Photo courtesy of Carlyle Group

I interviewed Carlyle Group’s Sandra Horbach, who heads the private equity giant’s consumer and retail group, at the Women’s Alternative Investment Summit in New York last week. I shared a few highlights, and since the session drew terrific audience feedback, it’s worth giving you more of Horbach’s smart talk about managing through the recession, investing into the recovery, and navigating a career in private equity, where few women dare to tread.–Patricia Sellers

If you had to hand over your job to someone else tomorrow, what would you tell them?

Horbach: Be really good to your people. Develop a vision. Inspire confidence because at the end of the day, they must follow you. Listen well, and give them the resources and developmental tools they need. One of the things we do not do well in private equity is develop junior talent.

What’s the lesson of the last couple of years?

Horbach: Bubble bursts, for sure. There is too much of a good thing. There was too much leverage and not enough checks and balances.

Did you make investment decisions you shouldn’t have?

Horbach: We bought a company called Oriental Trading that had 30 years of predictable growth. It’s a direct marketer, and it had years of success and dividends and free cash flow. It looked like the most predictable business you could buy. But there was a dramatic shift in the industry. The U.S. Postal Service, which is essentially bankrupt because of the Internet, raised the price for catalogs 20% in one year. When you mail 350 million catalogs, that’s a very big nut to swallow. We had to take a lot of costs out of the business. We’re not going to have stellar returns. But in general, Carlyle stayed away from the mega-deals in the ‘07 time frame. Knock on wood, we have a very solid portfolio.

You bought Dunkin’ Brands for $2.5 billion in 2006 from a liquor company, Pernod Ricard (PDRDY), where it had been orphaned. How is Dunkin’s strategy now shifting?

Horbach: We went on an aggressive expansion plan. Since we bought the company, we’ve given the cash flows back to the business. We’ve doubled EBITDA.  We’ve added almost 2,500 new stores in the U.S. alone. For every Dunkin’ Donuts store we open, we create 25 jobs.

In a tough category–competing against McDonald’s (MCD) and Starbucks (SBUX).

Horbach: We hold our own. We’re No. 1 in coffee. We’re also investing internationally.  Most people would be surprised to know that Baskin-Robbins has 4000 stores outside the U.S. Dunkin’ Donuts has several thousands. We just opened our first 20 stores in China.

There’s a belief that the consumer is never going back to the level of spending of the past. So, how do you deal with that?

Horbach: The consumer sector accounts for two-thirds to 70% of our economy. You can’t ignore it. We’re shifting to areas where consumers have to spend. Retailers that are value-oriented can still be very attractive. You look for great brands that are under-penetrated. We own a brand called Philosophy, a personal-care business, and we’re growing our top line double digits as we expand distribution and grow awareness–in a very tough economy. You have to pick your spots.

Philosophy is the last company you bought. That was in 2007. Why have you not acquired anything since then?

Horbach: We looked at a lot of things, But credit dried up completely. You couldn’t even find a banker. They wouldn’t return your phone calls. And we weren’t sure where the bottom was. No one was. Now we’re seeing multi-billion deals with high levels of leverage, at attractive rates. We’re back in business. We’re excited about playing offense again.

Do you feel confident that we’ve hit bottom?

Horbach: I believe that we’ve hit bottom.

What have you learned from Lou Gerstner, the former CEO of IBM (IBM), who is on the Carlyle investment committee?

Horbach: I talk to Lou a lot. His office is right next to mine. Very early on, Lou and several other members of our senior team were very aggressive about how bad it was going to get. “You have to take action now! You have to start cutting now! You have to evaluate your CEOs!” He said, “There are good-time CEOs and bad-time CEOs.” Good-time CEOs look good when the market is going up and everyone is acquiring things. But they don’t look so good when markets do down. We probably turned over 40% of our CEOs.

What is Lou saying now?

Horbach: Six months ago, Lou said, ‘Okay, now we have to start playing offense.” So, we are. The management teams that start to play offense will be so much better positioned when things start to pick up.

So you’re not looking for good-time CEOs yet, but rather, hybrid CEOs?

Horbach: Well, none of us expect a robust revenue environment. We’re calling it “the revenue-less recovery.” We’re thinking that there’s going to be a lot of M&A activity. Everyone is looking for share and global opportunities.

How might the private-equity industry attract more women?

Horbach: In order to be successful at anything, you have to love what you do. I think a lot of women have gone into private equity because it’s the right thing to do, or they think, “I’m going to make a lot of money.” Hedge funds, same sort of thing. Women have to step back and know what skills they need.

So, what are those skills?

Horbach: You have to be able to work in a very male-oriented environment and not take it personally. Women have to be adaptable–actually, that’s a strength women bring. But you need to be tough. You need to speak your mind. And you have to be realistic about how hard it is. Women often think that when they’re doing a great job, people will notice. Women don’t self-promote as much as men do. You have to network. And if you’re doing great work, make sure that your bosses notice.

by Patricia Sellers

Have we really hit bottom? Sandra Horbach, who heads the consumer and retail group at private equity giant Carlyle Group, says we have.

Horbach and I chatted on stage this morning at the Women’s Alternative Investment Summit down on Wall Street. “Trailblazers Discuss the State of the Market,” the organizers called our session, suggesting that we both have survived cycles and seen a lot. Yes, we have. Horbach, who started her career at Morgan Stanley (MS), spent 18 years at Forstmann Little before moving to Carlyle in 2005. (Meantime, I’ve been at Fortune for 25 years.)

At Carlyle, where she oversees a portfolio that includes Dunkin’ Donuts, Horbach operates out of an office right next to one of the all-time maestros of managing through tough times: Lou Gerstner, who turned around IBM (IBM) after stints atop RJR Nabisco (RAI) and American Express (AXP). “There are good-time CEOs and bad-time CEOs,” Gerstner has told Horbach many times–and yes, she heeds his advice.

As a senior advisor at Carlyle, Gerstner was gloomy and cautious earlier than most investors, Horbach explained. And in line with his thinking, Horbach’s consumer/retail group has bought no companies–zero–in the past couple of years. While credit was tight and asset values were tumbling, “bad-time CEOs” ruled the roost. Or at least these sorts of take-no-prisoner cost-cutters were favored to run Carlyle’s portfolio companies.

But about six months ago, Horbach says, Gerstner and a few others at the firm began urging a shift from defense to offense–to look for growth and start doing deals again. So, yes, the “good-time CEO” is back in vogue. Though, importantly, a new breed will be in demand. That is, CEOs who understand how to build the top line and do add-on acquisitions. Horbach predicts that we’re in for a “revenue-less recovery.”

Later on Postcards: more insights and outlook from Horbach. Stay tuned!

“I would give up all the money I have if I could be 50. You can always make money.”

–David Rubenstein, managing director of the Carlyle Group, in the New York Times. One of America’s more low-key buyout kings, Rubenstein celebrated his 60th birthday last month, prompting him to reflect that “I could be like the pharaohs and say, ‘Bury me with my money.’ Or I could start giving it away.” The billionaire recently gave $10 million to Lincoln Center, one of  the 30 major institutions he serves with his time and money.

Rubenstein’s giving philosophy reminded us of another big giver: In 2008, New York City Mayor Mike Bloomberg was the largest individual philanthropist, donating $235 million (even more than the $205 million he gave in 2007). The best measure of a philanthropist is that the check to the undertaker bounces, Bloomberg said. –Jessica Shambora

The female economy is on my mind. That’s the subject of an upcoming book, Women Want More, that I told you about in yesterday’s post, “Why CEOs should do housework.”

A survey of 12,000 female consumers, by the Boston Consulting Group, was conducted to research the book by BCG marketing expert Michael Silverstein–as I was telling Tory Burch and our dinner companions last evening. The female economy is of interest to Burch since she, in a scant five years, has built a fashion empire with 18 boutiques and sales through 450 other retail outlets. (She doesn’t disclose revenues, but Mexico-based Tresalia Capital last month invested in Tory Burch LLC, giving her company a valuation reportedly around $600 million).

Burch is expanding her business, opening her first boutique abroad, in Japan, in December. So when I told her about Silverstein’s intriguing global research—such as his finding that Brazilian women are most optimistic of all women about their financial prospects–she was eager to hear more.

So here, for Burch and other global-minded marketers, are a few more stats, from BCG’s recent research…

Women in Mexico fall right behind Brazilians in optimism about their own financial outlook. Five years from now, say 89% of them, their financial situation will be better than it is today.

Women in BRIC countries–China, India, Brazil, and Russia–are most optimistic about “the world, your country and community.” Chinese women express the most optimism: 82% expect improvement. Among American women surveyed, only 39% do.

And who are the most pessimistic worldwide? Japanese women–in terms of both their own financial prospects and their outlook on their country and the world.

Hmm, yesterday’s Postcard noted that Japanese husbands do fewer chores at home than men in the rest of the world. Do you think that Japanese women’s pessimism and their mates’ disregard, domestically speaking, have anything to do with each other?

Blackstone Group (BX) CEO Steve Schwarzman is worried. Very worried.

Last evening, at the firm’s annual press dinner, the big boss of the buyout industry riffed about what he’s been hearing as he has circled the globe. I was lucky enough to sit at his table — and I asked him that question, in fact: So, Steve, how do you think the U.S. and its economic policies are being viewed abroad? Though the dinner is a strictly off-the-record affair to convene financial journalists with the Blackstone brass, Schwarzman agreed to let me share some of his thoughts here.

Schwarzman says that foreign leaders and investors abroad have been telling him that they can’t quite believe what they see happening in the U.S. — the decline of capitalism, no less. And they’re asking, he says, how they can drum up public support for capitalistic endeavors in their own countries when the nation that’s long been their model — the U.S. — is shifting away from a market economy. The international anxiety, Schwarzman contends, can’t be good for global stability.

Yes, he’s a Republican, as you might have guessed. (Last summer, Schwarzman, along with other business VIPs including Cisco (CSCO) CEO John Chambers and former eBay (EBAY) CEO Meg Whitman — who’s now running for governor of California – tried to help John McCain with his economic policy.)

Clearly, though, it’s not just GOP-leaning financial execs who are fretting. When Tony James, Schwarzman’s No. 2 at Blackstone and his heir apparent, swung by our table, he too expressed worry that if the U.S. government shackles the financial giants with rules and regs and pay caps, the whole industry will have trouble luring talent.

Meanwhile, Blackstone’s share price has sunk more than 50% to below $9 in the past year. The firm has picked up advisory work for some casualties of the crisis — AIG, for instance — and for healthier companies like Microsoft (MSFT) (on its failed bid to buy Yahoo last year) and Procter & Gamble (PG) on its 2008 sale of Folgers coffee to J.M. Smucker.

Blackstone is reportedly considering launching a $3 billion fund to provide financing to companies on the brink of bankruptcy. But for the most part, Schwarzman & Co. are sitting on the sidelines with some $25 billion in capital, waiting to invest again in major real-estate and private-equity deals. The firm’s last big buyouts happened last fall: Apria Healthcare and the Weather Channel, where Blackstone partnered with Bain Capital and General Electric’s (GE) NBC Universal.

Blackstone wins big, of course, only when it sells the stuff it has bought — properties in its stable such as Hilton Hotels, Freescale, Nielsen and SunGard, all acquired before the global markets collapsed. The firm’s last major sales? That was in 2007, when it flipped Equity Office Properties months after acquiring it from Sam Zell for $38.7 billion in the largest real-estate deal in history. Ah, remember the good old days of get-rich-quick capitalism?

by Patricia Sellers

Dawn Hudson spent more than a decade chasing stretch goals at PepsiCo (PEP). She headed sales and marketing at Frito-Lay, the consumer giant’s snack unit. She led marketing at Pepsi-Cola North America and ascended to CEO of that $5.5 billion business.

That job turned out to be Hudson’s ceiling inside PepsiCo, where chairman and CEO Indra Nooyi has put her own stamp on the company. Hudson (who ranked as high as No. 41 on Fortune’s Most Powerful Women list in 2007) left Pepsi in January of last year. Since then, headhunters and others have wondered what big job she’ll land next.

It took Hudson 14 months–of silence, self-reflection, and ducking press inquiries—to decide that her new gig will be at….drum-roll…a firm you might not have heard of: the Parthenon Group, a Boston-based strategic advisory outfit. She’ll be vice chairman, working just three days a week.

What gives? Like a lot of women–and men too lately–who have come close to reaching a pinnacle in business, Hudson, 51, decided that shooting for bigger and bigger jobs is simply too stressful. And not worth the price.

“I was neglecting life,” she says about her time in the Pepsi pressure-cooker. “It took six months for me to realize that there’s some great life out there to be lived.”

Not that she’s idled these past 14 months. She serves on the boards of Lowe’s, the home-improvement retailer, and Allergan, whose restorative medical products range from breast implants to Botox to Refresh eye drops. Hudson got her own shot at reinvention as soon as she exited Pepsi: She stepped up to chair the LPGA–and then whittled her golf handicap to 12, from 15.

A serious athlete ever since her Dartmouth days, Hudson played in five competitive tennis leagues and a golf league–yes, simultaneously–at one point during her time off. “I transferred my 24/7 work ethic to sports,” she says, adding that she paid for it. She developed plantar fasciitis, or heel spurs. “I played through it.”

Her onetime boss, former PepsiCo CEO Roger Enrico, gave her the best advice about rerouting her career: “Roger said, ‘Whatever you do, you’re going to do passionately. So make sure you join a group of people who you really want to spend time with.’”

And Ann Fudge, a former top exec at Kraft Foods (KFT) who later headed Young & Rubicam Brands (and now sits on the General Electric board), was also helpful. “As her career progressed, she fought the urge to overload herself at the expense of her family and personal time,” Hudson says. “Ann told me that you have to follow your gut, take a deep breath, make the call to say no to something. And if it turns out to be the right call, you’ll wake up in the morning with a great sense of relief and satisfaction.”

That’s what Hudson did–but only after considering opportunities in consumer goods and retail. She says she came close to taking the top job at one large company owned by private equity. “But then I thought, what’s really going to be different this time?”

Parthenon appeals to her, she says, because she’ll have the chance to work with lots of companies in lots of areas–strategy, marketing, IT–and reach beyond business too. Parthenon has a philanthropy practice, and she plans to help the firm build a sports practice as well. She’ll start at Parthenon in a month or so. First things first: She promised to take her 11-year-old daughter (the younger of two) skiing in Colorado, and she’s taking “a mystery trip” with her husband, Bruce Beach, who wants to surprise her. (She’ll find out where the trip is when she gets there.)

So much for Hudson’s spot on Fortune’s Most Powerful Women list. Does she care? Hardly. “I’m in control now,” she says. “It’s a different definition of power.”

P.S. Hudson perpetuates the trend: Powerful women are opting out. Procter & Gamble (PG) president Susan Arnold quit her post two weeks ago, one day after she turned 55. Arnold needs to “decompress,” she told me, before she even thinks about what to do next. Former eBay (EBAY) Meg Whitman left business to run for governor of California. (She’s hardly decompressing, though! Read my current Fortune cover story.)

And three execs who used to be the most powerful women on Wall Street–Citigroup’s (C) Sallie Krawcheck and Morgan Stanley’s (MS) Zoe Cruz and Ellyn McColgan–are all without jobs now, while Erin Callan, the Lehman Brothers’ CFO who landed at Credit Suisse, is taking a leave of absence–supposedly to ease her stress. What do YOU think? Will women rise again when the business world gets out of crisis?

Guidance–the revenue and profit forecasts that companies divvy out to Wall Street analysts–is dying a slow death. Hooray for that!

As a slew of big names–Wal-Mart (WMT), Costco (COST), Microsoft (MSFT) and Yahoo (YHOO), among them–announced in the past two weeks that they would suspend or limit guidance because of economic uncertainty, analysts who follow these companies have reacted skeptically. Not giving 2009 guidance “hardly instills confidence in the business,” Sanford Bernstein analyst Andrew Wood wrote about Unilever yesterday. Indeed, less transparency is often ominous. Since December, when General Electric (GE) CEO Jeff Immelt put the nix on quarterly earnings guidance, GE stock has fallen 34%.

But here’s the reality: These companies are doing the right thing. In fact, there’s long been a small cadre of highly respected corporate chiefs who swore off earnings guidance on principle. Jim Kilts, who once ran Kraft (KFT) and Gillette and sold the latter to Procter & Gamble, wouldn’t provide guidance because, as he once told me, “Companies get in trouble the same way. They drive the organization to make a number rather than do the right thing.” Kilts calls this the “circle of doom.” Now doing private equity at Centerview Partners and on the boards of MetLife, Pfizer, and MeadWestvaco, he called this afernoon to offer his take on today’s no-guidance trend. “Everybody’s getting on the bandwagon,” he said, sounding happy.

One of Kilts’ disciples from his Kraft days, Bob Eckert, is now CEO of Mattel (MAT). He delivered disappointing earnings this week, but the forecast that the analysts had was Wall Street’s own, not Eckert’s, because he too refuses to give guidance. Always has. In 2000, when Eckert joined Mattel as chief, he decided, “We were not going to play that game anymore,” as he told me. He got rid of Mattel’s targets of 15% annual earnings growth and 10% revenue growth. He also sent colleagues copies of what he said was “my all-time favorite business article ever”: a 2001 Fortune story titled “The 15% Delusion,” by Carol Loomis, about the dangers of ambitious growth goals.

I called Eckert yesterday. I hadn’t talked to him in years. Our converation was off-the-record, but I’ll tell you, he believes more strongly than ever that providing guidance to Wall Street propels a boss to make bad decisions. Eckert reminded me of another article that explains the danger intelligently: “Temptation is all around us,” a first-person piece by Novartis CEO Dan Vasella that Fortune published in 2002. Here’s an excerpt from Vasella’s first-personer:

The practice by which CEOs offer guidance about their expected quarterly earnings performance, analysts set “targets” based on that guidance, and then companies try to meet those targets within the penny is an old one. But in recent years the practice has become so enshrined in the culture of Wall Street that the men and women running public companies often think of little else. They become preoccupied with short-term “success,” a mindset that can hamper or even destroy long-term performance for shareholders. I call this the tyranny of quarterly earnings…

Tyranny is a slippery thing. Rarely does it make itself known for what it is right from the start. Once you get under the domination of making the quarter–even unwittingly–you start to compromise in the gray areas of your business, that wide swath of terrain between the top and bottom lines. Perhaps you’ll begin to sacrifice things (such as funding a promising research-and-development project, incremental improvements to your products, customer service, employee training, expansion into new markets, and yes, community outreach) that are important and that may be vital for your company over the long term…

And here I would contend that the culprit that drives this cycle isn’t the fear of failure so much as it is for many the craving for success. For the tyranny of quarterly earnings is a tyranny that is imposed from within.

It’s hard to break out of such cycles, as Vasella notes. One of the few good thing about these dire and unpredictable times is that they’re giving CEOs a chance to behave a little better.

P.S. For more on Costco’s troubles and how one mega-store manager is trying to do to beat them, read “Discount retail woes: a quick tour,” on Postcards yesterday.

“We will end up with a bank, there is no doubt about that.”

– Wilbur Ross, Chairman and CEO of WL Ross & Co. to cnnMoney.com. A major player in private equity, Ross said that although the government rescue of the banking system had delayed his company’s purchase of a bank, it was inevitable. Last year the supersmart investor bought H&R Block’s (HRB) subprime mortgage servicing unit, and also acquired bond insurer Assured Guaranty (AGO). He’s lost a bundle on the latter. Fellow private equity firm TPG fared even worse with its investment in Washington Mutual before it failed and was sold to JPMorgan Chase (JPM) last September. – Jessica Shambora