Marc Rowan on Private Markets, Software Repricing, and Capital Allocation

The conversation between A16Z's David Haber and Apollo's Marc Rowan covers Rowan's career origins, Apollo's business model, and the firm's positioning at the intersection of private capital and the AI-driven industrial renaissance.

Rowan began his career at Drexel Burnham Lambert in 1984, drawn by its focus on financing entrepreneurs rather than blue-chip companies, which forced analysts to understand business fundamentals rather than rely on financial formulas. He credits Michael Milken with instilling a 'connect the dots' mentality and the principle that 'you either accept change or change is visited upon you.' When Drexel collapsed suddenly in 1990 amid a broad financial crisis, Rowan and colleagues pivoted from unemployment to launching Apollo after a cold call from France's Crédit Lyonnais, ultimately managing $6 billion by year's end and becoming the bank's largest profit center.

Rowan reframes Apollo's identity: while commonly labeled a private equity firm, 80% of its $1 trillion AUM is credit, and the vast majority of that is investment grade. The firm's two core businesses are retirement services (through Athene) and asset management. He argues Apollo serves three fundamental goods: providing retirement income globally, financing the industrial renaissance (data centers, energy, defense, manufacturing), and offering diversification away from the extreme concentration in public markets, where ten stocks represent nearly 50% of the S&P 500.

On private markets democratization, Rowan describes five new client markets beyond institutional alternatives funds — individuals, insurance companies, the debt/equity institutional bucket, traditional asset managers, and 401k plans — all of which require daily liquidity and transparency incompatible with traditional drawdown fund structures. Apollo is moving toward daily estimated valuations and standardized data infrastructure across its credit business, arguing that transparency and price discovery always expand markets.

Regarding the AI infrastructure buildout, Rowan sees immense opportunity at the intersection of Apollo and firms like A16Z. He argues that capital-intensive AI infrastructure — data centers, chips, robotics, energy — cannot be financed entirely with equity at the required scale. Apollo's role is to parcel out risks: venture/equity investors underwrite the business risk of individual companies, while Apollo finances the hard-asset, reusable infrastructure layer at investment-grade credit ratings. He anticipates concentration limits will soon be hit among the handful of hyperscalers committing $300B+ in capex, widening spreads and creating partnership opportunities between financial and technology entrepreneurs.

On enterprise software repricing, Rowan is blunt: roughly 30% of private equity investment over the past decade went into enterprise software, and those assets were priced for a future without AI competition. He expects private equity returns from that vintage to be 'disastrous,' not because companies will fail, but because exit multiples will compress. He distinguishes between tasks with objectively correct answers (coding, accounting, trade operations), where AI replacement will be near-vertical in pace, and judgment-intensive work, where augmentation is more likely for now.

Rowan also addressed moral leadership, recounting his vocal opposition to University of Pennsylvania's handling of a Palestine Rights Conference in the lead-up to and aftermath of October 7th, framing the issue as fundamentally about anti-Americanism and anti-meritocracy rather than solely antisemitism. He described withdrawing donor support as a lever that ultimately contributed to leadership changes at Penn. He articulated Apollo's employment philosophy as 'merit adjusted for distance traveled' — evaluating individuals on what they overcame personally, not on immutable group characteristics — and defended financing hydrocarbons under a 'make it better, not worse' climate framework rather than blanket divestment.

On culture, Rowan described a six-month internal project to codify 'what makes Apollo, Apollo' as the firm scaled to 6,000 employees across asset management and retirement services. Key cultural pillars include clean-sheet thinking, intellectual informality and insubordination, a 'wall of shame' normalizing investment losses as evidence of appropriate risk-taking, and 'moments that matter' — recognizing employees' personal life events to retain career-long partners. He argues that the fear of losing gradually overtakes the desire to win at most successful companies, and Apollo deliberately counters this by rewarding fast failure and fast fixes over error avoidance.