How NFL Legend Steve Young Built a $10 Billion Fund

0:00Support comes from Amazon Business. Unlock smart business buying with fast, free delivery on millions of items and practical AI innovations that automate repetitive tasks so you can make smarter decisions faster. Learn more at AmazonBusiness.com. Bloomberg Audio Studios. Podcasts. Radio. News. We started a firm basically around what I learned in football and said private equity can be a place of abundance that makes no sense because it should be just transactions. It should be zero-sum game. You get what you get, I get what I get, but great business, the greatest businesses are the ones that have that heart, that feeling, that there might be other ways to make some money.

0:47That's fine with you, but to me, that's the way to make money and make it legacy.

0:55There's no one quite like Steve Young. The NFL Hall of Famer who won three Super Bowls as a scrambling lefty quarterback is now making moves in private equity. Alex and I caught up with him in his office at HGGC. That's the$10 billion firm he created almost 20 years ago. We talked to him about ownership, risk, and why he thinks the P.E. business needs a new playbook.

1:25All right, so Steve Young, we often start this show by asking people to introduce themselves. How do you introduce yourself these days? Well, most of everything is at home. I still have one left in high school, my little daughter Lila, kids in college, kids out of college, trying to get people launched. And so I was like, I would introduce myself as an aspirational dad right now and see if I can, you know, get people launched. So not three-time Super Bowl winner, you know, MVP, Hall of Famer, co-founder of a private equity firm, just aspirational, Dan. Well, I think all politics are local. If things are good at home, then things are going to be good everywhere else.

2:01And so for me, it was my old mentor, Roger Staubach, who told me when I transitioned, I said, how do you transition? He goes, you run. I go, run where? He goes, run anywhere. Just get away from football because football will never leave you, but you need to leave it. Wow. And so I thought that was great advice because it's really true. Football never left me, but it's over. And I think that I don't want to drag it around. Everyone has a dream. And a lot of dreams are, you know, my dream is to play football and play professional football. And you get the dream comes true, but it is going to end.

2:32And the day it ends, the day before it ends, you're one of the best in the world. Great. The next day you wake up, that's gone. What are you great at? And the truth is nothing, right? I'm not great at anything else. I talk about it all the time, Steve, is this whole idea of it's not from penthouse to penthouse. And what I mean by that is you played for 15, 20 years and you're in the penthouse. That doesn't mean that you come to the business world and you're going to be in the penthouse. You don't start in the third floor or the lobby. You actually have to start in the basement and humanize yourself and have the humility to start from the ground up, just like you did in the minor leagues in baseball or football.

3:09And that's an interesting—I do have a question for you following up on what you just said. When you walk into an investor meeting or a company you're trying to buy, I find that sometimes being an athlete, the greater you are and even the more famous you are, that almost works against you. Have you dealt with that at all? So it's funny. For the first 15 years of this private equity journey, I tried to avoid it. And if it came up, I was fine. But if it didn't come up, I was fine with that too. And I realized over time that I was the one that was overwrought about it. I'm the one that's thinking about it.

3:44And I think it was an investor. And I'm not going to name the investor, but it was a big investor in one of our funds. And it was a big deal for us to get them in. And we finish. And he says, we're done. And he goes, do you mind? There's one last thing I wanted to ask you. He's like, yeah. He goes, will you throw me a ball? Can we go out and have a catch? And I was like, I was thinking about it. I'm like, yeah. We can go have a catch. And that's when I was like, stop. Let's just, like, I played. It was great. If it's helpful, if it's useful to you in some way, let's talk about it all day long.

4:17But if it doesn't come up, let's talk business. Yeah. Because that's what's fun. And so let's talk business. Let's talk about private equity because, as both of you know, I love private equity. I'm fascinated by it. But private equity is not for the faint of heart. I mean, I think you would agree, Alex, that you and I look at this industry together a lot. There are a lot of easier things you could have done. Why private equity? I don't know. I'll try to give you the quick answer to that. I'd gone to law school while I played. I went to three Super Bowls while I was in law school in the wintertime.

4:52But it was really around getting ready for the transition. And so because of that, I thought I'd be a lawyer. But then I was asked to be on the board of Power Bar, which at the time was a meal replacement for marathoners out of Berkeley, California. But for me as a single guy, I was like, that's not meal replacement. That's dinner. and so we got famously friends he goes look join the board on the board was a warren helman and larry sanzini titans of silicon valley helman founder of helman and friedman and larry sanzini wilson sanzini famous law firm and i had a buddy who had started a business around an algorithm that back in the mid-90s you could go in and fiddle around with urls in the internet and you and he said figure out an algorithm that could localize the internet before that everyone's time here, you remember when it was like, you could put in Palo Alto or New York hammer and you'd get a USSR sickle.

5:45Like nothing made sense. And so I took it to him and said, look, this is and they realized, Steve, you're a businessman. You're not a lawyer. And so that transition, we build a business. And that's where I met Rich Lawson, my longtime partner, was building a business called found.com. Wow. And we did it while I was finishing playing. And that's what started it. And one of our investors was Bain Capital and Bob Gay. and Bob saw what we were doing and then he sponsored us, essentially sponsored me and Rich together to start a private equity firm. And that's how it transitioned. And so I started what is now HGGC Fifth Fund and$10 billion later.

6:18Here you are. Here we are. So Steve, I mean, if you think about 40 years ago when Henry Kravis and Steve Schwartzman and you start Blackstone and KKR and Carlisle with David Rubenstein and the big top four, it was a very small industry. Very small. If you look 40 years now, you have thousands. 6 ,000 middle market private equity firms. So the competition is fierce. So when it comes to imposter syndrome, Hall of Famer, three Super Bowls, law degree, but now you're asking investors and institutions to invest in you and Rich, first-time fund, former football player. Describe how you felt when you were in this boardroom asking for money.

6:55For early, early days. The first days. You know, it was interesting. we all agreed in 2008 that private equity was broken. Wow. I'd seen enough of private equity for eight years to say, I have that opinion. And then others have been back in the KKR days and early Bane days and late 80s, early 90s. But like the middle market where the people are, Alex, it's like across the table is not some widget. It's you and me, let's work it out. We've got a business size that it's not a spreadsheet jockey kind of process, it's people. And we said, we've lost that. And so in 2008, we started a firm. basically around what I learned in football, which Bill Walsh used to say, he wrote a book, my famous Hall of Fame coach, the score takes care of itself.

7:38In other words, yeah, we have to return money to you, but that score will take care of itself if we have those fundamental values of partnership and the athleticism to be great partners and use our intellect and our ability and our expertise. And so what I had to do, Alex, as me coming out of a professional career and imposter syndrome, I need to get really smart people around me fast because I know it's not, if it's about me, we're in trouble. But the imposter syndrome sticks around. I mean, I still think about sometimes I feel awkward and a little out of place. And I think that's my own weird insecurities.

8:17And I think in a weird way, insecurities drove me as a football player. And in some ways, I think some of the insecurities drive me here. Just be completely authentic about it. Yeah, of course. I mean, it's hard to say because I'd love to tell you I'm the king and get out of my way. But I think to be honest about it, the imposter syndrome is something that is around and I don't know that it's completely gone.

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9:16You may not have an MBA from Harvard, and neither do I, but the MBA you got is three Super Bowls. To be in the middle of that huddle, in a pressure situation, in the Super Bowl with 150 million people watching, you're doing the same thing in a boardroom, right? Sending your message. Here's the play. Here's your strategy. And it really is about people. And if you're not good at that, it does devolve. It will, you know, football is one in relationship. I go back to Bill Walsh. He used to stand in front of the team the first day of training camp and say, I don't care what play we call. I don't care what defense we run.

9:50We will win because we have shared common experiences together and an element of love for each other. Mm. Wow. Powerful. And I was like, we all like, what did he just say? Yeah. That's insane. And so I go back to, you know, the boardroom, the things that I had viscerally experienced, the stuff that I went through. It's a different, it's not a field, it's not a huddle, but it is the same drama. Right. I mean, I've gotten to know you pretty well. Like, you have an ability to go pretty deep with people. Where does that come from? maybe it's my own vulnerability that I feel to myself. Like if someone says I suck, I'm kind of like, huh, let me look into that.

10:30You know what I mean? And I think that that vulnerability makes me interested in what's happening around me. And I think I watch closely. When you play, and Alex, I don't know how you'd think about baseball, but football with the field, you know, there's 80 ,000 witnesses. There's a clock. There's a score. There's a play clock that you got to go. and if you pay attention on the field, the human behavior that happens to you and everyone else is the truth. You cannot lie. And so to me, I think my vulnerability or my interest in it just got an expert jolt from playing all those years. Like I feel like every human behavior I see in the world today, I see the flaw.

11:14I mean, did you have that experience? I mean, I'm fascinated by this idea of translation. Football's a different game from baseball. What are the commonalities for you? I mean, it's total transparency, right? Because every time you come to the plate, you're sitting in front of Yankee Stadium in front of 50 ,000 people. And all you've got to look is that scoreboard. It's going to tell you what's your batting average, what RBIs, home runs, OPS, everything. So you're either going to get cheered or booed. And it's immediate. And I think one of the advantages Steve and I have being former athletes is we have no problem saying, hey, that's my fault.

11:47That's my fault. and we get our butts kicked over and over, over again. In baseball, if you fail 70 % of the time, you go to the Hall of Fame. So you almost have a PhD in failing. The key is that you have a master in getting back up. And I think that's, we were talking a little bit about that earlier. A lot of people in business that all they've done is win, win, win. We're actually perfectly made for business because business is a sport of failure. Well, yeah, I love that because in a way, if I could get all the guys that are out there going through that and learn, it it's intuitive right it's what the it's you can't get in the pros and not have that happen to you it's intuitive but it's not you're not necessarily aware of it and if you can become aware of it and watch it and become it as a as a talent you can be easily hireable like if you really take it in and you notice it and you pay attention to it it's again it's portable 100 % portable over into the another practice another because it's people all right so I want to introduce an on-the-fly segment that I'm going to call Asking for a Friend, because I really am asking for a friend.

12:50Steve, Asking for a Friend, if you were to, say, have just bought a couple basketball teams in the last few years, you're taking on the role as an owner for the first time, you've been an owner of your firm, what's the best advice you could give him? Fascinating. treat your position as highly fireable even though it's not you get inevitably a little lazy just because i'm safe you're like i can make mistakes and you know and just grow up well i might get embarrassed someone might write a bad article about me but i'm not i'm not at risk like i just feel like i want to walk around without the hubris that i own the place wow right i mean It's like because, and I think people will feel, because you walk around with hubris, you own the place, everyone else is like, you do, so I'll bow, but it doesn't make me feel like I want to go fight.

13:47Wow. And I think that's super powerful. The other thing is one of the best things that ever happened to me when I was playing, I wasn't playing around. I was playing pretty well, but Mike Shanahan, Kyle Shanahan, the coach of the 49ers, is his dad. He was a great coach of the Broncos, and he played the coach of the 49ers for me. He turned to me one day and he said, you know, I'm a really aggressive play caller. And I think I spend so much time trying to make sure that I don't put you in a bad spot. But you know what? I start to feel like I'm holding you back. So I'm going to flip the script. And instead of holding you back, I'm going to empower you.

14:23You take care of me. Instead of me, coach, take care of you, you player, take care of me. I'm going to call as hard and fast as I possibly can. And if you, you know, if there's a problem, you deal with it. Wow. And I remember feeling like this empowerment, this feeling like, I mean, I can still feel in the back of my neck right now. It's like, let's go do it. Let's do that. And then what came out of it was this acceleration. And so I guess my point is trust, like empower people to run ahead, not by the side and not from behind, but go. And I've done this in business and especially in our firm.

15:02You're young. you haven't done it before, well, you're about to. And you know what? It might cost us in the short run, but running out and forcing you to kind of do hard things that are ahead of your time, you're going to find out and we're going to find out really fast and then we'll iterate. Yeah. And it doesn't mean that you fail. It's just like, let's iterate, let's get back. And that's how you empower people. You have to empower. My coach empowered me. That's what it felt like. And then I was like unstoppable. And if you can get a team full of empowered people, you can't stop them. I love, thank you for that advice.

15:35And that really means a lot to me. And I think it's funny how much alike we think. No, we talked for a few minutes before. I'm like, we're going to turn to butter soon. We keep going around the circle. Yeah, I just want to take you to dinner and actually keep going because it was so good. No, but I've loved what you, I watch you on baseball. I watch you in a lot of interviews and stuff. I know this is rattling around. You're chewing on what I'm chewing on. And that's what I appreciate. Trying to figure it out every day.

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16:43I played for several amazing owners. Two of them are George Steinbrenner and Hal Steinbrenner. They were both great, but very different. And both had big impacts in my life and my business life. Talk a little bit about DeBartolo and also Bill Walsh. What did they mean to you and what made them so good? Eddie DiBartolo is in the Pro Football Hall of Fame as an owner. He's in there for a lot of reasons, but to me, the main reason is he was the first equity owner of a professional football team for sure that looked at the players as partners. Everything else, all I'd ever known was, and I'm going to conflate it, but it was chattel.

17:22And so I think he saw us like, you're my partner and we're in this together. and I think that's the empowerment, right? It's like I own the team and I could, it's in a drawer somewhere. I got a piece of paper that says I own it. Right. But I don't pull it. I put it in the drawer and I don't really pull it out. And you know what? Don't make me pull it out because I want you to know that, and his question was always, I want you to be champions. What do you need? And so whatever it was, we'd list it and then when you know what he did, he held us accountable. Like I gave you everything you needed.

17:54Where is it? And if we came up short, It was like, we didn't get it done. And so we'd have a little, you know. There'd be a discussion. There'd be a discussion. But it was like, you talk about empowerment. I always felt like we were in it together. And that's a super powerful feeling from an owner. That's unusual. And then Bill only accentuated that. He was somebody that was worried in 1987, 1992. He was worried about hydration and nutrition and sleep and mental health. And not only was the West Coast offense ahead of the, he was ahead of time in everything. Wow. They're both one of one. Yeah.

18:30And I ran into both of them. And it's a miracle. It's how many athletes that I know, amazing athletes, that never ran into someone like that, either a coach or an owner, and really toiled in general anonymity because they never got to a place that could be like that. And just to chew on that, because I'm obsessed with great coaching and great leadership. Bill Walsh, I've admired for a long time. Was it that he was just a great visionary, a great office of mind, great connector, EQ? What was his greatness? Okay, all of that. But I'm going to give you, I joined the team. First meeting, he's talking about love and everything.

19:09Someone's over in the corner with a big camera filming it and walking around, following down the hall, out to the practice field. And I'm like, what is this? You know, are they doing a museum or what is this? Because he's already won Super Bowls. He's like, maybe there's, I don't know, a documentary. And no, he was, it took me some time to figure it out, but he was developing what was a repository, like a physical box of everything that he was to all the EQ, all the speeches, all the installation, all the offense, anything that he'd ever done. I want it to be in a place where I could hand it to my assistant coaches because my assistant coaches aren't getting head coaching jobs and I want them to thrive.

19:47And so he handed it to Mike Holmgren as he went to Green Bay. He handed it to Mike Shanahan as he went to the Denver Broncos. and he handed it to many others. And he's basically saying at the height of his career, here's everything that I am. Here's all my proprietary knowledge. It's three generations ahead of everybody. We had a tactical advantage for 20 years. Yeah. Right? And he's handing it out. And both those guys told me that as he left, as they were leaving with this box of stuff, he said to them, I'll see you in the championship game. And we did. And then sometimes they beat us. Like, what are we doing?

20:19He goes, Steve, I knew I had a tactical advantage, but I knew it was going to be like a, it's like a glide slope. It's not going to stay the same. It's going to wane. So as it settles, if I don't reinvent myself off of the same, off of me, and I knew if I handed it to them, they'd sharpen my saw. Right. I was like, that's abundance. And so I know you think a lot about this, Steve, and Alex does too. What's the version of that that you use in your current life? You know, what is the spirit of abundance? What is the focusing on the transition? What does it look like? Think about transaction. Think about the roots of private equity are, we're going to make a deal, right?

21:01And if the deal sits as a spreadsheet in front of you, but there is a way to now take that as a base of transaction and create a space where we start to look at the full measure of what you'd like to do and the full measure of what we, the restrictions and the abundance of what we can do. And let's see if we can find ways together. And it's aspirational. You have to do it every day. You have to talk about it every day. You have to believe it every day. You have to go into the relationship that way. When things get tough, you got to remind yourself that that's what it is. And so I've taken from my previous life and said, private equity can be a place of abundance and makes no sense because it should be just transaction should be zero sum game.

21:43You get what you get. I get what I get. But great business, the greatest businesses are the ones that have that heart, that feeling that there might be other ways to make some money. That's fine with you. But to me, that's the way to make money and make it legacy. As we wrap up, Steve, I did want to ask you, and this is very much of a piece with what we're talking about. Your dad, who I think just recently turned 90. Grit. Grit Young. One line that you've talked about many times that I never forget is you told him you wanted to play in the NFL and he said, that's the dream. That's a wonderful dream, son.

22:19Less than 1 % chance, but everyone needs a dream. Hold on to it. But what's the plan? What's the plan? So I'll turn this on you now. As you think about this point in your career, you've got multiple partners now in this firm. As you think about this moment for you in this firm, in private equity, what's your dream and what's the plan? My dream goes back to my children. I think it's like, like I really do want to pay it forward. My dream is, and I think, you know, I asked my dad the other day because he's like, he bothered me all my life. What's your dream? He told me 110. So I guess my dream is 110.

22:58I'm sorry. What is 110? 110 years old. Oh, I like that. I love that. Sorry about that. You're not old enough to think about that. Yeah, exactly. In about 10 years, you'll be like, I know what 110 is. Yeah, yeah, exactly. He's like 110%. I love that. I'll always give 110%. No, 110 years. 10 years old. Yeah, yeah. All right, Steve Young, this has been a treat. I've been looking forward to this. I can't wait. I mean, I feel like you guys came to talk to me. I want more conversation with you guys, really. Anytime. I want to stay connected to you, Alex. Please. I think you and I are chewing on a lot of the same stuff.

23:32I love what you're doing. and I have a tremendous amount of respect and admiration for you. Yeah, me too.

23:41The Deal is a production from Bloomberg Podcasts and Bloomberg Originals. The Deal is hosted by Alex Rodriguez and Jason Kelly. This show is produced by Alexis Haught, Stacey Wong, and Anna Mazarakis. Original music and engineering by Blake Maples. Our booker is Paige Keffer. Our managing editor is David Ravella. And our executive producers are Jason Kelly, Amy Keene, Neville Gillette, Trey Shallohorn, Regina Dahlia, Kelly Laferriere, and Ashley Zingaro. Special thanks to Rachel Carnevale, Elena Saus Angeles, and Nick Silva. You can also watch this episode of The Deal on Bloomberg Originals on YouTube and Bloomberg TV.