Henry R. Kravis: The Tulsa-Born Pioneer of Private Equity | Full Interview

Early Life and Entrepreneurial Spirit

• 💡 Henry R. Kravis was born in Tulsa in 1944, influenced by his father, Raymond F. Kravis, an oil and gas consultant and philanthropist, and his mother, Bessie Roberts Kravis, a civic leader and founder of the Tulsa Urban League.
• 🧠 Kravis attributes his values of hard work, integrity, and giving back to his parents, who instilled in him a strong sense of independence from a young age.
• 🌱 He pursued his education at Claremont McKenna College, majoring in economics, and earned his MBA from Columbia University, working early jobs at Sunray DX Oil Company and Goldman Sachs.

Pioneering Private Equity with KKR

• 🚀 Kravis, along with his cousin George Roberts and mentor Jerome Kohlberg, developed the concept of bootstrap acquisitions and leveraged buyouts while at Bear Stearns in the late 1960s.
• 💼 In 1976, they left Bear Stearns to form Kohlberg Kravis Roberts & Co. (KKR), starting with only $120,000 of their own savings to focus on long-term investments in companies.
• 🎯 KKR's initial strategy involved buying public companies to take them private or acquiring private family-owned businesses, aiming to improve operations and foster growth with patient capital.
• 📈 They faced early rejections and pioneered the private equity fund model, eventually raising a $35 million fund after initially struggling to secure capital.

Major Deals and Public Perception

• 🔥 KKR gained significant public attention with the RJR Nabisco buyout in 1988, a $24 billion deal that inspired the book and film "Barbarians at the Gate."
• ⚠️ Kravis found the book "Barbarians at the Gate" to be fairly accurate, but the film adaptation was not, viewing it as mere entertainment.
• 📊 The firm continued to break records, including the $45 billion acquisition of Energy Future Holdings in 2007, which was the largest corporate takeover at the time.
• 💬 Kravis acknowledges the media scrutiny and varied public perception, from being called "barbarians" to "locusts," but emphasizes maintaining honesty and integrity in all dealings.

Philanthropic Endeavors

• 💖 Kravis and his wife, Marie-Josée, are significant philanthropists, donating substantial amounts annually to education, medical science, research, and the arts.
• 📚 He chairs Sponsors for Educational Opportunity, an 8-year program supporting minority students from ninth grade through college, achieving high graduation rates.
• 🔬 They made a $100 million grant to Memorial Sloan Kettering to establish the Kravis Center for Molecular Oncology and supported Rockefeller University with a new science center.
• 🏙️ Kravis also founded The Fund for New York City to foster inner-city entrepreneurship and job creation, and initiated a drug and substance abuse program for middle schools.

Key Principles for Success

• ✅ Kravis advises young people to embrace the workforce, as there is no perfect first job, and to be open to unexpected opportunities.
• 🧠 He stresses the importance of curiosity for investors, enabling them to connect dots and anticipate future trends.
• 🌍 Encouraging young individuals to step out of their comfort zones and seek diverse perspectives, rather than only associating with like-minded people, is crucial for personal and professional growth.
• 🌟 Kravis highlights grit—determination and fortitude—as the most critical trait for success, allowing individuals to persevere through challenges and achieve their goals.