Shortly after Blackstone raised its first buyout fund in 1987, it made what proved to be a disastrous investment in a company called Edgcomb Steel. A month after the deal closed and Blackstone acquired the company, Edgcomb was unable to make its first interest payment to its creditors. A wipe-out so early on could have been crushing Blackstone, which had yet to establish its credibility with investors.

Steve Schwarzman told CNBC in an interview recently about the ill-fated investment, and what he learned from it.

For entertaining commentary on the interview, check out