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Daniel e the founder of Spotify was kind enough to invite me to come to Sweden and since I was going to go to Sweden I figured I'd want to read and learn more about the most powerful family in Sweden uh it's the Wallenberg family it's
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actually 170 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 UL osen so Marcus wenberg Jr was known as MW so that's I'm going to refer to
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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 wallum family CU he's the third
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generation and there's just a couple ideas that I think were laid like the foundation laid very early in the very early uh days of the family Dynasty that Marcus definitely built upon although as you see he was fine with the responsibility of continuing the
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tradition and expanding the dynasty but he was much more of an like an innovator than an administrator as somebody you know born wealthy uh you might suspect that okay we're already rich we're kind of just going to maintain it he was not
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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 uh his
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actual Uncle says long experience in this bank has taught us that we must almost exclusively put our trust in ourselves so the Wallenberg and this is mentioned multiple times throughout the book they always had more liquidity than other Banks and they did never wanted to
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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
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remember this for later on because when uh MW is a young man his job one of the jobs in the bank in the family bank is the fact that he was handling all the loans for our Krueger which I covered all the way back on episode 348 which
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was the biggest one of the biggest maybe the biggest Financial Scandal and financial collapse definitely in in Sweden's history but in economic history in general and it is due to the conservative and prudent nature of the wallenberg's and what they taught you
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know the third generation that they wind up I'll tell you about this later but it's pretty crazy they actually held more collateral from Krueger than liabilities where a lot of other Banks and and the main competitor for the
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Wallenberg family was actually his life and work was destroyed uh by his association with Ivar Krueger so this idea it's like hey you want to have a ton of liquidity uh more liquidity than the other Banks and you don't want to put yourself in a
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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 Wallenberg for many many years and this came up over and
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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 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
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these problems could be solved or work themselves out uh 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
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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 uh the bank did not content itself with writing off the
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lending losses but continue to maintain its interest in its de 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 right up because they did
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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
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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 uh
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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 talk about the patriarch of the family uh that the
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founder of the family Dynasty His Name Is AO Wallenberg but in case you're interested in perpetuating family Dynasty you might want to have lots of kids because AO Wallenberg had 21 kids so I want to jump right into mw's life and you're going to see traits that he
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had when he was a kid that he continued his entire life uh they call there's there's a funny line in the book where they said that MW was a self-confident 5-year-old uh he showed signs of being argumentative and strong will from a
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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
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of persuasion so the family has Suchi set up a track for all the 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
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really push back on his father even though he had a great relation 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
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thought they could do so they actually the school after he does some brief military training MW is going to 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
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went back and 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 wenberg
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family is starting this business school right as a way to grow the entire pie 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
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more businesses if there's more businesses then they're going to own equity in some of those businesses and then have uh a relationship the the family bank is going to have a relationship with those businesses and mw's uh un was the one that started it
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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
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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
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time and it won't be the last time there's a bunch of really 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
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around him is this massive competitive drive this insane level of energy he's constantly wanting to push things forward he's addicted to technological change and and investing in technology up until the day he dies but what you
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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
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Champion uh he plays at Wimbleton for God's sake but there's there's nothing that he does that I would say that he does on like a recreational level he was not trying to be amateur at all he in fact he took the same intensity he
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applied to tennis he applied to his work and the same intensity he applied to his work he applied to his tennis 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
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engage in intense physical training so it's a 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
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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' become a bank manager in his later days an important explanation of his successes in various Fields was his intense
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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 MW and
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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
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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 expanded 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
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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 are right about my career being determined there
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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
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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
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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 very T typically very reserved I was shocked at how many of the letters that MW is
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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 something that his father taught
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him and that his father's father taught him was that the family and the bank were one and the same thing and that's definitely how uh MW thought about it now once you're done with your military training now you finished with the Stockholm School of economics
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this was very fascinating he's like okay I'm going to 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
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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 uh the bi two biographies
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of Heddy green who was the single largest individual financer in the world time the the way that she wanted to train her son the Next Generation you know cuz hdy green was fifth generation she her family was rich for five generations before her she said okay I
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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 want it or president anytime I want no you're not going to do that you're going to walk the goddamn tracks you were going to literally going
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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 banks that he's going to become
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a traine at but they he literally starts in the mail room he starts doing the lowest level possible so it say his father had already started to plan the next step in his son's carefully mapped out career period periods of training
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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 son it provided a basic insight
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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
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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 and even more important reason for training abroad and I think Marcus
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Wallenberg senior 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 uh Father and
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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
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pay visits or right to all 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
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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 W wenberg family cultivated and they did
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so over generations and they still do do so so he trains MW is going to study and train in Peak T which is in Switzerland uh this bank still exists 220 years after founding then he's going to go move on to Lazard uh or Lazard maybe in
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London that was founded 176 years ago in this bookshelf behind me I have a 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 Leon in Paris and
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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
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which is the family bank they Marcus Wallenberg Senor 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
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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 uh I
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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
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to cover 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
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his son and just how he think thinks uh like he he's writing a letter to his 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
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writes 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
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and only chance experience will modify this opinion a marriage is not only based upon a fancy once the first Outburst of emo has passed a happy marriage requires a common outlook on life shared interest as well as mutual respect and tolerance and then true to
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his personality when MW writes to his father about wanting to get married he essentially just presents it as a fate a compy like this I'm I'm making this decision it's going to happen it when up does happening but again his father
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writes him in return He says uh he's like I'm going to approve you know of your decision but the approve 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
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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
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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
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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
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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 United States and visit more iron steel and electrical Industries in the United
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States MW felt it necessary to demonstrate a certain amount of independent 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
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absolutely love that description and in the most simple terms it is the bank uh the holding company uh which is called investor AB which is founded in 1916 is public and still exists to this day in fact it is the second largest company in
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Sweden behind Spotify and then what I would call the Family office uh which is really a complex web of companies and holding companies that manage the family fortune you can actually see some of the structure on the Family's website uh it's Wallenberg
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tocom but it's important for me to point out that this is a very like oversimplified way to think about it because they're they have just this huge network of companies and you'll see this as we continue to go through the book
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just how complicated you can get but I want to read this section to 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
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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
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order to recover loan losses from their Bank secondly in the development of new companies that had the potential 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
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one that still exists this day and its subsidiaries backed by sebb which is the family's bank backed by scb's capital resources and this is a key Point here although dominated by the Wallenberg family the investor group of companies
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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 the industrial operations was the management
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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
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these companies were known as quote unquote Associated companies which meant that they were forly independent of the bank but we're still closely linked to it many of them were foreign companies enjoying tax and foreign exchange advantages and the reason I think it's
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so important to like try to simplify the the family sphere you okay you have the the the initial source of the the family's wealth being the bank the way they grow the wealth being the holding company and then you have all the the
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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 uh like components of the sphere now there's probably an unlimited amount of companies within
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them like let me give you a perfect example of why I think it would be so difficult to actually put a 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
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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
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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 in Ecuador Oran Plantation run
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by Germans owned by sweets and so 300 pages into this book when you're reading about all these different companies I mean MW is going to sit he's on 80 different boards he's like the chairman of board of like 30 something companies
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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 did they own it's almost impossible to know and so that brings us to two main reoccurring themes it's the fact that MW wants control and he's has
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an older brother and there's going to be lifelong tension with his brother in fact he he said later on that whenever he decided any anything in his brother's absence his brother would then come to the next meeting and try to change it
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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 uh is something that reoccurs over and over again in this story in his life is the
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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
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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
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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
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exploitation 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
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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
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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
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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 just depends on what you want to do but they the wenberg family they spent a ton of time not letting their bad
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Investments die and because they have such this long-term Horizon uh they're able to wait out for better times and and and opportunities so there's this company called Atlas and it says it's perhaps the best example of the perseverance of the wallenberg's with
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regard to its industrial Investments within the family this case has traditionally been regarded as a model of how industrial problems should be handled this is where MW rapidly learned practical crisis management under the
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supervision of his father Atlas was a company that had been founded in 1873 by by the patriarch of the family this is founded by AO Wallenberg in 1873 the reason he started the company is because in 1873 the tech the main technology of his day was the railroads
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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
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Wallenberg any Wallenberg started a company who do you think is going to be that company's Bank sebb was the atlas's bank Atlas became the largest mechanical engineering company in Sweden taking up a lot of the bank's management time and eny as well
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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
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consolidating and combining is something that the wallenberg's do over and over again remember they're not going to sell uh so they they wind up changing from producing equipment for railroads into the manufacturing of air operated tools
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and compressors so around the time that Atlas switches from railroad equipment to pneumatic air compressor tools okay Marcus Wallenberg Senor mw's Dad they found the wallenberg's found companies too they make investments they buy
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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
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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
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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 decide not to do that they decide to
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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
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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 a longterm they have a long-term perspective and they always had they can wait for better times now what they
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realized 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 wallenberg's do over
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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
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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
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investing in The Cutting Edge of technology and the international marketplace MW 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
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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 is the the section on Evar Krueger it says Evar
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Krueger became very closely associated with Oscar Rybeck 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 Marcus Wallenberg senior for the title of Sweden's leading Banker during
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the 1920s again the reason this speaks to the importance of picking who you associated with carefully Evar Krueger is going to destroy this guy's life and work the exact opposite is going to happened to the Wallenberg family I
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mentioned earlier that MW managed the Ivar Evar Krueger financial disaster extremely well the family bank had refused to loan Krueger more money before his Empire collapsed and when it did collapse the bank actually had more collateral than liabilities I do think
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Evar Krueger 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 Evar Krueger the finan genius behind a century of Wall Street scandals and I
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think in more ways than one the Evar Krueger cpse actually demonstrates the shrewdness of the way the wallenberg's operated their business so not only were they not taken down or destroyed by them they actually as a result of the
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collapse of the Krueger Empire the Wallenberg group was drastically expanded I'll just give you one example of this uh at the time where Krueger dies some people think it was a suicide some people think he was murdered but ericon was a very very precarious
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situation because Krueger was a majority shareholder in Ericson and this again combines with another idea that the Wallenberg has is this extreme long-term Outlook and the way they the wallberg family operates in this really long-term
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way they actually still control this company Ericson a 100 years later Ericson is jointly controlled by the Wallenberg and this other bank called handles bacon and they both acquired their voting strong a shares and thus control of Ericson after the fall of
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Krueger and so before I move on introduce this idea that they don't let the money Escape which is very F was very fascinating to me I want to put the notes from the book down quick and I want to just give you an update on where
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the Wallenberg family is today 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
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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 uh public company in Sweden right now behind Spotify so this is the way they
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describe invest AB it's their main investment company founded in 1916 which holds large ownership stakes in major Swedish multinational companies like Ericson in telecommunications Atlas in industrial equipment ABB in engineering astrazenica and
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pharmaceuticals and sebb and banking the Wallenberg 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
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long-term value creation over short-term gains I'm going to read one more thing before I go back to the book which was just blew my mind when I started reading about Marcus Wallenberg Jr before he read his biography mw's impact on
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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
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to read that to you because I think this idea and again I took this idea from the book and just compressed it down to a maximum for you and I don't let the money Escape is one way they do this so you're preferred partner right you have
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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
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take control of Ericson 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
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our bank and give it to Ericson so they can expand your network your telecommunications Network and then Ericson 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
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Associated companies almost always had to use the family bank now without a doubt since this is the biography of Marcus wenberg Jr of MW right he's been the main character the supporting character the most other important character in this book is without a
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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
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way he described it to his sons cuz he's about to pass away and the we 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
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to his sons was it was the importance of being sincere and true to oneself so this part is absolutely incredible I going to read the whole thing I'm going to give you my outline my notes before I read it to number one admiration for his
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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
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is repeated they just have a handful of OT that they repeat over and over again like everybody else surround yourself with great people this is something the wallenberg's repeat so now MW is writing right after the death of his father he
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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
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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
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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
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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
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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 sweds how how often MW exclamation
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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
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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
34:19
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
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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 going to become MW is going to become the most prominent and powerful person inside the family even
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though he is 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
34:55
Reviving and combining of all 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
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they're on the board they they wield hell of a lot of uh influence and control and so mw's 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
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fixing these ailing companies so he says first the banks management examines the company's position and then identify where the true losses lay then with the help of a very realistic approach a judgment has to be made as to whether
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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 uh bu business units that were not performing as well sometimes it means writing it down and recapitalizing it but then he says then
35:47
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 man
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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 alien company we've recapitalized it we've combined we got
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new management we've done whatever we can now what happen 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
36:24
customers for the resurging 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 it wallenberg's Bel and NW believe in long-term and active investment when he
36:42
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
36:54
were recruited a legal department employing professional law ERS 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
37:05
to summarize all the different things that he was doing here I 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
37:20
investor and then he goes about marshalling his leadership and his storytelling abilities because him and his brother have again they have have this like Dynamic tension over and over again his brother is the administrator he is the innovator and so there's a
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family motto that they would all s 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 AO Wallenberg in the 1870s that they then manag and
37:48
successfully shift from the old which is the railways all the way to diesel engines all the way to to being the leading company in you know uh pneumatic and and air compressor tools and so he's w a letter to his brother and this is
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what he says this is he's expressing his views on Enterprise and development uh 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
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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
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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
38:39
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
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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 to not just to
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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
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doing MW is doing exactly what I feel Charlie Monger 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
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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
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son hey you're young you're excited you met this you know sexy lady lady you have all these feelings you know you got to have a calm head his father's passed away MW gets a divorce and then he does one of the two of the craziest things
40:08
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
40:27
of all MW 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 not even trying he he would not he would refuse like
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compromise for like convention's sake and his dad you see his dad earlier trying to like coun his son through letters and conversations just like you know certain things are expected of you you're kind of acting like you know more will for a little wild than than
40:53
expected so MW go goes on a transatlantic Cruise there's a bunch of people leaving from uh 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
41:09
she stays back in Sweden he meets This Woman This is going to wind being his new wife his wife is going to be Maryann bernad doe who knows if I pronounce that correctly at the time Maryanne is married to count Carl bernotti count Carl is the son
41:27
of Prince Oscar who is the brother of King Gustaf I so despite the fact that they're both married right they went up falling in love and it says they prepared to dissolve their marriages quickly in order to unite and keep in
41:41
mind divorce it says divorce was still unusual me me members of The Establishment if divorce was frowned upon by the Wallenberg family which it definitely was it was a positive Scandal for the bernado family a member of the royal family had been abandoned by his
41:55
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
42:14
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
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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 wallenburg bank owned shares in the hambros bank and MW and Charles knew each other mw's children would later say
42:47
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
43:04
from his brother and every single thing that he wants to control whether it's the family's industrial uh 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
43:15
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 cuz he really has no
43:28
regard for convention or 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 uh the the management of the family
43:44
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
43:58
keep a breast 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 Wong episode I did last week where both MW and Jensen and a lot of
44:12
history 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 going to put in Sol points
44:27
I'm going to you know read hundreds of them uh every week and I'm going to have this unimpeded flow of information mw's analog version of that is I'm going to gather all my people together and every real quick in many cases they they
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mention the fact that these meetings go really fast uh like 15 minutes uh and I'm going to get this unimpeded information on a daily basis from the people in my company another thing that was very unusual given uh the industry that they're in and how reserved uh the
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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 the early in the early 1950s the bank which normally took a low Pro profile with the media
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advertised that it was at the service of private Enterprise he starts making the bank invest heavily in technology and so in the technology of their day they have these punch card machines so he buys a bunch of punch card machines and then
45:20
all he make sure that all accounting transactions inside of the bank have to be no longer done by hand they have to be done on the the the technology of their day which is the punch card machines right so this result all accounting transactions were transferred
45:32
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
45:47
125 employees but they do double amount of work because of uh 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
46:04
his holder 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
46:13
section I thought a lot about Steve Jobs uh and Jensen Wong 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 m W had a different way of communicating
46:29
with the staff he got to know everybody so I would say he's mw's 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
46:44
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
46:55
experience for the entire Company If You CRI 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 uh MW would become irritated and
47:10
lose his temper but there was often a sound intention behind his Outburst 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
47:23
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
47:38
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 his Remy Steve Jobs would insist on improving
47:56
every single ad that Apple did before it went out and so the people that made the ads in in the meetings with jobs they would like put the ad in front of them and they' try to tell them a story and jobs would tell him to shut up he's like
48:07
are you going to be there you know when I see this billboard or when I'm re having coffee on a Sunday morning and and seeing this Apple ad in newspaper and they're like no exactly so be quiet I want to be able to judge like draw the
48:20
conclusions myself uh another side of mw's leadership style was that once he had told someone off he would quick let the matter pass it did not linger now one striking way that MW deviated from both Steve Jobs and Jensen you know Steve focus on running Apple the whole
48:36
time Jensen focus 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 zel said where he set up
48:53
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
49:06
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's going to impatiently push things forward constantly which leads to number four
49:23
which seems paradoxical and the Paradox is MW W'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
49:38
important in fact let me interrupt the list I'm going to read the section to 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
49:49
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
50:03
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
50:18
driving people hard number seven he wanted new blood and number eight he had tons of expansive energy for new initi IES and number nine is one of his favorite sayings that he would repeat he said ownership without presence rots ownership without presence rots what
50:35
does he mean go in person be seen be prepared let me just give you a quick example of this it's also important him to study industrial operations at firsthand to forge contacts with on-site personnel and to be visible he likeed to
50:47
prepare himself well before his visits and like to surprise people with unexpected questions often quite detailed ones the managing director on the site could never feel feel absolutely safe which of course was mw's intention here's what a meeting with MW
51:03
was like from the perspective of one of his company's directors this is going to Remind You Again Sam zel Jay pritzer Bernard orol they have all been described in a similar way that MW is going to be described from one of his directors monthly reports sales
51:17
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 are about which you did not know all the answers the outstanding
51:29
ability he possessed to analyze a report quickly was certainly acquired through a lifelong experience of scrutinizing statistical information in annual reports he had a unique ability of quickly putting his finger on the weak points and of asking difficult questions
51:46
again Sam zel Jay priter Bernard anol have all been described in that exact same way now this is not to say that a lot as you can imagine this kind of domineering personalities very difficult personality there's going to be a lot of
51:59
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 in 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
52:15
going to 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 sense of responsibility for
52:27
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
52:42
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
52:59
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
53:21
like that and I want to pause there before I go on the greatest tragedy of mw's life cuz I read that part and I I really thought about this because I I told you before it was like very negative inner monologue and I want the reason one of
53:33
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 the reason I thought about this is because like if you were to ask Charlie merer and I did
53:45
I got to talk to Charlie merer 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
53:55
you and I study together together you 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 you know I've said before that's
54:12
not a prerequisite to success you have literally the guy that Monger says is the best ever do it and people worked for him for decades they said they not only they never heard him raise his voice they never heard him say an unkind
54:23
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 um but as I get older and I'm exposed to other people that are you know wildly successful and also not uh I
54:40
think etiquette and manners uh they they become more important and admirable to me and maybe because I see that's a 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
54:58
want to get to the end of my life and and be described by people like that that say like he was a small person a little man um so yeah I I you know I want to rip through these ideas in a in a fast manner I want to be respectful of
55:09
your time but I do think pausing there uh 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 for for what happens next which is by far the greatest tragedy in mw's life but it is
55:24
interesting that it follows in the book like that 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 and this this occurs Mark Jr is obviously being he's he's running parts of the
55:40
company uh the family business he's being trained he is mw's successor and he makes a mistake and it 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
55:58
permission from the authorities and he had answered honestly but imprudently that it was preferable to be prosecuted for breaking environmental laws and to paying large damages for breach of contract to a German buyer of Pulp and
56:10
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
56:26
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
56:45
by somebody that works with them and tells and that person tells MW the Dreadful news that his son killed himself m W's son went into the forest that afternoon and shot himself and the book describes the days after this happens I don't I
57:06
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 wallenberg's are ice cold there's another interview in the book given it says I remember I was
57:25
standing talking with w at Mark Jr's funeral MW looked at his watch and said at 300 p.m. 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
57:40
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 it was a father who had lost his son and a son who had lost his
58:01
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
58:16
on mw's life he passes away in he 82 says a straightforward and simple theme Ram throughout mw's life he had accepted responsibility early on for taking over the family's heritage Ag and traditions from his parents with almost religious
58:30
fervor his father preached to him about the importance of fulfilling this Duty in spite of crisises 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
58:52
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 at Founders podcast.com you'll be
59:05
supporting the podcast at the same time last time I checked there's only one or two uh 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