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Transcript: Jonathan Lavine

April 10, 2022
By Barry Ritholtz

Transcript: Jonathan Lavine

The transcript from this week’s, MiB: Jonathan Lavine, Bain Capital, is below.

You can stream and download our full conversation, including the podcast extras on iTunesSpotifyStitcherGoogleBloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.


RITHOLTZ: This week on the podcast, Jonathan Lavine of Bain Capital, really a fascinating career, just absolutely intriguing how he was able to convert his experiences doing M&A at Drexel and then being a consultant at McKinsey to not just joining a private equity firm, but really founding and creating the entire capital credit at Bain, really an interesting history. He is extremely knowledgeable about all sorts of different aspects of private equity and aware — very aware of how there’s a spillover from the equity markets, as well as the impact of alternatives like bonds and — and how that’s given rise to different types of private equity. We — we talk about everything from operating on it during the pandemic to what is going to happen as rates rise, what that might mean for private equity and for credit spreads. I found this conversation to be absolutely fascinating, and I think you will also.

With no further ado, my interview with Jonathan Lavine, Co-Managing Partner at Bain Capital.

ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: My extra special guest this week is Jonathan Lavine. He is the Managing Partner at Bain Capital, which manages about $155 billion. He is also the Chief Investment Officer at Bain Capital Credit, about $58 billion in assets. He is the Co-Chair of the Board of Trustees of Columbia University where he got his undergraduate degree before going on to earn an MBA at Harvard.

Jonathan Lavine, welcome to Bloomberg.

LAVINE: Thank you very much. I’m glad to be here.

RITHOLTZ: So — so given your background, you study economics, undergrad, you get an MBA, how did you find your way to Wall Street? What — what did you do between your undergraduate and your MBA?

LAVINE: Interestingly enough, I actually didn’t study Economics as an undergrad, I studied Political Science and English Literature. And I took one Economics course. I think that that’s why I’m so good at always reducing things to basic supply and demand because that’s how far I got.

And I was into Columbia Law School; I was planning on attending. And a friend of mine said, you know, these investment banks now have analyst programs, and they claim they’re just looking for smart people and you don’t need to know anything. And I thought I was smart, and I still wasn’t sure. I said, “Well, I’m going to law school.” And I’ll never forget he said to me, “Well, there’s free food.” And I said, “Well, free food. I’ll definitely show up.”

And I literally showed up, interviewed with a few places, was fortunate enough to get some offers, and I decided to go to Drexel Burnham. And I worked at Drexel Burnham for the — just short of two years between a business — business school in college because, obviously, Drexel didn’t make it the full two years, but it was an amazing experience before I went to business school.

RITHOLTZ: Really, really intriguing. I never knew that MBA programs came with free food. Otherwise, I might not have gone to law school. I didn’t know that. That’s — that’s really interesting.

So — so you go from Drexel, which you’re primarily known as a M&A shop to McKinsey, big consultancy. What was that transition like? How did you find yourself operating when you were no longer in a — what essentially was one of the hottest M&A shops on the street?

LAVINE: So, when I went to business school, a couple of things happened. One is because I didn’t have, you know, traditional undergraduate economics or finance or accounting, I really only knew about finance because that’s where I wound up. And so, I learned so much more about the strategic aspects of business.

Second of all, I met my wife the third day of business school. And we discussed where we wanted to be, and we wanted to be in Boston. And at the time, there weren’t a lot of finance jobs in Boston.

And I had the good fortune of meeting the people from the McKinsey Boston office, which was quite small at the time. I was able to go there at the summer, really found the work interesting. And — and probably even more so, the people were truly extraordinary people, great teachers, really, you know, intellectually curious. And the second year of business school, because my clients were local, I was able to actually work part-time in that office the second year of business school.

And I had accepted the offer. I went back there. My wife actually was working at a — a different consulting firm. She was at BCG. But it was part of me that always thought I would get back to some form of finance or investing, and Bain Capital in the early 1993 was raising its first institutional fund. Historically, we were less than 10 years old and historically had — basically had high net worth funds. And we were jumping from $120 million fund to a $300 million fund, which, at the time, seemed enormous.

And I got a call from somebody I knew here, and he said, “We’re — we’re — we’re trying to,” quote, “beef up a little bit.” I think the firm had fewer than 20 investors, and we want somebody with consulting and banking experience. Are you interested in talking to it?

And I literally came over on a Friday, met virtually everybody, came back the following Monday. Mitt Romney interviewed me and made me an offer. And I tell people I accepted it because it felt right.

RITHOLTZ: Really, really interesting. So — so let’s talk a little bit about — about that 1993 experience. Well, is it just that simple? There wasn’t anything else that — that made you say, “Yes, I want to move to — away from consultancy and towards private equity.” It just was a gut. Hey, this feels right?

LAVINE: I think it — it — in my heart, I think there were two things. I think it played better to my skill a certain entrepreneurial bend, the ability to combine what I had learned at Drexel, and as a consultant, and that is the heritage of the firm. Obviously, the — the firm started as a spin-off from the consulting firm, Bain and Company. And so, the approach to investing made sense to me. It made sense to me on a fundamental basis, how you think about looking at companies. And it was also differentiated because, at the time, nobody was approaching investing that way.

And while the firm was quite small, there was an energy and an aspiration in the hunger that really, really appealed to me. And I said, “I think this group is going to go somewhere, and I can help make that happen.” And one thing that I’m really, really proud of is that even today with a $155 billion under management and 150 partners in 21 offices throughout the globe, I’m still proud we have that hunger and we have that intellectual curiosity and the aspiration to do more and do better.

RITHOLTZ: So, five years later, in 1998, you found Sankaty Advisors, which eventually morphed into Bain Capital Credit. Tell us about what you were thinking, creating a new credit division and especially in light of, you know, late 90’s the equity markets were — they were on fire. Why start a credit focused investment firm?

LAVINE: The firm believed that what we did our approach to investing was applicable to multiple asset classes, and we made the strategic decision in the mid-90’s to expand both across asset classes and geographies not all at once. So, in the mid-90’s we founded a public equity business, and I founded the credit business. And the general belief was that we had been successful in investing in the equity of levered companies. And therefore, you would think that we would be able to apply that skill to the death of levered companies. My experience from Drexel and the fact that I had worked on a bunch of our financings previously at Bain Capital made me a logical choice to — to start that business.

At the time, there were really no other. A few of our peers or competitors were doing the same thing, but we were one of the first to do this. And although the equity markets were hot at the time, we invest for very long periods of time. And therefore, it wasn’t like we saw a two-year window or at any time one asset was better than the other, we thought that we had a sustainable advantage in this space.

The market was changing profoundly at the time the concept of a syndicated bank loan was very, very new. CLOs weren’t even around yet. We did one of the first CLOs in 1999, and we decided that institutionally it was worth doing. That said, it was so unusual for a private equity firm to have particularly a debt firm, and we didn’t want people to misread when we were buying the debt of — of LBOs sponsored by other sponsors. We put a different name on it. It’s always been part of Bain Capital, but Sankaty is the lighthouse in Massachusetts, and we thought stability — it was a — a good — a good — a good symbol.

And we kept that name for a while because we weren’t sure how people would think about us buying their debt. Ultimately, obviously, firms like ours having debt affiliates became quite mainstream. And in — about seven years ago, we changed the name to Bain Capital Credit. Our public equity business had the name Brookside. We changed the name of that to Bain Capital Public Equity. And, you know, I — I joke that that is the official story.

The unofficial story for why they pick me is I think Mitt thought that I was senior enough to be credible and young enough to be expendable as it didn’t work. But fortunately, we never had to test that hypothesis.

RITHOLTZ: Expendable, that’s very funny. So — so let’s stay with that. Given what subsequently happens a few years later with the dot com implosion and the market crash, how did that spill over to the credit markets.

LAVINE: It’s interesting. So, I still remember the first bond trade I did. I bought Riverwood bonds at about $0.95 on the dollar. And they went out to about 105. And I said, “Wow, this is going to be an easy business.”

There were several things I did not realize at the time. One, I knew nothing about trading, and the first thing we did in our first year is hire a great trader, a guy named Jamie Kellogg who was with us for 20 years. And two, people forget that, in August of 1998, Russia defaulted. And that shock waved through the bond market. So, we were already dealing with turbulence when the dot com bubble hit. And then shortly after that the dot com bubble, obviously, we had 911.

And what we learned through that period of time is actually one of the important things in credit is you get paid back at the end if you made good selection. Nobody likes price volatility, but I highlight that all those things I just described had no impact on how much pizza people were buying.


LAVINE: And therefore, we lent money to a pizza company, and those bonds and loans went up and down. But at the end of the day, that company went public, and we got paid back. And realizing to — to filter out the signal versus the noise or filter out the noise versus the signal is a really, really important part of credit investing.

When we do distress investing, that’s more of a hybrid, and you think more about enterprise value and what does it take to get paid back. But in the part of our business, that’s a lending business. And back then, we had mostly just the lending business. It was all about did we pick good credit. Were they paying their interest? And would they ultimately be capable of paying back when they were supposed to?

RITHOLTZ: So — so let’s talk a little bit about your role at Bain and what you do, starting with what — what does the co-managing partner do? Is that like a CEO or COO role? How do you — how do you define that?

LAVINE: The co-managing partner role is the equivalent being the — the co-CEO. But our firm is a partnership, and we chose not to put the title CEO on the leaders of the firm because it is a partnership. We are lead partners. We do not run the firms up-down. We are an old-fashioned partnership where the voices of all the partners matter, everybody is a leader, and everybody needs to contribute.

That said, it falls on myself and my co-managing partner, John Connaughton, to help drive strategy as a firm, to help make sure that our expansion is being done in a — in a thoughtful way, there’s standards across the firm, and as a real organizing force among our partners as we deliver great results for our investors and drive the business forward.

RITHOLTZ: So — so …

LAVINE: It’s really a reflection — sorry. It’s …

RITHOLTZ: Go ahead.

LAVINE: … it’s really a reflection of our culture.


RITHOLTZ: So, let’s talk a little bit about how that culture manifests itself in your investment strategy. And this is a loose quote from you. Your investment strategy is described as thoughtful, not aggressive, not cautious. Explain that a little bit, and — and how does that reflect the culture of the firm.

LAVINE: I use a driving analogy a lot to try to explain what we mean about this. You can cause as many accidents going 15 miles an hour in the right lane on a highway as you can driving 125 miles an hour in the left lane. You have to know when to put on the gas, when to slow down, and you drive differently on different stretches of highways at different times during the day. And that applies to investing.

You have to know that sometimes you have a view of the market that may be different than others. You have confidence that that view is well-considered and analyzed. And therefore, you might choose to put on a little more risk. You may choose to lean in when everybody else is running away.

There are also other times when we may decide, you know what, we need time diversity or industry diversity or we’re not entirely certain what — what the vision ahead is, and we will slow down a little bit. And I think what we do really well philosophically is we understand the difference between pricing risk and understanding uncertainty.

There is a famous economist named Knight who — who wrote back in the 20’s and 30’s about understanding the — trying to quantify the difference between risk and uncertainty. And you can price and quantify risk. You have to learn to live and mitigate uncertainty, and you need to understand the difference between the two.

RITHOLTZ: Really, really interesting. Let’s stick with that. Given how fast the recession was in 2020, equity markets plunged and then came back very strongly. Did you see something similar in the credit markets? How did they behave over that time?

LAVINE: So, the credit markets were as volatile for a while as the equity markets, although I always remind people volatility implies going up and down, and they were going straight down. And it’s at that time that as a leader of a firm and the managing directors who had seen different cycles before had to make sure that — that the team focused on first principles. What would happen over the long run? Would these companies be able to pay us back? How much cash could they burn? How long could this last? And we were able to find opportunities and had near record deployment during that period of time because the recovery was industry specific, so not everything came back at the same time. As you know, indices — stock market indices, credit indices lie because they’re averages.

Secondly, there were different needs by geography, and now those needs continue today where in Europe, in particular, banks still had to shed lots and lots of bad assets, and it became increasingly important to clean up their balance sheets. In the U.S., S there were a lot of industries, air lines, restaurants that did not recover the same way. We obviously made a very high-profile airline investment with Virgin Australia in Australia, which we bought in partnership with our private equity team out of — out of bankruptcy.

And while there was a recovery, there was some sense that people did not fully believe it was over. And therefore, there was a reticent to deploy new capital. We saw periods of time where the safer assets were way overpriced at the expense of riskier assets. And if you got the default picture correct which, fortunately, we did and the team did a great job thinking about how much money companies would need and how they would access cash if they needed it. And we — we said we could take a little more risk. We are not going to just buy BBs and ride the interest rate declined ways. And that was — was the right decision.

And then lastly, events like ’08, like 2020, like the dot com boom, they leave some scars. And we saw a lot of companies that had just gotten through that wanted to shore up their capital structures and said, “You know what? Having too much senior bank debt with covenants or not enough equity or perhaps they wanted preferred stock,” but we spend a lot of time working with companies all over the globe on very structured sources of debt and capital to help them make sure that they could ride through a second wave, a third wave.

RITHOLTZ: Really, really intriguing. Did you see as much distressed debt opportunities that you thought initially when — when the pandemic really took route and we started to see all sorts of economic dislocations or was that recovery just shockingly quick?

LAVINE: So, we clearly didn’t see as much distress as we thought we were going to see because we thought everything was going to be distressed. I mean, when you put yourself back …


LAVINE: … in, you know, March of 2020, nobody had any idea what was going on. I remember being on debate where we were wondering whether we would have our offices closed until Memorial Day or Labor Day. And we were right, we just had the wrong year.

And — but that said, there was a lot of — there was a lot of distressed opportunities and rescue opportunities that — available that we could do. The footprint that we operate with, the 21 offices throughout the globe also made a big difference because being proximate to so many different geographies and being able to participate in so many different ways, we were able to do business locally at different geographies we’re opening and closing. And we could visit real estate sites, some places in — in Ireland or in Greece or in — in — in Spain because we had a presence there.

When we were looking at Virgin Australia, we have two offices in Australia, so we were able to do analysis and have a view that others weren’t able to have because you couldn’t get to Australia. So, we really felt the value of our platform during that period of time.

RITHOLTZ: And — and let’s stick with the idea of value, a lot of people of the equity markets as — let’s call them fully valued and — and — or — or — or more. Does any of that spill over to the credit markets? What do you see in terms of private credit investments? Are — are things available at the same sorts of valuations that you like to see?

LAVINE: I would say that what we’re seeing is once again more bespoke opportunities. On the one hand, in our special situations business that, you know, there’s no cookie cutter solutions out there, and access to capital is still, in some segments, still pretty tight. I think that there are some people who loan a lot against enterprise value, and we will do that a little, but we’re not comfortable relying on getting paid back. We’re okay taking return from the equity market, but we need to believe we’re going to get paid back on debt instruments in traditional debt ways. Preferred stock, and structured equity, and things like that are — are a different story, and that’s obviously where equity valuations make a difference.

On the lending side of our business, in our private credit business, in our CLO business, in our bank loan and bond business, default rates are incredibly low. And the economic outlook vis-a-vis defaults, vis-a-vis company’s ability to access traditional capital market is pretty good. And when you make a credit investment, when you make a loan, you look at the spread you’re getting and then you always net out what you presume you’re going to lose in defaults over a period of — of the next two or three years. And I think not enough people look at loss-adjusted spreads that, in bad markets, people probably underestimate what the losses would be, and in good markets, they probably overestimate what they’re going to lose because of defaults.

And just like during 2020, we correctly thought that the whole world wasn’t going to default, and that a three percent, four percent default rate wasn’t the end of the world. The default rate up-to-date is less than one percent …


LAVINE: … so it is well below average. And when default rates are below average, you would expect the spreads that people are lending money at to be below average, which is what we’re seeing.

RITHOLTZ: So — so let me flip that question over a little bit. A lot of what has made private credit so attractive, at least for the past decade anyway, has been that interest rates have really been so low and the yields from fixed income has been less attractive. What does that mean in terms of rising rates these days if we continue to see bond yields take up if the Fed is early in their rate hiking cycle, and we could see, you know, four, five, six rate increases over the next two years? What does that do to your expectations for the private credits after?

LAVINE: Our expectations actually go up in that scenario for two reasons. One is most of the way we loan in private credit is through floating rate instruments. And therefore, as rates go up, the amount of interest we received goes up. There’s very little fixed rate in — in the private credit space now.

Secondly, you have to step back and ask yourself why are rates going up. And they’re going up, yes, because there is some inflation, but also because the economy is growing and the economy is doing well. And the Fed needs to tap the brakes a little bit. And that would suggest that there’ll be fewer defaults so it would be a good market to lend private credit.

RITHOLTZ: Let’s talk a little bit about Bain because they really are kind of an interesting private equity shop. They have employees across the U.S. and around the world. How did they manage this during the — the lockdown? Were you able to deal with this or did you go into the pandemic semi-virtual anyway?

LAVINE: So, because we have such a big global footprint in such a diversity of businesses from life sciences to, obviously, private equity and credit, and tech (inaudible), and venture capital and, you know, many others, we were used to working across our platform, and how do we activate our platform when we’re looking at various situations.

Now, we obviously had never encountered anything like we saw on March of 2020, but we had the technology in place and huge credit to our technology team that everything worked. We decided early on that we were going to make sure everybody from the most junior analysts to the most senior people in the firm had any technology they needed at their homes. If they needed routers, if they needed their internet be set-up, a new laptop, a screen, a lot of firms spend a lot of time figuring out what they were going to do. And we made that concerted effort to enable people as fast as possible.

In Boston, we even had a — a — a group going around with literally a pickup truck, and they moved our trade stations — our trader stations, and reset them up in their homes within the first week of the pandemic. We never missed an — an — an hour.

But when I step back and I reflect on that period of time and — and what we’ve learned over the last two years, it really has brought out the entrepreneurial spirit that defines us. And it has brought us closer together. People hop on zoom with colleagues in Mumbai, with more ease and more comfort today than they used to, you know, go from the 37th floor to the 38th floor to ask somebody a question.

It’s just been amazing to see the resourcefulness that individual people have brought to — to — to this situation and the aggregation of that. And the sharing of learnings has made a huge difference in our ability to be effective. We’ve hired hundreds of people during this pandemic. We continue to increase our assets under management. We have found great investment opportunities across all of our business units.

And, you know, while I never would like to do it again, I am just incredibly proud of what the team has accomplished and to be part of it. And I know that may sound corny, but it truly has been the finest hour for our people. And the compassion and resourcefulness people have shown has been amazing.

RITHOLTZ: Sure, it’s a baptism of fire. It’s similar to what people in the Armed Services go through where everybody has to pull together and — and rise the challenge of a — of a common enemy. I could certainly understand that.

Let’s talk a little bit about your overseas business. You — you guys have fairly substantial investments both in Europe and — and Asia and the Pacific. Tell us a little bit about what the challenges are of private investments outside of the U.S., and — and does your thought process differ when you’re considering those sorts of opportunities?

LAVINE: So, we view ourselves as a global firm. One of the things culturally is we don’t view London or Hong Kong or Melbourne as overseas because, to them, it’s home. And in fact, about half our partners are outside the United States now. And so, we have learned a lot from our global expansion over the last 22 years. And one is that each market, there were some core principles of what makes a good company, what makes a bad company. That does translate our investment style does translate, but there are different norms, different ways people do business. There are different laws. Lending is different from — from geography to geography. And you want to be sensitive to that, which is why all of our offices are predominantly people who are from the local market.

We didn’t send a bunch of people over to London and say, “Hi, I’m from Boston and New York. You’re happy to meet me.” We actually built a local team that does business and has participated in the market, but early on worked very closely with people who had moved over from Boston or they spend time in Boston so that the culture of the firm could grow as it — as — as we moved across the — the globe.

And I think that’s really, really important is the biggest challenge you have in these types of situations when you are growing globally, you’ve been very successful in a single geography is just trying to replicate it without being sensitive to the local norms and the local networks. And what you need to do is find a way to maintain the core firm culture and the platform advantage that you bring your — your reason for being, but make sure that you find ways to incorporate people with different experiences and people who know different markets better than we do.


RITHOLTZ: Let’s talk about diversity a little bit. Finance has been criticized for — for lacking in diversity. We — we tend to be a bit of a white male industry. There are signs that’s improving, but finance still lags a lot of other industries. Tell us a little bit about what Bain is doing to address that issue.

LAVINE: This is a — a huge issue in finance and — and a lot of industries across the U.S. And we recognize that we have to apply the same creativity we do to our investments and to our portfolio companies to — to bringing a more diverse group of people into the industry. Obviously, underrepresented groups, but also diversity of thought, diversity of geography, diversity of socioeconomic backgrounds. And we also recognize that we can’t solve it ourselves. And we have made sure to consult with expertise and partner with organizations like MLT and SDO. And we have found that technology has really helped us reach a broader group of people.

When you don’t hire a lot of people in any given year, we have 1,500 people and, you know, we may hire 20 associates and analysts, maybe 40 associates and analysts in the United States a year. That’s not a huge amount. And therefore, it was really easy to just lapse and to keep going to the same schools you’re going to. And we recognize that that wasn’t going to solve the problem.

So, we are using Zoom to host informational forum to teach people about what investing is, who we are, to coach people on the interview process, whether they interview with us or somebody else, and really start engaging with larger groups across the country. And we think it’s — it’s — it’s incumbent upon everybody in our industry to make the industry more accessible and not just think about, well, I want 10 more recruits.

And just the other day, we did a — a informational session on Zoom and had 200 or 300 students from colleges across the United States, learning about what we do, learning about the — the case method of interviewing. And we’re going to see how that works, and you just have to keep experimenting, but leaning in and, you know, be willing to take some risk because doing the same thing over and over again and expecting a different outcome is the definition of insanity.

RITHOLTZ: Really, really interesting. I saw a really wonderful quote of yours before the pandemic began. It was — it was around February 4th, quote, “I really think nobody could possibly understand the impact. And until we see how it plays out, how the quarantine works out whether or not we can find some sort of a vaccine, we’re going to study this very closely and look at it very carefully,” unquote. That — that was a solid month and change before the lockdowns began, and it very much tells us to your approach not too aggressive, not too cautious, but really looking at things closely. Tell us the bill a little bit about what you were thinking about a month before things really got bad here in the States.

LAVINE: Investing is not the prediction business, it’s really about adapting. And I use a framework a lot with the team called the OODA loop, which actually comes from the military and how they would teach fighter pilots to orient themselves in a dogfight, a time of high uncertainty. And it tells you that you need to orient yourself to where you are. You need to observe what’s going on, then you need to decide, and then you need to act. And it’s a loop because you do it over and over and over again.

And at that time, it was clear that we were in a situation where we were not being asked to price risk, we were being asked to price uncertainty. And we were humble enough to see that nobody had exactly gotten this right yet and sensitive enough to recognize that there was a human toll that this was taking, both in human life and people were starting to die, as well as fear. And I thought at the time and — and my partners and I talked about it that, boy, we don’t really know what’s going on. And sometimes people think you should zig or you should zag, but really what you should do when you don’t know what’s going on is standstill and watch. And that’s what we did.

We didn’t panic. We didn’t try to guess one way or the other. We set out a — a framework for how we’re going to look at this, how we were going to think about the safety of our team, as well as the — the security of our portfolio companies.

And we’re very fortunate at Bain Capital because we have a Life Sciences group with real doctors and people with PhDs who played a huge role, at that time, and trying to help us understand how this could play out, and also, what it took to develop a vaccine. And I had never put much thought into how developing vaccines work, and how they work, and who would take them. And that was incredibly helpful. And that part of the firm continues to be incredibly helpful today to this point, to this day.

RITHOLTZ: So, let’s talk a little bit about some of the philanthropic work you do. You were a major supporter of — of City Year, LIFT, uAspire, and you are one of the earliest donors to Bryan Stevenson’s Equal Justice Initiative. Tell us a little bit about what the connection is between all of these different causes.

LAVINE: My wife and I both went to public high schools and had the ability to obtain incredible education, both undergrad and graduate. And at no point in my life when I was walking through the halls of my public high school in downtown Providence did I ever question that there might be a ceiling on what I can do and what I could accomplish.

And that’s just not the case today. And we recognize that we have been incredibly, incredibly lucky. There’s a lot of people with the same skills I have that just never had the opportunities that I have had. And we focus a lot of our philanthropy on what we call “leveling the playing field .” So, City Year was the — the organization that we used as the models for AmeriCorps, which is the national service organization.

City Year — when we started volunteering with City Year, they had come to my business school section. A friend of mine had helped them with their business plan, and they had a vision of putting near peer mentors in public schools across the United States and — and using them to help students see their potential and help prevent the drop — help prevent students from dropping out.

We didn’t have much money back then, but we gave them $18, which was — which is high in the …


LAVINE: … Jewish state, which spends for lock and life (ph). And for some weird reason, I kept the check. I still have that check and have been involved with City Year for more than 30 years.

I chaired the board. I was on the — I was on the board for 15 years, and I’ve watched that organization grow to 3,000 young core members volunteering in schools in 30 cities in the United States, London, Northern England, and South Africa in Johannesburg. And I’ve seen the power of commitment and idealism to help solve problems that the problems we have of opportunity aren’t intractable.

And along that theme we were introduced to smaller organizations at the time. uAspire helps students find financial aid. The financial aid process in the United States is unbelievably complicated, and it started by helping Boston public school kids just learn how to apply for financial aid. It’s one of the number one reasons that students don’t apply to colleges. They just assume it’s not accessible to them.

People don’t realize that even understanding financial aid is super complicated. One of the things the CEO did when I first met him is gave me three financial aid letters and asked me to read them and tell him what I thought the best package was. And it was really hard. And he said, “Now, imagine your kid in South Boston whose parents didn’t go to college,” and this arrives in the mail. How do we help explain that to them? And they now work once again using technology with hundreds of thousands of kids across the country.

And LIFT Communities was founded by a woman named Kirsten Lodal who I met through an organization called New Profit here in Boston, which does venture philanthropy. And Kirsten started LIFT her junior year at Yale and with the belief that people need a helping hand, too. It’s not always people need money, and — and money will — will solve a problem.

And effectively what LIFT does is they’re life coaches. They help people budget. They help with financial literacy. They help people learn how to take care of their health. And it’s almost like life coaches for people who otherwise don’t have it — how to do a resume. And it — it follows the great line, you know, “Give a person a fish, you feed them for a day. Teach them how to fish, and you feed them for a lifetime.”

And LIFT has done just amazing work. They very much focused on underrepresented communities. It’s generally mothers, and they have had just amazing — amazing results. It’s now run by a woman named Michelle Rhone-Collins.

And then lastly, the — several years ago, just when Just Mercy came out, the founder — Co-Founder of City Year, Michael Brown gave me Bryan’s book for Hanukkah. He always sends me a book every year.

And he had gone to law school with Bryan. I had met Bryan once briefly at a City Year event. And I don’t know if you’ve read Just Mercy, but you’re reading it, and it’s about how Bryan, one of his first major cases he got somebody off of death row who was basically framed. And it was completely and totally racially-motivated and discriminatory.

And he did a — there’s a section in there about children who have been sentenced to life in jail and the horrible trauma that they go through. And I — I read this and I — you know, I’m humble enough to tell you I — I was shocked. I thought I was pretty aware of what was going on, and this is years and years and years before George Floyd. And I was like how can this be happening in America? And I actually called Michael and said, “Can you introduce me to Bryan? Jeannie and I would love to meet him.”

And we got to meet him. We’ve gotten to be friendly with him. We gave him one of his largest early gifts. He had been around for a while, but we gave him a substantial gift. And, you know, I thought it was so important that people understand that both the type of work that he is doing, but the need to do that type of work, which is it’s just incredible that that’s still necessary in this country.

He and I actually did a joint appearance on NPR six years ago to talk about it and talk about how somebody like me had come across the work he is doing down in Alabama and how I just thought it was so important as an American to do whatever I could to help not just rectify these types of injustices, but actually make sure they stop happening.

RITHOLTZ: And that his book, “Just Mercy,” eventually became a film with Michael Jordan and Jamie Foxx. So — so let’s — let’s stick with that concept of social and economic mobility. Why do you think that there is a ceiling today in the United States that didn’t exist decades ago? And what can we do about improving economic mobility?

LAVINE: You know, if I had all the answers, I — I — I — I hope it would be solved because other people smarter than I am would have figured it out. But I do think it starts with the educational system and making sure that public schools in the United States aren’t just good, they are great. The number of folks I went to public school with who now send their children to private school is staggering to me. And so, it starts with making sure that education in the United States works.

Secondly, I think we’ve all got to recognize the problem. We’ve got to recognize that people with different lived experiences do not have the same access to starting business, the same access to capital, the same access to all the resources that you might see, you know, more obviously in a traditional sense in Silicon Valley.

As an institution, we have committed ourselves to try to help improve that in — in business equity in the city of Boston. And many of our support other organizations across the country, which are all trying to — to level the playing field as I discussed. But the first thing is we’ve got to be aware of the disparity. You can’t fix it until you name it and you own it. And then people have got to recognize that there’s work to do …

RITHOLTZ: You — you — you …

LAVINE: … but it’s not (inaudible).

RITHOLTZ: Quite, quite interesting. You end up in a similar place to Joel Greenblatt who also points to the education system as the key to improving economic mobility. I — I think the book is something common sense, the guide — “Investor’s Guide to a Quality (sic) Opportunity and Growth.” You — you guys are very similar.

Let me ask you about a different project that you were involved in. You helped to fund the 2017 10-part documentary series by Ken Burns and Lynn Novick, “The Vietnam War.” Tell us how we’re going to find the — the next great filmmaker like Ken Burns.

LAVINE: So, while Ken’s film came out in 2017, I had met him about seven years earlier. One thing as I’ve become friendly with Ken over the years and my — my wife and I become really good friends with him is he starts thinking about his project a decade out.


LAVINE: He literally can tell you what he’s going to do in 2030. And when he approached me on “The Vietnam War,” it was very important to him that this have funding from people who would be associated with being Democrats and Republicans to immediately take away any possibility people would think that this had a political agenda. He also very purposefully, in the film, does not interview John McCain or John Kerry because a lot of people reduced the, you know, some of the Vietnam stories to two very famous people, both of whom are heroes, who served. And what he wanted to do is tell the story of, you know, a whole mix of Americans and what that story was. And that is the — the beauty of Ken’s work.

And as we’ve gotten to know each other, we helped fund a — a film. He did a shorter film on the Holocaust, and he’s actually got a multipart series on the Holocaust coming — coming out later this year. We talked about the importance of who is the next Ken Burns burns. And he came up with this idea and asked my wife — Jeannie and I if we would join him in funding a prize given by the Library of Congress to emerging filmmakers because he remembered that when he started, the toughest thing he had was getting what’s called the “completion grant.” He could do all the raw filming, but really pulling it together in something that was production worthy.

And so, we agreed to sponsor, and we do to this day a prize through the Library of Congress, which provides completion grants not just to the winner of the — of — of the — of the — of the award, but also to a couple of other runner-upstream. They are different size grants, so that the next Ken Burns can — can have an opportunity.

Over the last couple of years, Ken recognized that there are diversity and documentary filmmakers, just like we talked about in finance, wasn’t what it should be. And we came together with him and also fund a fellowship and mentorship program that he started to help mentor up and coming filmmakers from underrepresented groups.

And he’s just an amazing person. When you look at polls of people still trust his films and trust his storytelling and know that it’s up the middle. And in this time, when people do not trust media for whatever reasons and people polarized to their networks to know that there is people like Ken and hopefully a generation behind Ken who are presenting history in a really approachable and important way, I think, is incredibly important to strengthening some of the social fabric we’ve talked about.

And one of the amazing things about “The Vietnam War” where you would have thought everything had been done and written and all that is that was the first film I had ever seen that actually interviewed North Vietnamese soldiers and interviewed North Vietnamese citizens. And we forget that there were two sides in that war, both of which suffered incredible human loss. And learning the lessons of Vietnam applies to so many things that we’re looking at today. And I think that’s true of almost all of Ken’s (inaudible).


RITHOLTZ: You mentioned he’s working on a Holocaust film. Towards the end of his presidency, Barack Obama appointed you a member of the U.S. Holocaust Memorial Museum Council. Tell us a little bit about that experience.

LAVINE: It — it was an absolute honor to serve. It’s a cause that’s really important to — to me and my wife. The — the Holocaust is not just a moment in history, it’s not just a — a — you know, a — a time of a group was anti-somatic. It — it shows you that when you forget the lessons of history, those atrocities can be repeated again and again and again. But there is also a lesson of the Holocaust, which Ken is going to focus on in his film about what people didn’t do.

And there’s a whole section that was — was opened while I was on the — the memorial board, which is about America in the Holocaust and what we did or more appropriately didn’t do during the 30’s. And how easy it was to look away, say it was far away. And there are a lot of lessons to be learned to see what happens when people are bystanders and think it’s not their problem. And when you look at Charlottesville, you know, I’m not sure people understood the symbolism of people with tiki torches chanting “Jews will not replace us,” and that that comes from Nazi Germany.

And, you know, there’s an old adage that, you know, when you forget the history you’re doomed to repeat it.


LAVINE: And there’s just so many lessons to be learned. And the work, the educational work, it’s more than a museum. The educational work that the Holocaust Memorial Museum Council does and the — and the museum does not just on Holocaust — on the Holocaust, but on genocide more broadly, I think, is really, really important. And I am incredibly proud to have served and continue to support — support them because it’s so important that we learn the lessons and that we do not repeat them.

RITHOLTZ: Really, really fascinating stuff. Let me throw you a little bit of a curveball here and talk about the Boston Celtics. You’ve been a member of that ownership group for a while. Tell us a little bit about that experience, how that came about, and — and what’s it like being a Celtics owner.

LAVINE: So as somebody who grew up in the Boston area, I grew up in Providence, Rhode Island and went to games with my dad since I was little, the opportunity to be part of — of the investor group was, you know, so exciting. The — Steve Pagliuca, one of my partners, was friendly with Grousbeck and Bob Epstein, and the three of them put together the group that — that bought it a little more than 15 years ago. They had a vision of local business leaders, people who cared about philanthropy, cared about, you know, what the team meant to the city of Boston.

And, you know, it’s been great. We — you know, I was on the board for the worst season we ever had and on the board for a championship. So, it’s been — it’s been amazing.

RITHOLTZ: They — they started out the season looking pretty strong. They — they have a better than 500 record. What — what do you think? They have a shot at winning the east this year?

LAVINE: I always believe that we not only have a shot, but we’ll win until events are otherwise prove me wrong. I’m a true believer, and I think that the talent we have on this team is capable of winning any — any day. And if they get it all working, the beauty of basketball is the playoffs are like a second season. And as long as we make it into the playoffs, I think we can do anything.

RITHOLTZ: So, I know I only have you for a limited amount of time. Let me jump to my favorite questions that I ask all of my guess, starting with tell us what you’re streaming these days. Give us your favorite Netflix or Amazon Prime. What — what’s been keeping you entertained over the past two pandemic years?

LAVINE: So, besides Ted Lasso, the morning show, Schitt’s Creek, which I think everyone loves and — and — and people have really, really taken to, I — I think Ted Lasso may go down as one of the great philosophers of our time.

My wife and I actually particularly with, you know, all the difficult events that have been going on in the world and you can focus so much on what’s going wrong. We actually enjoy periodically just streaming comedy concerts. And Netflix and HBO have great — a great array of comedy concerts where you can just laugh because I do think we need to all laugh a little bit.

I also — as we’ve talked about, I very much enjoyed documentary and not just Ken Burns stuff, but some more offbeat stuff. I really enjoyed on HBO, they had a documentary called McMillions, which was riveting, believe it or not, which basically examined how the McDonald’s monopoly game in the mid-90’s and late 90’s was rigged. And nobody realized it for a while, and that somebody had rigged the game, even Monopoly — I mean, even McDonald’s didn’t know. And I’m not doing it justice, but it’s fascinating.

And — and I also very much enjoyed on Netflix the — the documentary about the fest of art from the Isabella Stewart Gardner Museum here in Boston. It — it was the largest art heist in history and remains unsolved decades later. And it’s called — I think it was called, This is a Heist or “This is a Robbery.” And …

RITHOLTZ: “This is a Robbery.” My wife and I saw that. That was really quite fascinating.

LAVINE: And I mean, the Isabella Stewart Gardner Museum is walking distance from our office, and it was just fascinating to — to watch and so much I didn’t — I didn’t know.

And then I’m a huge sports fan, and I think the ESPN “30 for 30” are just absolutely fantastic, and you can find all sorts of stuff that — that — that can keep your interest. I even watched the hour-long documentary on the “Tuck Rule,” which was that first — that playoff game that made Tom Brady’s career where there was a debate whether or not he fumbled the ball in the snow. And — and there was a little known rule in the NFL, which they took away the next year called the Tuck Rule, and he had not tucked the ball back in. And — and he — so it was ruled an incomplete pass. And because of that, the Patriots beat the Raiders and went on to win their first Super Bowl.

And I know that sounds crazy, but I watched it for an hour, and I just thought it was fascinating to listen to Tom Brady and Charles Woodson who had been a college teammate, who was the guy on the Raiders who knocked the ball out relive that 20 years later. So, I think that you can find lots of interesting things to do and things to watch. And I don’t think it always needs to be business material.

I listen to a lot of podcasts on politics, on — on history. And I think that we’re so lucky to live in an age where we can — where we can stream all that stuff. And, of course, I always make sure I listen to this business podcast.

RITHOLTZ: Well, appreciate you say that. Let — let me skip over that and — and just ask you two more streaming questions. The first is I assume you saw “The Last Dance,” the series about Jordan and the Bulls.

LAVINE: Believe it or not, I have not watched the whole thing because I couldn’t get my wife to watch the whole thing. So as travel is picking up, that’s on the stream it alone camp.

RITHOLTZ: I was a giant Knicks fan and I have vivid recollections of that era in — in the late 80’s and 90’s just thwarted every time the Knicks ran into that. But — so you mentioned standup comedy on Netflix. I’m curious, any — any couple, in particular, stand out. What — what have you really enjoyed in terms of standup?

LAVINE: Sure. There’s this guy Nate Bargatze. He has the Tennessee kid in the all-American average guy or something like that. I mean, it’s something funny like that. And, you know, he’s hilarious, and his — it’s self-deprecating humor. It’s — it’s clean. It’s — it’s not political. It’s — he’s really, really good. And the beauty of Netflix, as you find one you like and then you can watch two or three others because they probably have — have — have a whole library.

And then Mike Birbiglia has some really, really interesting thought-provoking — thought-provoking comedy specials there, too, that we really like. And then Iliza Shlesinger, who won Last Comic Standing on NBC had gone to a college here in the Boston area is hilarious and has a — a number of a — a — a number of interest — of — of fun concerts on — on — on Netflix.

RITHOLTZ: The — the one of hers I remember was Elder Millennial, and it — it is hilarious.


RITHOLTZ: I’m going to recommend two to you because I have a — a flavor of what you like. I’m going to go out on a — on a ledge with Inside — Inside with Bo Burnham. It’s …


RITHOLTZ: … eclectic, and here’s a guy just locked in an apartment making comedy all by himself in the early days of — of the lockdown.

But the one that I’m — I’m — so that people either love or — or completely perplexed by it. But the one that’s a — a slam dunk is going to be the Tom Papa’s comedy. He talks about his wife, his kids. And it’s just your — your — you and I are about the same age and that is right — talking right to our generation, and it’s also pretty hilarious.

LAVINE: Awesome. I will definitely — I will definitely do that.

RITHOLTZ: All right. So, let me keep working my way on my questions. Tell us about your early mentors. Who helped to shape your career?

LAVINE: I’m really lucky that I showed up at a firm that really believes in partnership and mentorship, and we use the word “sponsorship.” It’s more than just mentoring, it’s — we are responsible for each other’s success when we were quite small. And early on I worked with two partners really closely, a guy named Mark Nunley (ph) and a guy named Bob White (ph). And Mark (ph) was from Kentucky. Bob (ph) was from Woburn, Massachusetts; have been a hockey goalie in college.

And it’s so reflective of who we are as a firm. Mark (ph) went to Centre College in HBS. Bob (ph) went to Bowdoin (ph), played hockey there and also went to HBS. So very, very different backgrounds. They had very, very different approaches to investing.

And I learned with working with them that, one, people really matter — people on your team and how you treat people at the various companies you’re investing in. That makes a big difference. All money is green, and people want — wants to do business with you. You got to leave your values every day.

Secondly, there’s not only one way of doing it. Mark (ph) was always a little bit more of an engineer, and Bob (ph) was always a little bit more of an artist. And they recognize that in each other. And for me to become the third musketeer of that group early in my career really, really was — was helpful. And they both since retired from the firm but, you know, I — I spoke to Bob (ph) last Sunday. He’s teaching at HBS, and Mark’s (ph) got an office right around the corner. And that’s, I think, part of the beauty of — of the firm and how we grew up together, and also honestly being in Boston, it’s just a — a little bit smaller.

And then my father-in-law had really helped — helped me in my business career. He was a senior banker. He ran investment banking at Drexel Burnham. I actually met my wife after I worked for him so that was a little odd. But — so he understood the choices that you make and — and how to think through things from review processes to, you know, how to compensate people fairly, how you guide your own career. And he always made sure that you don’t forget that you are measured not only by what you do, but what you choose not to do. And I’ve always thought that that’s incredibly good — good advice.


RITHOLTZ: Let’s talk about everybody’s favorite question, books. Tell us some of your favorites and what you’re reading now.

LAVINE: So, we talked about Bryan Stevenson’s book and — and one incredible, incredible impact it — it had on me. Another interesting book, a — a — one, you know, I become friendly with through the Holocaust Memorial named Sarah Hurwitz was Michelle Obama’s lead speechwriter. But when she left government, she didn’t write a book on politics. She actually had rediscovered her Jewish roots. She had been fairly non-observant and reimagined religion and seeing it as an adult, you know, and somebody who — who focuses on language reimagine or — or investigate her Jewish roots in the Jewish state through the use of language, through the difference between what the values of the religion are versus the observances that, you know, are traditions that came along well afterwards.

And while clearly, it’s about Judaism, you could apply this to any religion and just think about, you know, the philosophical underpinnings of religion. And when people move away from their fate, did they do so because of the (inaudible), because it’s approachable. It’s just brilliantly written.

I — I — I — there’s a chapter in there about imagining God, and she’s like you actually don’t have to believe in God in any sort of traditional sense to — to be a person of faith. And she’s like I can’t tell you what God is, I can tell you it’s not an old man with a beard sitting on a chair, and it could be anything from the energy between us all as people to some concept of the force from Star Wars. And it’s just a — a fascinating book.

And I also just finished Bob Iger’s memoir, “The Ride of a Lifetime,” and I thought it’s just a — both a fascinating personal story, as well as interesting thoughts on on management. And I always try to read fiction and non-fiction, I have one going of each at the same time. And I discovered during a pandemic an author named Fredrik Backman who’s a Swedish author, and he wrote a book called, “A Man Named Ove,” O-V-E so — until I heard an interview with them, I thought it was pronounced “Ove.”

And — and he also wrote a — a book called “Anxious People” and “Beartown.” And there, he tells incredibly interesting stories. They’re all very different. They all sort of have twist. And they explore some — some really important and sometimes heavy topics, but with a humor and an approachability that is — is fascinating. And I just think his books are so incredibly well-written and so readable that during the course of the pandemic I read three of them.

RITHOLTZ: Really interesting. And — and what was the full title of the first book about faith. You went by too quick.

LAVINE: Sarah’s — Sarah’s book is called “Here All Along.”

RITHOLTZ: “Here All Along.” I’m — I’m …

LAVINE: What she’s saying is — is that the religion and the belief existed all along, she just had to find it. It’s been with her. It’s been here all along.

RITHOLTZ: Got it, finding meaning, spirituality, and a deeper connection to life. Got it. We’re down to our final two questions, what sort of advice would you give to a recent college grad who is interested in a career in investment management or finance or private equity?

LAVINE: Know why you want to do it. If you do it just for the money, at some point, that won’t be enough. And if you’re only doing it for the money and not because you’re interested in it, then the money won’t be there. And I think with any — any — any career you choose, it’s got a — you’ve got to peak your interest. You got to be good at it, and you want to make sure you know why you’re doing it.

RITHOLTZ: Good — good advice. And our final question, what do you know about the world of investing in private equity today that you wish you knew 30 or so years ago when you were first starting out?

LAVINE: I have an expression I use a lot with the team, which is it’s never as good as it looks or as bad as it feels. And that when the markets are doing great, avoid the temptation of enjoying it too much. And when the markets are bad, remember that markets operate in cycles, and there is another side.

And for our 20th anniversary a few years back, I wrote a letter to investors, and I had three pictures that summed up some of the things I had learned. One was a picture of a clothing tag that said one-size-fits-all. The other one was a picture of Roger Federer. And the last one was a picture of the moon landing. And the point I was making was, one, we know that you never walk into a store and say, “I want a sweater. Do you have one that’s one-size-fits-all? That you — you can’t be all things to all people. So, know what — know what it is that you’re doing and — and — and do that.

Two, I’m a huge tennis fan, and — and I should mention Christopher Clarey’s book on Roger Federer that just came out was — was phenomenal. But Roger Federer, over the years, early on people thought wasn’t going to make it. He insisted on playing with, you know, a low-technology, undersized racket when people were really turning to power games to just crank up their serves, he continued to — to — to — to focus on the techniques that he has. And he has a one-handed backhand.

And as everyone was trying to tell him to change his game and it was unsustainable, he actually knew who he was, and he knew what his game was. And overtime he’s made tweaks, he did finally get a slightly bigger racket, but still not one of the huge ones. And he’s added some things to his game, but at his core, he knows who he is, he knows what he’s good at. And that is what has been the key to his success. He has focused on making that better rather than chasing the newest tennis bat.

And then lastly, the picture of the moon landing is to remind people — and this is really important in investing and everything in life. Just because you’ve never seen it before doesn’t mean it can’t happen, and that you need imagination, and you need to be able to adapt to new realities all the time.

RITHOLTZ: Really, really fascinating stuff. Do you remember — I don’t know maybe it was like 15, 20 years ago, there was a David Foster Wallace article on Roger Federer. I’m sure I can find it in — in Google, but it was essentially Federer as like a near religious experience and how there has never been anybody like him. I’m going to dig that up because if you’re — I’m a tennis fan. I — I’m — I’m late to the game, I started playing over only over the past decade and have always been impressed just as a spectator of Federer. But if you read this one piece, it’s just a beautiful combination of writing and subject. I think you’ll find it, you know, absolutely intriguing.

LAVINE: I will — I will look that up. I think it was in “The “New York Times”,” and I will definitely look that up. I do think, you know, there are so many metaphors that can translate from sports to life. And I — I — I do think that his discipline and the — the last class and grace of his game teaches us a lot about how we can conduct our lives.

But also, when you look at Nadal, there’s lessons from how — how he conducts himself, and he has a particular humility. And I — I just think that as — as we said, the metaphor does translate.

RITHOLTZ: Really, really interesting stuff. Well — well, thank you, Jonathan, for being so generous with your time. I — I really enjoyed this.

We have been speaking with Jonathan Lavine. He is the Co-Managing Partner of Bain Capital. If you enjoy this conversation, be sure and check out any of our previous for 400 interviews. You can find those at your favorite podcast sources: iTunes, Google, Bloomberg, Spotify, et cetera. Sign up from my daily reads at Follow me on Twitter, @ritholtz.

I would be remiss if I did not thank the crack team that helps put these conversations together each week. My Researcher is Sean Russo. Mohamad Rimawi is my Audio Engineer. Paris Wald is my Producer. Atika Valbrun is our Project Manager.

I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.

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