Originally published in Nikkei Asia's “Henry Kravis: My Personal History"
Chapter 23
Handing over the reins
In October 2021, George (Roberts, co-founder) and I were "promoted" to co-executive chairmen of KKR. Since 1976, we held the three titles: co-founders, co-chairmen and co-CEOs.
While it is absolutely the most pragmatic thing to do, this is not the most natural step for a founder. George loves to quote Wayne Gretzky and how we should all be skating to where the puck is going, not where it has been. This applied as much to innovating as staying ahead of the curve on the macro or the investment theme (or trying to do so) as it did to keeping our house at KKR in order. George always thinks 10 steps ahead.
It's important to remember that KKR is our family business. We did go public and change our shareholder base in doing so, but George and I remain the largest shareholders to this day and our culture still has that family business mentality. If a company can be progeny, this might be one of ours, which is to say it will live on as part of our family, support our family and that of our grandchildren. And we have tried to care for it like we would and do for our family -- as much as one can for a corporation.
So, it was hard to fathom letting go. Age was part of the reason. We were both 77 at that time. Since we turned 60, limited partners, investors who had committed capital to our funds, had been asking questions about succession. They tend not to like changes that could potentially destabilize a team or organization caring for their capital.
Every time we turned a milestone age, like 65 or 70, succession was a major topic of discussion. George and I had been leading KKR together since its establishment in 1976, and we were feeling sharp in the mind and somewhat spry. But nothing lasts forever and that's not how you lay the bricks of a building with a strong foundation.
We selected Joe Bae and Scott Nuttall. Our real succession event we internally point to was when they were appointed co-presidents in 2017.
Joe built and oversaw our fast-growing business in Asia, and Scott played a central role in diversifying KKR's scope of business, starting with credit investments. Both men are excellent investors, highly creative, and they had joined the firm at the same time in 1996. And importantly, they were best friends like George and me -- who had seen each other through the late nights as associates to being there for the birth of some of their children to being good thought partners in business.
George and I had co-led KKR and we believed this to be a good model because it had worked for us. We agreed that if we were to pick two, there was only one obvious choice: Joe and Scott. We knew if we picked one, we probably would lose the other, and we wanted to avoid that. We also knew from our own experience that the business was so large that it really benefited from having two leaders, as long as they are the right two people.
So, in 2017, we promoted Joe and Scott to co-presidents and co-chief operating officers. We watched with a bit of awe and also continued testing the duo thereafter. We wanted to see how the two would work together or how the company and teams would follow them. The big test we didn't assign came in the form of an unprecedented pandemic.
They showed incredible leadership during this time. They brought people together and kept the business running. We even did a major transformational deal during COVID, acquiring our insurance business, Global Atlantic. They passed the test.
When we promoted them to co-CEOs in October 2021, George described their combination as "sort of like a good marriage" since they had been close enough to go on family vacations together since they were in their 20s.
When we handed over the CEO roles to Joe and Scott, we all agreed that everything would be 50-50, because that is how George and I did everything. "You're in it together, you're joined at the hip, and you're moving forward together as one very strong team," we said to them.
We also said to the two, "And your job now is to lead the firm, but you've also got to find the next two leaders, that are younger than you. Maybe somebody in their 30s or 40s."
It was just after their appointment, but it was not too early. We need to build a "bench" of reserves or backups. This time, because Joe and Scott are close friends and can divide up and do different things, we have two leaders who can cover much more ground than just one, but next time, who knows?
The same goes for other executives. If someone suddenly leaves, do we have a successor, or do we need to train someone or recruit from the outside? It is their responsibility to think about these things. It's important to plan for the unexpected.
George and I still meet with Joe and Scott regularly. It used to be every Monday, but now it's every two weeks. We spend a lot of time on strategy and thinking 10 years ahead. We still have a long-term view.
My schedule is as packed as ever. It just has a lot less management. I had no idea how liberating that could be and getting back some of the basics I love. I spend a lot of time with founders and CEOs and others interested in KKR. They want to understand how to build a company that can last 50 years. I don't have all the answers. I can only tell our story.
George and I both spend time with a set of mentees and some of our younger team members.
I'm now 80, but I'm having as much fun as I did when I was 40, and my curiosity and my love of the work and what we are privileged to do -- for our companies and clients -- is as vibrant as ever.