- David Rubenstein spoke to Business Insider about buying a sports team and his two big misses.
- He said the AI boom may still have steam, and selling in a crash can be a massive mistake.
- The private equity billionaire and author published a new book, "Inside the Owner's Box," this week.
David Rubenstein explained why he bought a baseball team, missed out on Amazon and Facebook, and would be careful betting on or against the AI boom.
The billionaire cofounder of Carlyle Group, one of the world's biggest private equity firms, spoke to Business Insider ahead of the release of his new book "Inside the Owner's Box: Conversations on Power and Leadership in Sports."
In the book, Rubenstein tells the story of buying the Baltimore Orioles for around $1.7 billion in 2024, and shares his interviews with fellow team owners, including Robert Kraft of the New England Patriots.
He told Business Insider that a few decades back, the ultrawealthy didn't want the scrutiny that comes with owning a team. But changing attitudes and soaring valuations mean they now believe "not only can they have some fun, and kind of be a big deal in the sports world, but they can actually make money on it."
Rubenstein said he bought the Orioles because he hadn't done much on the philanthropy front for his hometown of Baltimore, so he wanted to "try to do something for the city."
Early mistakes
He also shared that his best investment was likely "starting Carlyle with hardly any money," while his gravest investing error was "walking away from Facebook and Amazon at the beginning."
Rubenstein said that Amazon's founder Jeff Bezos, gave him and his partners at Carlyle a stake in the e-commerce startup "at the very beginning." But they decided to sell it after Amazon stock collapsed during the dot-com bubble, meaning they dumped a position that would have been worth "many billions of dollars today."
He also recalled that his then-future son-in-law was a classmate of Mark Zuckerberg, and asked Rubenstein to invest when the Meta cofounder was seeking to raise $30,000 to launch his website.
"I didn't take it seriously," Rubenstein said. Eduardo Saverin provided the initial capital for Facebook instead, and now ranks among the world's 60 wealthiest people with a roughly $40 billion net worth, per the Bloomberg Billionaires Index.
Navigating the AI race
Rubenstein told Business Insider that AI company valuations are "really, really high" and hard to justify with earnings in some cases. But he pointed to Nvidia's recent blockbuster results as evidence that it's "not all pie in the sky."
"As we learned in the dot-com era, not every dot-com company survived and made money, and not every AI company will survive and make money," Rubenstein said.
"But the ones that are hot and are doing well now, probably will continue to do well for some time," he added.
Rubenstein also acknowledged concerns about aggressive accounting, circular financing, hidden debt, and overinvestment in AI. Quoting Warren Buffett, he said that "when the tide goes out, we'll see who's been swimming without a bathing suit."
However, Rubenstein also emphasized that markets have historically rebounded after crashes, meaning the "biggest mistake people make when you have these bubbles bursting is selling everything and getting out."
Instead of joining in the panic-selling, he said, "probably that's the time to hold on and maybe buy more."
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