YouSaid · the spoken record

Henry Kravis

lines on the record: 65
first: 2024-01-05
most recent: 2024-01-05
sittings or episodes: 1
sources: podcast

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“KKR is like a football team with everyone having a position to play, a two headed quarterback in Georgia and myself when we were the co-COs, and now it's Joe and Scott. And that you just have to be in alignment. And Joe and Scott are very much in this same thinking, same kind of alignment. And you can't have a leadership team where one person in the group or another is trying to elbow out the other to get ahead. You have to focus on what's right for the firm, what's right for the team, not what's right for you. And so if you think about that to us, that's how we've always run KKR. Now, some people say you don't have anybody that can do the job by themselves. And we say, well, I don't know. We grew up with two of us running at George and I. Joe and Scott are now co-CEOs. We've had co-heads of private equity in Europe, co-heads of private equity, US, co-heads in Asia, private equity.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“But we stayed very close. George would come to Tulsa for some holiday. I would go to Houston. Actually, I had more fun going to Houston. It was a bigger town than Tulsa. But he would come up. And so we spent a lot of time together. Now, if you think about what makes for good relationships, well, number one, if you don't worry about who gets credit for anything, you can go a long way. Two, if you have the same value system, you can go a long way. And three, if you have the same goals. And George and I at all three of those areas were at 100%. And to this day, 100% in alignment. And, you know, we were co-CEOs for 45 years, and the firm's now 47 years old. So no issue at all. I am proud when George does something great and he's proud when I do something. And we're pulling for each other. And that's the way you really have to do it. I define sometimes.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Well, first of all, you have to understand George and our first cousins, we grew up together, we met on a family vacation, George's family. George's father and my mother were brother and sister. And so our families were very close. George grew up in Houston, Texas. I grew up in Tulsa, Oklahoma. We used to spend holidays together. And I believe when we were two years old, George and I were taken on our first family vacation. Marblehead, Massachusetts, and people say, well, was that the time you started thinking about? Yes, about that time. That was really we were thinking about that”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“And we said, no, no, we're just kidding you. We want to stay here and help you best we can. And so we set up something today called the G4, which is the four of us. We meet basically once a week, although we formally, although we're talking all the time They're running the business. It's not for George and me to run. We give them suggestions, maybe too many, but that's okay. And we just have a great relationship with Owen Scott. And they're doing a phenomenal job. Couldn't be happier.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“We said, let's see how they do. And for four and a half years, they did that all through COVID and just did a tremendous job. George and I kept giving a more and more responsibility and they just kept taking it and doing a better job than one could have ever expected. And then it became time. And that was basically now two years ago, this month, October, where we said, all right, it's yours to run. And George and I said, well, congratulations. We'll take it to the board. Assume the board will approve it since George and I had the controlling shares of the board. And we said this will give George and me an opportunity to now set up our own firm. And they said, don't even think about that. That's not even funny.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Culture of inclusion, everybody participates in everything we do at the firm, and they epitomized that approach, which is the DNA of KKR. So that was an extremely important. They ran two different businesses. Joe went out to Asia, wasn't even a partner yet. When he went out to Asia to set up and run Asia for us, and Scott was responsible for setting up our capital markets business, really growing our credit business and overseeing our financial services business at the time. So they brought very complementary and different businesses to the fold. They were also extremely well respected within KKR, and that was the important thing. So yes, the first move we made was to make them co-chief operating officers, not co-CEOs.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“All transitions in Georgia's, in my view, have to take time. We didn't wake up one morning and says, ah, let's pick Joe and Scott. This is the time, not at all. We actually started this journey seven years before, and we had a larger group of executives within KKR that we thought about. We moved a few of them around to different jobs to see how they did. And we narrowed it down to three people. And we had to make a decision. Is it going to be one person? And we knew if we did that, if we picked one of the three, we in all likelihood would lose the other two. Joe and Scott became a very natural choice for us. They were extremely close friends, and to this day are very similar to the way George and I are closest friends and first cousins. And we thought if we did that, they could work well together, which was important. They lived by our culture, the culture of KKR, which is critical.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Oil and gas with that one third expenditure than they would have. So all of a sudden, that's called alignment. They weren't spending somebody else's money. They were spending their own money. And you watch your expenses. You watch how you travel. You watch the way you run the business. How do you improve the business? And example after example is what we have been able to show investors over a long period of time.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Had an oil and gas company that we owned a half interest in with Allied Signal. And the management came to us with their first capital plan and had a very large expenditure set up in their budget for drilling. I think it was about a billion dollars. And we said, well, that's going to cost you $100 million. And I said, what do you mean? It's going to cost us $100 million. Well, you're a 10% owner in the company. Well, all of a sudden, you know, nothing makes you pay attention. You have to reach into your own pocket in effect, even though you didn't have to, but to the ownership. And we ended up having a drilling budget probably one third of what they thought they were going to have and probably found much more.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Is true in private equity. And that was really what drove us. We saw so many companies that were not particularly well run. They were not governed very well. The boards of directors were, you'll be on my board, I'll be on your board and we'll play golf every weekend and life will go on. We'll be happy. And so you didn't have anyone really holding management accountable. So we found a way that if we could hold management accountable and have an alignment of interest where they were owners and they had to put up capital, we're not just giving them options. They put up capital so they have something to lose, just like we as a shareholder have something to lose. We thought we would get more out of them than what we were seeing in companies on their own. And that's exactly what happened all of a sudden. Companies started paying attention to because the managements who drove this on capital expenditures, are we really wasting money? And I'll give you an example of that.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Well, first, understand how we actually got started. In the late 1960s and until we started KKR and then continuing on from 1976 until well into almost all of the 1980s, companies were not particularly well run. And what we saw was an opportunity to have an alignment of interest between management and the shareholders, shareholders being KKR, our investors that are giving S capital to invest. And once you have that alignment of interest with management becoming shareholders, there's a big difference between being a renter of the corporate asset, as I say, and being an owner. If you're an owner, think of it like having a rent a car. If you have a rent a car and it gets dirty or a little scratch in it, you're not going to fuss too much about it. If it's your car, you're going to be really upset about it. You'll keep it very clean. The same concept.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Today, we probably have over 40 different products, and they're in the categories of private equity, growth equity, core private equity, which is longer-term hold. We're in infrastructure, different types of infrastructure investments, real estate, again, core real estate, opportunistic real estate. We're in every form of credit business one could imagine, although we're not a bank. And we have a capital markets business. We have ESG and impact investing business, a climate investing business, and so forth. So today you would call us, I guess, a multifaceted alternative investment manager.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Well, you know, for years, we were described as a firm that was in private equity and private equity only, basically. And that was true because from 1976 until 2004, that's all we did. We were private equity in the U.S. private equity in Europe. And then in 04, we started expanding into the credit business. And we got in the credit business in an odd way. And it was because we were tired of calling on companies and said, would you have an interest in taking your company private or selling your business to us? And the answer was no, but we need credit because the banks aren't covering us the way they used to. And that was really the reason that we decided, okay, we've got to get in the credit business ourselves. And that was the first expansion. Today, in short, I would describe KKR as an alternative investment manager covering a number of different products.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“The short answer to imagining is absolutely not the fact when George and I had early conversation about this, did we want to do it? You have to keep in mind what the situation for each of us was. We had three children each, young. At that point, we had stepped down from the partnership at Bear Stearns, and we had no money. So George and I each put up $10,000, and Jerry, who was 19 years older and had some money, put up $100. So you're right, $120,000 is what we started the firm with. And all we were trying to do is can we last for five years and do a couple deals? If we can do that, then maybe we've got a future. And that was really how we thought about it. And that's about how long we thought out into the future. It was just do some deals. If anybody asked me, do you think you'd ever start an industry? Not a clue. We were just trying to do some just like we had been doing.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT
“Thank you. Nice to be here. And also, I have to say, it's really nice to be back in your offices. It brings back many memories of the time that I spent three summers working at Goldman Sachs in 1964, five and six. So I've had a long tie with your terrific firm.”
2024-01-05 · Goldman Sachs Exchanges · KKR’s Henry Kravis on private equity, culture, and global markets · IDENTIFIED FROM THE TRANSCRIPT