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Table of Contents
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Table of Contents
 * Early Life and Schooling
 * Career Before Carlyle
 * A New Leveraged Buyout Firm Was Born
 * David Rubenstein FAQs
 * The Bottom Line

 * Business Leaders
 * Rich & Powerful


HOW DAVID RUBENSTEIN BECAME A BILLIONAIRE


By
Warren Cassell Jr.

Full Bio
 * 

Warren Cassell Jr. started his first business at the age of eight. He is the
managing principal of The Abella Group LLC.
Learn about our editorial policies
Updated January 04, 2024
Reviewed by Charles Potters

Close

David Rubenstein is best known for co-founding Washington, D.C.-based private
equity giant the Carlyle Group. After a stint in law and politics, Rubenstein
turned to leveraged buyouts and made a fortune. Today, the Carlyle Group manages
billions of assets for a wide range of U.S. and international institutional
investors, earning Rubenstein a reputation as a “master fundraiser."1



Here's an overview of how David Rubenstein made his billions and built one of
the world’s largest private equity firms.




KEY TAKEAWAYS

 * David Rubenstein grew up with little income and needed scholarships to attend
   college.
 * He started out in law, then realized he wasn’t very good at it and got bored.
 * He then worked in politics, serving President Jimmy Carter.
 * Rubenstein’s move into finance was inspired by former U.S. Deputy Treasury
   Secretary William Simon’s story of striking it rich from a leveraged buyout.
 * This led to Rubenstein and his two partners creating the private equity firm
   the Carlyle Group.


EARLY LIFE AND SCHOOLING

Born in 1949, Rubenstein was an only child and lived in a small, low-income
community in Baltimore, Md. His mother was a homemaker, while his father, who
never made more than $7,000 a year, worked as a postman.23



Rubenstein's mother wanted him to become a dentist, but he wanted to serve in
public office after watching the inauguration of President John F. Kennedy when
he was 12 years old. He said that Kennedy's famous statement during the historic
event—‘‘Ask not what your country can do for you, ask what you can do for your
country’’—instantly struck a chord with him.45



As a result of his family's small income, Rubenstein had to depend on
scholarships to go to college.6 He studied political science at Duke, getting by
on scholarship, loans, and working part-time, then secured a full scholarship to
study law at the University of Chicago Law School.47




CAREER BEFORE CARLYLE

With a law degree under his belt, Rubenstein immediately joined a prominent New
York–based law firm called Paul, Weiss, Rifkind, Wharton & Garrison.8 Not long
after, he began to think about a new career path.



Rubenstein claimed whenever he thought about leaving and communicated this to
the firms he was working for, none of his partners or clients pleaded with him
not to leave. He took this as a sign that he wasn't a good lawyer. "I wasn't
going to be a Richard Posner; I wasn't any kind of legal genius," he said.9



Between 1975 and 1976 Rubenstein changed paths, serving as chief counsel to
Senator Birch Bayh on the U.S. Senate Judiciary Committee's Subcommittee on
Constitutional Amendments.10 He subsequently got a position in the Jimmy Carter
presidential campaign. After Carter took office in 1977, Rubenstein was
appointed deputy assistant to the President for domestic policy. His term
abruptly ended four years later when President Carter lost reelection.8




A NEW LEVERAGED BUYOUT FIRM WAS BORN

Following Carter's election defeat, Rubenstein initially had trouble finding a
job. He was unemployed for six months but eventually returned to practicing law.
However, he quickly became dissatisfied with his job.11



One day, Rubenstein came across an article in the newspaper about former U.S.
Deputy Treasury Secretary William Simon. After Simon's tenure with the
government, he and his partner, Ray Chambers, purchased Gibson Greeting Cards
with $1 million of their own money and $79 million worth of debt in what is
known as a leveraged buyout.2 They then made the company's operations more
efficient and took it public for $290 million.12



A light bulb went off in Rubenstein’s head when he read the story. It was the
first time he had heard about leveraged buyouts. Originally, he planned to
recruit a team of finance professionals interested in starting a private equity
firm that could employ him as a legal consultant, but he couldn't find anyone
interested in forming a new firm.3



So, in 1987, Rubenstein and two other partners went about launching a private
equity firm of their own. The company was called the Carlyle Group, named after
the Carlyle Hotel in New York City, where some of the initial company meetings
were held.410



Rubenstein is also a best-selling author and generous philanthropist.613

At that time, private equity firms were predominantly headquartered in New York
City, but Carlyle was formed in Washington, D.C. Rubenstein thought that he
could raise a lot more capital by telling investors that they were focusing on
acquiring businesses heavily affected by the government—hence, their location.14



Rubenstein and his team were able to raise $5 million to get Carlyle off the
ground. Of that figure, $3 million was allocated to actual investments, while
the remainder was used for operating expenses. One investor that backed Carlyle
was the well-established investment house, T. Rowe Price (TROW).14



Until 1990, Carlyle raised money on a deal-by-deal basis. Their first buyout
fundraised $100 million from investors. The funds were used to acquire a number
of businesses. Since then Carlyle has raised billions of dollars from investors
in the United States and abroad for more than 100 different funds.15



In 2012 Carlyle went public, raising $671 million in an initial public offering
(IPO).16 

Today, Rubenstein works at the company as co-chairman. He shares that
responsibility with his co-founder William E. Conway, Jr. Daniel A. D'Aniello,
the other co-founder, stepped down as chairman in 2018 and now serves as
chairman emeritus.17




HOW MUCH IS DAVID RUBENSTEIN WORTH?

David Rubenstein’s net worth, as of Dec. 28, 2023, is $3.8 billion, according to
Forbes. His net worth has fluctuated over the past few years. He was said to be
worth $4 billion in 2022 and $2.7 billion in 2019.18




HOW MUCH DID DAVID RUBENSTEIN PAY FOR THE MAGNA CARTA?

Rubenstein paid $21.3 million for a rare 710-year-old copy of the Magna Carta at
a Sotheby's auction in New York City in 2007. His actual bid was $19 million,
but fees and commissions raised the final figure to $21.3 million. Rubenstein
said he bid because he was determined to see the Magna Carta remain in the U.S.
and the National Archives, where it has been on display since 1988.19




HOW DID RUBINSTEIN GET RICH?

Rubenstein became rich turning the Carlyle Group, a leveraged buyout shop he
co-founded, into one of the largest private equity firms in the world.




THE BOTTOM LINE

David Rubenstein made his fortune by collecting management fees from investors
who gave him money to invest on their behalf. With a background in law and
politics, Rubenstein co-founded the Carlyle Group, a private equity firm that
invested in companies heavily affected by the government.2



Today, Carlyle is one of the largest and most diverse private equity firms in
the world. The company is responsible for allocating capital in a number of
sectors for institutional investors around the world.2



Article Sources

Investopedia requires writers to use primary sources to support their work.
These include white papers, government data, original reporting, and interviews
with industry experts. We also reference original research from other reputable
publishers where appropriate. You can learn more about the standards we follow
in producing accurate, unbiased content in our editorial policy.

 1.  Forbes. "David Rubenstein and the Carlyle Group: The Kings of Capital."

 2.  The New York Times. "Billionaire Confessional: David Rubenstein on Wealth
     and Privilege."

 3.  The University of Chicago, The Law School. "David M. Rubenstein '73,
     Lessons in Leadership and Philanthropy."

 4.  Horatio Alger Association. "David M. Rubenstein."

 5.  GW Today. "From Blue-Collar Birth to Billionaire."

 6.  The Giving Pledge. "David M. Rubenstein."

 7.  The New York Times. "Carlyle Co-Founder’s Formula for Success: Study the
     Humanities."

 8.  David Rubenstein. "Biography."

 9.  The University of Chicago, The Law School. "David Rubenstein Makes $10
     Million Gift for Student Scholarships."

 10. AllGov. "Rubenstein, David."

 11. Medium. "From Being Unemployed to Managing Billions."

 12. The New York Times. "Reaping the Big Profits from a Fat Cat."

 13. White House History. "David Rubenstein on Patriotic Philanthropy."

 14. The Washington Post. "CARLYLE GROUP IN SPOTLIGHT."

 15. The New York Times. "Little-Known Carlyle Scores Big."

 16. Reuters. "Update: 4-Carlyle IPO Raises Unimpressive $671 Million."

 17. Carlyle. "Board of Directors."

 18. Forbes. "David Rubenstein."

 19. The New York Times. "Rubenstein Buys Copy of Magna Carta."



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