An Elite Beginning
How I Got My Start in Finance
Featuring Josh Friedman
Published on: February 4th, 2019 • Duration: 6 minutesWhile earning a degree in physics from MIT, Josh S. Friedman’s storied career in finance began by investing student loans in Fidelity treasury accounts. From Goldman Sachs, to Michael Milken and Drexel, to Canyon Capital, Friedman recaps his career in finance with David Salem of Windhorse Capital Management. This is a clip excerpted from a video published on Real Vision on June 16, 2017.
JUSTINE UNDERHILL: Welcome to Real Vision's "How I Got My Start in Finance." This is where we show you how some of the biggest names in the finance industry began their careers. In this episode, we'll hear a conversation between David Salem of Windhorse Capital Management and Joshua Friedman.
Josh is the co-founder of Canyon Capital. It's a hedge fund that managed some $20 billion. Josh and his fund focus on credit-oriented investments such as distressed debt. You'll hear him explain how he and Mitchell Julis went from graduate-school roommates to the co-founders of one of the most important firms in their space. Take a listen.
JOSHUA FRIEDMAN: I really had no intention of going into Wall Street or of becoming a financial person. I was a physics major in college. My dad had pushed me to have my own business for my entire life and said you have to go to business school, you have to start your own company. And I thought I'd work on Route 128 at one of these startups that was doing kind of technology, which at that time meant basically electronics. And there were lots and lots of venture-backed firms out there, and that was really my path.
But by the time I finished my education-- I went to England for two years. I got a scholarship. I came back and I studied politics-- I studied law and business with you, of course, and somehow got waylaid by the Wall Street lure back then. And before you know it, life sort of happens.
I was at Goldman Sachs in the merger and acquisition department. Steve Friedman hired me. Was really a fantastic place to start. I think John Whitehead and John Weinberg were some of the greatest mentors that anyone could ever have in terms of how to run a firm and create a culture that was both, as my partner, Mitch, today says, ethical and effective, and they were terrific.
And as you know, Mitch Julis was my roommate in law school and business school. And so after a couple of years at Goldman Sachs with Mitch spending a couple of years at Wachtell, Lipton as a bankruptcy lawyer, we both reunited out on the West Coast working for Mike Milken at Drexel. So that's what drew us out to the West Coast.
I think that was regarded as a very out of the box, crazy thing to do at the time. No one left Goldman Sachs voluntarily back in those days. And I think it was the little bug of my father's voice saying you have to be an entrepreneur.
DAVID SALEM: So that's what drove you. Mitch, of course, preceded you out to the West Coast and sort of pulled you out there, as I recall.
JOSHUA FRIEDMAN: Yeah, Mitch was doing bankruptcy investing, and I think Mike Milken and a guy named Peter Ackerman, who I worked for, were talking to him about possibly having somebody join in the capital-markets group, which was the interface between the high-yield group and the corporate-finance group. And Mitch said, oh, you should meet Josh, and I came out and interviewed with them. And two weeks later, I moved to California.
DAVID SALEM: So let's talk a bit about Drexel because I've looked at it through the prism of nature versus nurture. When you think about all the luminaries in our business here, 30 years on after the fact, that had been so accomplished that were all actually at Drexel when you and Mitch were there, and the nature versus nurture question is were Milken and Fred Joseph and others that were running the firm just that effective in identifying really top talent or was it, in part, nurtured skills and experiences that you gleaned while you were at Drexel? What accounts for how successful the people that were at Drexel at the time have been since Drexel, since its days ended?
JOSHUA FRIEDMAN: Even when we were at Drexel there were people who left and didn't realize just how important the environment was in their own success. You know how people tend to judge their well-being by the people sitting within 50 feet of them. So if they feel poorly treated, even if they're in the best environment in the world, sometimes they miss that. They go someplace else, and then their career can go into a tailspin. There was some of that back then.
But I will tell you, for those who were there, number one, I think the recruiting was pretty good. I think Mike had a knack, at least-- and I think Fred did in corporate finance too-- of hiring really smart, entrepreneurial people. But there was a ton of nurture going on. Creativity was rewarded. It wasn't frowned upon.
I think Leon Black for example, was one of the most creative and smart investment bankers, long before Apollo days, that I've ever seen in my life, and he was very, very young when he was at Drexel. And I think Fred Joseph encouraged that in the corporate-finance department, and that spread to a whole army of people around him-- the Ken Moelises, Art Bilgers, et cetera.
In the high-yield group, Mike really created the new-issue business for high-yield securities. It was really just a secondary fallen-angel business before that. And Mike was among the most entrepreneurial, creative, positive-thinking people I've ever met. And he encouraged that level of creativity, and he gave people a sense of confidence that, if you had a good idea, you could go out and create it, and I think that really infected everybody. I think there's a heck of a lot of nurture in there.
JUSTINE UNDERHILL: So Joshua Friedman and Mitchell Julis went from running a $17-million firm to over 1,000 times that. Perhaps in pushing his son towards entrepreneurship, Josh's father had a point. For Real Vision, I'm Justine Underhill.