The Future of Private Markets in the Age of AI | Blackstone
In a Nutshell
Blackstone is betting big on the second phase of the AI revolution—deploying applications across the real economy—by building N1, a unified platform consolidating its growth, hybrid, and perpetual private equity strategies in San Francisco. The firm is leveraging partnerships with Anthropic for enterprise AI deployment and Google for TPU compute infrastructure to address critical bottlenecks in power, chips, and talent as the market shifts from training to inference. This positions Blackstone to capitalize on AI's industrial-scale rollout through pattern recognition across its 275 portfolio companies and four-decade investment history.
These notes were generated by AI and may contain inaccuracies.
Jazz is a 22-year Blackstone veteran recognized as a visionary investor known for being collaborative, innovative, and humble. The conversation begins by establishing the current economic backdrop: a resilient economy, reopening exit environment, and a wave of opportunity created by AI. The discussion focuses on converting investment conviction into actual investment decisions.
Blackstone began investing in AI infrastructure long before AI dominated headlines. The firm focused on critical foundational areas including data centers, power, and increasingly chips and compute. This investment thesis was developed by studying historical industrial shifts and revolutions, including electricity, the automobile, and the internet. Each industrial revolution starts at the physical layer, which is why Blackstone began examining data center opportunities nearly a decade ago.
Every industrial revolution follows a two-part pattern. The first phase involves building the physical infrastructure layer. The second phase, which is about to begin, involves creating value on top of that physical infrastructure. Blackstone excels in this second phase because the firm can see value creation opportunities across technology applications in healthcare, financial services, transportation, and other sectors that clients and customers interact with daily.
Blackstone's scale, breadth, and ability to see into opportunities across 275 portfolio companies provides a significant advantage when evaluating AI-related investments. The firm has built on the development of AI infrastructure investments and watched the space grow and develop closely.
Blackstone recently launched a new company with Anthropic to deploy AI across the economy. The focus is on deployment rather than just technology development. Technology diffusion through the economy follows an S-curve pattern. Early challenges are often human-related: understanding how to implement technologies in key workflows, addressing security concerns, and managing organizational change.
Successful AI deployment requires real talent, specifically critical engineering talent capable of implementing the technology. Anthropic is recognized as one of the best companies in enterprise model frameworks. The partnership provides access to Anthropic's engineers to identify how to deploy AI into the real economy. Finding the right teams and talent represents a key growth market challenge.
Building this company from the ground up provides Blackstone with several competitive edges: the partnership itself, visibility of demand across the portfolio, and the ability to work with Anthropic to attract top talent. This gives investors a unique opportunity to see AI's impact in the real economy.
Jazz was recently appointed global head of N1, Blackstone's new unified platform for growth, hybrid, and perpetual private equity investing across the AI ecosystem. The platform represents a shift from operating across multiple different businesses to a unified approach.
The N1 platform was created because AI is shifting from test cases in labs to production deployment in the economy. Blackstone aims to be a leader in this space similar to its leadership in the physical layer with data centers. The platform consolidates one team across growth, hybrid, and perpetual strategies, located in San Francisco where many AI companies and founders are based.
The unified platform enables Blackstone to connect dots across the portfolio and data center investments to identify N of 1 companies and founders. The firm wins through variant perception or conclusions ahead of competition. Pattern recognition across investments, conversations, and diligence processes drives unique insights and conclusions. Blackstone's 22-year presence and the firm's four-decade history contribute to its pattern recognition capabilities.
Blackstone launched a significant joint venture with Google focused on addressing the key shortage of compute. Nvidia has built an 80% market share with 75% plus gross margins, which historically demands competition as few industries remain sole-sourced. Google's TPUs (Tensor Processing Units) represent the chipset most capable of serving as the second competitor to Nvidia.
Google has been using TPUs inside their labs for the last 15 years, currently on their eighth version. These are production-grade silicon that Google has refined over time but never previously commercialized or sold externally. Google made a strategic decision to bring these chips to market and needed a partner with data centers, power access, operating expertise, and scale.
Blackstone spent the last year working with Google on this partnership, which was selected to help develop a cloud based on Tensor Processing Units. The joint venture launched at the moment the market transitions from training large language models to inference. Inference represents the big revenue unlock, with companies like Anthropic, OpenAI, and Meta seeing huge demand for tokens served from these chips.
The Google joint venture exemplifies Blackstone N-1's approach to AI investments: building a category-defining company at the exact moment the market needs it, at cost, with one of the most important technology companies in the world. This represents the type of investment Blackstone was built to execute.
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