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KKR's Head of European PE, Philipp Freise: Do Andreessen & General Catalyst Scare KKR?

Philipp Freise is Co-Head of European Private Equity at KKR, where he manages the largest private fund in Europe with $8BN in the latest fund. Philip has led KKR's investments in FGS Global, Superstruct, Axel Springer SE, BMG Rights Management, Fotolia, GetYourGuide, GfK SE, Leonine, Mediawan SAS, Scout24 Switzerland and Trainline. Previously, Philip worked at McKinsey & Company in and co-founded Berlin-based VC firm Venturepark, Europe's first pan-European incubator. ---------------------------------------------- In Today’s Episode We Discuss: 00:00 Intro 02:06 The $100M Dot-Com Failure That Changed My Career 06:22 ”We Lost $500M in Turkey.” 07:39 Do You Take Market Timing Risk? 11:02 Is Sticking to Deployment Cycles Still Smart? 12:40 KKR’s Ruthless Portfolio Discipline: Love Doesn’t Matter 14:55 Do Power Laws Apply in PE? Freise Destroys the Myth 17:03 The Truth About Capital Intensity in the Age of AI 18:53 Can AI Kill the PE Model? Here’s What Philipp Says 23:22 The Secret to Great Investment Decisions at KKR 25:39 Why There’s a $3T Liquidity Time Bomb in Venture 32:57 Will KKR Europe Hit $20B? Freise's Bold Prediction 41:10 Thematic Thinking in a World That Doesn’t Care 43:08 Helsing, Defense Companies: The New Age of DeepTech Bets 46:18 Tariffs, China, and the Future of the German Car Empire 57:36 Freise’s Relationship to Money 01:00:22 Quick-Fire Round ----------------------------------------------- Subscribe on Spotify: https://open.spotify.com/show/3j2KMcZTtgTNBKwtZBMHvl?si=85bc9196860e4466 Subscribe on Apple Podcasts: https://podcasts.apple.com/us/podcast/the-twenty-minute-vc-20vc-venture-capital-startup/id958230465 Follow Harry Stebbings on X: https://twitter.com/HarryStebbings Follow KKR on X: https://twitter.com/KKR_Co Follow 20VC on Instagram: https://www.instagram.com/20vchq Follow 20VC on TikTok: https://www.tiktok.com/@20vc_tok Visit our Website: https://www.20vc.com Subscribe to our Newsletter: https://www.thetwentyminutevc.com/contact ----------------------------------------------- #20vc #harrystebbings #philippfreise #KKR #privateequity #vc #helsing #ai #china

Philipp FreiseguestHarry Stebbingshost
Jun 30, 20251h 4mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 2:06

    Intro

    1. PF

      I'm a free marketeer. I think tariffs are not the answer. (mouse clicking) We need to work on the underlying issues in our Western democracies. To try to raise money through tariffs is not the right approach. In Turkey, I think we lost around 500 million. What we didn't see was rule of law was a bit of a flexible concept there, and quite frankly, we have so much going on in Western Europe, we just don't take the risk. We stay close to what we can control.

    2. HS

      Do you believe the US dollar will be the reserve currency of the world in 10 years? Ready to go? (upbeat music) (mouse clicking) Philipp, I'm so excited for this, dude. Listen, I've wanted to make this one happen for a while. I've heard many good things from Henry and from Johannes at Get Your Guide, so thank you for joining me.

    3. PF

      Harry, it's great to be here. Thank you for having me.

    4. HS

      Now, when I was chatting to you, Johannes, he was like, "You gotta start with the Venture Park days." Uh, I was about probably four or five years old, uh, not to age you. (laughs) That's a really unfair start. But, um, it was before the SAMwas, and so I had to start here. What are your biggest takeaways from the Venture Park days and that really early Web 1.0?

    5. PF

      Yeah, just for your listeners, to put this in context, you're absolutely right, Harry. This was 1999, so this was rock and roll days, the Wild West of venture investing in Europe, really. And I had been a young kid at McKinsey in New York, and I had encountered Thomas Midelhoff, who was that very visionary CEO at that time at Bertelsmann, who loved IdeaLab, you remember, which is still-

    6. HS

      I do.

    7. PF

      Bill Gross's still going strong today. And really wanted somebody to back, to bring that to Europe. There hadn't been anything like this in Europe, and there wasn't anything. And so we went there in '99, 2000. We raised a pretty big round. Uh, uh, Goldman was our lead investors. There was a lot of people involved. And if you ask me today, what's the lesson, I think... I'm sure Johannes will have, uh, spoken to you about this, because he embodies it perfectly. In bull markets, you just gotta keep perspective and humility, and not take yourself for a genius.

  2. 2:06 – 6:22

    The $100M Dot-Com Failure That Changed My Career

    1. PF

      So many of us back then, once we had raised, whatever it was, 100 million, thought that was the end of it. I learned very quickly, a few months later, when the dot-com, uh, bubble crashed, and the new n- new market in Germany crashed, that the most important thing, really, was the investors I had, uh, in, on my board. 'Cause there were two camps. One did this to have a quick turnaround, to have a quick IPO, and the other ones wanted to do it literally for eternity, the big corporates, Telefónica, Bertelsmann. They just wanted this to be their window into venture and innovation. And I spent, as a young founder, I think I was 26 at that time, um, all my time intermediating between these two camps. So, my lesson learned is this, and I'm applying it manically in everything I do, and I know Johannes does. As a founder, the investors you choose are so important. So, of course, it makes a huge difference, you know, if you're the founder of Helsing and you choose Daniel Ek, because Daniel Ek understands what long-term business building means. You know, and you don't want those kind of fast buck, financial-orientated, early-stage VCs that, you know, when the shit hits the fan, that drop you very quickly. And I learned that lesson very quickly.

    2. HS

      Many things for me to unpack there. You said about kind of the humility in the, in the good times. The thing that I struggle with is Bill Gurley's statement of, you know, "You gotta play the game on the field." And I look at the very exuberant times that we have, say, largely fueled by AI and a huge amount of-

    3. PF

      Mm-hmm.

    4. HS

      ... capital coming into our business, and I'm, I'm stuck between playing the game on the field-

    5. PF

      Mm-hmm.

    6. HS

      ... and retaining discipline on price, on cadence of investing. How do you think about those seemingly opposing statements?

    7. PF

      So, that's a very important point, and f- in fact, having invested through all these crises, it wasn't only the dot-com crash, it was the great financial crisis, the euro crisis, the pandemic, teaches us that we all just boil with water, if you will. So, to have discipline, even in those times. Yes, you want to deploy when there's incredible opportunity, but you need to set yourself limits, right? There's just limits of how much you invest in a year, how many different, uh, types of, in a theme, things you back. Because, unfortunately, even if you're right and these are fantastic teams, these are great ideas, these are scalable ventures, you don't know when the next missile hits or the next virus comes around. Things can just be out of your control. And therefore, as an investor, you just need to, you know, keep the humility of what else could go wrong.

    8. HS

      I think another, really, and you'll learn, one, that I don't stick to schedule, and two, that I literally just use this as a way to get better as an investor myself.

    9. PF

      (laughs)

    10. HS

      But one thing that also I find really challenging is, you have a failure or a mistake-

    11. PF

      Yeah.

    12. HS

      ... and you let a past failure impact a future decision. So, you invest in healthcare, lose money-

    13. PF

      Mm-hmm.

    14. HS

      ... and you go, "Ugh, all healthcare's shit." How do you think about retaining purity of mind despite success or failure impacting your mindset?

    15. PF

      Uh, rigorous analysis, and you wanna reflect your rigorous analysis with as many great minds as you can. Because on Venture Park, the mistake certainly wasn't to go into that space of combining capital with hands-on scaling support. You see that with the Zombers you mentioned, uh, Oli and, and his brothers. They came a couple years later and made a fantastic success out of it. So, the space itself, in our case, wasn't the problem. The space was, we were too early, we had the wrong investors, and the execution wasn't what it should have been. So, to answer your question, gotta retain your enthusiasm that you originally had for a certain idea, and just go through that rigorous analysis, what went wrong, and then build on that. There's nothing as helpful as a good failure. Without that good failure, you cannot become a world-class founder.... and investor.

    16. HS

      My biggest failure, you're going to- you might laugh at this, was I lost in Pakistan. Um, in the good times, I thought I knew more than, uh, p- most people did about emerging markets. Alas, I did not, um, and I got taught a hard lesson, learnt many things.

  3. 6:22 – 7:39

    ”We Lost $500M in Turkey.”

    1. HS

      What would you say is your most painful lesson, and what did you learn?

    2. PF

      I'm right with you, um, we lost a whole bunch more in Turkey. I think we lost around 500 million. We backed a company called UNRural, which we thought was this incredible kind of logistics shipping player in Turkey. Remember the days, um, where everybody thought that's the next frontier, great demographic-

    3. HS

      100%.

    4. PF

      ... incredible innovation, great people-

    5. HS

      Increasing middle class.

    6. PF

      ... increasing middle class. And, you know, what we didn't see was rule of law was a bit of a flexible concept there, so what we thought was a protected player, suddenly there was some oth- some other entrant, um, that came in even though that wasn't really possible and we lost our shirts.

    7. HS

      Does that mean then that you don't go into emerging markets in the future? Like, I just take a pretty blunt view that I'm like, "Hey, it's hard enough to build a business. Add in political risk, currency risk, I don't need to take that risk."

    8. PF

      At KKR, we made exactly the same decision. We tried also Africa, Ethiopia, where we were the largest, uh, growers of, of, uh, of, of tulips and roses. That didn't work out for similar reasons. And quite frankly, we have so much going on in, in Europe, in Western Europe, and we can talk hours about it, that we just don't take the risk. We stay close to what,

  4. 7:39 – 11:02

    Do You Take Market Timing Risk?

    1. PF

      you know, we can control.

    2. HS

      You said that about taking the risk. Another risk that you can take is market timing risk.

    3. PF

      Mm-hmm.

    4. HS

      I'm probably expected to take market timing risks more than you, given me much earlier, do you, are you willing to take market timing risk and suspend disbelief? Or do you need to see now is the time for this?

    5. PF

      Many people thought at KKR in Europe we were crazy when we leaned in and invested, I think a third, if not 40% of our current fund, during COVID. So in 2020, we, um, made some pretty, um, you know, I would say, uh, bold decisions, because we didn't know what that virus would yield. But I've learned a long time that you have to focus on what you can control. So, I'll give you an example. Uh, we invested in Wella, uh, which is the, the other hair care brand with L'Oréal, and there were seriously people who questioned, "Well, once this pandemic is over, will people still go and get their hair colored?" Having, uh, you know, three daughters and three sisters, I, I absolutely was convinced there's not gonna be a problem. And so we invested. And there's many more examples like this. So yes, those types of uncomfortable decisions we took, and I'll tell you why. After the great financial crisis, we were pretty much like the rabbit in the headlight. We didn't invest anything. The only investment in 2009 we made was BMG when I took the decision to invest, uh, you know, with Bertelsmann into music at a time, quite frankly, when music was in free fall. That was a great investment. In the end, it was courageous. But probably, I could only do it at KKR because we had, we didn't make any, any other investments. There was no large investments. But then the crocodiles, crocodile tears came later when we, we, we, we thought that, yes, there was a great financial crisis, but those types of disruption are exactly when you should go in, and we didn't. And during COVID, there was no discussion with our founders and our leaders around, "Should we invest now?" There was the opposite discussion. So this is very important. There was a very reflected top-down encouragement, "Don't be afraid. Talk to us about what you can control. Let's deploy."

    6. HS

      What do you think was the boldest bet you made in that period? 40% is a lot. What do you think was the boldest?

    7. PF

      I thought that, um ... Well, a- as you know that what we, what we do is we pa- we partner a lot with companies, right? We don't just buy outright. So the decision at that time, Coty, uh, was the holding company that owned Wella, and we had seen, again, I give my oldest daughter the credit for this, that one of the, uh, one of the Jenners had her, had her cosmetics brand, just sold to Coty, which was an unbelievable Instagram success. And Coty got a little bit in trouble. They were over-leveraged, and we took a 10% stake in the company and then bought out the majority of Wella at the same time, so it was kind of a combined transaction. And that leap of faith to do that, uh, in the midst of the pandemic, uh, because they had in their mix also a travel retail business, for instance, which, you know, for cosmetics, et cetera, you could ask, "Okay, when are these airports going to open again?" That was a bold decision, because in conjunction, these two investments were very sizable in the fund.

  5. 11:02 – 12:40

    Is Sticking to Deployment Cycles Still Smart?

    1. PF

    2. HS

      You said there about 40% of the fund in COVID. I was always taught ... And again, I really am a student of investing. I've loved it since I was 13, which is why I had no friends in school. But temporal diversification is everything, and actually, really disciplined in terms of deployment cycles is crucial. How do you feel about sticking true to temporal diversification and a three-year fixed cycle in venture?

    3. PF

      Mm-hmm.

    4. HS

      I don't know what it is for you. Versus actually just moving faster and putting 40% out in COVID?

    5. PF

      It's an excellent question. What I told you is just a variety ... Or it's a variance on the, on the theme of linear pacing, because we typically have five to seven-year cycles. Now, on average, it's probably more like four or five, but we very much believe in you gotta have the discipline of linear pa- uh, linear deployment, because it avoids that issue. So, even though COVID hit in '20, you know, if you have a full-year cycle, you have to deploy 25%, right? Most people didn't deploy anything. We took the decision to go 10, 15% above, but then we got lucky because in '21, we didn't invest almost anything. And as you know, my market went very exuberant when COVID gave way to that incredible wave of liquidity. But the answer to your question is, I-... is incredibly important. That discipline to deploy linearly over three year in your world and five, four, five years in ours.

    6. HS

      This is such a fun show for me to do because I have to say like venture in itself is a little bit uniform, especially after you've done-

    7. PF

      Mm-hmm.

    8. HS

      ... as many great interviews as I, uh, guests as I've done, and yours is a different world, and it's a world that I don't know as well.

    9. PF

      Mm-hmm.

    10. HS

      So it's like a real learning curve for me. So when we look at... I heard your other

  6. 12:40 – 14:55

    KKR’s Ruthless Portfolio Discipline: Love Doesn’t Matter

    1. HS

      shows, and you said you spent a lot of time on portfolio construction, and I was like, "Great, that's a super place to start to understand where we're at." How large is the fund then as a starting point?

    2. PF

      So your, uh, for KKR is an $8 billion fund. It's the largest standalone investment fund in Europe. As you know, I'm a massive, um, voice for Europe. Uh, it's been not always easy. It's tough sometimes to, you know, make the case that we should invest in Europe, but it helps us to have that vehicle because it actually very much helps you in that discipline to say, as a global investment firm, Europe is on the map, we gotta deploy relative to a global fund, which can just make the decision to deploy in, in other geographies. In terms of your question on portfolio construction, it is so important because traditionally people didn't really think about themes, you know, they didn't think about growth versus cashflow, didn't think about the underlying industries, um, the geographies. So we really very much focus on that. And also what's many people in my industry, and I know you, you're gonna reflect on that in our conversation, sometimes lack is the discipline to say, "Hey, you know, of the... in a fund of 8 billion, you c- typically you have around 15 investments, okay?"

    3. HS

      Mm-hmm.

    4. PF

      So of these 15 investments, you know, when you start selling some of them, when you start insisting that they should be better, and when do you just, um, keep them for the long term because they're the- they're your winners. Often if you make that a work of love for the individual investors in the fund, you start losing perspective. You have to top down as the f- as the kind of lead of the fund, make those calls to say, "Hey, you know, my space company in Bremen, which is OHB, we just did that investment, that's gonna be a big winner given everything that's going on. And then there's five others which are, which are great, but honestly, they do not compound in value by, you know, uh, consistently by more than 20% or so." And at some point, if somebody calls you and says, "Hey, we would like to buy that company," you just have to force yourself to sell

  7. 14:55 – 17:03

    Do Power Laws Apply in PE? Freise Destroys the Myth

    1. PF

      it.

    2. HS

      Do, do you believe then that he and your business very much aligns to the power law nature that my business does? Or is it much more in the consistent 3 to 5X, get your money back and, and always and 3 to 5X everything?

    3. PF

      I do believe there we overlap in quite a few things. What is different is our business model is not to have two massive winners and then have most of the others be failures. You have to be pretty consistent.

    4. HS

      Mm-hmm.

    5. PF

      Nonetheless, you need to have some real winners, um, because you always will have one or two which are, which are not great. So my... It's a common, um, misunderstanding that my industry is sleepy, boring, and just, you know, aiming for those, for those doubles over five years. If we do that, we don't do our job really.

    6. HS

      Totally agree with that. If we think about 15 companies in the portfolio, as you mentioned, that $8 billion fund, what's the average check then?

    7. PF

      Yeah. So on, right, on average it's like 400 to 600 million.

    8. HS

      400 to 600 million. And we are getting like... H- w- how does this structure work in terms of ownership? Are we taking majority? Are we buying?

    9. PF

      So in the last 10, 15 years, three quarters of all investments we have made are partnerships. So I didn't just buy something outright, but I went into, for instance, in Bremen, OHB, w- we were... we are 30% shareholder or, you know, um, uh, Weyland in Germany, which was the synthetic flavor business, 35%.

    10. HS

      Reserves. Do you have a similar... Most venture firms say, especially early stage, "Ah, we have a one-to-one initial to reserves."

    11. PF

      Mm-hmm.

    12. HS

      Do you have a reserves policy?

    13. PF

      Mm-hmm. Always do, uh, but it's more like 10, 15% of the fund. So you would... of 8 billion, you would retain, let's say, a billion or so as a reserve, because we do not need as much capital for follow-on rounds because this is... you know, in terms of the maturity of these companies, these are the Spotifys, right? These are very big companies that do not necessarily need any more rounds. It's more for the... follow-ons is typically for acquisitions, so if they wanna buy

  8. 17:03 – 18:53

    The Truth About Capital Intensity in the Age of AI

    1. PF

      something.

    2. HS

      Totally get it. So that's when... What about capital intensity? How much does that factor into your decision-making-

    3. PF

      Mm-hmm.

    4. HS

      ... about getting involved? You said that they probably won't-

    5. PF

      Mm-hmm.

    6. HS

      ... need to raise more. I never have met a company that needs... doesn't need to raise more. How do you think about the future cash burn of a business when investing?

    7. PF

      Yeah, it's extremely important. Uh, if you think about everything we discussed about the crisis you have to sustain, the discipline of capital allocation for the founders and the CEOs of these businesses, it's very interesting because... You spoke to Henry. So-

    8. HS

      Mm-hmm.

    9. PF

      ... Henry Kravis always tells the story about the team that, you know, was told, "Hey, you own 10% of the company now. And by the way, we wanna now invest 150 million of CapEx i- in buying these things. And by the way, if you really wanna do this, you know, uh, 15 million is your, your, is your own money." And the reaction was, "No, no, no, no, you don't understand. Uh, if that's the case, we don't need to make that CapEx." So the idea... We come from the other side than you, right? You come from the side where the founders are the owners and you back them. We making those entrepreneurs that are in there, or these, these CEOs or these families, we make them owners again, right? Because many of them weren't originally the founders of these companies. And once...So where you and I meet is the owner mindset, where it's truly your baby and you truly care about the scarcity of capital. And you say, "Okay, do I open France? Do I open Japan? Or do I rather open, do I, uh, rather launch another product?" It's these are real trade-offs. And so you are right, capital is, is always wanted and we always invest it. But the discipline of deciding where you invest it is critical.

  9. 18:53 – 23:22

    Can AI Kill the PE Model? Here’s What Philipp Says

    1. PF

    2. HS

      Does the model work in an AI world? And what I mean by that is when you look at, especially on the model side-

    3. PF

      Mm-hmm.

    4. HS

      ... these companies are just cash incineration machines.

    5. PF

      Mm-hmm.

    6. HS

      Uh, regardless, when you look at anything like Harvey and Legal-

    7. PF

      Mm-hmm.

    8. HS

      ... which has raised a huge amount of money very quickly, they just require so much cash and so much more. Does the model still apply?

    9. PF

      It's fantastically, um, intellectually inspiring and interesting because we, we are the largest owner of fertility clinics in Europe, okay? So they're, we are c- expanding very, very quickly and very broadly in different geographies, in different areas. I mean, a lo- I know Elon likes, uh, talking about this, right? The demographic trends are not great. People do not have children anymore, and we're extending life spans. But to answer your question, those are businesses that will not be replaced by the AI models. These are, these are j- real businesses that still very much need the cash to open more clinics. Yeah, so it's a long-winded answer to tell you, and I'm sure you'll ask me about some other things that are happening right now, I happen to be lucky, quite frank. I'm super lucky because, by pure luck, I've seen so many different cycles of this. And, uh, I'm, I know I sound like a younger version of Warren Buffett now, which is crazy, but he's right. Things are looking different often every five years. But the underlying view, separate the noise from the reality, the underlying principles of capital allocation has to be very thought through and rational. It hasn't changed. You will have some AI models where you need lots of capital. That makes a lot of sense to invest in there, and you have some others which don't. So-

    10. HS

      Do you think the principles are the same? I, uh, you know, I've been, again, a student of venture for 15 years.

    11. PF

      Yeah.

    12. HS

      And I was always taught that zero to 10 millionaire era was like gold standard in 18 months. We have three companies that have gone from zero to 100 millionaire era in a year. That's-

    13. PF

      Yeah, that's the AI magic. It's incredible.

    14. HS

      And, and so do the principles actually apply if the revenue and company scaling is, is like never ever seen before in history?

    15. PF

      So I'm making the bold prediction that you have just seen three of the incredible winners in this space, but they will be not the norm for whatever comes afterwards. When you see those winners, you better invest and double down or triple down. But this doesn't mean that software, you know, SaaS models investment that is the bread and butter of many in, in, in our industry still will not be good investments anymore, and you just have different cycles there.

    16. HS

      Do you ever sit around the table at KKR and think, "God, it'd be an easier job if we just stuck money into OpenAI, Anthropic, Anduril, and Helsing, and we didn't have to be so operationally involved? We could sell in secondary markets in two to three years for 3X, and we could ride the wave very efficiently."

    17. PF

      No, I have incredible respect for the Benchmarks, and the Harrys, and, uh, the Daniel Ecks who found those types of opportunities. But, you know, you asked me my l- lessons learned from venture park.

    18. HS

      Mm-hmm.

    19. PF

      I tried, Harry. That's what I set out to do. And I learned the hard way that some brilliant minds can do that and some others that are not so much in that space. My, my experience is the truly outstanding investors in venture are ones with deep, um, you know, vertical experience and real knowledge. I'm an, I'm a generalist. I've seen so many things in patterns, I'm better in the later stage, uh, i- industry. You look with great admiration at the Excels, Benchmarks, and Indexes, and Kleiner Perkins of the world, um, but that's not our business. Our bus-

    20. HS

      When we look at 2021, we saw a lot of your D1s, your Co2s.

    21. PF

      Mm-hmm.

    22. HS

      A lot of crossover firms move earlier and earlier. I'm, I'm gonna be seeing kind of Insight's stage is covering the full spectrum.

    23. PF

      Mm-hmm.

    24. HS

      Um, to what extent do you feel pressured to move earlier and earlier to ensure more and more access?

    25. PF

      Growth is a separate team. So I always, I cannot, uh, understate the importance of this. It's not like the same bunch of people does different things. Um, I don't think that the DNA of KKR and of other later stage firms, it extends to what Insight does or what growth funds do. It will never extend to venture 'cause it's a different skillset set. It's a very different skillset.

    26. HS

      Hmm.

  10. 23:22 – 25:39

    The Secret to Great Investment Decisions at KKR

    1. HS

      And I totally agree with you. Uh, I think Thrive is the one who's able to cross growth and early stage incredibly well.

    2. PF

      Mm-hmm.

    3. HS

      But I totally agree with you. You said there about a, a different team.

    4. PF

      Yes.

    5. HS

      In terms of decision-making, I think the quality of your decision is the quality of your product in our business.

    6. PF

      Mm-hmm.

    7. HS

      How do you think about decision-making today in KKR, and what have been your big lessons on how to do it right?

    8. PF

      There's not one brain which decides. We truly ... Our partnership, and if you have two or three brains around the table thinking through a tough decision, you always get a better decision than if you just have one. And in terms of the decision-

    9. HS

      Do you think so? Does that not lead to consensus thinking?

    10. PF

      No, because the culture is that you have to be willing to challenge each other and to be open about concerns you have. Coming back to your AI point, a lot of this is pattern recognition. Isn't that fascinating? The best investor today in the world, full stop, is Warren Buffett, who is what? 93 years old. So how do you replicate that brain, right?

    11. HS

      So I do wanna chat about s- th- the big L in our business, which is obviously liquidity.

    12. PF

      Mm-hmm.

    13. HS

      Uh, it's, it's been a f- interesting few years. I think there's, like, structural illiquidity-

    14. PF

      Mm-hmm.

    15. HS

      ... which is a real problem and a concern that I have, and it seems to be kinda getting worse in some respects. How are you thinking about access and liquidity, particularly for the largest of the positions?

    16. PF

      So, Harry, I'm gonna make an old fart-type of comment.

    17. HS

      Go on.

    18. PF

      I've seen at least three, if not four, cycles where liquidity goes from unbelievable exuberance, like we've seen in, you know, 2021, to the drought that we see now, only for people to say at their peak, "Liquidity is u- is limitless и the party is, is never-ending, so I don't actually need to sell anything, I just ride all my winners," to give way to the hangover и the realization that that was a mirage, there's no more liquidity. And then at the bottom, people predict there will never be liquidity again, and it's structural и the world is coming to an end. I literally can walk you through the same sentiment in the great financial crisis after the dot-com bust и to certain elements probably also during the euro crisis.

  11. 25:39 – 32:57

    Why There’s a $3T Liquidity Time Bomb in Venture

    1. PF

    2. HS

      But we have 3 trillion in, in locked LP money into private companies.

    3. PF

      I hear you and you're absolutely right. The party that was celebrated in '21, '22 in terms of the velocity of fundraising and investing was absolutely artificial, inflated and not sustainable, and the hangover had to be tough. The hangover is now... I don't think it's structural, it just has to clear the e- excesses. But remember... I remember very well in 2001, how the venture industry had to digest the exuberance. You had many funds which had to halve, right? People gave money back on a grand scale. We haven't seen that yet. And the halving, if you will, of the universe of public companies is also structural.

    4. HS

      Mm.

    5. PF

      And I'm gonna make the point which has led to so many of our partners choosing to be rather with us than to be public. I mean, the space company, OHB, was a public company. GfK, the market research firm, was a public company. Both of them owned by, you know, a family foundation и the family who both said, "The public markets are not helping us," because they just can't cope with all that volatility and all that change. So we'd rather have KKR take it private and be with them for the long term, and they help us deal with all of that change. That's a structural factor. That's different from 2001. So...

    6. HS

      I'm sorry, that structural factor is that founders ar- are aware that actually they'd be better off in private markets-

    7. PF

      Yes.

    8. HS

      ... and they wanna privatize it?

    9. PF

      That is a structural factor. Uh, if you think about my industry, I give you one set for KKR. Over the last 15 years, only 15% of our exits were actually IPOs, so 85% of our exits were either strategic exits or some large company came along. Иак if you want an example, I just mentioned GfK, NielsenIQ said we merge with GfK and we build a global champion. Or it was another player in our industry. I mentioned Fotolia, right, which, uh, GA Associates had basically built up to a certain scale и then they sold 50% to us. That is much more of what we have done historically. So the structural crisis of the IPO market right now are not... is not resulting in a structural crisis for, for our firm and for our industry. It's slightly different for venture.

    10. HS

      Totally get you. In terms of, you said about, kind of, uh, fund sizes halving-

    11. PF

      Mm-hmm.

    12. HS

      ... and the impact that you saw from 2001, I think that AI is kind of the OxyContin that actually venture needed.

    13. PF

      Yes.

    14. HS

      It's like we were just coming to the dip.

    15. PF

      Absolutely.

    16. HS

      And then it's like, "But wait a minute, it's the best time ever." And if you're an LP, there's enough material there to be like, "Actually, they could be right and so I have to keep going." Do you agree with that?

    17. PF

      I, I agree and that is why we don't see f- uh, fund sizes halving, because exactly of what you said, a lot of these opportunities are so capital-intensive because you suddenly have some interesting places to deploy. Now, it doesn't mean that the fundamental underpinning of what we all do, it doesn't matter whether it's venture or private equity, we are the answer to the demographic crisis that Elon Musk is putting his finger on. We have an aging society everywhere. People are retiring ever later, but they have to retire. They have ever fewer babies. So if we don't have a capital stock compounding and accumulating for the benefits of retirees, people cannot pay for their old age. Therefore, what is happening right now is a pretty narrow investor base, university endowments, you know, f- insurance companies, sovereign wealth funds, pension funds that underpin our industry и yours are being complemented by ever-growing elements that were completely excluding alternatives so far which is the 401K pensions, the individual investors. If you think about it, we have a hu- I think it's, uh, it's $192 trillion of savings that are completely excluding alternatives that are in a high net worth and kind of individual investor base. The innovation, you know, that was underpinning Norges Bank, right, this, the Norwegian s- sorry, wealth fund, to allow them to participate in all of this long-term investing that we do and investing in these growth companies and creating huge values, uh, is now extending itself to individual investors. I think it's 1% of the $192 trillion are invested in alternatives. If that only goes to 5%, uh, you suddenly have $10 trillion, you think about the magnitude relative to the entire institutional investing base. Meaning, to answer your question, while that whole universe on the left...... is in dire need of liquidity. There's others who are dying to provide liquidity. So there's a market, right? So what's happening is secondaries, as an asset class, is going through the roof. They are going and buying fund stakes, uh, providing liquidity to some LPs who need it. And also, there's innovations in the industry, um, which I hadn't seen in my lifetime before, where you have evergreen products. Because if you think about the treadmill system that we have in our industry, which was just, you have to go every three to five years and present your case again to the LPs, then you have a new fund, then you have a another new fund. That is being replaced. I mean, I call it very much the Warren Buffett. I remember still, um, at that time, again, I was a young turk at KKR, and our brilliant mind, Scott Nuffield, who's now my co-CEO, he came up with this idea, uh, to go public for KKR by merging with a public, uh, LP vehicle actually, which hadn't worked, because the public markets were assuming that we would lose 80% of every, uh, o- one of our investments. So he said to the public, "If you value more stability, why don't you become a 30% holder of KKR's general partnership, so of, of our partner economics, in exchange for that pool?" And that's how we ourselves became owners of a five billion p- pool that had been valued at one, and that became 10, and that's now 30. So we are actually the largest investor in our, in our own things. But to cut a long story short, what he saw at that time was that Warren Buffett had innovated in an incredible way, where he got GEICO and other insurance companies to provide the liquidity for all the investments he made, right? Because he owns these insurance companies. So all the people who write, um, you know, who have insurance policy, they pay up front, the cash comes in, and normally it sits in interest-bearing accounts earning nothing. And now he uses that, the source to buy whatever companies he buys, American Express. That is now the innovation that we see in our industry, on top of this retail money. So basically, we, Apollo and others, have now taken under our wings insurance companies that provide all this liquidity. So you see the innovation goes beyond what some people c- talk about, continuation vehicles, et cetera. It e- extends to completely new areas of the

  12. 32:57 – 41:10

    Will KKR Europe Hit $20B? Freise's Bold Prediction

    1. PF

      market, which make a lot of sense because-

    2. HS

      Will KKR's Europe fund be $20 billion in 10 years?

    3. PF

      I think that the answer is not the fund. If you ask me, will KKR Europe's asset under management, uh, double and triple over the next 10 years, the answer is yes. Because the universe for what we do is radically expanding. Y- you know, uh, when I did the BMG deal, that was a one and- one and a half billion deal for a 50% stake in that music company. You fast-forward 10 years, and we had a 10 billion deal to buy half of Axel Springer, which again was a 50/50 deal with the family. You can very easily see how that could scale further. The capital itself will be doubled and tripled, but the source of it won't be necessarily a fund. It could be those retail funds that I mentioned or it could be some part of the insurance capital, if you see what I, what I mean, yeah. So the funnel becomes much bigger. We are responsible for a much broader scope of capital to invest, and the demand for what we do in Europe is also growing much faster, because more segments of the market want private equity investment.

    4. HS

      To what extent you can share, w- what percent of your LPs are European? Like, you know, I'm very happy to say, mate, I, I think I probably have 10% that are European. 90% of mine are US.

    5. PF

      So I'm gonna disclose one thing to you. The large majority is, is America. Uh, you have some pockets in Europe, like Holland and, uh, Norway, uh, that are very strong. The Middle East is incredibly innovative and takes a large chunk. And then you have-

    6. HS

      Do you not just find it ironic though that when we make a huge amount of money from European companies, that we just ship it back to a load of people in the US?

    7. PF

      So, first of all, I'm grateful for any capital that comes into Europe, regardless of the destination, because we need more capital in Europe. Mario Draghi is right. We need to invest 750, 800 billion a year alone to, to catch up with, on innovation, AI, but also to complete in other industries, defense, uh, you know, uh, high tech, et cetera. Nonetheless, for the future, you're absolutely 100% spot on. We gotta wake up in Europe, as for instance, Germany has now decided to invest 25% of its GDP, and make sure when we make these investments, we build equity value. So in other words, we need to, you know, it's d- being done here in the UK with the Mansion House complex. We need to professionalize, together, our pension systems and allow more investments in alternatives to build capital accumulation. Absolutely. And that means in 10, 20, 30 years, hopefully we retain a larger percentage of the value creation we, we make with alternatives investment.

    8. HS

      Are you fundamentally investing in a different type of company today? And what I mean by that is, you know, in, in past generations there might have been a Fotolia, there might have been a, a GetYourGuide-

    9. PF

      Mm-hmm.

    10. HS

      ... kind of similar to me in that respect. And now, you know, we have the most terrible challenges with energy, with defense-

    11. PF

      Mm-hmm.

    12. HS

      ... with infrastructure. You mentioned obviously your space company.

    13. PF

      Mm-hmm.

    14. HS

      I mean, we are woefully under-equipped when it comes to space. Um, are you investing in a fundamentally different class of company given this need for capital in all of these very hard but new industries?

    15. PF

      Mario Draghi is right. We are behind in defense, for instance. But look in scarcity and hours of need, innovation kicks in. And look at what happened because of the hour of need and that, and that i- innovation that we h- in Europe have seen, the US has done by saying 10% of the spend of the Department of Defense needs to go actually in the innovative ecosystem, and space the same, right? Uh, you know, SpaceX was just the result of opening it up to the privates, to the private sphere. That is coming here now. So-Let's not forget we have had a terrible tragedy in Ukraine for years now and they're still standing, and it's because of the innovative companies like Helsing that have supported them. So, short answer to your question is yes, um, innovation, eh, what, y- you know, what you know best is the answer to these- to these problems, but I wouldn't be so negative. They are coming now, uh, much faster than some people realize.

    16. HS

      Do you feel we're taking more risks than ever, given the volatility that now exists in the world on a daily basis? We were- we were talking before about some tweets and events that happened that just got- changed everything with a tweet. My point being, the world seemed relatively stagnant or plateaued at certain points-

    17. PF

      Mm-hmm.

    18. HS

      ... but now it seems like it is more volatile than ever. Do you think we're taking more risks than ever?

    19. PF

      Well, you started this conversation with AI, you're right. I mean, AI is a fundamental transformation of all the assumptions that we had made around productivity, around the innovation cycles you need in certain industries like healthcare, eh, defense, et cetera. So that alone was already massive, right? And then, at the same time, you have this incredible, um, pivot from the post-war consensus of how everything works, right? After the second World War there was an institutional ecosystem built with the IMF and the World Bank and the United Nations, and there was a clear understanding of how everything works. And people had forgotten about the 1900 to 1930 period when it was much more bilateral and was much more nation states and it was much more, you know, everyone for itself. People also, thirdly, had taken for granted the unique role of the US dollar as a reserve currency. Also, that is being questioned now. Uh, Ray Dalio fourthly, points out that when you have large amounts of debts accumulated, we are just one step away from a major crisis because debt bubbles at some point get resolved by internal strife, war, or, um, massive transformations in the monetary system. So, what my point is, we have four disruptions at the same time; technology, geopolitics, monetary sphere, and at the same time, we have a huge demographic crisis we talked about, right? There's a feeling of unparalleled inequality between certain segments of the population and others and certain regions of the world and others. So yes, we are investing against an unbelievable backdrop of risk and volatility and uncertainty, but e- especially in times like this, I remind myself of what Warren Buffett says, "You gotta focus on what you can control." If I have a spectacular founder like Murat at Hammerton, we have a large market that will be transformed by technology, and if I see that there's unparalleled openness to actually institute change for the better, which I think is the case in Europe right now, then I invest. I just have to be able institutionally to be patient and to hold for longer 'cause, eh, you are not able to predict what's gonna happen in three years. It's impossible. So if something goes wrong, you just have to be able to hold longer.

    20. HS

      Do you believe the US dollar will be the reserve currency of the world in 10 years?

    21. PF

      Yes. I think that it's impossible to replace, uh, reserve currencies that quickly. Will the US dollar be the reserve currency in 50 years? I couldn't tell you. I do think in 10 years time the percentage of reserves the US represents will probably have reduced slightly. The problem that the monetary system has is if you wanna replace one thing, you need to decide what you replace it with. Right now the only credible alternative is the euro, and we in Europe, we need to get our act together. It's a fantastic opportunity for us to take larger share-

    22. HS

      You don't think it's Bitcoin?

    23. PF

      Um, I think Bitcoin is a very interesting innovation and will take larger share, but it's too early now for us to- to call that that will be the reserve currency of the world. And you know, Harry, why? Nobody talks about quantum computers anymore. Think about what that means, right? If we have quantum in terms of the- all the impact of that. And people will just not replace 80% US dollars with Bitcoin overnight. I think Bitcoin will take a larger share as will the euro, but it's gonna be more of a mix.

  13. 41:10 – 43:08

    Thematic Thinking in a World That Doesn’t Care

    1. PF

    2. HS

      We mentioned the kind of four disruptions. The hard thing with disruptions is they change the world in such unprecedented ways that they make a lot of prior assumptions really invalid.

    3. PF

      Mm-hmm.

    4. HS

      I think we mentioned kind of thematic thinking earlier.

    5. PF

      Yes.

    6. HS

      I don't like thematic thinking because I think the world is so unpredictable, like COVID-

    7. PF

      Mm-hmm.

    8. HS

      ... could happen and industries have changed overnight in ways that we can't comprehend. To what extent do you think thematic thinking and a prepared mind is actually valid-

    9. PF

      Mm-hmm.

    10. HS

      ... in a world that changes so much so quickly?

    11. PF

      Can I put a Buffettist spin on the idea of thematic thinking?

    12. HS

      100%.

    13. PF

      I think it's very relevant. If you think about Buffett, he will tell you, "Whatever noise there is in the world, I'm going to look at a few essential elements. I'm gonna look at the founder or his team or the CEO of the team. I'm going to look at essentially the business itself. Is it in a, you know, is it in a large market? Has it an unassailable, um, position in that market? Is it innovative enough to have product cycle innovation? And is it having a good return on capital? And then I'm putting incentives in for these people to just keep running fast at it." I love his thinking. That is a very different thing as saying I invest in energy and I invest, you know, in certain-

    14. HS

      Mm-hmm.

    15. PF

      ... industry verticals. He has a human spin on thematics. Now that said, I do think thematic investing is valid. If you now think that in Europe, Draghi is right and there are certain elements where we just have to invest, and that, for instance, is- is, uh, space and defense. If that is part of your investing theme, then it makes sense because you can't just overnight say, "Hey, I was a healthcare investor, now I'm a space investor." You need to build, going back to our original conversation about what makes a good venture investor-You need to have a th- a deep thematic.

    16. HS

      D- But do you... Sorry, I don't mean to be difficult, but like I've

  14. 43:08 – 46:18

    Helsing, Defense Companies: The New Age of DeepTech Bets

    1. HS

      met so many space, uh, not space, defense companies. Every defense company is trying to be the next, uh, obviously Helsing in Europe. I met so many defense companies, none of the founders... Uh, I don't know Hammertal to be fair, but none of the founders that I've met touched Thorsten. I mean, it's, uh, even if I knew nothing about sp- uh, defense, which I don't, to be very clear. Nothing.

    2. PF

      I love nothing more than having such a massive consensus with you, Thorsten is a rockstar.

    3. HS

      Yeah.

    4. PF

      No debate.

    5. HS

      And so if I met all of them, even though I know nothing, I know he's the best.

    6. PF

      He is the best for sure. But it doesn't... That's the good news about markets and innovation cycles. Um, Henry Kravis was the best by far in his industry and, and he, he set up a whole industry. People are fast to copy. People are fast to innovate. They're fast to follow. There will be... Thorsten is, is the best, but in five years time, we look back and say, "Of course, Thorsten couldn't have done it all by himself." There will be, there will be more, that Hammertal, there will be others. So-

    7. HS

      To what extent... I always say, if you wanna invest in the next, uh, Helsing, don't. Just invest in Helsing. I, I spend my life with investors who are like, "Oh, I'm trying to find the next OpenAI, the next Anduril." Don't. Just put your money in the winner, right?

    8. PF

      Well, you always wanna back your winners. I completely agree with that.

    9. HS

      And like, k- winners compound.

    10. PF

      Winners totally compound, but it doesn't mean that you can put your entire fund into one winner, right? This is what we discussed before.

    11. HS

      How much money would you put into a company, a concentration of funds?

    12. PF

      So, we are absolutely rock solid, um, f- you know, disciplined on this. You wouldn't... Normally, you don't do more than 10% of one fund. You know, I think in terms of underwriting, the absolute maximum was 15%, but it's in that range.

    13. HS

      I love Bryan Singer at Founders Fund. He says, "The enemy of great venture returns is capital concentration limits."

    14. PF

      Mm-hmm.

    15. HS

      "And that's why we did 33% into Airbnb." And I just always remember thinking, "My God, that's conviction." 33% into one single company.

    16. PF

      Yeah, that's absolutely, in my industry, not, not, not the right approach. (laughs)

    17. HS

      (laughs) Klaus, we, we were talking about Europe. Europe has an incredibly fragmented public markets.

    18. PF

      Yes.

    19. HS

      How much of a problem is the complete life of functional public markets for Europe today?

    20. PF

      It's a beautiful question. We come back to Mario Draghi, uh, the f- second thing he said after you gotta invest 750 billion a year to catch up is we need a capital market union. We need to come together and do away with artificial limits between s- 27 nation states and the UK when it comes to concepts like securitization or going public laws. Yes, of course, we need a European SCC. Yes, of course, we need a bit more of one pan-European place where people can go public. It's extremely important.

    21. HS

      I completely agree with you. I think a unified European liquidity mechanism would be great. To what extent do you worry also about an EU AI act? You know, bluntly, it's incredibly prohibitive.

    22. PF

      Well, we are experimenting today, and blunt speaking, which I'm happy to experiment in, we absolutely over-regulated that space. We need to i- unleash the power of, of that technology, technological innovation and not stifle it by too much innovation for sure.

  15. 46:18 – 57:36

    Tariffs, China, and the Future of the German Car Empire

    1. PF

    2. HS

      Germany has a challenge in the auto industry.

    3. PF

      Mm-hmm.

    4. HS

      Do you worry as much as I do about the rise of BYD, Xiaomi in China in bluntly destroying much of the European car market?

    5. PF

      So, I'm gonna answer that question, um, indirectly by saying what I'm observing because we own fantastic investments in related industries-

    6. HS

      Mm.

    7. PF

      ... is the, the dearth of good engineers. And what we see is when the automotive industry is shrinking because of some of the factors you, you mentioned, those people immediately find jobs in other industries which are growing. Uh, whether that is sensors, whether that is, uh, defense. So, of course, we need to have a fair, we need to have a fair playing field, right? Between different, uh, economic regions in the world. And I always worry when certain industries, um, do not find fair, fair conditions to compete and-

    8. HS

      Should we tariff the shit out of Chinese, Klaus, then? If that's subsidized by the Chinese government in terms of their creation, and they're able to flood our markets, if we're playing fair, do you not just tariff them?

    9. PF

      I just think generally, I'm a free marketeer, I think tariffs are not the answer. Um, I know that's a controversial statement in today's world. But, you know, we need to work on the underlying issues in our Western democracies. For instance, we have too high deficits. Those deficits lead to exceedingly high indebtedness. We are therefore now crisis-prone. To try to raise money through tariffs is not the right approach.

    10. HS

      What do you think is the best way to deal with the current situation we have in terms of deficits?

    11. PF

      Well, uh, critically important is what we discussed before. If you think about 20, 25, 30% of all of our budgets going to two sources. One, to just serve, service the interest of the existing debt stock. It's huge. I mean, in many countries, these are higher expenditures than our healthcare or our defense budgets. Then it is becomes very clear that the only way to do... To restrain that is on the expenditure side, where on the, you know, on the, for instance, on the pension systems and the benefit systems, we do not benefit from the capital accumulation and the wealth creation. You know, if I had... It is mind-boggling. If, you know, if you and I were Norwegian, we wouldn't worry a bit about this because the Norwegians saw a Roth fund, right? Through everything they have done has created such a capital stock that every single person doesn't need to worry about their pension.

    12. HS

      I had Nicolai on the show and he said every single Norwegian is a millionaire.

    13. PF

      He's a genius. Um, and he's doing a great job, by the way, running...

    14. HS

      I asked him if he'll invest in my fund and he said, "Of course. Uh, our minimum check is $10 billion." (laughs)

    15. PF

      (laughs) But, you know, imagine if we had the, you know, the, the German, the, the British, the French Norges Bank, right? What tha-, what tha-, that would have meant, and that's the conversation I had with Angela Merkel 10 years ago. It was absolutely possible.... we slept through it. It doesn't mean because we missed it, we couldn't do it in the future. We must do it.

    16. HS

      I think one interesting one for me is that, again, I'm a student of economics and history as well, and it's like, you know, if you look at Japan in 1980s, their deficit was huge.

    17. PF

      Yes.

    18. HS

      Um, and the question is like, everyone's like, "Well, we gotta, we gotta worry about the deficit and we've got to control it."

    19. PF

      Mm-hmm.

    20. HS

      Why? Why can't we just let it go higher? I know it sounds terrible, but they kind of kicked the can down the road in the '80s. To what extent can we not just do it now?

    21. PF

      I mean, you're, you and I are gonna have a hobby, uh, economist conversation because it's a fascinating conversation. You know, the chickens will always come home to roost. That's what I've learned in economic theory. Because here's, here's what we miss sometimes, a lot of this is very much virtual. What's the biggest coin of the realm? What's the biggest currency in, of our business and of our economy? It's trust.

    22. HS

      Mm-hmm.

    23. PF

      So, those numbers don't mean anything, but if people convince themself that, um, spending 20%, 25% of an ongoing budget in any country on interest for your debt is too high and you can't pay for innovation for, for, f- you know, for, for healthcare, for defense, et cetera, at some point, there will be calls for one of two things. Either e- increased taxation, which typically means that a lot of your value creators leave your country-

    24. HS

      Mm-hmm.

    25. PF

      ... or radical cuts in spending. We have seen both in Japan and the United States of America, that it’s extremely hard for a political system that is elected every four years to actually have the discipline of reducing these expenditures. I mean, Japan still has a structural deficit the way they have. So, if you don't, if you, if you can't really raise taxation and if you can't really reduce expenditure, the only other way to do it to get rid of your, of your, you know, interest income, of your interest load is to inflate away your debt, right? So, you do financial repression, which means you force your interest rates to be below the rate of inflation, which means in real terms, everybody who has, who has assets, uh, you know, loses. And that is, uh, a very, y- you know, inflammatory way of dealing with it. We know what that meant in the '30s, right? And quite frankly, we're having a philosophical debate now, uh, our generation, so the people that are not retired yet, will ask the questions, you know, if the statistics I give you, uh, Italy as an example, are that in a few years time, every fourth person is a p- is a person in pension age, so over the age of 65. How can you sustain any balance between toiling every day and f- feeling that in your own retirement you actually will have anything to live from? And then at some point, societies get in imbalance, right? I mean, look at our political systems all over the Western world and the election results, right? Populism rises. This goes much beyond now, uh, what we do as a job, but there's a direct correlation between all of this. So, I come back to what you and I do every day. There's, uh, much of a purpose in it. It's not about just making returns or... It's actually making pension affordable for millions and millions of people. And we need to have a political system where what we do benefits as broad a population as possible.

    26. HS

      Do you think AI will have the productivity gains that people suggest it might do?

    27. PF

      It's too early to tell. I totally... I... Well, I think it will. However, productivity gains, which will be extremely beneficiary to the world, don't mean that the challenges I just mentioned will be solved, because there will be this disruption phase where many, many people who are-

    28. HS

      Won't they be worsened 'cause you'll have more-

    29. PF

      Exactly.

    30. HS

      ... and more people who are removed from the labor force actually, and so even people-

  16. 57:36 – 1:00:22

    Freise’s Relationship to Money

    1. HS

      how do you think about your relationship to money? Mine's a weird one.

    2. PF

      Mm-hmm.

    3. HS

      I used to think it was everything, and then I got it and I realized it's relatively nothing. (laughs)

    4. PF

      (laughs)

    5. HS

      I mean, it's, it's nice to have as a foundational layer, but it wasn't the jar of happiness that I thought it would be.

    6. PF

      Can I disclose a, can I disclose a secret to you?

    7. HS

      Yeah.

    8. PF

      Um, gotta go and see the new Brad Pitt movie, F1: The Movie, uh, which I think is spectacular. Um, if I had had a say in how we call it, 'cause one of our production companies produced it, it wouldn't be called F1: The Movie, it would be called It Is Not About the Money. And you'll see when you see the movie why. That's the message that I would give to people when they ask me what my relationship with money is.

    9. HS

      Was it never about the money or was it like me, where you think it is but then it's not?

    10. PF

      I just stumbled into... So, when I made the decision to leave a high-paying job at McKinsey people thought I'm absolutely crazy because I gave up the s- the safety net for, for no certainty at all. And you know how it is to be a founder. You are one day, you think, on paper, a gazillionaire and the other day you are broke. It's the most incredible experience that, because you learn very quickly from that, that it's not the money that matters, it's the learning. When I went to KKR it was a startup, let's make no mistake, right? It was, when I joined, whatever, 39 people, and I had no idea what it means to build a c- career track record in investing in funds. You know, it is the important yardstick, my job is to create, uh, r-results for these pensioners and for what we do, but it's only an output, okay? It's not, it's not the, the main reason we do that, for me at least it's not. I mean, I enjoy every day speaking with people in completely different ways of life. You may know that I'm a crazy mus- music fan.

    11. HS

      You love the opera, huh?

    12. PF

      I'm crazy about trying to innovate the Bayreuth Festival which is the Richard Wagner festival in Germany. I'm also a trustee of the Royal Opera House. I do, I do love the opera, yes. But I love all kinds of music. But it's, you know, I, I love it because I learn so much from these artists, right? When you see the shining eyes of the opera singer or the ballet dancer, I mean, it was so incredible to experience during COVID when they couldn't perform, what it meant to them once the curtain could rise again. It's... So, in many ways, whether you are a Formula 1 driver or you are an artist or you're an investor, if you don't love what you do, then you won't be, you, you ain't be good at it. And if you're really good at what you do and you love it, there will be money that

  17. 1:00:22 – 1:04:33

    Quick-Fire Round

    1. PF

      follows.

    2. HS

      Listen, I could speak to you all day. Can we do a quick fire round?

    3. PF

      Ha- Happy to.

    4. HS

      So can I say a short statement? Okay, so let's roll with which investor do you most admire and why them?

    5. PF

      Warren Buffett. Incredible ability to just separate the noise from what really matters.

    6. HS

      What's the most painful investing lesson and what did you learn?

    7. PF

      Venture Park. I set it up, it failed, and I learned to keep going, to remain humble, and to really, really, really think about your investors.

    8. HS

      What do you know now that you wish you'd known when you started at KKR?

    9. PF

      That it's a marathon and not a sprint. I think as an investor, you just have to go for the long term. And sometimes-

    10. HS

      What does that mean?

    11. PF

      It means when you're in the eye of the storm like COVID or like now, make, do not make the mistake to think that it's structural. You gotta stay through it. You gotta look for the long term. And when you look back now it's also obvious but it's never obvious. You just gotta... D- endurance is what matters in, in our industry. You never give up.

    12. HS

      I so agree on endurance. What matters though, so when you're in the eye of the storm like now, I'm seeing so many people sacrifice trust-

    13. PF

      Yes.

    14. HS

      ... for short-term financial gain.

    15. PF

      Never do it.

    16. HS

      So dangerous.

    17. PF

      Yes.

    18. HS

      Totally agree with you there. Um, biggest lesson from working with Henry Kravis?

    19. PF

      Arrogance kills, is what he taught me. I will never forget when I was the new kid on the block in KKR and I entered for the first time the office and I didn't know what to do quite frankly. I was just shy.He and his cousin came over and just said, "Hi, you know, we are Henry and George, and, uh, w- this is the firm we built, and tell us about you." I was s- so mortified but so inspired by it.

    20. HS

      I love that. (laughs) Uh, if KKR were a band, what genre would it be and who's the front man?

    21. PF

      Listen, I love the opera, I love classical music, I love many things but i- it's an orchestra, quite frankly, where the tuba player, the violinist, the bassist, all of them are world-class but my job is to be the conductor and try to motivate everybody and bring them together as a team.

    22. HS

      What's one European startup you wish KKR had invested in?

    23. PF

      Spotify. I was the first institutional investor through the door, I just didn't have the fund to invest.

    24. HS

      Oh, fuck.

    25. PF

      I know, but this is, again, every failure you have in life is an opportunity. Um, you know, I learned from it, uh, because of that we did GetYourGuide, which is a fantastic success now.

    26. HS

      Is there one that you've said no to? Like, you did have the chance?

    27. PF

      Oh my god, um, I have to hide now under the table, w- we literally at KKR had the chance to invest in Alibaba a long time ago and, uh, that came on my desk and I said no. Big mistake.

    28. HS

      Nah, that wasn't your desk, Philipp, that was someone else's desk. (laughs)

    29. PF

      It was literally, at that time, kind of early angel kind of family KKR stuff, and I was the, I was the maverick in terms of having done venture investing.

    30. HS

      What do you make of all venture firms coming into your field? Now you have Andreessen's, your Lightspeeds, your General Catalysts, just eating the financial stack. Do you worry they're coming into your field?

Episode duration: 1:04:33

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