Transcription
[Music] Hi everyone. Today, I'm in seriously good company with Marcus Wennergren, who is the Chair of SEB Banking and Vice Chair of Investor AB, both really important companies in the Wennergren family.
Now, for those of you who are not familiar with the Wennergren, they control and have influence over companies such as Ericsson, Atlas Copco, Electrolux, Astra, ABB, and SEB Banking. And this journey started back in 1850. Incredible. So, Marcus, what a pleasure to have you here.
Thank you. It's great to be here with you.
What's the key to surviving for 175 years?
Uh, I'm well, there are many aspects, of course, uh, with that. But, uh, perhaps the most important thing, or one of the most important things, would be that you are ready to adapt with the times. I think that is a very important part of it.
And what's been the most important adaptations you've done, you think?
Well, you know, I, I think that if you think about 175 years back, uh, you will, of course, very quickly come to such things as dramatic technological change. Uh, gone through the times of the steam engine, the electrification. Now we have the internet that we just passed. Now we're in the age of AI. So the wish and the drive to change with the times is a very, very important aspect.
What part of the Wennergren legacy are you the most proud of?
The fact, uh, that we are able to, um, be here as a family, uh, to work together in our family is very important. Um, I think that is, uh, perhaps one of the, uh, things that we can be proud of, that we've been able, uh, throughout the generations to do that. Uh, I think also that we have the possibility, uh, to not only work with companies but also to support, uh, research and education, uh, is an important aspect of what has been done.
Capitalism looks very different in the Nordic countries. So in Denmark, you have foundations. In Norway, the state is very important, uh, with part ownerships. And in Sweden, of course, you and a couple of other families are very important for long-term ownership. So how do you, how do you look at yourself? Are you, you know, are you an owner, or do you feel like more like a prime minister? Just, how do you, how do you look at yourself?
Uh, I mean, you're much more important than the prime minister.
No, I would not say so. In these times, I would tell you that democracy is an extremely important thing that we should be, uh, guarding carefully. I think about it as two dual tracks. From an ownership side, uh, being a steward of of corporations that we try to work very closely with, uh, where we have a financial interest, uh, in order to create value over time and develop them, uh, be close to them so we can see that they, they stay competitive in a very, in a dramatically changing world. Uh, on the second track, uh, doing what you're saying about the foundations, U, supporting, um, these foundations who are giving, uh, a substantial amount of money to Swedish universities primarily, uh, for the betterment of Sweden, which is in turn, I think, helps, uh, Sweden as a very small country in, in, in the view of this large world, uh, to try to stay competitive in certain fields.
How important are these foundations for you personally and for, and for the people who work in all these companies?
I think there are many, many, uh, of the, um, colleagues who actually are quite happy with that, uh, the dividends that come out of these companies actually go back, uh, for a good cause. Uh, and, uh, for us and the family, it's very important. It helps us to stay, uh, a bit closer to what goes on in science and technology, to see what is about to come, uh, which I think is, in, when you think about it, in that you're adapting with the world, that is an important input to that equation.
You have saying that you want to do things without being seen publicly too much. To be not seem to be, yeah. What's the thinking behind this?
It was my great-grandfather who, who, uh, adopted that saying. I think he pointed to what is something we think is very important, namely, um, we should, uh, really work as a family to do things that will have a good impact. But the most important is perhaps not that you're standing in the front line, but that you actually, uh, support that these things are happening.
Well, you're on the front line now in this podcast.
Yes. Uh, I am. And, uh, I think you are, uh, doing something quite interesting, uh, since you're using your time to spread the word about different companies and individuals. That's an interesting aspect of your job. Yeah. And we are very keen to learn from how you're doing things, because I do think we need to extend the time horizon for planning. We need to be more long-term and act more like owners rather than than investors, which is why we are here.
How would you, uh, characterize the Wennergren culture, or is there such a thing as a Wallenberg culture?
We hope, hope there is, uh, a set of values that is very important to us as a family. You just mentioned the long-term aspect, uh, to stay with the companies, try to be supportive, uh, of them for a long time, see a change in these companies to be really competitive. Uh, we talk a lot about the, uh, future-proofing of companies, which basically means, today, we're, we're looking very much at the people question. We think that is extremely important. We look at, uh, companies and their ability to innovate, and not the least also with sustainability. And, uh, last but not least, I would say the demands on all companies to understand their data and AI and cyber strategies.
Now, you run, um, this, uh, in a way together with your cousin. Um, how were you groomed to take over this? For instance, we had John Allen on, uh, while back. He was told that he should take it over when he was like 22 or something, right? Yeah. Now, how old were you when you knew that you would have this incredible responsibility?
Well, I, I think that, uh, we, U, uh, in our generation, we were always told by the older generation that just because your name is Wennergren, you don't get a free ride. So, uh, a lot of focus for us was on learning, uh, on, uh, doing, uh, work within different companies over time, uh, work hard, uh, be interested, um, do a good job. Very important.
Who told you this?
I think, uh, both, uh, my grandfather and, uh, my, uh, uncle were very strong in that. So it's, uh, it's really about learning. It's about, uh, showing that you have the interest and also to perform.
Is it a burden?
If you don't like it, it can be a burden.
What is it that you like?
A lot of satisfaction getting when you see that companies are developing. Then, uh, when we can see that actually, uh, the work we do with the universities is actually moving things forward. And if you can add to both these companies and to society.
No, I always admired, um, Swedish companies because they are just very, very impressive. What do you think? What is it with, um, Sweden which explains this success, or, or is there something Swedish in it?
Uh, I don't know if it's a Swedish trait, but I, I think that as a country, Sweden, uh, has always been very dependent on trade. If you want to do trade, you have to be competitive. If you want to be competitive as a small country, you have to innovate. So this is something that I think Swedish companies have been forced to understand and to deal with over a long time.
We are small countries. Um, that means that you cannot assume that you'll get all the attention that maybe you would like. So you really have to build the trust, you have to be cost, uh, effective, and you have to innovate.
But you managed to create some world leaders in initially in relatively small niches, and then they have expanded the niches, right?
Uh, absolutely. Expanded their technologies, expanded, you know, some acquisitions as well, of course, over time. Uh, being very international. Most of these companies have less than 10% of their business in Sweden. And that means that you really have to understand the international markets. You have to rely on free trade, which is a perhaps not an obvious question today. No. And, uh, that you can, as I said earlier, stay, uh, competitive in the sense that you can adapt to the different markets and needs over time.
When you look at the Norwegian industrial base, what reflections do you have?
I think that countries have a tendency to, to, uh, work more and more with things that comes natural to them. You have very strong industries in terms of your natural resources and fishing, for example. Uh, I'm sure that, uh, there are areas, other areas that Norway, uh, could and will develop over time, such as, for example, you know, I'm involved with the, the private equity business, EQT. They're quite active here. There are a number of startups in Oslo that, or in, in Norway, that are very interesting companies. So it's, there, there are definitely possibilities.
Marcus, can there be such a thing as too much responsibility in too few hands?
Yes. You, you're touching something that is very, very important, because you, responsibility, of course, have to, uh, be adapted to what can be done in a, in a, in a good way. So the question is relevant. Uh, I would say that we, in the family, carry and have carried a lot of responsibility. But when you talk about, if there is a culture or a value base, uh, in our family, coming back to that question, I would say that if you look through the years that the family has been active, one of the key, uh, questions that I can at least detect, uh, is that, uh, the family has worked with fantastic people, and it is a team play. It's a team sport. One person, a couple of persons, can't do this yourself. You have to rely on people that share your value base, and they have to take their responsibility along your own responsibility. And that in itself is, is a responsibility to find these people and to work with them for a long time, and really understand that you share these ideas and the values of what you're trying to create with the businesses.
How do you work with the next generation of owners?
There are about 30 of them, uh, in the next generation. And we have for a number of years, more than 10 years, worked with them in different ways, introducing them slowly to each other and to the businesses and to, uh, the foundations and what the family, uh, wants to do. Some of them have said that they're interested to work in the business. Some of them said that they would like to work with the foundations. Some of them said that, I'm a happy family member, and that's fine. And I think that is a very good way of doing it. Uh, there is always a balance with hoping that they will get the interest, understand the necessary things you need to do as an owner. But I think we're also, uh, very mindful that, uh, this is something, if you, if you work with these things, you will have to spend a lot of time at. There's a lot of demands on your time and so on, so you really have to like what you're doing. So gradually, I, you know, I think they will take more responsibility, and, uh, that's something we're in very close dialogue with them about.
Coming on. Well, that's going to be exciting to follow. A little while back, um, Sweden went through a period with, you know, a lot of wealth tax, very high taxation, and a lot of very prominent Swedes left the country. Whilst you guys didn't. Do you think that it would have been different if you hadn't had the foundations as an ownership structure?
You never know, of course, what would have happened then. Um, but in the case of the largest foundation, K. Wennergren, my great uncle, and his wife, Alice, a Norwegian opera singer, they had no children. So for them, it was a natural thing to go for a foundation. Then came the tax question, as you said, which we're now, I think we're close to 15 of the family foundations. So many have now decided to start foundations over the years. It, one of the important things here is that, as we all know, the Nordic way of doing foundations, nobody owns the foundation. MH, which means that when you go from one generation to another, you're not quarreling about any money because the money will never belong to you. So you actually work for the good of the foundations and for the companies, uh, based on on your interest. And it's not there to, you know, fight or have a, a big discussion about how to find the money here. I think that has been extremely important for our family, because those, uh, of us who decided to work with the family, we have done that because we have a keen interest in doing so. And, uh, we've been lucky that throughout the generations, um, there have been very qualified people in the family who's been able to be there and develop the business.
Moving to a topic a bit here, um, investment philosophy. If you were to kind of distill down what you think a great company is, what characterizes a great company? What would you say are some of the characteristics?
Management, market position, ability to innovate, stable finances, some of those important things.
What are the most innovative companies in your portfolio, you think?
I hesitate to mention names because I, I think that, uh, all of them have to be innovative. If you are going to be successful in the pharma world, you have to be extremely innovative, such as AstraZeneca. If you're going to compete in the telecom world, you have to be extremely, uh, innovative to to stay ahead. But also when you look at the traditional engineering companies, such as Atlas Copco, they have huge pressure on themselves to innovate and innovate and innovate. So I think, uh, most of the companies in our portfolio have that pressure on them, and that is something that they are keenly aware of and something that they are actually really trying to to put more and more emphasis on over the years.
Now, the foundations fund research in areas, I mean, really kind of basic, groundbreaking, uh, research where, which in many countries would be taken care of by, you know, governments and public funding. Do you do that because you think it will be beneficial for the companies eventually to have that type of progress, or what's the thinking behind the fields you are choosing?
You're, you're right that we are funding primarily basic research, and sometimes high-risk research, right, with a very uncertain outcome. You back, uh, people, rather than projects.
50% is backing people.
Yeah. 50% are some large projects like AI, Quantum, yeah, in, in, in very long duration projects. And there are not that many institutions which think that way. I mean, Howard Hughes Foundation is one that comes to mind where they also do this kind of binary outcome, backing people. We're trying to focus on excellence, and we're really, uh, pushing that the, the research that is being performed is open research. It's for everybody. The Swedish system is such that the researcher owns the IP. So, it, it really is an open, uh, question. And, and of course, this comes along very much in line with, uh, what I tried to describe earlier, namely, if you think about yourself that you have to innovate and future-proof the whole time, also being in a country, uh, where, uh, research and, uh, education is a very important part, that works very well in our book in, in how to think about adapting with the times and looking around the corner, or what is about to come.
How does, uh, the geopolitical situation influence the way you think?
I mean, it's hard to say that we are living in the most difficult times, so that, that you should not do. But I think one can at least conclude that we're living in extremely complex times. Yeah. And it's not only geopolitics, it's also, uh, the advancement of science, it's climate change, it's, uh, so many things that we have to think about in our generation. And I guess we're all keen to give something to our kids that is, uh, in a good shape. So that impacts our thinking a lot, uh, about the surrounding world. When I take, you know, from a bank perspective, it's always been around, you know, the credit risk and the market risk and the liquidity risk and so on, that on the balance sheet things. But today, if you're a banker, there are so many additional risks that you have to consider: cyber, regulatory, political, climate. There's so many different risks that are now coming into the equation. So we are living in a quite complex world from that point of view. So we spend a lot of time in the family and the people that we work with to try to understand, to our best ability, I should say, uh, what is actually about to happen and how it could impact what we do.
So these things cause a lot of volatility, sometimes?
Yes. Yet you are not really utilizing that volatility to scale up your positions in various companies, for instance. What were the, did you make a lot of big active changes during the financial crisis?
I think that we have, you mean buying more shares? Well, we have about bought in certain companies. I think we have been taking a very step-by-step approach.
Do you think you should do more of this?
I think that if you look at, uh, for example, the privately owned, uh, business of Investor, which is called Patricia Industries, we have been investing quite, uh, a lot there in the last 10 years. So yes, we are participating in that. So in the other holding companies, if you look at EQT, they have been extremely, uh, on their toes and have created a very big business in the past 10 years. So I think that, uh, we have been quite, quite, uh, active. Perhaps we have, we're, we're known to deal with some of the very large, uh, public corporations. And as you know, since you're an investor as well, uh, it's not that easy if you are a very major shareholder to move your ownership position, uh, in these times. So, we have made a number of investments over time, and I think we're quite happy about that. Most recently, increased the ownership part in Ericsson.
You mentioned EQT, which is, for those of you who don't know, a very, very successful private equity company, which, in a way, you, well, which you started up. How did that come about?
It came about that, um, we got through contacts in the United States. There was a group called the AEA Investors, and we got to know them and understood, uh, that they had a big contact network with the CEOs of large US corporations who, at the time when they were leaving their companies, still had a lot of mileage left in them. And they used them to develop the companies in the AEA portfolio from an industrial point of view. And that became also one of the principles when we started EQT. When Conny Jonsson and Klaus Doberck, and their teams started EQT, and that has also followed their legacy over time. And, and I think that they've done a fantastic job. When they listed EQT as a company, they've also been able to, with shares, to get into new businesses such as Bearing Partners in Asia and so on, which have actually given them a much broader, and much bigger platform, in different parts of the world. So they have done, uh, really well over these years.
And how you see, cuz we are, um, the Norwegian sovereign wealth fund is in a way in a somewhat similar situation. We have, you know, large listed holdings, and then the question is, should we go into the, should we be allowed to go into the unlisted market? What do you think? What do you think are the arguments for having the two in tandem?
I, I think that we have both learned, uh, from it. They have been operating quite independently, but we always have had in our communication from both sides, we have always talked to the relationship as a very good one. I think that operating, I think what we have learned from them is how do you operate, uh, in a private setting, and what are the important things there? I think they have taken a lot of the values that the way we have been owners in the public companies with them as well, and stand for the long-term ownership and trying to really push innovation, etc., etc., in them. So I think, yes, it has been good to be side by side. From, from my perspective, it's been really good. And, uh, I think that the question of learning is so important because you really have to see, and what has taught us one thing with EQT is that you can do things in a different way, and you can, being in a private setting, uh, you can also be more nimble in your relationship to the companies and stay much, much closer to them, uh, than if you are a minority owner in a big business.
You talk about learning. I'm just curious, you are PR at the Royal Swedish Academy of Engineering. Yes. What, uh, what are you taking from that and bringing into the system here?
I take that, you could say, we call it IVA. This IBA, this organization, has, it's the oldest engineering academy in, uh, the world. They have a very, very strong membership group, with, uh, immense knowledge in it. Everything that is being done in that group is done on a pro bono basis. By doing this, this organization has the possibility to help out in Sweden, so society, when difficult discussions are there about the future. I mean, for example, how should we think about our energy, uh, situation? What other policy measures do we need to do, uh, to make sure that Sweden stays competitive? So questions like that. So we, we engage in different projects, and our members, uh, can and will, uh, give their free time to help out in doing that. And then we have the possibility to have discussion with government and give our input into the political debate. So it really, uh, we, we often think about, in Sweden, we talk very much about triple helix, namely the relationship between government, business, and academia. And you could say that this organization, IVA, is really at in the middle of this discussion.
What's the key to creating this helix between government, private, and academia?
I think, uh, one of the key aspects is to be open. Open to the discussion, uh, open to that, uh, you try to bring in competence, uh, around certain questions that can actually be helpful for the development of the country. And having that openness toward, uh, listening to each other and taking some, uh, advice, hopefully, uh, into the process of decision-making for, for example, in politics.
Moving on to, uh, to leadership. Marcus, you are, uh, widely considered the person in this part of the world with the biggest Rolodex. And many of the people who listen to this call wouldn't know what a Rolodex is, but it was something in the old days which we had at our, at our desks, and you stuffed your business cards into it so you could easily find them. So basically, not a word for having a tremendous network. Why, why is network important?
Number one, of course, uh, opportunities that you may be introduced to. Uh, I think that the network and to understand what is actually happening around the world is for us, since we are close to businesses with global businesses, it is a very essential part that you actually have people that you can talk to in different parts of the world, ask for advice, listening to what is actually their viewpoints. It's very hard to do over a Zoom call. You have to spend time getting to know these people, getting to know them, uh, in times when, when you maybe not need their help, because one day you may need their help with something, and then it's very good to have that network.
And what's the key to maintaining it?
It's like everything else, Nicolai. It's like, uh, just hard work. But you also have to like that part of it, because, uh, at least that, that is something, you know, getting to know people with, uh, all these abilities is extremely stimulating.
What is it that you like with it?
The challenges. In my mind, the whole time.
Who are some of the most surprising, fun people you met lately?
Oh, many. Um, I met a composer the other day, a young composer in Sweden. I met one of the founders in Mistral, which is, you know, a French AI company, which is one of the, uh, most forward. I'm a lucky person from that point of view.
Would you take away, uh, from, from these things into business? Do you get inspiration from a lot of non-business related?
One thing that is, you know, we spoke about geopolitics, that's a necessity to hear what's going on. That's one side of it. But I also believe that, um, in this era of dramatic technological and scientific change, you really have to understand that the ability to use these technologies across different fields of interest is something that is, uh, very, very important. If you're not out there listening to those people who do this on a daily basis, and also see the same thing, it's difficult to understand that you do need to change and you do need to advance things.
I've heard you say that good leadership depends on the situation you lead through. Yes. But is there a common denominator when it comes to good leadership?
Sure. I, I mean, uh, the engagement, the, uh, the energy, the knowledge, the judgment, strength to carry on, also in difficult times, and lead people through difficult times, but also lead people in times of great expansion. That's why it's so important to have people, uh, in leadership positions who is also there at that particular time for a certain company, because sometimes you have to, companies need to go through a very difficult period. That may be a very different leader from somebody from a company who are in a strong, strong expansion phase.
Has good leadership changed, do you think, in the last 10 years? Does it take something else to be a good leader now?
I'm not sure, actually. I, I, I think that leadership, the qualities of leadership still remains to a certain, to to most extent. But I, I think that the way you apply it has probably changed.
In what way? With technology?
No, but I mean, think about some of these multinational corporations. They can actually do, they don't have to do all staff meetings by going to certain countries. They can do three all staff meetings over Zoom, without moving, and then they cover all the time zones. So it, it, it helps you, uh, to run the companies in a very different way. You can use, uh, you know, the, the corporate version of Facebook or whatever to communicate between different groups that work with different projects in in multinational corporations. So yes, you can apply these things in a very, very different way.
Do you think it's tougher to be a CEO now than what it was in the past?
I think it's, it's, uh, for a multinational corporation in a, for example, high technology company, the demands have gone up. Yeah. What, what part of it is tougher? I think, uh, the speed of change is a very big factor here. M. And, but also, you know, running a bank or running a pharma company, you have to keep your energy going.
What's the toughest time you have had personally in terms of businesses?
I've gone through a number of, seen a number of crisis situations. Personally, loss of family members is usually a tough thing.
How did you cope with it?
I, uh, have learned that you, you have to realize it's part of your life. You have to deal with it as it is. And you have to think positively because there are so many positive things in life. So it's a very, very important part of that to think positively and to see the many, many good things on what goes on.
It takes a strong mindset to have that attitude. But, um, how do you think about, um, developing leaders within the Wallenberg sphere? Moving people from, you know, one company to the other company. Is cross-fertilization very important?
Extremely. If we can do it, I think some of the great leaders are those who have, uh, the ability to have seen different things. You can see, for example, Björn Ekelund, who's now running Ericsson, did a very good job at Investor before that. And, uh, if you look historically into our group, the people who have been very helpful in helping the family over the years, they all did, uh, a multitude of things.
Atlas seems to be some kind of CEO factory.
It, yes, they've done, they've done really, really well.
And why? What is it with Atlas?
One of the aspects, I think, with Atlas is that they, in their corporate structure, they have pushed so much responsibility into different parts of the group. They, they're really very firm on people, even for small businesses, to take full responsibility. And that has created many good leaders in that company.
And for those of you who haven't heard it, we have also done a podcast with the ex-CEO of Atlas, where we talk about these kind of things.
M. Absolutely. Really, really, uh, fascinating.
And then you move them on to become chair after a while. How does that work?
That's been generally a very, very good thing, because having worked with some of these CEOs over many years, and then we've gotten to know each other, we know that we share values, which is very important when they take on chairs.
Chair roles. What makes a chair effective? What's the best chair you've seen, apart from apart from yourself, of course?
[Laughter] Uh, I've seen, I've seen many fantastic chairs. What makes them effective? I think the, uh, presence, you know, applying their wisdom and and experiences, really forward-looking, all knowing where things can go wrong, and see to, you know, to address those subjects with the management.
When you say presence, what do you mean?
I believe that, uh, good chairs usually engage themselves with the companies, uh, quite a bit. Even in the setting, I mean, this of course depends in which jurisdiction you're working, because in, in many, many jurisdictions, many capital markets chairs are much, much closer. They're almost half executive. But, in the Swedish or the Nordic way of doing it, then of course, we have non-executive chairs. But those chairs who stay very close to the companies, to the managements, I think tend to do very well.
In our part of the world, we split the chair and the COO role. Yes. Is that important?
I think that has worked out really well for us. Yeah.
And why do they still keep the other way of doing it in America, for instance?
Well, it's an interesting question because they seem to be doing quite well as well. And so there maybe not any column egg here. But I, I think that I think what speaks to our model, which is very good, is that also CEO needs somebody to talk to. And I think those relationships where CEOs and chairs have that relationship where, because it, running a company can also be quite lonely.
Absolutely. Absolutely. And, uh, therefore, I think that model works. It also works because, uh, chairs can both challenge and support when they get close. But that, you know, that of course demands that the chairs have enough time to spend with the companies and really understand what's going on.
Now, in, uh, in our fund, we have the view that one share should have one vote. But you don't quite share that view. Could you, you mind just explaining how you, how you look at it?
I look upon it this way, that it happens. I mean, at, at the base of it, it's a contractual right. These companies that have it have made an agreement at one point in time. Yeah, to have that. It has very often been situations where companies have been developed by by entrepreneurs who, uh, needed to go for more capital. And doing so, found that their presence and their possibility to influence was very, very important. And the, and the investors at the time, thought that also that was a very important idea. I think that in our part of the world, we have a very, very transparent system around this. You are free as an investor to buy the type of share that you want to buy. You can decide if you want to buy into that company or not. I realize that some people may not want to invest in that kind of company, but I, I think there is a very big question of contractual right, and how you, uh, look upon that as as an important factor of doing business.
Well, we typically vote against these kind of things, right? But in the case of the Wennergren companies, we don't, because it was in place when we bought the shares, and we went into it with open eyes. So, so we are, we are not making too much noise here.
Now, rounding off, um, we have a couple of, uh, uh, ways of, uh, relaxing in common. Sailing and cross-country skiing. Yes. Tell me about it, because I know you have a, see a smile on your face here. So why not?
The first time, uh, uh, no. What is it? It's, it's about the vast expanse, isn't it?
Yeah. Yeah. It's the vast expanse.
Yeah. Being on the ocean or being up in the, the mountains. And I find that to be, uh, very good for my mind, at least.
So I read a book on architecture, and one of the keys to good architecture is the combination of repetition and variation. And I think both sailing and cross-country skiing area have that.
I agree. And I, in addition to that, I think that, uh, some sports or some activities actually help your mind. Yeah. To think about something different than than what you usually do. And I, I do believe that is maybe the most important way to refresh your brain, is that you keep your mind on something different.
What do you read?
Many different things, actually. History, current situations. I'm actually reading right now a book on Swedish-Finnish relationship back, uh, from the 1800s to now. Very interesting, especially in the time that we live in right now.
And what's your advice to young people?
Stay curious, work hard, follow your interests, get a good boss.
Sounds like a good plan. And sounds like the people that, you know, the Wennergren companies have a really good boss in you. Big thanks for being here. It's incredibly impressive what your family have achieved over the last 150 years.
Thank you. And thanks for having me. Pleasure.
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