Larry Fink Only Needs to Build Another Eleven BlackRock’s to Catch Up to Schwarzman

“CNBC – Larry Fink, the chairman and CEO of investment management company BlackRock, is one of the latest Wall Street investors to surpass $1 billion in personal wealth, according to the Bloomberg Billionaires Index.”

On behalf of everyone at Leveraged Burnout (myself), I’d like to congratulate Larry Fink on finally crossing the billion dollar mark. After years of building BlackRock into the asset management behemoth it is today, Larry is finally reaping the rewards of his 0.7% stake in the company.

There is an interesting history between Larry Fink and Steve Schwarzman, CEO and founder of Blackstone. In 1988, Fink and his team was given a $5M credit line from Blackstone, in exchange for 50% of the equity, in order to build out an institutional fixed income platform. They named it BlackRock in order to establish that it was an entity within the Blackstone family. BlackRock began to take off and, with its success, came disagreements on management style. Fink and Schwarzman butted heads over equity compensation. Larry favored distributing equity to new hires to lure top talent, while Steve wanted to keep ownership with management in-house. Schwarzman and Fink amicably agreed to go their separate ways, allowing BlackRock to pursue any management style it saw fit.

The split was important not only for the two companies involved, but the broader financial services industry and its comp structure. Steve Schwarzman is worth about $12B today, while Larry just only crossed $1B. If you were to compare the two solely on the size of their wallets, Schwarzman obviously came out on top. Larry, however, used his equity as cash to build the largest asset manager on earth. At over $6T under management, BlackRock’s asset base crushes Schwarzman’s $430B, making it a much larger and more valuable company – which came directly at the expense of Fink’s own net worth.

So, I guess beauty really is in the eye of the beholder. Would you want the money, or the prestige that comes with upending an entire industry and becoming legend? It’s easy to be cynical and say take the money, but anyone that fancies themselves a Sandlot fan knows the answer isn’t so simple.