David (0:00)

There's two ideas in this book that are repeated. Marcus Wallenberg Jr. Prioritized investing in technology and surrounding yourself with great people. That is actually something that multiple generations of the Wallenbergs would repeat. And I've been telling you lately that there's a lot of similarities that I noticed between people like Steve Jobs and Jeff Bezos and Jensen Huang last week. And now I would add Marcus Wallenberg Jr. To that list as well. And it starts with Jeff Bezos's very first shareholder. Where Jeff Bezos emphasizes the importance of having the very best team. He wrote, setting the bar high in our approach to hiring has been and will continue to be the single most important element of Amazon success. You will HEAR Marcus Wallenberg Jr. Say something very similar to that. Jeff's focus on talent is very similar to this quote that actually found that Steve Jobs gave in an interview that very same year in 1997. This is what Steve said. He says, I think I've consistently figured out who the really smart people are to hang around with. You must find extraordinary people. The key observation is that in most things in life, the dynamic range between the average quality and the best quality is at most 2 to 1. But in the field that I was interested in, I noticed the dynamic range between what the average person could accomplish and what the best person could accomplish was 50 or 100 to 1. Given that, you are well advised to go after the cream of the cream, you want to build a team that pursues the the A players. That is exactly what Ramp did. Ramp has the most talented technical team in their industry. Becoming an engineer Ramp is nearly impossible. In the last 12 months, they hired only zero. 23% of the people that applied. When you use Ramp, it means you have the top tier technical talent and some of the best AI engineers working on your behalf 24, 7 to automate and improve all of your business's financial operations. And they do this all on a single platform. That means the longer that you use Ramp, the more efficient your company becomes. In the end of that interview, Steve Jobs added one thing. He said a small team of A plus players can run circles around a giant team of B and C players. From a customer's perspective, what does a team of A plus players sound like? It sounds like this customer review that I read which says that Ramp is like having a teammate who you never need to check in on because they have it handled. As you're about to hear, Marcus Wallenberg Jr. Pushes all of his companies to invest in technology that provide massive productivity gains. If he was alive. Today, he would use Ramp. Ramp's website is incredible. Make history's greatest entrepreneurs proud by going to ramp.com to learn how they can help your business today. That is ramp. Com. One more thing I want to tell you about before we jump into this episode is Vesto. A lot of my friends are using Vesto to see all of their company accounts in one view. So Vesto helps you connect and control all of your business bank accounts from one dashboard. I know the founder, Ben. I'm friends with him. We spent a bunch of time together. We've had dinner, we've gone on walks and I've offered to help him by introducing him to some of my other friends that I thought would benefit from using Vesto. So I called one of my friends and he said, listen, David, I will meet anyone that you want me to, but I will tell you, I have to tell you that we say no to over 90% of the software that we're pitched. And yet a week later I hear back and he said that Ben and Vesto are great and that they signed up. So I asked him, can you please ask your team to explain the benefits that they get from Vesto in their own words? So I'm going to read this text message exchange where his team now, in his own words are, in their own words, rather, are telling me and you what the benefit is that they get from Vesto. And it says it provides us the ability to view all of our bank accounts and loan accounts on one platform with a single sign on. It makes it much easier to grant access to users in one place as opposed to 20 different banks. So I text back, what did they do before Vesto? And this was the response. We have 20 plus different bank loggings across five accountants. We literally use 21 banks. So every bank has an account and a loan that multiple people need access and views to. Just to log in and see everything would take hours and all be in different tabs. So if you have multiple businesses, if you have multiple accounts, go to vesto.com and and schedule a demo with the founder, Ben and tell him David sent you. That is Vesto with a V Vesto. Com. The link will also be down in the show notes. And now let's get to the episode. Daniel Ek, the founder of Spotify, was kind enough to invite me to come to Sweden. And since I was gonna go to Sweden, I figured I'd wanna read and learn more about the most powerful family in Sweden. It's the Wallenberg family. It's actually 1-7-0 year old family dynasty. So the book that I want to talk to you about today is called Furthering a Fortune. Marcus Wallenberg, Swedish banker and industrialist and it was written by Ulf Osen. So Marcus Wallenberg Jr. Was known as MW. So that's. I'm going to refer to him throughout the entire conversation that you and I are going to have. I do want to jump right into his life. I do think there's a few things I should like some background I should give you about the Wallenberg family because he's the third generation and there's just a couple ideas that I think were laid like the foundation laid very early in the very early days of the family dynasty that Marcus definitely built upon. Although as you see, he was fine with the responsibility of continuing the tradition and expanding the dynasty. But he was much more of an like an innovator than an administrator. As somebody, you know, born wealthy, you might suspect that, okay, we're already rich, we're kind of just going to maintain it. He was not interested in that. He was interested in technology, innovation and drastically expanding the family fortune. Now there is a couple ideas that he never deviated from. So there, there's a line at the very beginning of the book where his actual uncle says, long experience in this bank has taught us that we must almost exclusively put our trust in ourselves. So the Wallenbergs, and this is mentioned multiple times throughout the book, they always had more liquidity than other banks and they did never wanted to put themselves or find themselves in a position where they had to rely on the kindness of outsiders. I don't think you survive and thrive really for 170 years without being relatively conservative and having like this financial fortress. Remember this for later on because when MW is a young man, his job, one of the jobs in the bank and the family bank is the fact that he was handling all the loans for Ivar Kruger, which I covered all the way back on episode 3 48, which was the biggest, one of the biggest, maybe the biggest financial scandal and financial collapse definitely in Sweden's history, but in economic history in general. And it is due to the conservative and prudent nature of the Wallenbergs and what they taught, you know, the third generation that they wind up. I'll tell you about this later, but it was pretty crazy. They actually held more collateral from Kruger than liabilities where a lot of other banks. And the main competitor for the Wallenberg family was actually his life and work was destroyed by his association with Ivar Kruger. So this idea, it's like, hey, you want to have a ton of liquidity, more liquidity than the other banks. And you don't want to put yourself in a position where you have to rely on the kindness of outsiders. Another thing that is in the book, and I also got to meet, while I was in Sweden, some people that had worked with the Wallenbergs for many, many years. And this came up over and over again, the fact that the family rarely, if ever, sold. In many cases, there's a bunch of problems in the businesses that they own or they invest in, and they wind up owning these for decades, in some cases over a century. And what they found is, like, in time, a lot of these problems can be solved or work themselves out. So it says the bank did not content itself. And when you hear the bank, you really have to think of the family, which, again, there was no difference between the way Marcus thought about it, the way his father, the way the rest of the family thought about it. There's no difference between the bank and the family, the business and the family. The family is a business. The business is a family. The bank did not content itself with writing off the lending losses, but continued to maintain its interest in its debtor companies in an attempt to rescue them and at some future date, recover as much of the bad debts as possible. So, again, I wanted to bring that up right up, because they did this before MW was born. And you'll see MW does this, and he actually carries on the tradition and really rescues, restructures, combines a bunch of companies that the family owned for an extremely long period of time, before MW was born, before he played a role, in fact, in the. The. The family business, the family bank, there's multiple examples where they tell the. The Wallenberg family tells the employees that are working for them that this is a family business. It will be owned and controlled by the family. And again, they repeat that we must endeavor to build up as large reserves as possible in the bank. And in case you're listening to this and you want to perpetuate a family dynasty, I'm not going to talk about the patriarch of the family that the founder of the family dynasty. His name's A.O. wallenberg. But in case you're interested in perpetuating family dynasty, you might want to have lots of kids, because A.O. wallenberg had 21 kids. So I want to jump right into MW's life, and you're gonna see traits that he had when he was a kid that he continued his entire life. Uh, they called. There's a. There's a funny line in the book where they said that MW was a self confident five year old. Uh, he showed signs of being argumentative and strong willed from a very early age. He had a great need for independence and control. Remember, he's a kid, he's like this his whole life. And he was way more defiant than his siblings. Uh, they also said that he often got his own way thanks to his charm and powers of persuasion. So the family has essentially set up a track for all the K kids very early on, which for the most part, MW agrees to. He's like, yeah, okay, my, my, my fate, my destiny is to work in the family business and to perpetuate this dynasty. But he's also going to have input and really push back on his father, even though he had a great relationship with his father. But I want to give you an idea of like the kind of family we're dealing with where they really, there was no ceiling on their ambition or what they thought they could do. So they actually the. The school. After he does some brief military training, MW is gonna go to the school. This, the school is the Stockholm School of Economics and it's created by his family. And the way I was thinking about this is when you, when I went back and I, you know, I reread my highlights over and over again before I sit down and talk to you. And the second or third or fourth time I read this section, I was like, oh, you know what, what's really happening? The way I think about what's happening is the Wallenberg family is starting this business school, right, As a way to grow the entire piece and then take a percentage of that growing pie. So what do I mean by that? Growing the pie? They're interested in making more business people, so they make more businesses. If there's more businesses, then they're going to own equity in some of those businesses and then have a relationship, the family bank is going to have a relationship with those businesses. And MW's uncle was the one that started it. And he says it is for knowledge and training that will raise the members of the commercial sector from the level of shopkeeper, shopkeepers and merchants, and allow them to attain the position of respect that they occupy in other countries, trying to build a more sophisticated financial and business base inside Sweden. He said, this is my first, last and only wish with this whole idea was to promote merchant trade. And so then I got to bring up for the first time, and it won't be the last time, there's a bunch of very really important personal Traits that I think MW had, it's. That's mentioned, you know, when he was a kid, teenager, when he's 80, and he's still pushing the pace and outrunning many of the young people around him, is this massive competitive drive, this insane level of energy. He's constantly wanting to push things forward. He was addicted to technological change and investing in technology up until the day he dies. But what you realize is that he. The way he approached business, he approached everything that he did. And so one of his great loves, really, the one love he had in his life was business. Outside of. Of business, though, was tennis. To the point where, you know, he becomes a Swedish doubles champion. He plays at Wimbledon, for God's sake. But there's no he. There's nothing that he does that I would say that he does on, like, a recreational level. He was not trying to be amateurish at all. He, in fact, he took the same intensity he applied to tennis, he applied to his work. And the same intensity he applied to his work, he applied to his tennis, he applied. He's very intense. He's energetic, he's disciplined, he's physically fit, and he's very consistent. So it talks about the fact that he would engage in intense physical training. So it said tennis involved physical training, which made him conscious of the importance of taking regular exercise. He never abandoned his habit of doing physical exercises every morning, which stood him up in good steed for the hectic pace he would keep throughout his life. Later in life. He once described himself as a sportsman who would become a bank manager in his later days. An important explanation of his successes in various fields was his intense competitive drive. He loved to compete and believed in competition as a principle for development and progress in business and in life. And so one of my favorite parts about the book is the fact that there's all these letters in the book back and forth between M.W. and his father. And you see the advice that his father has, how MW kind of pushes back. But one thing that he doesn't push back, and I think this is actually good if you're born into a situation like he is. He writes to his father at the time, MW is about 21 years old, and he knew that he was going to go into the family bank right now. He's going to expand it way past finance and go. He really thought of himself much more as, like an industrialist. He was much more interested in industry than he was finance. But he writes to his father something that's very interesting, and I think there's a side idea here that you and I can benefit from. He says, I do grant you, father, that you were right about my career being determined. There is but one possibility to make progress, to gain knowledge, in other words, to go forward. So at the very end of the book, there's a line in the book that says, MW was not given to introspection. This is one of surprisingly, like one of the most controversial observations that I have just about reading all these books. Many of the great founders once that they know what they want to do, I would argue that they actually have very low levels of introspection to like almost no introspection. And the reason that is important is because low introspection equals more action. And you see the importance of action and moving forward with the way he ends that letter. These are very, you know, Swedish people are very typically very reserved. I was shocked at how many of the letters that MW is writing. And he just used exclamation points way more than I expected. And he ends that letter to his father forward, exclamation point. And one thing that MW did not have to think about was that the family was something that his father taught him and that his father's father taught him was that the family and the bank were one in the same thing. And that's definitely how MW thought about it. Now, once you're done with your military training, now you've finished with the Stockholm School of Economics, this was very fascinating. He's like, okay, I'm gonna map out. You can't just come into the bank. We're not just going to make. Give you a, a position of authority or, you know, put you right in the top. The, the way the family trained the next generation, I absolutely loved and I've seen this a few times too. They insisted that they have to learn from the ground up. When. When I want to read to you, if you listen to a few weeks ago when I covered the bio, two biographies of Hetty Green, who was the single largest individual financier in the world at the time. The. The way that she wanted to train her son the next generation. You know, cuz Hetty Green was fifth generation. She, her family was rich for five generations before her. She said, okay, I want you to learn the railroads and you're going to learn it. You know, even though I own the railroad, I could make you CEO anytime I wanted or president anytime I want. No, you're not going to do that. You're going to walk the goddamn tracks. You are going to literally going to pull weeds and clean up. You're going to do every single job. You are going to learn from the ground up. So what MW's father does is first of all they have phenomenal network. Just wait till I read the, the, the banks that he's going to become a trainee at. But they, he literally starts in the mail room, he starts doing the lowest level possible. So it says his father had already started to plan the next step in his son's carefully mapped out career period, periods of training with foreign banks. The work was monotonous with all the manual duties that formed part of everyday banking at the time, such as sorting, checking, counting and writing everything by hand. It provided. But this is why he's doing this for his son. It provided a basic insight to the workings of the financial system. So MW's father is sending him all over the world training in all these other banks. See how they do it, right. He's doing it. So he learns from the ground up. But he's also. This is something that is repeated over and over again. It's this maximum that I, I've said to you before, relationships run the world. His father talks about the fact that personal contacts were actually even more important, an even more important reason for training abroad. And I think Marcus Wallenberg Sr. Would agree with that. Over and over again he's talking about, you need to prioritize the personal contacts. I'm going to read this great advice that he gives to his son again appearing in one of these letters that go back and forth between father and son throughout the book. It is necessary to behave in a way befitting a well mannered member of an established family. When MW was about to leave London, his father stressed how important it was to clear out in a decent way. You should pay visits or write to all of those who have shown you some kindness. The most lasting relationships are created through paying attention and showing gratitude. You should take a couple of extra days doing that. So it is when MW is in his early 20s that his dad sends him all over the world to study and to train in a bunch of different banks. Now I'm going to just give you this list because this is remarkable and it really does speak to the relationships that the Wallenberg family cultivated and they did so over generations and they still do them do so. So he trains. MW is going to study and train in Peak Tay, which is in Switzerland. This bank still exists 220 years after founding. Then he's going to go move on to Lazard or Lazard maybe in London that was founded 176 years ago, in this bookshelf behind me, I have a company history of the Lazard bank or Lazard bank that I'll eventually get to. He then goes to Brown Brothers in New York and then Credit Lyonnae in Paris. And one thing that would have been obvious to MW about the fact that relationships on the world during his training was the fact that Lazard they actually, because of their long established relationships with the Wallenberg family and the scb, which is the family bank, they. Marcus Wallenberg Sr. Was actually able to persuade them to persuade the management of the bank to take his son on as a trainee, which was totally against the bank's procedures and principles. And so up until this point, MW has kind of followed the path that his dad wanted him to embark on. And then we see his dad finds out really early and he probably knew this from when he was a kid, that he's going to exert his own will. And so he writes to his dad, hey, guess what? I met a woman, I love her and I'm getting married. And so obviously if you're trying to perpetuate a family dynasty, who your kids marry is extremely important. So there's a series of letters that go back and forth about this impending marriage. And again, I'm going to cover it to the chase. Like MW now and throughout his entire life is going to get what he wants. He is not going to be allow himself to be controlled by anybody. But it is fascinating where you see his father really trying to counsel his son and just how he thinks, like he's writing a letter to son about how he actually thinks about marriage, that, you know, when you're in your early 20s, you're not going to have this perspective. And so his father writes, it is the most natural thing in the world that a young man takes a fancy to a young lady. However, it's important to decide whether or not his fancy shall be decisive for the rest of his life. When young one tends to believe in the one and only chance experience will modify this opinion. A marriage is not only based upon a fancy. Once the first outburst of emotion has passed. A happy marriage requires a common outlook on life, shared interest, as well as mutual respect and tolerance. And then, true to his personality, when MW writes to his father about wanting to get married, he essentially just presents it as a fait accompli. Like this, I'm, I'm making this decision, it's going to happen. It wind up does happening. But again, his father writes him in return. He says, he's like, I'm going to approve, you know, of your decision, but the approval. The approval is not given without reservation. So he says, I approve of your decision and congratulate you wholeheartedly. However, I do consider that a deferment is appropriate so that both parties have time for reflection. I'm more than happy to see my boys getting married and continuing our esteemed family. Experience shows that it is important not to make the wrong choice and be misled by one's feelings. Further reflection is recommended. And then marriage is not the only place that he's going to push back on his father again. He's. He was MW from time he's young till time he's old. He's was way more interested in industry than he is finance. So he's like, okay, I've studied in these banks. I don't want to study in the banks anymore. I want to go out and see companies building things. So his argument to his father was, our own bank is heavily engaged in industry. It would therefore be better to spend a month and a half gaining experience in an iron foundry. An iron foundry, a company in a forestry sector, and an electrical company. After that, I could complete my bank training and then go to the United States and visit more iron, steel, and electrical industries in the United States. MW felt it necessary to demonstrate a certain amount of independence towards his father. After all, should not MW himself ultimately take the decision on his own future? So the book talks a lot about what they call the Wallenberg family sphere, which I absolutely love that description. And in the most simple terms, it is the bank, the holding company, which is called Investor AB, which was founded in 1916, is public and still exists to this day. In fact, it is the second largest company in Sweden behind Spotify. And then what I would call the family office, which is really a complex web of companies and holding companies that manage the family fortune. You can actually see some of this structure on the family's website. It's wallenberg.com but it's important for me to point out that this is a very, like, oversimplified way to think about it because. Because they're. They have just this huge network of companies. And you'll see this as, as we continue to go through the book, just how complicated it can get. But I want to read this section to you because this was what was taking place when MW starts his career in the family business. It is important to remember that the banking business was only one of the fields of activity in which the Wallenberg Group was engaged. There were at least two other principal activities which came under the family umbrella. The family was directly involved in industrial ownership, first through the rehabilitation of weaker companies in order to recover loan losses from their bank, secondly, in the development of new companies that had the potential of becoming valuable customers of the bank in the future. Much of their industrial activity was carried out through the holding company, AB Investor, again, the one that still exists this day, and its subsidiaries backed by SEB, which is the family's bank, backed by SEB's capital resources. And this is a key point here. Although dominated by. By the Wallenberg family, the investor group of companies was formally kept separate from the bank. So their bank and their main holding company is technically separate, but they still control both. A third line of business, alongside the banking and industrial operations, was the management of the family's assets. Considerable growth was also achieved by the use of finance and holding companies that could carry on financial activities on a larger scale using techniques not normally found in banking. That's why they have all these holding companies. These companies were known as, quote, unquote, associated companies, which meant that they were formerly independent of the bank, but were still closely linked to it. Many of them were foreign companies enjoying tax and foreign exchange advantages. And the reason I think it's so important to, like, try to simplify the family sphere, okay, you have the initial source of the family's wealth being the bank, the way they grow, the wealth being the holding company. And then you have all the private, you know, the family office per se, of the actual, like, the management of the family's assets. And I think those are the three primary, like, components of the sphere. Now there's probably an unlimited amount of companies within them. Like, let me give you a perfect example of why I think it would be so difficult to actually put it. Put a actual price on, like, how much wealth does this family have? Any. And this goes for, you know, anything that's been compounding for a long period of time. So later on the book, they're, like, fighting with the eventual Nazi government in Germany over one of their assets. And this, to me, this is like, the perfect example of just how complicated and how widespread their family sphere went. So the Wallenberg family owns a plantation in Ecuador. That plantation in Ecuador is run by a German limited liability company. But the main, the principal owner and the main shareholders is the Wallenberg family in Sweden. So an Ecuadorian plantation run by Germans, owned by swedes. And so 300 pages into this book, when you're reading about all these different companies, I mean, MW is gonna sit. He's on 80 different boards. He's like the chairman of board of like 30 something companies. I think we'll get to that in a little bit. But the note I left myself when I got to this section is like, how many companies do they own? It's almost impossible to know. And so that brings us to two main reoccurring themes is the fact that MW wants control and he has an older brother. And there's gonna be lifelong tension with his brother. In fact, he, he said later on that whenever he decided anything in his brother's absence, his brother would then come to the next meeting and try to change it immediately. So there's going to be a bunch of conflict between those two for control throughout their entire lives. NW MW is the one that winds up winning that battle. The second thing that is something that reoccurs over and over again in this story in his life is the fact that he was extremely interested in technology. Again, he did not view himself, you know, he was not an administrator, he was an innovator. That's was really important to him. He stressed in his talks and in his management of his companies on the importance of technology. He says, I imagine that economics quite simply means making use of technology. It is always possible to build up new industries on the basis of inventions. We can only express the hope that we shall see new epoch making inventions emanating from Sweden that will be the benefit of the world. And then his next sentence is why that was important to him and then to his family. If that comes about, we may rest assured that the necessary capital for their exportation would be made available within Sweden from the Wallenberg family and from the Wallenberg family bank. So let me actually give you a practical example of this, of the idea of moving into a place where there's technological headwinds. Okay. And this idea that I mentioned earlier, that they rarely if ever sell and they wind up just being having a very long term point of view. And a lot of the problems that they have inside companies because they never sell, they're able to work through given enough time. And so the, this is really a family case study for how problems should be handled inside of their companies. And one of the most surprising things that I learned from this book is they really try to avoid letting bad investments die. There's a, you know, some people believe that, you know, spend all your time on the big winners, kind of cut your losses. There's really, you know, no wrong way for this. It just depends on what you want to do. But they, the Wallenberg family, they spent a ton of time not letting their bad investments die. And because they have such this long term horizon, they're able to wait out for better times and opportunities. So there's this company called Atlas and it says it's perhaps the best example of the perseverance of the Wallenbergs with regard to its industrial investments within the family. This case has traditionally been regarded as, as a model of how industrial problems should be handled. This is where MW rapidly learned practical crisis management under the supervision of his father. Atlas was a company that had been founded in 1873 by the patriarch of the family. This is founded by A.O. wallenberg in 1873. The reason he started the company is cause in 1873 the tech, the main technology of his day was, was the railroads, right? So they start Atlas for the purpose of producing equipment for a network of railways. I'm going to pause there. There's another maxim that jumps out when you study this family and that's don't let the money escape. So if you're going to start, if, if AO Wallenberg, any Wallenberg started a company, who do you think is going to be that company's bank? SEB was the Atlas's bank. Atlas became the largest mechanical engineering company in Sweden, taking up a lot of the bank's management's time and entry as well as a disproportionate share of its loan portfolio. The company's first crisis occurred after the 1870s with the decline of the railway industry. So what did they do? During the 1880s and 1890s Atlas was restructured two separate times. So this idea of restructuring, consolidating and combining is something that the Wallenbergs do over and over again. Remember, they're not going to sell. So they, they wind up changing from producing equipment for railroads into the manufacturing of air operated tools and compressors. So around the time that Atlas switches from railroad equipment to pneumatic air compressor tools, okay, Marcus Wallenberg Sr, MW's dad, they found, the Wallenbergs found companies too. They make investments, they buy companies, they, they start companies. He founded a company called AB Diesels. The idea was, hey, we're going to manufacture engines based on Rudolph Diesel's patent, right? What they do is like, hey, we're going to actually consolidate Atlas into AB Diesel. So we're going to combine the companies that combined company does well for a few years in large part because this is during World War I and there's a huge demand for their products. After the war ends, there's a depression in Sweden that hits Both companies very hard. So keep in mind this is 50 years after the founding of Atlas. They're still in control of the company. They were thinking, okay, maybe we need to close down the business completely. They, they decide not to do that. They decide to restructure it and then they have to lay off a bunch of workers. So they go down from about 900 employees down to 300. They restructure the company, they write down the shares. They still have full ownership and control. So it says the family was again prepared to wait for better times. That is a very important line. Because they have control and because they have financial resources and the long term. They have a long term perspective. And they always had, they can wait for better times. Now what they realize is, hey, our compressor and air compressed tools division shows the greatest potential for growth and it's being pulled down by this diesel, diesel engine division. And so another thing that you'll see the Wallenbergs do over and over again is that's fine. We're not going to sell the company. We're just going to drop that bad business line and then we're going to find a market that provides tailwinds. And this is what happens. The profits came instead from air operated tools and compressors, a market sector that appeared to be expanding. Before the decade had ended, diesel engine manufacturing had been closed down. And the march towards a position for the company as a world leader in the area of pneumatic technology had been initiated. By investing in the cutting edge of technology and the international marketplace, NW chose a direction that would in the future be central to his industrial philosophy. Okay, moving on to another idea that the Wallenberg family repeats over and over again. The importance of picking who you associate with carefully. I'm going to start with an example of somebody that did not do this and it winds up destroying this guy's life and work. This is the section on Ivar Kruger. It says, Ivar Kruger became very closely associated with Oscar Rydbeck, who had headed this other bank. I'm not even going to try to pronounce since 1917. And who was the only person who could really compete with Markus Wallenberg Sr. For the title of Sweden's leading banker during the 1920s. Again, the reason this speaks to the importance of picking who you associate with carefully. Ivar Kruger is going to destroy this guy's life and work. The exact opposite is going to happen to the Wallenberg family. I mentioned earlier that MW managed the Ivar Ivar Kruger financial disaster extremely well. The family bank had refused to loan Kruger more money before his empire collapsed. And when it did collapse, the bank actually had more collateral than liabilities. I do think Ivar Kruger is very important to study, but I already did an episode on him. If you're interested in learning more, listen to episode 348, which is about this book called the Match King. Ivar Kruger, the financial genius behind a century of Wall street scandals. And I think in more ways than one, the Ivar Kruger collapse actually demonstrates the shrewdness of the way the Wallenbergs operated their business. So not only were they not taken down or destroyed by them, they actually, as a result of the collapse of the Kruger empire, the Wallenberg Group was drastically expanded. And I'll just give you one example of this. At the time where Kruger dies, some people think it was a suicide, some people think he was murdered. But Ericsson was a very, very precarious situation because Krueger was a majority shareholder in Ericsson. And this again combines with another idea that the Wallenberg has is this extreme long term outlook and the way they, the Wallenberg family operates in this really long term way, they actually still control this company, Ericsson, a hundred years later. Ericsson is jointly controlled by the Wallenbergs and this other bank called Handelsbacon. And they both acquired their voting strong A shares and thus control of Ericsson after the fall of Kruger. And so before I move on and introduce this idea that they don't let the money escape, which is very fat, was very fascinating to me. I want to put the notes from the book down real quick and I want to just give you an update on where the Wallenberg family is today. It says the Wallenberg family is one of Sweden's most prominent business dynasties controlling a significant sphere. There's that word again. Significant sphere of influence in Swedish and Nordic businesses through their investment companies and foundations. The core of their business empire centers around Investor ab. This is what I mentioned earlier. It's the second most valuable public company in Sweden right now behind Spotify. So this is the way they describe Investor AB. It's their main investment company founded in 1916, which holds large ownership stakes in major Swedish multinational companies like Ericsson in telecommunications, Atlas in industrial equipment, ABB in engineering, AstraZeneca in pharmaceuticals and SEB in banking. The Wallenbergs are known for their long term investment approach and active ownership style, often placing family members or trusted associates on the boards of companies that they invest in. They emphasize substance over appearance and long term value creation over short term gains. I'm going to read One more thing before we go back to the book, which was. Just blew my mind when I started reading about Marcus Wallenberg Jr. Before I read his biography. MW's impact on Swedish industry was so substantial that during the 1970s, Wallenberg family businesses employed about 40%. A single family employed about 40% of Sweden's industrial workforce and represented 40% of the total worth of the stock market in Sweden. Now, I wanted to read that to you because I think this idea. And again, I took this idea from the book and just compress it down to a maximum for you, and I don't let the money escape is one way they do this. So your preferred partner, right, you have this network of companies who knows the count. Even if they're separate legal structures, they're, you know, heavily controlled by one family and people that they trust. It's your preferred partner for every single thing. Should be. Should be inside the Wallenberg sphere. So they take control of Ericsson, okay? They wind up going to the government of Finland, and the family bank, scb, says, hey, we are going to loan you, government of Finland, $4 million from our bank. So you can then spend that money that came from our bank and give it to Ericsson so they can expand your network, your telecommunications network. And then Ericsson, you're going to have an agreement with SCB that we get at least 37.5% of all of your banking business. Don't let the money escape. Their associated companies almost always had to use the family bank. Now, without a doubt, since this is the biography of Marcus Wallenberg Jr. Of MW, right, he's been the main character, the supporting character, the most other important character in this book is, without a doubt, his father. And his father's life motto actually becomes the family's motto and is still to this day. It's on their website over and over again. It's also in this book. It translates from Latin. It is to be, not to seem. And one way he described it to his sons, because he's about to pass away. And then we're going to get into really how his sons are now writing back to each other to. To their friends and to their associates about the impact that their father had in their lives. But the way he described it to his sons was it was the importance of being sincere and true to oneself. So this part is absolutely incredible. I'm gonna read the whole thing. I'm gonna give you my outline, my notes, before I read it to you. Number one, admiration for his father. Number two, the importance of innovating and creating something new. Number three, his idea that we need to be epoch makers. Number four, the traits that MW most admired from his father. And number five, the importance of. Again, this is repeated. They just have a handful of ideas that they repeat over and over again like everybody else. Surround yourself with great people. This is something the Wallenbergs repeat. So now MW is writing right after the death of his father. He said, you probably know better than most people what a wonderful father, friend, comrade, and mentor he was. And the strength of the ties with which we had developed with him. He has left a great void. But his spirit is so strong that it will live on forever among many of us. What MW inherited from his father and turned to his own advantage was the ability to create something new. For this is now how MW thought about this. For the sake of civilization, I sincerely hope that the epoch of bold and constructive innovation has not come to an end with the passing away of my father. Innovation goes on constantly and is stronger than any regulation. The fact that he was often seen as the soul of an epoch or regarded as an epoch maker was probably due to his unusual qualities. Should other men of the same caliber emerge, I believe they will also be seen as epoch makers. MW continues to describe his father. He was extremely versatile. He had a phenomenal memory and was very knowledgeable in all kinds of sciences and literature. He enjoyed music and knew about different technologies, and he mastered languages as well. There's all these exclamation points again. I'm really surprised by these very reserved Swedes how often MW used exclamation points. I do the same, so I love it. He was very interested in history and would tell stories about his various companies and about the difficulties he had encountered. He was talented, first of all, in terms of wisdom and intelligence, but he also had great judgment, industriousness, energy, and he also enjoyed good health and had a sense of responsibility. Really the reason I'm reading this to you, because he's describing his father. But now that I know the full arc of MW's life, you could use the same description of him as well. He often used to say, I find it difficult not to intervene when I see things going wrong. And one thing that I think is very important is that he was very good at picking good collaborators. And so with the passing of his father, this is not going to surprise you. Based on the personality and everything you and I have discussed up to this point, he's gonna become. MW is gonna become the most prominent and powerful person inside the family. Even though he's the second son. That is why the book is called Furthering a Fortune. And the way he furthers the Wallenberg family fortune is because he had this obsession not with finance, but with industry. And I'm shocked at how much of the book is covering the restructuring, reviving and combining of all of the different companies that they quote, unquote, invest in. But really they're like, I don't think of them as investors. They are very much like operators, almost like co founders in a lot of these cases they're on the board. They, they wield a hell of a lot of influence and control. And so MW is talking about the fact that, you know, they, if you own something for a long period of time, it's given, it's going to have ups and downs. And he talks about their approach to fixing these ailing companies. So he says first the bank's management examines the company's position and they identify where the true losses lay. Then, with the help of a very realistic approach, a judgment has to be made as to whether the company could be able to succeed if it was given a fresh start. So sometimes that is combining a company, sometimes that's shedding business units that were not performing as well. Sometimes it means writing it down and recapitalizing it. But then he says, then the company's bank, right? This is what I mean about they don't let the money escape. The company's bank must often become involved on a long term basis and in the interaction, interaction between the family bank and the company's management. This is what MW says over and over again. The personal element of the relationships was the greatest importance. He goes back on to why relationships are so important. Let's say we have an ailing company, we've recapitalized it, we've combined, we've got new management, we've done whatever we can. Now what happened? Now what do we do next to make it grow? The management of the bank, which you can think of as the family right often committed itself to trying to secure markets, meaning customers, further resurgent company through judicious use of our contacts. And so here's a description of some of the ways that MW implements and exerts his influence. Again, they believe Wallenberg's belief and NW believe in long term and active investment. When he became the managing director of the bank, he was able to mobilize all of its resources. He established a system of active ownership. What does that mean? This is what he did. He hired a staff function for the gathering of information. Economists and technicians were recruited. A legal department employing professional lawyers was set up and files on potential managers were kept and so on. So he's essentially helping them recruit as well. When you go through this whole section, I was trying to summarize all the different things that he was doing here. I was like, wait a minute, this guy sets up a business inside of a business, which is the bank, that is in the business of managing businesses. That's really what he did. That is not a short term and passive investor. And then he goes about marshaling his leadership and his storytelling abilities because him and his brother have again, they have this like dynamic tension over and over again. His brother is the administrator, he is the innovator. And so there is a family motto that they would also have is to shift from the old to that which is coming. Which we saw, remember, go back to the case study on Atlas, right, You have this, this company founded by A.O. wallenberg in the 1870s, that they then manage and successfully shift from the old, which is the railways, all the way to diesel engines, all the way to being the leading company in, you know, pneumatic and air compressor tools. And so he's writing a letter to his brother and this is what he says. This is. He's expressing his views on enterprise and development. So he says to sell a railway in order to buy into airlines. In other words, to shift from the old to that which is coming, which has been the motto for the business activities of early generations of our family, is the only tradition worth caring for, in which our ancestors would like to see us maintain. MW was not shy. He was a very direct person. He was not shy about saying that he thought he was better suited to take care of the family's industrial traditions. We are expanding not just from a bank. We have all kinds of businesses. These businesses are growing rapidly. This is in between pre and post World War I and pre and post World War II. You have these massive economic explosions and MW is constantly criticizing. He says his brother is too passive and he's more of an administrator than an innovator. There was without a doubt a difference in their temperaments. MW was impatient, curious about technology and untiring in his following up on business matters. Whereas Jacob was often analytical, Too analytical, in MW's opinion, frequently delaying decisions and giving freer reign to executive managers. And the reason I think this part is so important, I wanted to bring out too, not just to talk about the differences, personalities between the two brothers, but what is very obvious. Think about the description of a 5 year old MW that you and I talked about now, you know, he's 40 years old, 45 years old. Where we are in the story he's doing. MW is doing exactly what I feel Charlie Munger would tell him to do, which is you need to follow your natural drift. And you see his natural drift manifest through his personality, through his actions. You also see when he plays golf. I love this story. When NW played around a golf, he would aim straight for the green. Even if the course were difficult and curving, Jacob preferred to hit two safe strokes. Now remember, MW's father is dead. Go back to the advice that he had his son. Hey, you're young, you're excited. You met this, you know, sexy lady. You have all these feelings. You know, you gotta have a calm head. His father's passed away. M.W. gets a divorce, and then he does one of the two of the craziest things I've ever read about. And one indication that his first wife and him were not going to last very long is because one of her favorite. One of his first wife's favorite expressions to repeat is, there's more to life than business. Not for mw. Now, here's two crazy things. First of all, N. W is going to marry or steal the wife of the king's nephew. Okay, this goes back. Remember, he was having a really hard time, and not even a hard time. He wasn't. I guess he might not even trying. He. He would not. He would refuse, like, compromise for, like, convention's sake. And his dad, you see his dad earlier trying to, like, counsel his son through letters and conversations. Just like, you know, you're certain things are expected of you. You're kind of acting like, you know, more willful, a little wild than. Than expected. So NW goes on a transatlantic cruise. There's a bunch of people leaving from. From Sweden. They're going. They're all going to a wedding in America. And on this cruise, when his wife is pregnant with their third child, by the way, who she stays back in Sweden, he meets this woman. This is going to wind up being his new wife. His wife is going to be Marianne Bernadotte. Who knows if I'm pronouncing that correctly at the time. Marianne is married to Count Carl Bernadotti. Count Carl is the son of Prince Oscar, who is the brother of King Gustav V. So despite the fact that they're both married, right, they wind up falling in love. And it says they prepared to dissolve their marriages quickly in order to unite. And keep in mind, divorce says divorce was still unusual among members of the establishment. If divorce was Frowned upon by the Wallenberg family, which it definitely was. It was a positive scandal for the Bernadotti family. A member of the royal family had been abandoned by his wife. And it gets even more awkward. MW used to play tennis with the king and now you have just stolen the wife of the king's nephew. Needless to say, I got a good chuckle out of this next sentence. It took some time before MW and his new wife were invited to the royal palace for dinner. That is the first wild thing that he does in his personal life. Here is the second. It is very highly likely that MW winds up setting up the next marriage for his first wife because MW's first wife marries a close associate of the Wallenberg family. His ex wife marries this guy named Charles Hambro. Charles Hambro is a member of a well known family of bankers. The Wallenberg bank owned shares in the Hambro's bank. And MW and Charles knew each other. MW's children would later say, jokingly or not, that their father had probably arranged his wife's second marriage. And I think the thing that ties all this together is really just like MW gets what MW wants and so he winds up wrestling control of the family bank from his brother and every single thing that he wants to control, whether it's the family's industrial holding company, the bank, anytime he wants to control something, he winds up getting control of it. So from here on in, for the rest of his life, he's going to push the pace up until his 80s, he works until he, he dies. And in fact, he's like training all the young people around him and they just cannot believe the amount of energy that this guy has. So I want to go over the very unique way because granted he really has no regard for convention, are just continuing down a path just because somebody else in his family beforehand continued on that path. In everything he does, he injects some kind of new idea. So takes over the management of the family bank and he institutes this thing called he calls morning prayers. So he gathers his top people and each of them would give an account of their respective areas of responsibility, report major individual transactions, and exchange general information. In this way, MW could keep abreast of developments within the bank and be at the center of the flow of information. So it's kind of like an analog low tech way. If you listen to the Jensen Huang episode I did last week where both MW and Jensen and a lot of history, great entrepreneurs, they want unimpeded information and a lot of it. And so Jensen has this idea where he's like, hey, every single person in the company, you're going to write, I think once a week this top five things, this T5T email, right? Top five things, you're gonna put in bullet points. I'm gonna, you know, read hundreds of them every week. And I'm gonna have this unimpeded flow of information. MW's analog version of that is I'm gonna gather all my people together and every real quick. In many cases, they, they mentioned the fact that these meetings go really fast, like 15 minutes, and I'm gonna get this unimpeded information on a daily basis from the people in my company. Another thing that was very unus, given the industry that they're in and how reserved the family was. MW is the first person. He actually starts advertising the bank's services publicly because he wants to grow. And so it says in an early, in the early 1950s, the bank, which normally took a low profile with the media, advertised that it was at the service of private enterprise. He starts making the bank invest heavily in technology. And so in technology, their day, they have these punch card machines. So he buys a bunch of punch card machines and then all he makes sure that all accounting transactions inside of the bank have to be no longer done by hand. They have to be done on the technology of their day, which is the punch card machines, right? So this result, all accounting transactions were transferred to punch cards, which led to a dramatic increase in efficiency. Productivity doubled. Twice as many transactions were carried out by a workforce, workforce that only had to increase from 425 employees to 550. So they add, you know, 125 employees, but they do double amount of work because of MW's insistence that you need to invest in technology, because we want to push these massive increases in productivity that technology enables. And so remember, he wrestled control of the family bank from his older brother. And we're going to get a lot more details on how he decided to run his business. There's obviously a lot of differences between his brother Jacob and him, but there's also going to be a lot of parallels. When I got to this section, I thought a lot about Steve Jobs and Jensen Huang. So it says MW was a highly visible driving force in the bank. Jacob had adopted a low profile. The employees did not see much of him. MW had a different way of communicating with the staff. He got to know everybody. So I would say he's. MW is a big proponent of management. By walking around, he locked. He liked to walk around the office asking what the different employees were doing, the pace of the work in the bank increased. MW would express his dissatisfaction with somebody in front of other people. So remember, just like Jensen was a big proponent of public criticism, talked about the fact that you should criticize publicly because it should be a learning experience for the entire company, if you criticize privately, only you and that individual employee actually learned the lesson. And Jensen was optimizing, just like MW is optimizing for the overall learning of the entire company. MW would become irritated and lose his temper. But there was a often a sound intention behind his outbursts. He considered it useful for others to understand what it meant to work for him. That reminds me of Jensen as well. Not keeping him informed of what was going on was a mortal sin. That reminded me of Jensen as well. It was not up to the subordinate to judge what needed to be reported. Jensen almost says that exact same thing. It's spooky how similar this is. MW himself wanted detailed information, even on apparently trivial matters. He wanted to draw the conclusions himself. Reports containing the writer's own reflections he would call half chewed food. Now, I had a weird thought that came to mind when I got to this section because this is this reminding me of Steve Jobs would insist on improving every single ad that Apple did before it went out. And so the people that made the ads in the meetings with Jobs, they would like put the ad in front of them and they'd try to tell him a story. And Jobs would tell him to shut up. He's like, are you going to be there? You know, when I see this billboard or when I'm having coffee on a Sunday morning and seeing this Apple ad in a newspaper and they're like, no, exactly, so be quiet. I want to be able to judge, like draw the conclusions myself. Another side of MW's leadership style was that once he had told someone off, he would quickly let the matter pass. It did not linger. Now, one striking way that MW deviated from both Steve Jobs and Jensen. You know, Steve focused on running Apple the whole time. Jensen focused on running Nvidia the whole time. MW was the chairman of the board for 33 separate companies and on the board of another 80 companies. His style, I would say, is much more in line with what Sam Zell said where he set up his all of his companies and everything he was in. Sam said, I am the chairman of everything and the CEO of nothing. There's a couple other things. And I just made a list because, you know, they reappear over and over again. And so I just made a List of how I think about MW's entrepreneurial philosophy. Okay. Number one, he wants to invest in technology. Number two, he wants decisive influence over the company he is working on or investing in. Number three, he is going to impatiently push things forward constantly. Which leads to number four, which seems paradoxical. And, and the paradox is MW's short term impatience combined with the long term perseverance of the Wallenberg family in their industrial matters. The list continues. Number five, the quality of the people is most important. In fact, let me interrupt the list. I'm gonna read this section too, and I'll get back to my list. When judging companies, MW considered that the capacity of its top people was generally the most important ingredient. He therefore chose executive managers with great care. He kept himself well informed about new names, drove his managers extremely hard, and moved others aside if they were not up to the task. Those of his own generation who had allied themselves closely with him earlier were gradually moved to one side in favor of new blood. He demanded unlimited work and loyalty from his managing directors in all of his industrial companies. So, number five, the quality of the people is most important. Number six, he believed in driving people hard. Number seven, he wanted new blood. And number eight, he had tons of expansive energy for new initiatives. And number nine is one of his favorite sayings that he would repeat. He said, ownership without presence rots. Ownership without presence rots. What does he mean? Go in person, be seen, be prepared. Let me just give you a quick example of this. It's also important to him to study industrial operations at first hand, to forge contacts with on site personnel and to be visible. He liked to prepare himself well before his visits and liked to surprise people with unexpected questions, often quite detailed ones. The managing director on the site could never feel absolutely safe, which of course was MW's intention. Here's what a meeting with MW was like from the perspective of one of his company's directors. This is going to remind you again. Sam Zell, Jay Pritzker, Bernardo Null. They have all been described in a similar way that MW is going to be described from one of his directors. Monthly reports, sales statistics and minutes for meetings were reviewed. MW had a unique talent for putting his finger on the exact figure or point which you had not analyzed sufficiently or about which you did not know all the answers. The outstanding ability he possessed to analyze a report quickly was certainly acquired through a lifelong experience of scrutinizing statistical information and annual reports. He had a unique ability of quickly putting his finger on the weak points and of asking difficult questions. Again, Sam Zell Jay Pritzker, Bernardo Null have all been described in that exact same way. Now, this is not to say that a lot of, as you can imagine, this kind of domineering personality, it's very difficult personality. There's going to be a lot of people that love him and there's going to be loyal to him, and a lot of people that don't. In fact, one of his main directors and one of the holding companies actually described MW as both a great man and a small one. This part, I thought, was a great description. So I'm gonna just read the entire thing to you, and I think it really gives us a sense of, you know, who MW was. His greatness was incontestable and worthy of all of our admiration. It was based on a deep sense of responsibility for Sweden as a country, and in particular for the Swedish economy. He spent all of his expertise, energies and time on the task of developing and in many cases, rescuing companies. This was his life. Everything and everybody was subordinated to his mission in life. What do I mean then by saying that he was a small man in certain respects? I certainly do not exaggerate when I say that he was notorious for striking terror into the hearts of many of his direct and indirect subordinates. He could be merciless. Even relatively trivial issues could cause dreadful outbursts of anger. It is mainly this merciless side of him that I have in mind when I speak about being a little man. A thoroughly great and just person does not treat his fellow human beings like that. And I want to pause there before I go into the greatest tragedy of MW's life, because I read that part and I really thought about this because I told you before, I have very negative inner monologue. And I want the reason. One of the reasons I work by myself is I don't want to express, like, I don't want to talk to other people the way I talk to myself. Okay. And if you were at. The reason I thought about this because, like, if you were to ask Charlie Munger, and I did, I got to talk to Charlie Munger about this before he died, like, who he thought the greatest entrepreneur of all time was. And he would say Rockefeller. And one of the most fascinating things about Rockefeller is like, obviously the people you and I study together, you know, a lot of them are, you know, ruthless, and there's a bunch of examples of them being incredibly harsh and mean and to people around them. But then on the. That's on one end of the spectrum. But I, I would. I, you know, I've said before that's not a prerequisite to success. You have literally the guy that Munger says is the best ever do it. And people worked for him for decades that said, they not only they never heard him raise his voice, they never heard him say an unkind word. Now, of course, I'm not naive like Rockefeller's competitors would not describe him, you know, as a, As a nice person with etiquette and manners. But as I get older and I'm exposed to other people that are, you know, wildly successful and also not assholes, I think etiquette and manners, they become more important and admirable to me. And maybe because I see that's like a area in my own life where I have like vast room for improvement. And so it's almost like aspirational. But I don't, yeah, I don't want to get to the end of my life and be described by people like that, that say, like, he was a small person, a little man. See, I, you know, I want to rip through these ideas in a, in a fast manner. I want to be respectful of your time. But I do think pausing there is really important, like, just what. How do we want to be described after we're gone? And then I'm not going to say it's the cause for what happens next, which is by far the greatest tragedy in MW's life. But it is interesting that it follows in the book like this. So Mark Jr. Which is MW's grown son, this is towards the end of MW's life. He's probably 70 years old when this occurs. Mark Jr. Is obviously being. He's running parts of the company, the family business, he's being trained, he is MW's successor. And he makes a mistake and says Mark Jr. Had been given a interview and he was asked, like, why did the Wallenberg start building this new pulp factory in Germany without yet having received permission from the authorities? And he had answered honestly but imprudently that it was preferable to be prosecuted for breaking environmental laws than to paying large damages for breach of contract to a German buyer of pulpit. And so his reply aroused a great deal of attention and was reported throughout the press. He could expect to receive some sharp comments from mw. Sure enough, at the board meeting in the that afternoon, he was severely reprimanded by his father. His father then closes the meeting. MW then leaves Sweden to fly to London. The next morning, wakes up, gets an alarming report that Mark Jr. Had not appeared at his scheduled Friday morning meetings, nor did he spend the night at his house. So Mw flies back to Sweden. When he gets back in Stockholm, he is met by somebody that works with them and tells. And that person tells Mw the dreadful news that his son killed himself. Mw's son went into the forest that afternoon and shot himself. And the book describes the days after this happens. I don't have words for this, says Mw did not outwardly reveal any sorrow or possible remorse. He told one family member, remember that in a crisis, we Wallenbergs are ice cold. There's another interview in the book given. It says, I remember I was standing talking with NW at Mark Jr's funeral. Mw looked at his watch and said, At 3pm There's a board meeting at the bank. Only now do I understand the importance of these words. You have to force yourself to carry on and to return to normal life again. And then one of the saddest lines in the book is about Mark's son, Husky, who is Mw's grandson. And it says, mw took care of Husky. The ties between them reflected the fact that that it was a father who had lost his son and a son who had lost his father. And so for the remaining 10 to 12 years of MW's life, he's spending the time trying to train the generation and the next generation after him for this perpetuation of this family dynasty. And I think this is a fitting way to close on Mw's life. He passes away when he's 82. This is a straightforward and simple theme rammed throughout Mw's life. He had accepted responsibility early on for taking over the family's heritage and traditions from his parents with almost religious fervor. His father preached to him about the importance of fulfilling this duty. In spite of crises, conflicts, and shifting political winds, Mw carried out his task with remarkable consistency and strength. Mw's whole life was colored by this overwhelming task. Anything else would have been a betrayal of his destiny. And that is where I'll leave it for the full story. Highly recommend buying the book. If you buy the book using the link in the show notes below, available on your podcast player and@founders podcast.com, you'll be supporting the podcast at the same time. Last time I checked, there's only one or two copies available, but if you can get a copy of it, highly recommend you buy the book. That is 377 books down, 1,000 to go. And I'll talk to you again soon.