Transcription
I'm Becky Quick of CNBC and your host of the forum. I'll be guiding you through exclusive conversations among some of the world's global leaders. Conversations previously held behind club doors. But today, we invite you in.
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>> Okay. I want to take us a little bit deeper into how you manage your organization. You have a some military background, you have art backgrounds. I mean, you're curious, but I'm sure you in your mind these are all learning opportunities. Talk to us about your organization and we we touched on AI in particular. Um how it's changing in how you operate, how you think about hiring, how you think about um processes and productivity. Talk to us a little bit about that.
>> Yeah, a lot of people talk about, you know, how they intend to integrate AI, but not so many people have done it. And and I think it's just the most uh it's the most important thing we do just now. I think to integrate AI into your organization, first of all, you need a total maniac at the top, you know, who is just talking about it.
>> Is that you?
>> That's me. Like uh talk about it. You need to talk about it all the time. You know, every time I get the microphone, I talk about it. You have to overcommunicate from the top. Everybody you need to everybody you hire, they need to be very technically able. Then we have ambassadors. You know, we are 700 people. We have 50 ambassadors. They be they are being trained every week you know in these things and we have events you know tech day tech year coffee talks all these kind of things. Then we have forced training, you know, because people hate forced training, they totally hate it. Uh, but you can't you can't make this voluntary because the people who need it the most, they like it the least. And so you just need to force people to get started, you know, so you need to carpet bomb the organization to get it going. Now we think I I asked Sam Olman on on a podcast we have. It's like Sam, what do you think? How much do you think we can increase our productivity by? Do you think and then I just took a number out of the air, which I do sometimes. Do you think 10%? Do you think do you think it's achievable? And then he put on his thinking machine, you know, and he asked, so how many people do you have programming? How many you have doing different things? And he said, you know, you should be you should be hitting 20%. And I think we are hitting 15, 20%. Because now everybody is on on Claude. We use everybody's got like a separate screen with Claude, you know. But we also have programming tools. We use something called Cursor and Claw Code. And out of 700 people, we have 460 people contributing to our code and who are actually programmers. It's amazing, huh? It's amazing. So what it does to the organization is that five years ago, our IT guys, you know, the IT department, they were like hidden in the corner, you know, in some kind of cupboard with lots of dust and cobwebs on. Now they are like heroes. And five years ago when you hired young people, they were just like a pain because it was like, gee, do we really have to train these people? They're not going to do a a single sensible thing for five years. Now they're in production within 45 minutes. So not only have you put like technology at the top of what you do, but also the age uh structure is changing. I mean, this is just like it's a revolution, right?
>> So
>> It's so much fun.
>> You said 700 people managing two trillion.
>> Yeah. So we are the most cost-efficient fund in the world. We are we are like much cheaper than you know the index funds. We are like and we are we are we are like really mean and lean. There is only one person in the firm who's got a secretary. That's me.
>> We book our own travels. You know, no luxury.
>> So,
>> Because we manage the money on behalf of the Norwegian people, you know, and you get that responsibility and you need to you need to be responsible in the way you spend your money.
>> So, the processes, I mean, there's this tug-of-war debate about is it AI, is it just better processes that we're seeing in the numbers. I mean, sounds like you think you're able to deploy a lot of the, you know, you've given us examples of Claude, etc., but there is this debate. Do you have a any thoughts on you know what how much you describe when you look at some of the companies out there, a lot of the announcements on the labor market, this question of whether or not the growth that we're seeing is laborless growth. What what do you think these changes, maybe it's early innings, but just curious on what you think the the change in the number of in the labor market is reflecting.
>> Now you're going to you're going to have changes in the labor market on the back of this. Absolutely. A lot of the repetitive tasks you're not going to do. I think that's really positive because you know why do I just think in the future you you shouldn't do boring stuff and then perhaps you get a bit more spare time. I mean, certainly in Europe, we like spare time.
>> So let me ask you about inflation.
>> Yeah.
>> On the back of that, what's your view? I was looking at some of the European numbers. Certainly the UK is at 3.8, here around three. What how do you how do you think about that as as an artifact of the conversation we just had about labor about AI? What's your view?
>> I think there are I think there are two forces working against each other here. I think on one hand, you have inflationary forces. We talked about climate. So that's one inflationary underlying force. Uh and and of course, tariffs are in general terms, tariffs are inflationary according to many professors are stating anything which is new here. But then you have some deflation and I'm sorry and then and then kind of the fragmentation of of world trade and so on that that is inflationary too because one of the things which has been deflationary has been of course that you produce things in cheaper places. Now that may be changing the deflationary things. I I think AI is going to be deflationary. Cost of knowledge is coming down. The cost of compute, I think, you know, generally will come down with some of the new energy solutions. Cost of energy could come down. And then of course, in a couple of years, we have the humanoids, you know, which are going to do all the homework, all the work for us at home. It's going to be fantastic. Uh that's driving down labor cost, right? And these are coming fast. I mean, they're being rolled out as we speak. I think in two years time, many of us will have them at home. Make coffee, do the laundry. It'd be amazing. It'd be great.
>> That's why that's why it's so amazing to be alive just now because all these things are happening, you know, and things are going so fast and it's so it's never been more interesting. I've been wondering sometimes, you know, all these old guys who run companies and who are like continue to be in politics and like some of them are like 95 and they still are hanging around and you know why I think it is because it's so interesting, you know? I just think the world is more interesting in the past and you just don't want to die because it's so much fun to be alive.
>> You know,
>> You might not have to die. We might have to take a little pill. Well, it's interesting just thinking about and and you and I had a conversation about the fact that really if you think about an an asset that the average US household has purchased that's quite significant and they were willing to take debt out for it. The last time that happened was for the automobile.
>> The car. Yeah.
>> Um, the car and there hasn't really been that kind of innovation and people have high expectations about robotics being doing exactly that. So, it's kind of fun with the robotics. Perhaps you have thought about it, but I hadn't thought about it. Why do they why do they look like human beings, you know? Why do they look like human beings? It's because the world is now made for human beings. You know, your dishwasher is made for human beings. Your stairs, your chairs, your everything. You know, your door handle is just made for human beings. That's why they need to look a bit like human beings.
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Talk to us about going back to you running your fund, your investment process, but more importantly, your hiring process. So, if we're forecasting where the puck is going, we're going to be living with robots. Women are going to be so happy. We won't have to cook and clean and do laundry anymore. And you know, you guys are going to get bailed out because, you know, we all know who does the housework. You're going to look back and you're going to say, "We have all this free time." Uh, what is that? What does that mean? What does that mean for humanity? What does it mean for thinking about your investment process on the micro, but on macro? What are we all going to be doing?
>> Read books.
>> Written by robots.
>> Are you robot?
>> Not written by robots. No, I think we'll Hey, I don't know what we're going to do, but I do think there is an argument for spending more time, you know, doing sports, enjoying culture, these kind of things. I think it's imp it's quite interesting because when you look at the inflation, inflation in luxury goods, it's not coming now in the physical luxury goods, it's coming in the luxury of for instance going to a tennis match or the opera or, you know, it's the experiences, the inflation in experiences is going up. That's because that's really uh those are rare things and you can't mass-produce them.
>> What are your thoughts around market structure and you you hinted a little bit about uh concentration risk. We haven't really talked about the fact that there are fewer and fewer publicly traded companies. Obviously, private equity is a big thing.
>> What what how are you approaching that those trends?
>> Yeah, I think you're absolutely right. So, you know, more and more the value creation takes place in in the private space. Uh, private equity is very important as an employer, as an owner, and so on. We are not allowed to uh buy private equity. We are it's not in our mandate and so we are only in publicly traded securities and it's been proposed several times, but the Norwegian politicians are not very keen on it and so so far we have not been allowed. Historically, there was it was about transparency and and so on. Now I suspect it's mainly about fees because in Scandinavia, you don't like to pay high fees. And but now we are there is a political process going on and we'll see where that ends. I don't expect there to be, you know, any immediate change in that. Now, what's the situation in private equity? Well, they have some challenges, right? There's uh some of them are struggling a bit with fundraising, some of them are struggling a bit with exits. So perhaps, yeah, so we'll see. I want to take us back a little bit to something that you've alluded to and but I think you're uniquely placed to address this. You are European and you are heavily invested in in the US. You see a lot. You travel, you experience and understand, you know, some of these global trends you've already talked about. Could you talk to us about how you think about this idea of US exceptionalism? We've seen the Mario Draghi report on productivity. We we you know, in a sense, you're you're speaking to converted in the sense that we tend to read the same materials. What do you think it is that explains your ultimately your positioning in the US, the bets you're taking in the US, and what is it that you think makes other regions laggards?
>> Yeah. Well, we talked about ambitions. You got high ambitions here. You got a highly educated workforce. You got a very innovative uh, you know, you got a very innovative people generally. You have um very highly skilled immigrants, at least you've have had that until now, you know, you have an ecosystem in terms of venture capital and uh and so on which backs up and then you are very good at taking risks, you know, I mean, here you you fail, you just move on. In in Europe, I mean, by the way, Europe also has a lot of fantastic companies, right? They are leading in luxury goods, great in industrial gases, Swedish engineering, you know, great pharma companies and so on. Uh, but in technology, there is much less. We have SAP and ASML, but it's generally very little and in AI, hardly anything, right? So it's just a different uh it's a different landscape. The Draghi report uh point which was made by the previous uh, you know, head of the central bank points to things that can be rectified and which can help this, but very little is happening. And of course, it's difficult to get the EU, which was set up to regulate, to actually deregulate. It's it's tough. So it's it's taking time.
>> So we're hinting about some on something that you've talked to me about um which I think is sort of at the rub, which is this idea of culture. Um and it's not just culture at the country level, but culture in the organization level and you you have mentioned to me how important culture is. Could you talk a little bit about that because I think that might be lost in the financial metrics.
>> You know, when I was when I was younger, the only thing I looked at was like the next quarter and uh, you know, the numbers and P/E and that kind of stuff. Right now, I just don't think so much about that. I think about the culture because you can have two companies which are exactly the same, you know, two elevator companies or two sneaker companies or two, you know, coffee chains or whatever it is. They are in a way they're totally similar products, but then one company just does great things and totally builds apart from the other one. And what is it, what is that about? I mean, you see to the extreme in banking, you know, some of them are going bust and some are thriving for like years and years and years, and it's this culture thing, you know, and corporate culture. It's the definition is how do we do things around here? And it's about your appetite for risk. It's how you train people. It's how you care about people, how you motivate them, how you see them, how you delegate. It's all these kind of things, you know, and how do you get a culture right? Well, it's a bit like when you when you raise kids. If it goes bad, it's typically like it went really bad three places, you know, and there there are these books, "Where Did It All Go Wrong?" and he's like, okay, it went really wrong then and then and then there is a book called "Where Did It All Go Right?" and that's about these hundred times. I mean, many of you are parents, right? Every day, all these small choices, you know, all these all this all these small decisions you have to get right. And to me, leadership and management and corporate culture is is the same thing. It's kind of all these small things you need to get right. And it's so fascinating. And, you know, corporations are living organisms. And I've I've done quite a bit of reading on on ant hills. I don't know if any of you are interested in ant hills. It's really, really fascinating because, you know, one ant hill, let's say, let's say that one ant lives for one year. During the 15-year lifespan of an ant hill, you basically have swapped out all the ants 15 times. So you would have thought that nothing much kind of changes with the speed. The thing is that during the 15-year lifetime of an ant hill, the speed halves. So after 15 years, the neighbor ant hill comes right, and what do they do? They kill all the guys. They kill them and eat them, you know, and that's the end of that ant hill. And that's like with companies. Companies are like that. They slow down and they are just eaten by somebody. So I kind of think one of the important functions of a CEO, which in my mind stands for Chief Energy Officer, is to walk around and just whip the speed up. So why is this taking so long? Come on, hurry up here. Sometimes I just walk around and say, "Come on, guys, hurry up."
>> So Nol, I can't I I can't resist. Um, you have talked about flattening competition, getting out there, fighting, whipping people up, and there's so much sounds to me very much military language. How much is your of your military background influences what you do today?
>> No, not very much. And by the way, I mean, I'm I'm not saying it works that I walk around. Come on. Come on. Come on.
>> Well, we try. I try.
>> Do you want to talk a little bit about that?
>> No. Well, I mean, I don't think we should exaggerate. You know, I did u my intelligence service in the I did it in the intelligence service. We were trained at that stage, it was called interrogation. Now it's called uh conversation management. It's more more friendly. And so I I think the the main thing I took away from it was the the way you ask questions. And it's actually, it's pretty amazing, right? You look at the people who have as a job to talk to other people, you know, nurses, lawyers, journalists, none of them are trained. And very few of them are trained in getting information out of people. And, you know, this interface you have with this other person is just so valuable. And you have to make the most of it. And so, you know, the way we do it, for instance, in the podcast, and you you know, you're doing really well by that.
>> Am I? Thank I was I was given two instructions. Tell them what you
>> But you start, you know, with an open-ended question. And, you know, what's on your mind? And sometimes you just hear really interesting things. And then uh, you know, never two questions in the same question, you know, they should be kind of single and be careful about leading questions and so on. I think it's just fun. Sometimes you get next to somebody at the table at the dinner party and you just ask two questions and bang, bang, bang, the whole thing is gone, right? They just keep going. It's fantastic.
>> I want to go back and talk a little bit about innovation specifically around financial innovation, Bitcoin, crypto. Talk to us a little bit about that with your thoughts.
>> That's I'm going to talk very short about that because I don't know much about it, to be frank. Well, you well, you I think you know enough about it to decide not to know enough about it.
>> No, I'm not. No, no, this is not a statement. This is not a I I just I just I'm just not I'm just not very well read up on it.
>> Because
>> Well, it's not in our mandate. It's not an alternative we have.
>> And um and I think it's interesting because it's very binary. I mean, you have some really clever people who think it's not worth very much, and you have some really, really clever people who think it's just like totally fantastic. I've hardly seen anything being so polarized in terms of opinions.
>> Mhm. It's very I just think it's really fascinating. I'm trying to learn a bit more about it now. I had a a call with somebody yesterday. I'm I'm working on it.
>> Okay. Well, we're gonna have to come have you come back so you can tell us how you're thinking about that. So, we're sitting here, there's some forecast that there's about $124 trillion of intergenerational wealth that's on its way down from older generations coming in. And one of the debates around that potential flood of new capital coming in is the question of moving from investment to speculation. This sort of gamification of the markets. Do you have any thoughts or insights into how you're thinking about that?
>> Yeah, I mean, our personal view is that uh, you know, I'm not a very big believer in inheritance. I think you should give away a lot of it because I think the worst thing you can do is to give your kids a lot of money. But that's that's that's off the record. Uh, but no, I so so the way I look at it, I look at it. You have speculation, investment, and then you have owner. And I would say in our fund, we are investors, but I don't think we act as owners totally yet. And that's where we want to move.
>> What does it mean? What's the difference between an investor and
>> Well, it's just a longer-term perspective, you know, it's really, really. And it's really difficult to be long-term. We are moving part of the kind of the bonus structure or the uh result uh dependent pay from like three year to five years. So we're moving in that direction. But you have some other companies such as Capital Group, they have a lot of it in the eight-year class, right? And so I think it's fascinating, but it's so difficult to be long-term. And why is it so difficult to be long-term? Because it's so difficult not to do anything. You know, you come home on Monday night, you've been at work the whole day, you know, your husband has been making dinner, you start, I guess, with some cheese soufflé because it's only Monday. Uh, you know, and then you go on with some kind of, I don't know, roasted duck or whatever they do on a Monday. And then he asks you, what have you done at work today? I've done nothing. Okay. So Tuesday, you come back, you know, what have you done today? Nothing. Wednesday, nothing. Thursday, nothing. We are we are kind of wired to just do a lot of stuff, which is which is really u strange when you think about where is wealth created? Wealth is created by families and people who own great assets for the long term and they compound. Right now, how do you check whether you add value? You do what is called inertia analysis. So you take your January one portfolio and you just assume you have done nothing. And then you look at what would have happened if I just kept the January one portfolio. And then you look at what did you actually achieve? And it's a terrible thing to read the numbers because often times you have subtracted value by going to the office every day.
You've been listening to the forum by the Economic Club of New York, a nonprofit 501c3 dedicated to connecting the world's brightest minds for critical nonpartisan conversations. Be sure to subscribe now to be alerted to future new episodes. Would you like to be a part of the conversation at the Economic Club of New York? Learn more about membership, the New York City and National Fellows programs, and other opportunities for engagement in the club at www.econclubny.org. I'm your host, Becky Quick. Thanks for listening.