By Tomas Kubica Sep 04, 2018
I have focused on TMT investing in Europe since I joined KKR in 2012. My original mandate was more on the telecom side but, as the number of technology opportunities in Europe has increased, I began to spend increasingly more time in tech. In a majority of new deal opportunities where our U.S. tech team had previous experience, we were reaching out to our colleagues in Menlo Park to leverage their sector knowledge and proximity to Silicon Valley. I saw an opportunity to strengthen my technology knowledge and experience, expand my professional network at KKR and externally, collect and share best practices between offices, and grow personally by spending time on the ground with the team in Menlo Park. I thus raised my hand for a mobility assignment, moved my family to California in September 2016, and have just returned back to London in summer 2018. As I have been enjoying the rainy weather outside over a cup of British tea, I had time to reflect on what I learned and observed over the last couple of years on the West Coast.
So what are the ‘top 5’ take-aways?
- The technology deal flow in the U.S. is significantly larger (what a surprise!). In Europe, our team reviewed on average 3‐4 relevant technology opportunities per month, while in the U.S., it was around the same or more per week. The increased deal flow in the U.S. leads to a stronger need for an upfront prioritization in both sourcing as well as in diligence. In Europe, on the other hand, we can spend more time to diligence high priority opportunities, build relationships with the companies’ management teams/founders (more below), and develop potential deal angles.
- The market in the U.S. is more homogenous and more transparent vs Europe. In Europe, one may still uncover a new, (likely smaller) opportunity flying under the radar in one of the many countries. The importance of being ‘local’ and developing long-term relationships with founders/management teams is thus critical. In Europe, we have a balanced country/sector model with concentrated sector expertise and local offices across the continent. In the U.S. market, on the other hand, larger multi‐billion deals are unlikely to go unnoticed by the private equity community, and hence the market is more transparent, efficient, and auction-driven.
- The portfolio company experience is more bifurcated in the U.S. vs a steady ‘hands-on’ approach in Europe. KKR believes in the ‘power of partnership’ and will use as many resources as required to support our portfolio companies. The level of involvement will vary based on the actual need. While well-performing companies in the U.S. will need less attention, challenging situations call for a much more involved approach. In Europe, our focus is on primary deals (with KKR being the first external investor), often with partnerships with original founders, which requires a more ongoing institutional support and best practice sharing.
- West Coast communication style in the U.S. is more subtle vs European style. Without too much generalization and simplification, the European communication style is more direct and willing to engage in a constructive discussion or feedback. I found the West Coast style to be more indirect, compromise‐seeking, and leading by questions rather than statements. Experience from both environments has allowed me to better adjust my communication style to a particular audience and become a better listener and communicator.
- A two-year ‘Silicon Valley immersion’ proved to be the right length. It allowed me to establish myself in the new environment, contribute to the team, and maximize learning, while still being able to integrate back to my old team easily upon my return. And on the personal front, although busy at work, we also managed to travel around the U.S., make new friends and welcome a new addition to our family.
Would I do the mobility again? The answer is a definitive ‘yes.’ I gained a much stronger understanding of technology, broadened my professional network, picked up some best practices and grew personally. I also recognize that the most significant benefits from the mobility experience are likely to come only now, after my return to London, as I put my learnings to practice. I feel fortunate for this experience and thankful to KKR for the opportunity.