"Whatever needs to be rectified in all this uh you know will take place So you know uh to quote Queen Elizabeth just stay calm and carry on." - George Roberts [00:08:58]
"You know our scientific approach to investing is throw enough stuff up something will stick And uh uh so we're always trying new things and that is really important." - Henry Kravis [00:18:28]
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"There's $44 trillion in the hands of individuals in savings... let's assume that we're only able to capture 5% of the $10 trillion to date You could do the math That's $2 trillion That triple what we have." - George Roberts [00:21:51]
"It wasn't barbarians outside the gate It was barbarians inside the gate that created this when Ross Johnson tried to buy the company on the cheap." - George Roberts [00:28:20]
"I think there three things that mess up any relationship It's sex money and ego... so you have to have a mindset which I think is true in any relationship that this relationship is so much more important than anything else." - George Roberts [00:32:21]
"If you don't worry about who's going to get credit for something there's that great saying it's amazing how far you can go." - Henry Kravis [00:35:36]
Speakers & Credentials
Henry Kravis: Co-Founder and Co-Executive Chairman of KKR. A pioneer of the private equity industry who has helped build KKR into a $664 billion global powerhouse over nearly 50 years.
George Roberts: Co-Founder and Co-Executive Chairman of KKR. Cousin and lifelong partner to Henry Kravis, co-architect of KKR's global expansion, cultural framework, and historical success.
Host / Moderator: Representative conducting the interview at the 2025 Milken Institute Global Conference, highlighting the rarity of Kravis and Roberts sharing a public stage.
1. Executive Summary
KKR Co-Founders Henry Kravis and George Roberts reflect on nearly 50 years of partnership and managing a firm with $664 billion in AUM and 4,400 employees.
Despite macro uncertainties around global tariffs and shifting regulations, KKR emphasizes a non-linear, constant-investment approach, deploying $30 billion since the start of the year globally.
Europe presents a newly emerging opportunity landscape, particularly triggered by recent German defense and infrastructure spending commitments, ending a long period of European reliance on US support.
The retailization of private equity is highlighted as a massive secular growth driver, with KKR targeting vast, untapped pools of individual capital ($44 trillion in individual savings and $10 trillion in 401ks) via key partnerships like Capital Group.
The founders attribute their enduring success not merely to financial engineering, but to a deeply embedded "one-firm" culture devoid of silos, empowering younger employees, fostering emotional intelligence, and completely stripping ego out of their 50-year relationship.
2. Chronological Table of Contents
[00:00:00] - Introduction and the Scale of KKR Today
[00:01:43] - Decoding the Macro Environment: Tariffs, Regulation, and Uncertainty
[00:10:59] - The Awakening of Europe: Defense & Infrastructure Opportunities
[00:12:51] - Internal Culture: Mentorship, Emotional Intelligence, and Risk
[00:17:27] - Strategic Inflection Points: KPE and Permanent Capital
[00:21:24] - The Retailization of Private Equity: Targeting a Multi-Trillion Dollar Market
[00:27:00] - Addressing the "Barbarians at the Gate" Stigma 35 Years Later
[00:31:45] - The Anatomy of a Successful 50-Year Partnership
[00:37:05] - Final Advice for Investors: The 70/20/10 Rule and Curiosity
3. Detailed Thematic Summary
The State of the Global Economy & CEO Sentiment [00:01:43]
The Trinity of Corporate Anxiety: When speaking with CEOs daily, Kravis notes three overwhelming concerns dominating executive mindshare: shifting tariffs, unpredictable regulation trajectories, and basic market uncertainty [00:02:08].
European Paralysis vs. US Adaptation: While KKR's US portfolio is mostly resilient, Kravis observes that European operators are essentially "sitting on their hands," pausing major capital expenditures and waiting for geopolitical and trade policy dust to settle before moving forward [00:03:08].
The Investor Mandate (Monetization): On the LP side, investors are acutely worried about liquidity. They want to know when they are getting their alternative investment cash back. KKR addresses this by citing their track record: returning $2 for every $1 invested consistently over the past 10-year period [00:04:07].
The Linear Investment Philosophy: KKR avoids timing market tops and bottoms. Instead, they deploy capital steadily. Since the beginning of the year, they have put over $30 billion to work, showcasing their belief that uncertain times represent their "sweet spot" for leaning in [00:03:59].
KKR’s Asset Class Playbook & Capital Deployment [00:04:35]
Private Equity Aggression: Year-to-date, KKR has deployed $11 billion in traditional private equity across Asia, the US, and Europe, reflecting continued confidence in their core buyout operations [00:04:59].
The Infrastructure Advantage: Roberts notes that there is "probably no better time to invest right now" in infrastructure than the present due to high rates and quality assets. Crucially, KKR faces significantly less competition in their $110 billion infrastructure unit compared to private equity [00:05:17].
Credit Selectivity: With widened spreads, KKR's credit portfolio holds over 1,900 positions. Roberts enforces a strict risk-management mental model: only invest in the credit of a business if you would be perfectly happy owning the underlying company should the debt default [00:05:31].
Real Estate Restraint: Conversely, KKR remains highly cautious regarding Real Estate, noting that asset pricing has "not there yet" in terms of providing the requisite yield premiums required to justify capital lock-up [00:05:53].
Insulation from Trade Wars: Kravis emphasizes that the KKR portfolio is built defensively against current geopolitical shocks; over 90% of their portfolio companies have virtually zero or very limited exposure to direct tariff impacts [00:10:44].
The Awakening of Europe as an Investment Destination [00:10:59]
A Shift in Geopolitical Reliance: Kravis highlights a massive psychological and economic shift occurring in Europe. Leaders realize they can no longer rely on the US defense umbrella. Kravis recounts a private meeting with Angela Merkel where she admitted Trump was correct about Europe needing to spend more on defense, yet Germany failed to act at the time [00:11:56].
The Trillion-Dollar Catalyst: Under new leadership dynamics (Friedrich Merz in Germany, Emmanuel Macron in France, Giorgia Meloni in Italy), a $1 trillion defense and infrastructure package is moving forward. KKR is actively mobilizing around this, noting a distinct "different vibe" in Europe that presents actionable investment alpha for private capital stepping in to fund this modernization [00:11:25].
Firm Culture, Mentorship, and the Power of Emotional Intelligence [00:12:51]
Decentralizing Courage: Roberts argues that the key to managing a 4,400-employee global firm is "giving them courage to make decisions." He urges young executives to push past financial modeling and develop emotional intelligence, emphasizing that analysis is easy, but human connection is hard [00:13:27].
The "No Silos" Compensation Model: A foundational pillar of KKR's success is that professionals are compensated off the global balance sheet, not their individual fund or silo. This enforces a collaborative culture where cross-pollination of ideas is financially incentivized rather than penalized [00:18:06].
The Rejection Metric: Roberts points out that in the early days of KKR, 90% of the ideas they pitched failed or were rejected. He laments that technology has degraded interpersonal skills, noting that modern associates struggle to pick up a phone to make a cold call due to fear of rejection [00:14:15].
The Quest for Permanent Capital and Strategic Corporate Moves [00:17:27]
The KPE Innovation: Kravis details the massive strategic leap of creating a publicly traded pool of capital (KPE) to secure permanent capital. Despite Morgan Stanley and Goldman Sachs having no precedent for it and estimating they might raise $1 billion, KKR deployed 8 teams globally and circled $7 billion in just three weeks [00:19:32].
Weathering the Storm: The KPE vehicle priced at $25 a share, plummeted to under $2 a share during the 2008 Global Financial Crisis, but ultimately enabled KKR to merge the underlying partnership into the vehicle at $6 a share, securing the permanent balance sheet that defines the firm today [00:19:52].
Insurance as a Pillar: Kravis highlights the acquisition of Global Atlantic (now 100% owned) as one of the most critical structural moves in the firm’s history, providing massive, stable capital flows that supercharge their credit and origination businesses [00:20:47].
The Retailization of Private Equity: A Multi-Trillion Horizon [00:21:24]
The Total Addressable Market: Roberts breaks down the retail mathematics: There is $44 trillion in global individual savings and $10 trillion in 401ks. Assuming a 5% growth rate over 25 years, capturing just 5% of the future $401k market would yield $2 trillion in AUM for KKR—triple their current size without needing to triple headcount [00:21:51].
Explosive Short-Term Growth: Through strategic partnerships with groups like Capital Group, KKR's retail AUM has already surged from $8 billion to $21 billion in a single year, proving massive pent-up demand among individual investors seeking alternative yields with 5-year liquidity windows [00:25:01].
The "Barbarian" Label and Navigating Historical Stigma [00:27:00]
Reframing the Narrative: Discussing the legendary book Barbarians at the Gate, Roberts notes the historical irony that RJR Nabisco's own CEO, F. Ross Johnson, was the actual "barbarian inside the gate" trying to steal the company before KKR intervened [00:28:20].
Using Low Expectations as Alpha: Instead of running from the label, KKR used it defensively. Because counterparties expected hostile, sword-wielding raiders, Henry and George found it incredibly easy to "get over the bar" and impress management teams simply by being polite, thoughtful, and analytical [00:28:59].
A 50-Year Partnership & Final Advice for Navigating 2025 [00:31:45]
The Secret to Partnership: Kravis and Roberts met at age 2. Their only fight occurred at age 7 over a bicycle, ending with Kravis getting 26 stitches [00:35:12]. They maintain that sex, money, and ego ruin partnerships. To prevent this, they have maintained exact equal ownership and carry since day one, a practice they forced upon their successors, Joe Bae and Scott Nuttall [00:36:42].
The 70/20/10 Rule for Individuals: For individual investors frightened by current headlines, Roberts provides a strict asset allocation framework: Average into the market over 6 months putting 70% in fundamentally sound long-term equities, keep 20% in cash/cash equivalents, and allocate 10% toward riskier, high-upside alternative investments [00:39:17].
The Reference Vault
4. Data & Figures
Data Point
Value
Context
Timestamp
KKR Total AUM
$664 Billion
Total assets under management for the firm as of the interview.
Concept: When buying credit or debt instruments, apply a rigorous equity-owner mindset.
Application: Roberts insists that KKR will only purchase the debt of a company if they would be perfectly comfortable converting that debt to equity and operating the company should a default occur. [00:05:31]
The "Balance Sheet" Compensation Model:
Concept: Aligning employee incentives with the holistic health of the firm rather than isolated silos.
Application: KKR pays employees off the global balance sheet rather than out of their specific fund's carry. This forces collaboration, prevents information hoarding, and ensures the best ideas receive capital regardless of origin. [00:18:06]
The "Scientific Approach to Investing" (Strategic Redundancy):
Concept: Volume and iteration lead to alpha.
Application: Kravis describes their approach as "throw enough stuff up something will stick." It emphasizes constant networking, pitching ideas constantly knowing a 90% failure rate is normal, and generating proprietary deal flow through sheer volume of market contact. [00:18:28]
The 70/20/10 Retail Allocation Framework:
Concept: A defensive, yet opportunistic portfolio construction strategy for individual investors navigating turbulent markets.
Application: Roberts advises deploying capital gradually over 6 months: 70% in fundamental, long-term equities; 20% held defensively in cash/equivalents; and 10% allocated to high-upside/riskier alternative assets. [00:39:17]
6. Anecdotes
The Angela Merkel Reality Check: Kravis recalls a small, private meeting where German Chancellor Angela Merkel openly admitted that despite disliking Donald Trump, he was "absolutely right" that Europe and Germany needed to drastically increase domestic defense spending. Despite her admission, they did nothing at the time, highlighting the massive pent-up demand now being unleashed by her successors [00:11:56].
Working at Dollar General: To underscore KKR's hands-on culture, Roberts points out Raj Agarwal (now head of KKR's $110B infrastructure unit) who, while in the retail group, actually went and worked shifts inside a Dollar General store for three weeks to understand operations before KKR acquired it [00:23:14].
The Wall Street Permanent Capital Pitch: Kravis recounts pitching the unprecedented idea of a publicly traded PE vehicle (KPE) to the CEOs of Goldman Sachs and Morgan Stanley. Both bankers admitted they had never seen anything like it and guessed they might raise $1 billion. KKR teams bypassed the banks, hitting the road to circle $7 billion in three weeks, changing the firm's trajectory forever [00:19:32].
The 26-Stitch Bicycle Fight: Illustrating the depth of their bond, Kravis tells the story of the last fight he and Roberts ever had. At age 7, fighting over who got to ride a new bicycle first, Kravis ran into a house corner, cracked his head open, and required 26 stitches. They never fought again and built a 50-year firm with strictly equal compensation [00:35:12].
"Locusts" vs. "Barbarians": Kravis recalls being in Germany when Chancellor Schroeder publicly referred to private equity firms as "locusts." Kravis confronted him afterward, jokingly asking if being a locust was considered a step up or a step down from being a barbarian [00:30:30].
7. References & Recommendations
Mike Milken: Host and organizer of the Milken Institute Global Conference; mentioned by the host for chasing Kravis and Roberts down for a long time to do this rare joint interview.
Joe Bae and Scott Nuttall: Current Co-CEOs of KKR; mentioned as the leaders running day-to-day operations who share the founders' commitment to culture and equal compensation.
Angela Merkel: Former German Chancellor; referenced in an anecdote highlighting Europe's historic reluctance to spend on its own defense despite knowing it was necessary.
Friedrich Merz: German Chancellor candidate/leader; mentioned as a catalyst for future European infrastructure and defense investments via his push for a $1 trillion spending bill.
Emmanuel Macron & Giorgia Meloni: French President and Italian Prime Minister, respectively; mentioned alongside Merz as the new guard of European leadership poised to drive self-reliance.
Raj Agarwal: Head of Infrastructure at KKR; highlighted as an example of KKR's hands-on culture for working in a Dollar General prior to acquiring it.
F. Ross Johnson: Former CEO of RJR Nabisco; labeled by Roberts as the true "barbarian inside the gate" who tried to steal his own company on the cheap.
Jerry Kohlberg: KKR founding partner; mentioned in passing ("Jerry, George, and I") regarding the early days when nobody else was doing private equity.
Chancellor Schroeder: Former German Chancellor; referenced in an anecdote where Kravis asked him if calling PE firms "locusts" was better or worse than being called barbarians.
Milken Institute: The organization hosting the Global Conference where this interview takes place.
KKR (Kohlberg Kravis Roberts): The $664 billion alternative asset management firm founded by the speakers.
Goldman Sachs & Morgan Stanley: Major investment banks mentioned as doubting KKR's ability to raise more than $1 billion for its permanent capital vehicle (KPE).
Global Atlantic: Insurance company acquired fully by KKR; highlighted as a critical pillar providing massive permanent capital and supercharging their credit business.
Capital Group: Wealth management firm; mentioned as a crucial strategic partner enabling KKR to distribute private equity products to the retail market.
RJR Nabisco / Dollar General: Major portfolio companies acquired by KKR; mentioned as examples of historic deals and hands-on due diligence.
Barbarians at the Gate: The seminal business book covering the RJR Nabisco buyout; discussed extensively for giving KKR its enduring, yet inaccurate, "barbarian" label.
8. Actionable Next Steps (AI Recommended)
Re-Evaluate European Infrastructure Exposure: Given the explicit pivot away from US defense reliance, allocators should immediately screen for infrastructure, defense, and industrial modernization opportunities in Germany and France (tracking the $1T policy shifts).
Audit Credit Portfolios for "Loan-to-Own" Viability: Apply the KKR framework to current fixed-income allocations. Liquidate any debt positions where you would be uncomfortable owning the underlying equity in a distressed scenario.
Capitalize on the "Retailization" of Alternatives: Wealth managers and RIAs should actively build pipelines to connect mass-affluent clients to PE/Infrastructure products, prioritizing platforms (like Capital Group's partnership with KKR) that offer the required 5-year liquidity structures.
Implement the "Balance Sheet" Incentive Structure: Corporate leaders should audit their compensation models to ensure employees are rewarded for holistic firm growth rather than silo-protection, fostering an environment where cross-departmental collaboration is financially mandated.
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PE Deployment YTD
$11 Billion
Amount deployed specifically in private equity year-to-date.