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- Jon Korngold has been busy building out a division within Blackstone dedicated to investing in fast-growing companies.
- Business Insider spoke with more than a dozen people who know Korngold to learn more about the 45-year-old investor behind Blackstone Growth, or BXG for short.
- Fresh off purchasing a $3 billion controlling stake in the owner of the dating app Bumble, Korngold, who joined Blackstone in January, said he’d like to do four to five deals a year, writing checks between $200 million and $500 million.
- People close to him say his ability to connect with founders and entrepreneurs suits him well in tracking down future opportunities.
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Jon Korngold has long perplexed colleagues with his ability to cram his calendar.
He spent 18 years at General Atlantic, a firm known as the “gold standard” for growth equity, where he was personally involved in deals with Adyen, the Amsterdam-based payment company; Qualicorp, the Brazilian healthcare-insurance group; and MedExpress, the urgent-care center.
Then, in January, he joined the asset-management giant Blackstone to lead an ambitious new growth-equity push, charged with finding fast-growing companies to write big checks to. He’s fresh off his first investment at his new firm, coleading a deal earlier this month to acquire a $3 billion controlling stake in MagicLab, the owner of the dating app Bumble.
He is also on the board of trustees of the 92nd Street Y, an Upper East Side institution known for its star-studded lineup of community events.
Plus, he’s on the board of trustees at the Dalton School, the New York City prep school that Chevy Chase and Anderson Cooper graduated from, as well as at the Central Park Conservancy, a nonprofit that maintains the most visited park in the US.
“I would challenge you to find a guy who is involved in more things, who has as big of a job as Jon,” Sarah-Marie Martin, a managing director at Goldman Sachs who has advised Korngold as a client, said. “I always wonder if the guy sleeps.”
We talked to more than a dozen people who have worked with Korngold, and Korngold himself, to learn more about the man who is meeting with investors all over the world and seeking as much as $4 billion to kick-start the Blackstone Growth division.
In leading the division, Korngold has become a new entrant to an elite club atop the billionaire Stephen Schwarzman’s house of financiers overseeing more than $554 billion assets under management.
Many said his past successes have stemmed from his ability to network and connect with founders and entrepreneurs — letting them down easy when he has less than optimal news about a company’s valuation, while also appealing to their human side with an earnestness rare for Wall Street.
“I find it really entertaining; everyone is like, ‘Whoa, how do you know Jon Korngold?'” said Steven Zuckerman, a childhood friend who has gotten some help from Korngold in building his healthcare-technology company Vatica Health. “He’s the same guy I’ve known for 30-plus years.”
Now Korngold will have to put his contacts to use at Blackstone, in an area where the firm has traditionally been only an occasional player.
Going from General Atlantic, with 340 employees in 14 offices focused purely on growth equity, he will have to adapt to a larger pond, with 2,500 employees in 24 offices worldwide, and business lines spanning infrastructure, credit, real estate, hedge-fund solutions, and private equity.
Still, Blackstone has fewer people dedicated to growth equity than General Atlantic, so Korngold has a full plate booking international travel to reach investors and reaching out to colleagues to build out a bigger team.
Financial News An ‘impossible-to-get’ hire
It was Korngold’s work leading General Atlantic’s financial services and healthcare investments that landed him on the short list of executives sought by Blackstone President Jon Gray, who had envisioned Blackstone’s own dedicated growth-equity team.
“We thought Jon would be amazing, but it would probably be impossible to get him,” Gray said.
Gray, a real-estate billionaire and the chair of Hilton Worldwide, had just been appointed president at Blackstone in February 2018. One of his first orders of business was executing an idea that the firm’s executive ranks had long been contemplating.
Technology looked to be disrupting many industries, Gray observed — including retail, media, and energy. The only problem was that Blackstone didn’t have a dedicated platform to invest in these companies, Gray said.
Over four to five months, Gray and other Blackstone execs convinced Korngold to make the leap — a move observers expected would draw investors to fork over funding for BXG.
Korngold had a hard time with the decision, given his tenure at General Atlantic, people close to him said. Friends characterize him as a family man who makes time for his kids despite a busy travel schedule, throwing Halloween costume parties and coaching his son’s and daughter’s sports teams.
“He struggled with the idea of leaving a place that was good for him and where he grew up,” one friend who he spoke with about his departure said.
In addition, while working at General Atlantic, Korngold had marketed the advantages of a pure growth-equity platform over one that operates within traditional private equity.
One reason was the way GA raised capital — from high-net-worth people and their foundations and endowments, as opposed to institutional investors — a difference, he told the finance publication Privcap, that translated to a “softer culture in terms of no sharp elbows or masters of the universe.”
GA also funded its investments from a single pool of capital, rather than a series of separate funds. This, he said, meant fewer time constraints when investing.
He told The Deal in 2016: “Best idea wins, as opposed to having the pressure to deploy capital, potentially in an unnatural time in the cycle, because that’s when your fund’s mandate or regional mandate requires that you invest it.”
Asked about the comments, Korngold said he stood by them. He said Blackstone differentiated itself from other large private-equity firms in that the firm is dedicating a whole team to growth equity, rather than treating it as a side project, with investors moonlighting from other divisions.
Financial News Taking fewer bets
Ultimately, Korngold was drawn in because he liked the idea of a “blank sheet of paper” to reimagine growth-equity investing.
The opportunity arrived at a time when the investment strategy had fallen from fashion, with industry observers saying the late cycle is not generally considered the best time to invest in fast-growing companies. The number of funds raised for growth equity in 2019 was the smallest since 2012, according to Preqin data.
As it had traditionally been done, Korngold said, growth-equity firms generally would take small stakes in a variety of companies — maybe 20 in a given year — but offered little more than their own financing, with few resources such as industry specialists to actively improve the businesses they invested in.
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At Blackstone, he said, he could take fewer bets. Korngold told us that he’d like to execute between four and five deals a year, finding just the right companies worthy of a $200 million or $500 million check, the sweet spot for BXG investments.
He also plans to utilize the firm’s more than 100 so-called operating executives — former CEOs and other execs — who can help companies grow into what he calls the “end state” of maturity, from startup to blue-chip corporation.
“If it’s just capital you need, go to a bank; get a revolver. It should be something else,” he said. “If you’re looking for a partner who acts like an invited guest alongside the founders, that’s what we do.”
He has a broad mandate at Blackstone to work with its other divisions in scoping out opportunities, including a unit called Tactical Opportunities, which sometimes takes minority stakes in companies, and the firm’s traditional private-equity business.
That’s how things worked when Blackstone’s $3 billion deal for a controlling stake in MagicLab, the owner of the dating app Bumble. The deal, which Korngold says will help Bumble expand into new geographies and user demographics, and create new product features, was funded not only by capital raised for BXG but also by Tactical Opportunities and the private-equity unit, according to a person with direct knowledge of the matter.
Whitney Wolfe Herd, Bumble’s chief executive, said a late July meeting in the company’s Austin, Texas, headquarters was where she first met Korngold.
“It just felt like when you get to know Jon, he is thoughtful, he is purposeful, he is motivated by impact,” Wolfe Herd said. “He cares about things we truly care about inside Bumble as well.”
Alongside striking deals, Korngold is building his team. He’s been on a recruiting spree to hire executives in New York, San Francisco, and London, forming a team of 20 to staff up BXG alongside some of Blackstone’s existing dealmakers.
More hires are expected to follow. And he’ll need do more work to ramp up to his desired four to five deals per year.
It will all be done with a slightly different pitch than he used to have.
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