Photo

BOSTON — Stephen A. Schwarzman, the billionaire co-founder of the Blackstone Group, has a sobering message for any junior financiers hoping to emulate his success: Think twice.

Mr. Schwarzman, 67, speaking here on Sunday before an audience of Harvard Business School students, said the temptation to start a new financial firm could disguise the considerable risk of failure and the damaging consequences failure brings. Calling finance an “apprentice business,” he said any would-be entrepreneurs need years of training, as well as the ability to bring something new to Wall Street.

“This is not Silicon Valley, where failure is an option,” Mr. Schwarzman said.

The warning carried special significance because Mr. Schwarzman is seen by many young Wall Streeters as the paragon of entrepreneurialism in finance, having become a billionaire several times over as he helped pioneer the business of private equity. Today, Blackstone is the largest firm that invests in alternative assets, with $290.4 billion under management.

But Mr. Schwarzman had a number of advantages when he started Blackstone in 1985 with Peter G. Peterson, who had been his boss at Lehman Brothers. At 37, he had years of experience in the world of mergers and acquisitions and even negotiated the sale of Lehman to American Express. Mr. Peterson, two decades his senior, had a Rolodex that was instrumental in getting Blackstone off the ground.

His message on Sunday, delivered at the business school’s 21st Annual Venture Capital and Private Equity Conference, sprang from his own observations of Wall Street’s young overachievers.

“The biggest mistake I’ve seen people make with their careers is, when they’re good, after two or three years — and they happen to be smart — they announce that they’re going out to start their own firm,” he said. “I have begged, literally begged — I’ve had people come over to my house on Saturday — and begged them not to do that, because they’re going to destroy their careers, because they’re not old enough yet, they can’t raise enough money yet, they don’t have enough credibility.

“And they sort of look at me and think I’m trying to discourage them so they’ll stay at Blackstone,” he added. “That’s actually not the case. If somebody really wants to go out on their own, they’re going to go anyhow. But the question is, when is the right moment, when do they have the right skills?”

“Every person who’s made that decision, in my view, has failed,” Mr. Schwarzman said. “Every one of them.”

To be successful, he said, entrepreneurs on Wall Street have to have “that match between your maturity, your timing and that great market opportunity.” If you fail, he said, “you’ve then detoured for years, and getting back on a better track is really hard.”

He emphasized the importance of bringing something new to the table — a more difficult achievement than it may seem.

“Doing a me-too business, because it’s you — the only person who cares about that is you,” he said. “The market doesn’t care if it’s you. The market is pretty much being served. You better have something that the world doesn’t have, because even then you might screw it up through your own ineptitude and inexperience.”

Mr. Schwarzman reflected on his own experience as an entrepreneur, saying it involved lots of worrying.

“Sleeping at night is not a specialty of entrepreneurs,” he said. “The entrepreneur who is sleeping soundly, something bad is happening to that person, they just don’t know it’s happening yet.”

What about striking a healthy work-life balance? Is that possible?

“I’d say pretty much not,” Mr. Schwarzman said, drawing laughter. “At least in my experience, it’s a day-and-night type of preoccupation.”

“Work life-balance is a good part of a classroom mantra,” he said. “But if you’re really out there, with your reputation, your background, the trust of everyone around you, it’s not all it’s cracked up to be — until you get to be someone like me sitting up here telling stories about it.”