23 May 2018
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John A. Paulson, MBA 1980

2018 Alumni Achievement Award Recipient
by Susan Young

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President, Paulson & Co. Inc.

John Paulson’s knack for business was evident early on. At six, he sold Charms candies on the playground in his Queens neighborhood. Buying the candy in bulk, he sold each piece at a profit and saved his earnings in a treasure chest. By the time he was 19, he was employing 50 people in his father’s home country, Ecuador, and importing clothing and decorative items to Bloomingdale’s and others.

“The world is a never-ending fascinating place. There is always something new to learn.”
“The world is a never-ending fascinating place. There is always something new to learn.”

Paulson, the son of a child psychologist and a businessman, initially majored in philosophy. After his first year of college, however, he moved to Ecuador and started several businesses. “I was producing, packing, shipping, and selling an awful lot of items,” he says. “Although I was doing well, the business quickly outgrew me. I knew I needed more training.”

So he returned to college at NYU’s School of Business, where he graduated as valedictorian of his class. Then he went straight to HBS. “Harvard gave me a very good understanding of business, across the different types and functions of business,” he says. “The case method made learning exciting and instilled a problem-solving focus.” After earning his MBA as a Baker Scholar and spending two years with the Boston Consulting Group, he gained experience in finance at Odyssey, a boutique investment firm; Bear Stearns; and then Gruss Partners, where he concentrated on risk arbitrage and bankruptcy investing.

In 1994, Paulson was ready to return to his entrepreneurial roots and set up his own fund. “Ultimately, that’s where you have the greatest opportunity to succeed,” he says, adding that he sent out 500 printed cards announcing the formation of Paulson & Co. Then, he says with a laugh, “I sat by the phone waiting for it to ring.” No one called, but he persevered, managing his own money while knocking on doors. “Gradually I started raising money,” says Paulson, whose remarkable success built confidence—and investors—and by 2006 led him to attract $6 billion under management.

In 2005, Paulson was looking for new investment opportunities and began researching mortgage bonds. “The system was geared to sourcing mortgages, packaging them into securities, and selling them globally,” he says. “The infrastructure to source and sell was so massive that volume continued to grow despite rapidly deteriorating credit quality.” Seeing the absurdity of it, Paulson bet against the market at the peak of the housing bubble, yielding what many have called the biggest short in history and turning his company into one of the world’s largest hedge funds.

Since achieving such enormous success, Paulson has avoided the limelight. The father of two daughters continues to run his firm and focuses on giving back. “My mother was very philanthropic,” he says, noting that when he was a kid, the family would trick-or-treat for UNICEF instead of candy. “I believe that education is the great equalizer and creates a path to equal opportunity,” adds Paulson, who received a fellowship to attend HBS.

Paulson and his wife Jenny’s generosity includes making the largest gift in Harvard’s history to the School of Engineering and Applied Sciences (SEAS). “SEAS is an integral part of the future of Harvard. I think the value creation that will come out of Harvard will be a thousand times what I gave,” says Paulson, for whom SEAS is now named. Echoing his sentiment, Harvard President Drew Faust observes, “John and Jenny are putting their mark on the future through the generations of students they are educating and the discoveries that will unfold new human possibilities in the years ahead.”

Paulson also supports a maternity hospital in Ecuador, and, closer to home, a number of cultural and educational initiatives in New York, including the Central Park Conservancy. “Central Park is the heart and soul of New York,” he says, his face lighting up. “People of all ages, income levels, races, and nationalities walk through the park every day. Everyone is smiling and it’s all free.” That idyllic legacy is yet another example of John Paulson’s remarkable impact in the world.

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TIMELINE
1955 Born, Queens, New York
1973 Launches clothing manufacturing business in Ecuador
1978 Earns BS, Finance, New York University
1980 Earns MBA, Baker Scholar
1980 Joins Boston Consulting Group, Consultant
1982 Joins Odyssey Partners, Associate
1984 Joins Bear Stearns, M&A Managing Director
1988 Named Partner, Gruss Partners
1994 Launches Paulson & Co.
2007 Makes what many call the “greatest trade ever” on subprime mortgage market
2012 Contributes historic donation to Central Park Conservancy
2015 Endows Harvard’s School of Engineering and Applied Sciences, which is renamed in his honor

Photo by Susan Young

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Featured Alumni

Featured Alumni

Class of MBA 1980, Section D

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