoe, Leylah Fernandez, Carlos Alcaraz, and other top tennis players will compete for the final Grand Slam title of the year.
  • Pump some iron: Today kicks off the start of World Iron Awareness Week. Iron is one of the most common nutrient deficiencies, so the week is meant to promote iron-rich foods.
  • Happy birthday, Sheryl Sandberg. Ai Weiwei, Shania Twain, Honey Boo Boo, and Jennifer Coolidge were also born on this day.

Grenade footage

Facebook/68 окрема єгерська бригада ім. Олекси Довбуша
Video shows the huge explosion after a Ukrainian drone dropped a grenade on a hidden Russian ammo cache. Drone footage also showed the explosion’s aftermath.
The Insider Today team: Dan DeFrancesco, senior editor and anchor, in New York City. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Lisa Ryan, executive editor, in New York City.
Get in touch:

Leave a Reply