Ken Hersh

Ken Hersh is a self-professed “expert at nothing” who says he built a career simply by being a cheerleader for smart people with great ideas.

Hersh’s characteristic modesty belies an extraordinary career. Hersh co-founded the private equity fund Natural Gas Partners in 1988 as an energy fund focused on the oil and gas industries. By the early 1990s, the firm was a leader in funding entrepreneurs and helping startup companies with mergers and acquisitions.

Under Hersh’s leadership until 2016, NGP Energy Capital Management invested more than $12 billion and earned a 27-year annualized 30% rate of return, making it one of the nation’s leading private equity firms during that period. His reputation and skills landed him on numerous boards, including Major League Baseball’s Texas Rangers and many private companies in which he invests. He also served on the GSB’s Advisory Council from 2009 through 2015.

Since 2016, Hersh has been CEO and president of the George W. Bush Presidential Center in Dallas, where he manages the Bush Institute and the George W. Bush Museum and is a board member of the George W. Bush Foundation.

In August 2017, among other endeavors of his family office, Hersh decided to lead cheers in an entirely new arena — the online gaming world — by investing in the esports company Envy Gaming (now OpTic Gaming), where he is chairman of the board.

“It’s no different than cheering on petroleum engineers, geologists and geophysicists,” Hersh says of his initial unfamiliarity with the esports industry. “I couldn’t read a seismic line either.”

Hersh’s new book, The Fastest Tortoise: Winning in Industries I Knew Nothing About, recounts lessons that evolved from his business and personal experiences.

On March 16, Hersh was presented with the 2023 Ernest C. Arbuckle Award, which recognizes his commitment to both managerial excellence and to addressing the changing needs of society.

Private equity pioneer Richard Rainwater was one of your mentors. How did he fulfill that role in your life?

I had an office four doors down from him for eleven years. Being able to watch him and interact almost daily was a real gift. He had an electric personality, a computational mind, and a charm and charisma that made you feel like you were the only one in the room when he talked to you. Every day was just unscripted free-for-all capitalism.

What were the most important lessons you took away from your experience with him?

He was always great to be around, and he treated people well. I made sure to carry that on. I had almost no employee turnover for the first 25 years [at NPG]. I treated the firm like a family; just because I was tough didn’t mean I didn’t love everyone. My mantra is “Demanding doesn’t need to be demeaning.”

You’ve talked about “staying the extra hour” to set the pace for your peers. How does that play out in your day-to-day life?

There’s no question I go all in. Here at the Bush Center, my car is one of the first ones here and one of the last to leave. If I do something and put my name to it, I always want it to be something I can be proud of. That’s in my DNA, and I’ve just come to accept it.

Explain the title of your forthcoming book, The Fastest Tortoise.

My goal is to be the fastest tortoise in the race. We built a successful investment business just hitting lots of singles and doubles and trying to take volatility out of a volatile business. If you make your wins big and your losses small, the portfolio will succeed. I tried not to chase the shiny new penny. It worked.

You’re not a gamer. Why did the convergence of the online gaming and the physical world strike you as a business opportunity?

Richard used to say, “Wherever there’s chaos, there’s opportunity.” My small ownership in a professional sports team got me reading the sports business weeklies. I saw a blurb about esports and thought, “What the hell’s that?” So I Googled and realized there’s an entire world that’s growing like a weed, has an entire community around it, and it was completely invisible to me because it was online. The viewership of esports has now passed every major sport except the NFL. It’s growing 15% a year, it’s viral, and it’s not going away. The youth of the industry and the fact that the numbers were so staggering told me there was an opportunity there.

All to watch people playing video games online?

It’s really more of a consumer entertainment and lifestyle brand, not unlike Nike, which can slap their logo on different things, and it conveys a certain lifestyle. And it’s global, like English Premier League soccer. If somebody told you 50 years ago that Arsenal would have the word “Emirates” on their jersey, you’d have said, “What are you talking about?” There are people who cheer for Man U, but they probably don’t know what the Man stands for and couldn’t find it on a map. Those are global brands, and it’s a global game, and people follow it. Esports is not that different.

Cite an example of a situation where, as Rainwater said, opportunity emerged from chaos.

In 2007 and 2008, right before the crash, natural gas prices shot up to $12 per MMBTU [which measures energy value]. When you have a high price, you can try a lot of things, like looking for reserves in crazy places or using crazy techniques. Thirty-five miles from where I’m sitting in North Texas, an entrepreneur decided to combine hydraulic fracturing with horizontal drilling. It was an expensive well to drill, but that experimentation was justified because he had the higher price to back him up. That brought on the unconventional shale revolution, and the U.S. went from a massive importer of energy to an exporter. It has liberated our foreign policy, it’s been a massive engine of economic growth, and it was brought to you by the ingenuity of companies you’ve never heard of, run by people that get no fanfare. That changed the world.

Did your relationship with George W. Bush begin when you were both involved with the Texas Rangers?

When [Bush] put together the group to buy the Rangers in the late 1980s he was short of money, and Richard Rainwater pulled a group together that put up a good portion of it. As a result, he [Bush] would come into our office, and we would talk oil and gas. I would use him to check references on his buddies from Midland. I would see him both in the office and at games. I even showed him some oil deals along the way. He put $50,000 in my first deal and it worked out well, so we’ve always stayed friends.

Did the relationship change when he became president?

I didn’t want to be one of those industry guys who was always asking for a favor. I left him alone. I had a great relationship with him because I never asked for anything.

You may be the only Stanford alum who is the subject of a George W. Bush painting.

I bet he’s painted Condi Rice. But he surprised me with it, which was really touching and special. His portraits are interesting because he doesn’t try to precisely trace a face. It’s an interpretive portrait. He paints the way he sees people. Mine was my cherubic face with my impish grin and a squinty smile, in a T-shirt. That tells me he sees me as a regular guy, which says something.

You said Bush’s character was revealed in the “unscripted moment” of 9/11. Apply that standard to yourself. What unscripted moment in your life exemplifies your character?

I had a heart attack in 2020. My life was going through a series of transitions, and one day I woke up feeling funny. Turns out my arteries were 80% blocked, and I was in surgery at six the next morning.

And how did that experience reveal your character?

I didn’t freak out. I’ve tried to be that person that when everyone is freaking out, I’ll be the calm one. We’ve been through financial crises and oil and gas collapses when people are worried about their jobs and portfolios. It was my job to steady the ship and be the person who said, “We’re going to get through this.” I woke up and my life was changed. I could have felt sorry for myself, but I fall back on that idea that in life there’s no reverse and there’s no neutral, only forward.

One of your focuses at the Bush Center has been immigration reform. Why?

It was an important issue to President Bush when he was in office, and one of his great regrets was he didn’t get reform passed in his second term. It just boggles my mind that this is a complicated issue for this country because we’re a country of immigrants, a compassionate country, and a welcoming country. Everyone in this country has benefitted from that fact at some point in their family’s history. To take an isolationist mindset now defies logic and contradicts who we are as a country. Our productivity, innovation, and creativity has been driven by immigration.

Is good immigration policy also smart business?

The immigrant mentality is entrepreneurial. This issue also is a classic example of where the necessary policy actions are known to everybody, but unless the politics are right, the policy just stays on the shelf. My feeling is we need more legal immigration, we need a secure border, and we need a compassionate set of immigration laws. If you have more people coming over the top of the bridge, then you’ll have fewer people going under the bridge. You want them coming across in ways that are productive and legal and get incorporated into our economy. They’re here to work for the most part, so if we can give them legal pathways to work, it’s amazing what people will do.

Photos by Grant Miller