Partnering for New York City A Voice for the Private Sector An Interview with Henry R. Kravis, Founding Partner, Kohlberg Kravis Roberts & Co., New York, and Co-Chairman, Partnership for New York City, New York, and Jerry I. Speyer, President and Chief Executive Officer, Tishman Speyer Properties LP, New York, and Co-Chairman, Partnership for New York City, New York EDITORS’ NOTE EDITORS’ NOTE proud of New York and its vast array of Henry Kravis began Prior to the 1978 resources, but if we don’t care for them his career in 1967 as founding of Tish- well – if we don’t, as corporate leaders, vice president of man Speyer Proper- band together for the betterment of the Katy Industries and ties, Jerry Speyer was city – the city will suffer. This outlook was then joined Bear senior vice president really what prompted the formation of the Stearns & Co. in and director of Tish- New York City Investment Fund within 1969, where he man Realty & Con- the structure of the Partnership for New eventually became struction Co., Inc. York City. The Fund, which invests in a partner. He left An active advocate both nonprofit and for-profit entre- Bear Stearns in for the city of New preneurial enterprises based in New York 1976 when he co- York, Speyer is also City, endeavors to build a stronger and founded Kohlberg Henry R. Kravis Jerry I. Speyer vice chairman of the more diversified local economy, and con- Kravis Roberts & Co. Museum of Modern sequently, it is reliant on the combined He currently serves on the boards of RJR Art, chairman emeritus of Columbia Uni- cooperation of the leadership entities of Nabisco, Safeway, Gillette, Borden, and versity, chairman emeritus of the Real the city. The private sector has a wonder- Owens-Illinois, among other compa- Estate Board of New York, a member of ful set of resources and a lot of good nies, and he founded and heads the the Council on Foreign Relations and the ideas, but the public sector needs to know New York City Investment Fund. He also Economic Club of New York, and a past what these are and that they’re available. serves as co-chairman of the Partner- president of the board of trustees of the At the end of the day, our efforts with the ship for New York City; serves on the Dalton School. His other board affilia- Partnership are just as important as the boards of the Metropolitan Museum of tions include the Federal Reserve Bank of work we do for our own businesses; ulti- Art, Mount Sinai Hospital, and Colum- New York, YankeeNets, the Rand Corpora- mately, they are means to the same end. bia Business School; and is chairman tion, New York Presbyterian Hospital, Remember, if your home is not an attrac- emeritus of Public Television Channel Carnegie Hall, the Real Estate Round- tive place to live, if the environment is not 13. Kravis holds a B.A. in economics table, and the Urban Land Institute. conducive to work, it becomes very hard from California’s Claremont McKenna Speyer holds a B.A. in German literature to attract the kind of talent you want. In College and an M.B.A. from Columbia from Columbia University and an M.B.A. other words, by working to improve our Business School. from Columbia Business School. city – the place where we work – we’re also working to attract the best people to COMPANY BRIEFS An investment firm Jerry Speyer. The company owns a real work for our businesses. that makes long-term equity invest- estate portfolio of more than 50 million Speyer: I absolutely agree. Before ments, Kohlberg Kravis Roberts & Co. square feet, including two of New York’s Henry and I took this assignment on, we (KKR) was founded in 1976 by Jerome most renowned landmarks, the Chrysler visited several of the city’s major leaders. Kohlberg, Henry R. Kravis, and George Building and Rockefeller Center. With We asked them if they would help us act R. Roberts. Since then, the firm has offices in the United States, Europe, and as agents for change in order to make the invested more than $114 billion in some South America, Tishman Speyer Proper- Partnership and the Fund more effective. 110 companies, with its current invest- ties also maintains a variety of smaller We said we wanted to give business lead- ments including stakes in the publishing interests in retail, entertainment, and ers a voice in their own government, and company Primedia, the insurance bro- residential ventures. we convinced 25 out of the 26 people we ker Willis Group, and the largest drug- met to sign on. The one that didn’t sign store chain in Canada, Shoppers Drug As corporate leaders, you are both on, retired. This was a great result. Mart. With offices in New York, London, very involved in the community. Why Kravis: I would also add that New and Menlo Park, California, KKR man- is corporate citizenship important to York is probably the hardest place to ages its investments through a variety of you, and how is your approach to it undertake this kind of project because strategic ownership positions. affected by doing business in New the city is so big. It’s difficult to make the A leading developer, renovator, York? work interesting enough and to give the and owner of commercial real estate, Kravis: My view is very simple: This is participants from the Partnership an Tishman Speyer Properties LP was our home and we have to take care of our important enough role – one that will formed in 1978 by Robert Tishman and own backyard first. We’re all extremely make them feel that they’re really making 28 LEADERS POSTED WITH PERMISSION. COPYRIGHT © LEADERS MAGAZINE, INC. VOLUME 26, NUMBER 4 an impact. If participants feel that their outward and toward expansion to the whom they are able to delegate responsi- contribution matters, then they will stay degree that they should, and I think this bility. I think that recruiting talented peo- involved. But if they don’t feel that way, has probably affected the economy nega- ple is vital, and I have been able to do this they’ll simply fall away. Jerry and I are try- tively as well. in my company. ing to make sure that the former and not Kravis: First, I would say that it is Another rule I try to follow is to the latter happens – that we do indeed much more difficult to lead companies make sure that my people feel comfort- provide a voice for the private sector. today than it was before, because today’s able talking to me – comfortable enough So what is the current state of companies are much more complicated. that they can give me bad news without the relationship between the two sec- They are larger than they’ve ever been trying to make it better than it is. Being tors? Can you track such a thing? and they’re often global. So with regard to absolutely clear with news, good or bad, is Speyer: The relationship between the corporate citizenship, for example, com- something I really value, and I think peo- public and private sectors is currently in a panies now need to be responsible citi- ple around me know this. It’s certainly an state of evolution, partly because of the zens not just in their hometowns, but also important element in getting ahead in our dramatic change in leadership we experi- in cities all over the world, and that’s no company. enced at the city level when Mike small job. Kravis: We have a very flat organiza- Bloomberg became mayor. Things have tion and that automatically gives people an also changed in the state government, enormous amount of responsibility. It’s especially between the executive and the flat by design, and I think everyone here is legislative branches. aware that the company works this way. As for how to gauge the relationship, We’ve been very fortunate: In the 27 years I frequently travel around the country on of KKR, we’ve lost only nine professionals, behalf of our company, and I’m always and of those nine, I think four or five of struck by how much cities are affected them retired. I believe this loyalty is a through the involvement of their business product of the way the company is run. leaders. For example, Houston’s business We pride ourselves on a lack of politics community is very strong; the people who and a strong team aesthetic within the run the major enterprises in that city are firm. Nobody raises a hand and says, very engaged with the city of Houston and “That’s my idea,” or “That’s my deal.” it shows. Conversely, when the business Instead, they say, “This is our idea,” or leadership in a city isn’t engaged, that city “This is our deal.” That’s how we work. suffers. If you look at the top 15 cities in the United States today, you’ll see that each one reflects a very strong partner- ship between the public and private sec- tors. The businesses involved are looking forward; they are focused on something beyond the current moment. Likewise, the Partnership for New York City concen- trates on what is good for the city’s future, rather than on some private interests which are motivated by self interests. Kravis: I’d add to that the fact that the relationship is made stronger in New York by the amount of resources the pri- vate sector can make available to the pub- lic sector.