October 24, 2023

I recently had the enormous privilege of sitting down for with legendary financier and philanthropist Mike Milken for a wide-ranging conversation. As I always do, I came away humbled and grateful to know this remarkable man.

I first met Mike at his annual conference in 1987 and I remember three things very clearly: He was serenaded by Diana Ross; I didn’t know preferred stick from livestock; and there were assets worth $6.8 trillion in the room.

Over the last 36 years, Mike has proved time and again that he is not only a super-human intellect, he is an incredibly kind, generous, thoughtful human being. Despite his ferocious work ethic, he always makes himself available to others, to listen, to counsel, to help.

If the truest test of friendship is to endure through adversity, Mike Milken is a phenomenal friend. He never stops thinking of how to raise up and help others.

Our conversation touched on several topics, but I’ve chosen to share some of the perspectives that struck me most. (If you want to watch the whole conversation: https://youtu.be/9kfbvlKTgSk?si=rkMU-XsKMc4UlKAr)

The Evolution of Capital Markets

It’s a good thing that President Dwight Eisenhower did not take up 11-year-old Mike on a letter he wrote offering to lead NASA in its early days. At the University of California, Berkeley, he studied finance and became fascinated by credit. Mike quickly discovered that small and medium-sized businesses, which often had trouble getting credit, offered a far higher rate of return, with lower default rates, than even sovereign debt issuers, which were assumed to be the safest.

Not only that, but because of the large number of smaller enterprises, it was possible to create a whole new asset class if you could package up the variety of companies that existed and then create the liquidity to encourage investment. Mike also noted the importance of understanding that one size does not fit all: Different companies and sectors flourish when they have access to customized financing options – a revolutionary notion at the time.

I was deeply struck by his early sensitivity to a topic that, decades later, has come to dominate the corporate arena. What, he asked, does society think about your business?

Mike asks this question not because he’s blindly altruistic, but because society’s opinion quickly becomes political and translates into regulation and policies that can make or break a business. It’s an important consideration, especially for those who are intent on innovation and challenging received wisdom and those whose interests are entrenched in the status quo.

The Importance of Leadership

In capital markets, one essential differentiator is entrepreneur, the CEO, and the vision that drives the leader at the helm of an organization, according to Mike.

“We traded 7,000 different securities. So, whether it was a preferred stock or warrants or whatever it might be, what I was looking for was the vision of the CEO. And, as the world changes, can that CEO adapt?”

He also insists on one factor that is typically undervalued or overlooked altogether in the external evaluation of every organization:

“Human capital is the number one asset. It’s 70, 80, 90 percent of the value when you finance people and their vision.” 

Philanthropy

In recent years, Mike Milken has become an icon in terms of the time, talent, and treasure he has devoted to education, public health, medical research – among other causes. In his book, Faster Cures, he provides an overview of the initiatives he supports and the rationale: Public health and medical advancement are the bedrock for economic well-being. Furthermore, access to healthcare is, in Mike’s view, the ultimate equalizer in society.

He credits his dad with instilling in him the belief that at a very fundamental level, society functions best when all people believe they at least have a chance at success. “You need a hope and a dream that you can succeed based on your ability.”

“It was drilled into me at a very young age that we are not “giving,” we are investing in the future, in the world of the future for our grandchildren and great-grandchildren.”