Season 2 - Ep. 8 | Carlyle Group CEO: You may not like change, but you're going to like obsolescence even less

Redefiners Podcast
Hosted By:
May 11, 2022 | 36 min
Our guest
Kewsong Lee - Chief Executive Officer of Carlyle

“It's the deals that don't work out that I've learned the most from.”

Adopt Kewsong Lee’s motto – think bigger, move faster, perform better – and you’ll be primed for success in whatever leadership position you’re in. But how this CEO of private equity firm Carlyle Group puts that motto into motion is what’s made Kew one of the world’s savviest business leaders. In this episode, we’ll talk with him about embracing change, essential traits of successful leaders, and why having an authentic ESG mindset is not just good for the world but also good for business. Kew’s 30-plus-year career is rife with successes, but his mistakes and failures taught him the most. We’ll talk about it all, as well as the transformation of the private equity industry in an era where more companies are staying private for longer—and how to be on the forefront of that change.

Here’s a taste of what you’ll hear from Kew in this episode, in his words (edited for length and clarity):

Kew’s Redefiner Moment: Go big or go home

I was really happy doing deals at Warburg Pincus, and then the Carlyle opportunity came along. I remember debating this with my wife and family at the dinner table over a few weeks, going over the pros and cons. Very different firms, very different size and complexity. And finally my daughter slammed her fist on the table and said, "I'm sick and tired of hearing about this. Dad, go big or go home."

That was a defining moment in the sense that I realized it was time for me to try something different. Rather than being good at the deal, this shift for me was, how do I be really good at the business of doing deals? Because of the size and the scale of Carlyle versus the private firm that I was at. And so it was actually a fun moment when, as I look back, she was absolutely right.

On why people, not price, make the deal

When people ask me what deals I’ve learned the most from, it's never the deals that have worked out. It's the deals that don't work out where I've learned the most from.

One important lesson for me early on, and a mistake I see others make, came from a deal where we lost money. It was an okay company, okay management team, okay prospects, but great price, great structure. And it didn't work out too well. I learned a really important lesson: so many folks hone in on price and valuation and the structure of a deal, and they think they got a great deal, when in fact it's all about the people and what the business can become. I learned that it's not just about just price and structure. In fact, I would back and partner with a great CEO, even if it was an incredibly high price, because great CEOs will lead companies and figure out ways to grow and drive profitability.

On what an ESG mindset really means

The fact of the matter is, in order to perform well, you have to have a terrific ESG mindset. It's not an “either or,” it's an “and.” What I mean by that is, when we make an investment into a company, we're doing everything we can to enable it to perform better, drive revenues, new markets, new products, improve costs. But our research has shown that earnings at companies with diverse boards grow 12% faster than those portfolio companies without diverse boards. So why wouldn't we bring more diversity to that portfolio company?

It's integral to our approach to say, "How do we partner with companies to make them better?" When you have an ESG mindset you look for better supply chains; you’re able to recruit and keep talent because they like what the company is doing. When you think about raising financing, where your cost of capital actually goes down, you can lower emissions targets, which we've put in place at our portfolio companies. It drives performance. Why wouldn't you do that?

On his advice to young people joining the private equity industry

There are moments in time, like in the past five, 10 years, when liquidity has made a lot of things easy. Well, I think we're in a new era where it may not be as easy. There are no shortcuts. You have to do the hard work. You have to be resilient. And you have to go with the flow a little bit and tolerate some ambiguity and keep going, because it's never precise and it's never going to be clearly laid out.

Related to that, the last thing I would tell people is to be a real person. So many young associates are so career minded, they forget that part of succeeding in business is also having a real personality above and beyond work to make you an interesting person. It’s hard to do when there's a lot of work, but I try to get away, be with friends, go watch a show or go fly fishing every once in a while.



Kewsong Lee
Chief Executive Officer of Carlyle

Kewsong Lee is the Chief Executive Officer of Carlyle and was elected to the Board of Directors effective January 1, 2018. Mr. Lee joined Carlyle in 2013 as Deputy Chief Investment Officer for Corporate Private Equity and in 2016 he assumed the additional role of leading the Global Credit segment.

Prior to joining Carlyle, Mr. Lee was a partner and a member of the Executive Management Group at Warburg Pincus, where he spent 21 years. He is currently the President of Lincoln Center Theater, Chairman of the US Chamber of Commerce China Center Advisory Board, and Vice Chair for the Partnership for New York City. He also is a member of the Business Roundtable, serves on the board of the US China Business Council and FCLT Global, and is a Trustee of the Center for Strategic and International Studies.

Mr. Lee earned his AB in applied mathematics in economics at Harvard College and his MBA from Harvard Business School.


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