ART BILGER: The slope of the curve of the change in jobs and skills when measured against time has never been so steep.

2002, the Akamai stock traded at a total equity value for the company at $57 million.

And now, they're working 20 hours a week driving Uber or whatever- they are considered employed.

ALEX ROSENBERG: I'm Alex Rosenberg. I'm about to sit down with Art Bilger. Art has been at the center of so many financial innovations over the past 40 years, from the rise of junk bonds to the tech bubble and everything in between. So, he is going to explain what he's seen in his career and why that all led him to looking at the nature of work, the changing landscape, the incredible rate of change, and how humans are working and trying to really stave off mass unemployment with this current venture. So, we're going to talk about where he's been and the issues he's looking at now in this 60-minute conversation. Please enjoy.

Art, thanks so much for joining us.

ART BILGER: Happy to be here. Thank you. ALEX ROSENBERG: So, I want to talk about what you're doing now, what you're looking at about the nature of work and some of the ways in which technological advancements may be setting us back and in certain ways. But to get there, and in order to get there, I want to give people an idea for where you've been and what led to these revelations into these solutions. So, let's just start at the very beginning in terms of how did you get into the financial industry?

ART BILGER: Well, it's funny. I was just telling that story the other day. Someone was asking me. When I was 16 years old, I got my first job. And my father got me a job as a summer intern for a small Wall Street. Although very famous Wall Street brokerage firm called Spingarn Heinen and Company. This was 1969. And I went to work there, this was boom days on Wall Street. And my job was to be a runner. Back then, we didn't have all the digital and so you carried checks between firms and securities between firms. And the way I remember it, I was the youngest runner I think by 50 years. I think the next youngest guy was about 66 years old.

Anyway, it was a fabulous two months. It just opened my eyes to a world that I really didn't know anything about. And I came out of that summer saying, I want to go to work on Wall Street when I'm done with college. Subsequent to that, Wall Street crashed. And so, my father actually tried talking me out of the idea of wanting to go to Wall Street.

ALEX ROSENBERG: What did he want you to do?

ART BILGER: Well, he was a businessman. So, it wasn't that he didn't want me to do business. It just Wall Street, he thought was different. But anyway, I didn't listen. And so, what happened was when it was time to apply to college, I actually applied to the Wharton School at the University of Pennsylvania, and they admitted me. And that's how it all began.

And what happened is I actually knew over time, and I don't remember how this was that I ultimately, from a Wall Street standpoint, I wanted to become an investment banker. And I didn't really want to- I wasn't interested in the sales and trading side, but more the financial advisory type side and merger and acquisition. And that, I don't remember how that got into my head. But when I was attending the Wharton School, that was pretty clear to me.

ALEX ROSENBERG: And then so we fast forward a little bit. I don't know how long, and we find ourselves at Drexel Burnham. And as that firm was becoming- it must have been the fastest growth for any Wall Street firm in terms of the amount of profits generated and the amount of change to the financial industry.

ART BILGER: Well, let's go back a little bit first, because there was some other critical points before Drexel. The one thing I didn't know until the summer of between my sophomore and junior years at Penn. Well, I worked side of summer job at the Chase Manhattan Bank, and I was working for an international BP there. At the end of the summer, he took me out to lunch, he says, Art, you're great. And the Wharton School is great, but I got bad news for you. You can't get a job as an investment banker in today's world without an MBA. And I said, oh- now, it's obviously not like that today. Today, you have analyst programs in all these firms, but there was no analyst program back then.

And so, what I did is I said, okay, I'll go get an MBA. But I was going to finish Wharton. So, actually what I did is I actually shifted much of my curriculum to Liberal Arts, electives and Liberal Arts curriculum, although there were requirements for it that I didn't take, because I didn't really feel like duplicating my- and I literally went, I graduated from the Wharton School in May of '75. And I started the MBA program at the University of Chicago in July of '75. I literally just drove from Philadelphia to Chicago, got my MBA at the University of Chicago. And now, I was qualified to apply for an investment banking job and applied to Drexel Burnham, as well as a few other places.

And Fred Joseph, who at the time was running corporate finance, and at this point, Drexel was unknown. And Fred, who went to Harvard undergrad and Harvard grad, everyone in the three years before me that he hired I think went to Harvard. So, the fact that he hired me from the University of Chicago, I even said to him, what happened, everyone from Harvard turned you down? Anyway, so I became, I think two or three of us that joined that year. And so, I joined Drexel in summer of '77. And originally in New York, in the corporate finance area, and then ultimately moved to California very early '80s.

ALEX ROSENBERG: Did you have a feeling while you're at that firm that we are changing the financial world around us? What was it like day to day, week to week being inside such a growing and influential company?

ART BILGER: Well, at first, it didn't seem like we had much influence at all yet, didn't have any business. But I'd say in '78 is when we did our first junk bond financing, new issue financing. I remember when I first joined, we're doing a lot of debt restructuring work, because Mike Milken was already at the firm business and trading a lot of the broken down securities out there. So, actually the first thing I've ever worked on was the restructuring of the debt of an REIT. And what was interesting is I was- owned all kinds of trailer parks in the southern part of the country, and I had to go down and do diligence in Georgia and the panhandle of Florida. And I grew up in New York, I'd never seen a trailer park. I've seen many.

Anyway, but it was '78 is when I think we did our first new issue bond deal. And that's really where the momentum began building. And then so '78 and '79, '80, '81 really started becoming a very significant product on Wall Street in general. But Drexel dominated that business, and other the firms who did some, but Drexel truly dominate. And thinking about it, it was a financing vehicle for enterprises that really didn't have much in the way of alternatives. So, it wasn't just that we built a great business for ourselves. But we really enabled a lot of other entrepreneurs and others to build incredible businesses that they might have had a tough time getting financing for.

ALEX ROSENBERG: Now, did your friends from Wharton and University of Chicago say what the hell are you guys doing? You can't you can't do this. This isn't how Wall Street works, or?

ART BILGER: No, because matter of fact, one of my closest friends from Chicago, he initially got out and went to work at another firm and he was on the sales and trading side. And after a short period of time, I said to him, one of these days, you'll get smart, Leon, and decide to come to work at Drexel and go to work for Mike Milken. And he actually eventually did. I think it was about four or five years later. But no, I think people were intrigued from pretty early on.

ALEX ROSENBERG: What was it like working with Mike Milken in the '80s?

ART BILGER: Well, it was fabulous. You had to- a funny story. It's actually written up I think, in some Drexel books. I learned very early on that if you want to get ahead and get ahead with Mike, you got to play the game. And so, this truly happened.

At some point- I'm now living in LA, and I'm waiting for Mike. He was in a meeting for the end of the day for a couple hours. And I forget what deal it was, but we had to make a decision on Sunday, it was a very time-sensitive decision. And he comes out of the meeting about six o'clock. And I'm waiting. I said, Mike, listen, we got to sit down, we got to talk this through. We got to figure out what we're going to do on this. And he said Art, look, I really apologize, but Lori and the kids- Lori's his wife- Lori and the kids are waiting for me. I can't be late. Can we meet first thing tomorrow morning? So, I said, having played the game, I said, okay, no problem. I said, what time would you like to meet? And he said, could we meet at 4:30 in the morning? And I said, what am I supposed to do between 1 AM and then?

So, working with Mike was a true experience, learnt obviously a tremendous amount. Also, Mike introduced all of us. He really became a magnet for a lot of pretty interesting people out there. So, a lot of the interesting introductions and ultimately, relationships that I developed over time. A lot of them were original intros by Mike.

ALEX ROSENBERG: I think we all know what eventually happened to that firm but from someone inside, what was that like the last years there at Drexel Burnham?

ART BILGER: One that required a lot of change. So, it was '86 when the first news broke. At the time, I was in LA and a fella named John Kissick ran corporate finance in LA, and I was his number two. From the time I moved out, when it was John and me, we were now up to, I think, like about 89 investment bankers in just Los Angeles. Forget about when I joined the firm in '77, I think I was the 21st to 23rd investment banker in the firm. We got up to probably 600 investment bankers.

Anyway, what happened was when things- we still kept doing a lot of business. I don't know that it really hurt business at any meaningful degree. What did hurt the business a little bit is the stock market of '87, it influenced a lot. But then, we had to start thinking about what might happen? And I guess it was '89 when Drexel finally pled guilty. And it was as a result of that, that's what really caused the unwinding of Drexel- when Mike pled guilty and had to go off to prison.

What happened when Drexel pled guilty, the banks started pulling our lines of credit. And so, the economics of day to day sales and trading were becoming impacted. So, and that was '89. And that's why finally, February of '90, we went out of business. But we kept doing a lot of business. And I will tell you, the spirit of the people were quite good.

I mentioned Kissick because what happened is when Mike had to leave the firm, John Kissick moved over to the high yield bond department. And he sat there from an administrative standpoint. I became head of investment banking in LA. And Fred Joseph, who now was the CEO of the firm, he had me, Leon Black, and a fellow named John Sorte in New York, become co- heads of the corporate finance area out there. And Leon was running the M&A group, I was running LA and Sorte, more the generalist stuff in New York.

ALEX ROSENBERG: So, before we move on, I'm just curious, looking back now, do you think Milken has gotten a bad rap in the public imagination? And maybe Drexel Burnham has gotten a bad rap? Do you think that the perception of Milken as this criminal, running this big criminal enterprise, I guess you saw, you were there, you knew everything that happened, and now, I think his perceptions around these conferences and that he's doing a lot of good things in the world. But I'm just curious what it's like to have been there. And now, to see from the sidelines people talk about Milken became one of these figures of Wall Street greed is in the pantheon of these people like me enough I guess what do you make of that?

ART BILGER: I guess I'm biased, but I think it was fairly unjust what happened to Mike in that- Yes, I'm sure he did some things wrong. Okay? I wasn't there into the detail, but I'm sure there's some stick. But there were a lot of things done all over Wall Street that had never been criminalized. And criminalizing some of the stuff that the junk bond department and Mike may have done as opposed to it being civil litigation. I think that's one of the things that was unfair. Yes, it then took Wall Street beyond that, and yes, they became aggressive at a lot of figures on Wall Street.

But I do think Mike was- and I think part of it was because to be honest, he and Drexel became so powerful. And we really controlled what now was a multibillion-dollar market. And I suspect, there were always rumors that some of the pressure put on the SEC and the government may have come from competitors on Wall Street, who just were trying to compete for this incredibly lucrative business but were having a hard time. I wasn't part of the conversation. So, I don't know for sure. But that clearly was the rumor.

ALEX ROSENBERG: And just one more thing is does it make you look at Wall Street regulation has been really one of the big news stories over the past 12 years- does it make you look at the new wave of Dodd Frank, and the way that regulators look at these firms, does it make you look at all that differently, having seen really the start of the regulations get created ad hoc, as you say?

ART BILGER: Well, I do think regulation is important. And we're also living in really a totally different world today from global markets and things like that. And so, I guess one might argue that regulation is more important in a world that's spread literally from around the globe and so many different players and also, given the pace of what happens, so much of it is automatic now. As I started my story when I was 16, I literally carried securities and checks. In today's world, it's absolutely instantaneous. And a lot of it- and this is something else I'm deeply involved in, but a lot of isn't even about human beings doing stuff. So much of it is about technology and data and analytics and things like that.

So, I'm not opposed. I'm not opposed to regulation. But let's make sure we keep the efficiency of the markets allow value to be created.

ALEX ROSENBERG: Sure. So, resuming the story then, tell us about the beginnings of Apollo.

ART BILGER: So, we ended February of 1990. And I think Leon Black, who I worked closely with on various things, including co-heading the department at that point- Leon I think was out in LA visiting family in April of '90. We had breakfast together. And he said, Art, if I can pull together a pool of capital, would you be interested in partnering with me and starting up a private equity fund? And I said, sure. And then, I don't know- Leon and I hadn't talked for a while. And then all of a sudden one day, he called me. He says, Art, I think I got $800 million coming our way. And I said, great. And I think we actually launched Apollo officially July of 1990.

ALEX ROSENBERG: Tell us about the initial strategy that you came into Apollo with and how it went from there to again, the runaway success of Apollo.

ART BILGER: Right. Well, two things really influenced our strategy. First was, so people remembered the early '90s, we went into a very fairly significant recession here in the United States. The second thing that happened is the primary market maker party that had really will take control but had dramatic influence over the junk bond market had disappeared. And so, the whole junk bond market just really went into a tailspin because of the combination of those two things. And

so, where we started and for the first four years at Apollo, our whole business was into buying private equity, buying up some company and leveraging, it was actually buying up the debt of bankrupt to near bankrupt companies. Because we were able to buy that debt so cheap. Because Drexel was gone in the economy. And then work those debt holdings either through bankruptcy process or otherwise through negotiation to end up with a significant ownership positions in those companies that we liked or even control over those companies.

And if you think back, the first thing that I worked on in 1977, when I joined Drexel, was the debt restructuring of an REIT. So, I was just back to-

ALEX ROSENBERG: To the trailer park. ART BILGER: Back to a trailer park, exactly. So, that was our business for really the first four years.

ALEX ROSENBERG: Just to give us a better idea, is there one company in particular, or one thing that was an early success that set the stage for the rest of what you guys were doing there?

ART BILGER: Obviously, there's a small group of us in LA and then Leon and others were in New York, so we did a lot of different things. The ones that I could highlight and things that I worked on- good example is Telemundo. It was in bankruptcy. You live in LA in 1992, you didn't have to be a genius to know Hispanic broadcasting might be a big opportunity. So, we bought up a significant- not a majority, but a significant portion of Telemundo's debt. And I was chairman of the creditors committee, and from '92 to '94, worked through that whole bankruptcy proce