Friday, May 31, 2013

Why Did KKR Hire a Four Star General for a High Profile Position?

Former CIA Director and retired four star U.S. Army General David Petraeus has joined private equity giant KKR.

The statement released by KKR announcing that Petraeus joined the firm included some telling comments by Henry Kravis, co-Founder and co-CEO of KKR (my emphasis):
I have long known and respected General Petraeus and, on behalf of everyone at KKR, I welcome him to the firm. As the world changes and we expand how and where we invest, we are always looking to sharpen the ‘KKR edge.' With the addition of General Petraeus, we are building on the work we have done to understand the investment implications of public policy, macro-economic, regulatory and technology trends globally. 
Got that? KKR wants to better "understand" the public policy and regulatory implications of its investments.

Henry Kravis is one of the shrewdest operators in finance, if he is hiring a four star general that can bring him little but access to Washington D.C. power players, it is a signal of how important access to Washington is these days.

The press release went on to come as close to confirming this, as possible, without coming full out and explaining what KKR is doing (my emphasis):
 Over the past several years, macro-economic and geopolitical considerations, including the heightened role of central banks following the financial crisis, new regulation and major changes in public policy, have led to KKR's increased engagement on these areas and on environmental, social and governance issues.
Bottom line: More and more of business needs a nod from Washington D.C. for its operations. If you don't have a D.C. insider, you are not protected. KKR, in the hiring of Petraeus, just bought itself major protection. Big business is building a moat around itself, using government regulators to keep out competition. It will get tougher and tougher for new businesses to launch with just grit and a great idea, when big business is hiring DC insiders who have the power, through new regulations, to snuff out new operators.

This is one of the reasons there are fewer exciting jobs for new college graduates. They are often hired by upstarts, the type big business is doing a pretty good job of snuffing out.


  1. Rather than put yourself in Dave's pocket by figuring out what he might be able to do for you, why not put Dave in your pocket by promoting him to the top job.

  2. So apparently Petraeus had value as a human being. Odd. After being thrown under the bus- it's good to see him make a comeback...he may have always been part of the oligarch.

    1. thrown under the bus? or jumped under it?

  3. It's General PEUtraeus' turn to monetize his public service.

    KKR's Global Institute joins Milken's and Clinton's. Interestingly, all three experienced disgrace in their former careers.