Now in Their Own Orbits, Carlyle's Stars Keep Rising

Jones, 38, joined the Marines after graduating from Harvard and then attended Stanford University's graduate business school. Carlyle hired him as a junior associate out of Stanford and put him to work on the buyout team focusing on aerospace and defense. He rose from associate to a principal at the firm after six years, then quit to work with his father at TWJ.

But what happens when the business cycle changes and the good times end?

Joseph E. Lipscomb, a former Carlyle managing director who is a partner at Global Environment Fund of the District, a private-equity firm with nearly $1 billion under management, said the competition between private-equity firms will get more intense if the economy slows.

"Firms that don't put up the returns or make big mistakes may not survive to see the next up cycle," Lipscomb said.

Carlyle built its name and its first several billion dollars in profit by buying aerospace, defense and telecommunications companies, retooling or improving them, and reselling them at a huge profit. The firm's flagship U.S. Buyout Fund, under the guidance of co-founder and chief investment officer William E. Conway, was the vehicle for these transactions.

Mark A. Frantz, who worked in Carlyle's U.S. Venture Capital Fund and now is a general partner in RedShift Ventures, said he learned how to run a private-equity firm from his time at Carlyle. He added that the firm's founders, which include David M. Rubenstein and Daniel A. D'Aniello, all brought different talents to the office.

"DBD [David, Bill and D'Aniello] is like the Olympic logo. They don't have a lot of overlap," Frantz said. "It's not Steve Schwarzman. It's not Henry Kravis. They have this thing. One Carlyle. You aren't taking on [Star Trek Capt.] James Kirk. You are taking on the board."

So why leave? Several said they wanted to make their mark at a smaller firm.

"It's kind of a natural step for people to move out on their own," said Manos, who cut his teeth on aerospace and defense during three years at Carlyle.

Or as Lipscomb puts it: "I wanted to be in a place where one day my name was going to be on the door."

There are other reasons. Though everyone lauds Carlyle as a training ground for private equity, now that the company has more than 800 employees, the question arises about whether Carlyle may have lost its entrepreneurial edge, giving way to an institutional mindset.

Carlyle associates can sometimes spend days and weeks grinding out the paperwork on big deals. And it may take years before they sit across from a chief executive of a company Carlyle is thinking of acquiring. The days of creating companies like natural-foods chain Fresh Fields from scratch are largely gone. Instead, it is buying well-established companies -- it bought Hertz and is fine-tuning the rental-car firm into greater profitability.

"It's a brilliant training ground -- but if your personality is entrepreneurial and you want to have real contact with a client, it's hard to do that," Dupree said.

Some ask whether Carlyle has suffered a brain drain because so many good people have left, many of whom hew to the same conservative investment approach as Conway and his team.

D'Aniello regards the departures of a kind of validation. "It just gives evidence to the fact that we hire the best and the brightest, some of whom are self-motivated in terms of striking out on their own," he said.

"Do you think the success of Harvard Business School in populating the investment industry generally has overpopulated it with people who are like-minded thinkers? What's the downside of overpopulating an area with capable people," he said rhetorically. "I don't know. Tell me where it is."