STANFORD GRADUATE SCHOOL OF BUSINESS —The economy is stumbling but George Roberts, cofounder of Kohlberg Kravis Roberts and Co., says don’t overlook opportunities in investments that others have fled.

Savvy risk takers should look to the debt markets, or buy home mortgages from banks in regions where it appears prices are likely to recover in the future.

So, what’s the next investment move for KKR, one of the world’s largest private equity firms that he started in 1976? That multibillion dollar company—whose leveraged buyout of RJR Nabisco in 1989 was made famous in the book Barbarians at the Gate—is now “sitting in a very nice position with a lot of capital” and weighing where to put its money next, Roberts told a Business School student audience on March 11.

“I can’t tell you what month or when or what it’s going to be. It could be taking a minority stake, which we did with [financial service provider] Legg Mason [in January 2008]. It could be creating a pool of capital to buy debt. You need to be able to go with the flow and see where the opportunities are,” Roberts said.

During an informal View from the Top presentation, Houston-native Roberts discussed why pursuit of opportunity led him to quit a cushy banking job at Bear Stearns—where he had become a partner at age 29—to help found KKR at a time when buyout companies were a new and relatively untested industry. He explained why people should look beyond resumes when picking business partners. And he spoke about how he has managed to balance his successful career with a fulfilling personal life.

It all started when Roberts, his first cousin Henry Kraviz, and one-time mentor Jerome Kohlberg Jr. decided to leave Bear Stearns and start a private equity firm with $120,000.

Roberts said that he had done a dozen management buyouts while working at Bear Stearns. But the company wasn’t really interested in investments that might take up to seven years to pay off. So the trio decided to take on that challenge themselves.

Pulling off the deal wasn’t easy. After building credibility with banks, insurance firms, and other investors, the trio purchased nine businesses for $105 million. Convinced that they were on to something, the trio didn’t stop there. Since its inception, KKR has completed about 160 transactions with companies involving an enterprise value of over $400 billion. KKR and other buyout firms purchase foundering enterprises, whisk them off the stock market, fix them up, and sell the improved businesses at a huge profit for stakeholders.

Before founding KKR, Roberts said he thought about what might happen to his career if he failed. Ultimately, he said, he realized that “if I didn’t do it, I would always look back and say I missed an opportunity. The system we have in this country does not penalize failures as long as you fail honorably. The system will give you a second or a third or a fourth chance.”

Roberts considered himself joined at the hip with Kravis, the cousin he has been close to since boyhood. As adults, they share personal philosophies as well as business goals. “It was a unique relationship,” Roberts said. “We have a different style in how we do things. But our sense of values and what we want to accomplish are pretty symbiotic.” When picking a business partner, Roberts urged students to select someone they trust and who shares their value system. “I don’t mean about making money,” he said, “I mean the same value systems about what’s important to you in life and as a person.”

Roberts believes giving everyone in a company, from the front-door greeter to top executives, a financial stake encourages more realistic decision-making. He recalled how the board of directors at Union Texas Petroleum, an oil and gas business KKR purchased in the early 1980s, wanted to set a $600 million budget, even though oil prices had plummeted from the prior year. After Roberts reminded them that their 10 percent stake meant $60 million of their own money was involved, “a light went on, and they came back with a budget that was substantially lower. If you own a house you take better care than if you’re just renting it.”

Students peppered Roberts with questions about himself and his company.

One student asked about how he keeps balance in his life. “I’ve been blessed because I found something at a very early age that I love to do. I’m very passionate about my work, about the firm. I wish that for all of you. If you do that, then going through difficult times will become a bit easier because you’ll look at these as challenges that you are going to get over in ways that will make you stronger.”

While Roberts has been in the same line of work since his twenties, he conceded that students closing in on MBAs today won’t have that same experience, and he urged them to find a “starter job” to learn skills and set them up for better posts. “You don’t have to make a career decision for the next 50 years of your life. If you need to change jobs in two or three years, you haven’t committed a sin,” Roberts explained. “Work hard, and work with integrity all the time, and opportunities will be there aplenty for you.”

The student-led View from the Top speaker series invites corporate, government, and nonprofit leaders to describe leadership experiences. It is organized through the School’s Center for Leadership Development and Research.