George Roberts: Don't Miss Opportunities | Summary and Q&A

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July 27, 2009
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Stanford Graduate School of Business
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George Roberts: Don't Miss Opportunities

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Summary

In this video, George Roberts, co-founder of KKR, shares insights about the early days of private equity, his partnership with Henry Kravis, and advice for aspiring business leaders. He discusses the origins of the industry, the importance of finding a good business partner, common mistakes made by managers, the balance between work and life, and career advice for students. He also addresses the criticisms and public perception of private equity and shares his vision for the industry's future.

Questions & Answers

Q: What led George Roberts and Henry Kravis to start their own firm in the private equity industry?

George Roberts explains that the idea of leveraged buyouts was not new, but the unique part of what they did was making management partners in their ventures. They had experience with management buyouts from their time at Bear Sterns, and in 1975, they were able to buy a collection of nine businesses from Rockwell for $105 million, which convinced them they could do it on their own.

Q: What concerns or fears did George Roberts have about leaving his banking job and starting a new firm?

George Roberts shares that his main concern was the fear of not being successful and having to live with his mother-in-law if the venture didn't work out. However, he also believed in his education and reputation, recognizing that failures are not heavily penalized in the United States as long as they are handled with integrity.

Q: How has the partnership with Henry Kravis influenced the leadership and culture at KKR?

George Roberts explains that he and Henry Kravis are first cousins and had a close relationship growing up. They believed that by sticking together, they could face any challenges together and have each other's backs. While they have different styles, their shared values and goals make their partnership effective. Roberts highlights the importance of finding a business partner with shared values and trust.

Q: Based on George Roberts' experience in seeing how different businesses are managed, what are some common mistakes that managers make?

George Roberts points out that many managers get consumed with managing the corporation instead of focusing on achieving objectives. Meetings in larger companies can become unproductive, and people often lose sight of what is truly important: making the organization run better. He emphasizes the importance of delegating responsibilities, holding people accountable, and creating an environment where people can do their best work without interference.

Q: What is the biggest mistake George Roberts has made, and what did he learn from it?

George Roberts acknowledges that there have been many mistakes throughout his career, particularly in terms of business judgment. One recurring mistake was not making changes in management when it was clear that they were not doing their job effectively. He realized that it is better to make changes quickly rather than giving second or third chances, as organizations expect changes when there is a change of control.

Q: Are there any CEOs or leaders that George Roberts finds inspiring or effective, and what makes them stand out?

George Roberts mentions Ray O'Keefe, CEO of a company called A.J. Industries, as someone he found inspiring. O'Keefe's dedication to working hard and getting things done, regardless of the challenges, made him a successful leader. Roberts believes that leaders who lead by example, ask others to do what they themselves are willing to do, and have a strong sense of values make effective and inspiring leaders.

Q: How does George Roberts think about work-life balance, especially in the demanding field of private equity?

George Roberts explains that he considers himself fortunate to have found something he is passionate about early in his life. He emphasizes the importance of finding something you love to do, as it makes going through difficult times easier. He also credits his strong sense of what is important in life, particularly family, for helping him maintain a balance. Roberts advises finding a mate who shares the same values and finding work that you love, as that will naturally create a balance.

Q: What is the vision for KKR's future and the private equity industry as a whole?

George Roberts believes that the private equity industry is not going away, despite the current challenging environment. He acknowledges that the focus has to be on making investments in companies and making them better. While deals may be more challenging to do in the current market, KKR's goal remains to focus on improving their existing investments, attracting capital, and growing their business globally. Roberts emphasizes the importance of staying focused and continuing to do what has worked in the past.

Q: How does George Roberts think about spending the rest of his time outside of work?

George Roberts mentions that he prioritizes staying fit, spending time with his family (including four grandchildren), and enjoying hobbies like golfing. He also expresses a commitment to give back through philanthropic efforts. He and his wife have started a venture philanthropy firm that focuses on creating jobs for underserved populations, and they have developed metrics to track the impact of their investments.

Q: How does George Roberts address the criticisms and public perception of private equity?

George Roberts acknowledges that private equity has faced criticism, but he believes that their track record speaks for itself. He notes that the information on their returns is audited and transparent. He also recognizes that the press often focuses on negative stories and individualizes criticism. However, he emphasizes that private equity has been a net creator of jobs and has made a positive impact.

Q: What advice does George Roberts have for students looking to start their careers and make job decisions?

George Roberts advises students to have confidence in themselves and their education. He suggests not overthinking career decisions and recognizing that it's okay to have multiple jobs and experiences early on. He stresses the importance of finding a job where one can contribute and learn, while also treating people fairly and communicating regularly. He also encourages students not to stress too much and to remember that the opportunities will be plenty if they work hard and with integrity.

Takeaways

George Roberts shares valuable insights about the early days of private equity, the importance of finding the right business partner, common mistakes made by managers, work-life balance, and career advice. He highlights the industry's track record of success and encourages aspiring leaders to have confidence in themselves, focus on contributing and learning, and prioritize fairness and integrity in their work. He also emphasizes the need to adapt to changing circumstances and to make investment decisions based on a clear understanding of market conditions. Overall, Roberts believes in the resilience and future growth of the private equity industry.

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