If you have really, really high ambitions, you achieve great things, even if you fail.
If you have low ambitions, you achieve nothing, even if you succeed.
Where do you think the tech sector evolves from here?
Well, that's the trillion dollar question, right?
Luckily, you manage, what, two trillion?
When I give presentations at universities I ask people hey, anybody here who thinks differently from other people, who kind of think that they are weird?
Hands up.
So typically less than 10%.
I said, you guys, you're great.
We'd love to hire you.
And then the other 90% is like, you know, sorry, guys, you're just like everybody else.
You're never going to make much money.
Okay, so I never do politics because my job is totally not political.
But if I were like prime minister for a day, I would inject AI everywhere.
If you look at the golden ages we've had and you look at the real powers we've had during the years, you know Rome, Venice They were open economies, free trade, free movement of labor, thought and so on.
What they all have in common in terms of the end of the golden ages is What are you leaning against right now?
Well, I think the stuff to lean against, if you really want to do the opposite of everybody else, would be to do less AI-related investments and more real estate investments.
How do you see real estate playing out?
Well, that's a very tough one, right?
But it's not very popular.
And I see that a lot of big investors are reducing their exposures to real estate.
So that's probably a good sign, right?
That there are better times ahead.
What do you think of office?
I guess that's the worst real estate class.
It's very bad.
It's very bad.
So you have to think in a way, you've had a bit of a perfect crisis there now, in that COVID meant that more people were working from home.
You had some trouble with part of the banking system.
You had rates being relatively high.
And so you had a few factors there impacting it negatively.
How do you think about rates?
I mean historically or something somewhere thereabouts, and we've been lower than that for almost 20 years now.
Yeah, we've been very low and for a very long period of time.
I think there are some structural issues which mean that they probably will be a bit higher than they have been.
And i think one one factor here which uh, you know people don't talk so much about just now is is the impact on climate, you know.
So climate is impacting harvests, is impacting prices for a lot of raw material and input factors, in particular to the food side.
So be it chocolate, coffee and so on.
Then you've got various fires.
You just got a lot of kind of impacts from climate on pricing structures.
You know, it also hits kind of insurance rates, reinsurance rates and so on.
So that's on the one hand.
Now, the thing which is pulling in the other direction is, of course, efficiency gains through AI.
And you'll have, you know, just much more intelligence at cheaper levels, right?
Where do you think the tech sector evolves from here?
Well, that's the trillion dollar question, right?
Luckily, you manage, what, two trillion?
It's pretty hot, right?
I think we can agree on that.
And I think it's quite interesting.
So you have Jensen Huang, the CEO of NVIDIA, who goes to Korea, right?
He hangs out with the guys at Samsung.
They go and have, you know, some deep fried chicken.
And so...
When they are photographed in this chicken restaurant.
The share price of that chicken chain is going up like 20 right.
And the company that actually breeds chicken in Korea is going up a lot.
And the company that does the robotic arms to actually deep fry the chicken is also going up a lot.
So it just indicates to me that this is now a very, very hot sector when things like that happen.
What would be your argument for the fact that we're in an AI bubble and then against the fact that we're in
Well, I think okay, AI bubble, you would look at things like valuations.
You'd look at circularity in terms of ownership and you know Vendor financing these type of things.
You'd look at news coverage.
You look at things like what happens when they eat chicken at a restaurant.
So you just kind of just look at how frothy a sector is.
On the other side, it has huge ramifications for how we live our lives.
And we see in our firm, we are increasing productivity probably by 20% just by utilizing it more.
And we're just stuffing it in wherever we can. and it's making a huge impact.
How does that show up, the increase in productivity?
Well, it shows up in that we do more with the same amount of people.
We are keeping headcount now flat and we are just producing more and producing better quality.
What do you think would cause inflation to come back?
Slower world economy, AI leading to more productivity gains humanoids, so increased use of robotics, which is just a cheaper labor supply.
Is ai making decisions now at the firm or is it?
No, we are.
There is always a human in the loop, but it's helping us, it's supporting our decision making.
Do you think it'll ever replace humans and investing?
I am not in our place um, but clearly in some places.
Right, you have fully automated uh investment models in a lot of places.
What skills do you think will matter more in an AI world?
Interpersonal skills.
The ability to talk to people.
The ability to listen.
And empathy.
These things have always been important, but they are just even more important.
And I'm just seeing it so many places.
It's really, really interesting.
You talked about the ability to listen, I think, in your Wharton commencement speech.
Yep.
How would you teach somebody to do that?
Well, that's a tough one.
I mean, it can be taught in that you can point it out to people that they talk all the time and they don't listen.
Right.
So you can say that.
But I think we would fall back to how we are generally um, and i think it needs to come with some curiosity, because if you're not curious, you're not going to listen.
So i think it goes.
It goes hand in hand with that.
I mean, generally you should listen twice as much as you speak, why?
That's why i got two years and um but um, it's super important.
A lot of people think they're listening, but they're not actually listening.
Yeah, they're just processing stuff and Can't wait to get to the next questions themselves.
You know.
So there is little listening.
I spoke to this guy called Saul Perlmutter.
He is a scientist.
He got the Nobel Prize in physics.
And he said Nikolai, we are now at the stage in the world where we, for the first time, can solve all the problems.
Because of all the problems.
We know how to solve the climate problem.
We know how to feed everybody in the world.
We have the technology.
We have the science.
It's just that we don't talk to each other.
We don't listen.
We don't work together properly.
So that's why we need to zoom in, I think.
Would you say that's the biggest problem in society?
I think one of the biggest problems now is the fact that we close up.
If you look at the golden ages we've had and you look at, know the real powers we've had during the years, you know rome, venice uh, you know the song dynasty and the netherlands.
You know these companies, places which did really really well.
They were open economies, free trade um, free movement of uh labor, thought and so on.
And what has what they all have in common in terms of the end of the golden ages is Close to free trades tariffs, end of immigration, end of free thought, the rise of the strongman attack on you know freedoms of all types of you know sorts.
And we are seeing that in many places of the world.
And that's a negative.
Which one of those concerns you the most?
All the above.
For me, it's free speech.
It's like that seems to be the big limiter.
Yeah, but you need, you need new ideas.
You know you need to rejuvenate countries and societies, but clearly, free speech is important.
How do you see the difference between american and european mindsets?
So this is super interesting right um, and now i'm in new york for a month and you know wow, the energy here uh, the entrepreneurship, the drive.
You know, i just get so much energy just living here.
Uh, level of ambitions super high uh, versus europe where there is.
I mean, europe is a fantastic place too right, but for different reasons.
Um, You know, culturally incredible.
You know, food pretty good in many places, but less ambitions.
You know, the thing with ambitions, I think it's so interesting.
If you have really, really high ambitions, you achieve great things, even if you fail.
If you have low ambitions, you achieve nothing, even if you succeed.
And so having great ambitions is just fantastic.
And you know, in America five, I mean, do you think five is a high number or a low number?
For what?
Well, just generally number, is number five high?
Well, there you go.
You think you think five is low.
Okay, you ask, you know a european, is five high or low?
They would say it's pretty high.
So it's just like, and so the whole concept of you know, growth rates, ambitions and so on is different.
And then, of course, you work much harder in america.
I mean, that's just not something.
I think it's just like the facts.
You got less holiday uh, and so on.
Do you think that's good or bad?
Think it's both.
I think it's good for some things in society and i think it's not so good for the people involved.
It's so interesting because if you think of it from an evolutionary point of view, i mean, evolution doesn't care about you, it cares about the species, and so it would sacrifice you and make you work harder for the good of the, the whole unit and the survival of the unit.
Was that a culture shock when you came to orton to warn?
Yeah absolutely, absolutely.
Well, you see, in a way, Norway is the opposite of Worden.
Because in Norway, everybody's supposed to be the same.
You have this thing called Jante Loven.
It's just like, don't think you are fantastic in any way, shape or form.
So you come to Worden and I sit there in a class and it's just like hey, what do you guys want to achieve in life?
And one of my fellow students just hands up.
What do you want to do?
I just want to conquer the world.
And that's kind of a statement which is totally normal.
I'm warning, but it's not particularly normal in where I'm from.
How would you change that to add more ambition?
I don't think you can change it.
You can't change a nation.
But you can change it in your own company.
And you can work on the corporate culture in the firm you work.
And you can change it with yourself and your family and your friends.
But to change the ambition level of a whole country, I don't think you can do that.
It's tough.
How would you go about it if you had to, if that was your task?
Okay.
So I never do politics because my job is totally not political.
But if I were like prime minister for a day.
And your only job, just ambition, nothing sort of like.
I would inject AI everywhere.
I would just go all in.
I would do what they did.
You know, in Sweden in the 80s, they had something called home PC.
So they bought 800000 PCs in a country of I don't know.
At that stage let's say it was six, seven million or something.
Eight,
Put them in people's homes and it just increased the digitalization of the country.
So now you have, you know, Spotify, Klarna, all these things.
So is it directly linked?
Probably not.
But, you know, they increase the digitalization.
Now they're doing the same thing with AI.
Now they're doing the same in Iceland.
In Iceland they announced a cooperation project with Antropix where they're basically going to stuff it in to all the schools and all that kind of thing.
And I think it should be perfect for Norway.
It's a highly digitalized country and where people think it's pretty nice to have a lot of spare time.
And, of course, AI helps you with that.
And it's a once you know.
You read the book about NVIDIA, for instance, and Jensen Huang talks about this once-in-a-lifetime opportunity.
And this is just a once-in-a-lifetime opportunity for people, companies and countries to pull apart.
And if you don't do that, you're sort of going to be left behind.
Totally.
There's...
I mean Alpha School, I guess is one of them who's using AI to get curriculum down to two hours a day.
The students are getting massively better outcomes.
And then Synthesis Tutor has created this math program through I think it's kindergarten, through grade eight or nine now.
And the results are like just off the charts.
They move kids to standard deviations within like three or four months.
And so we've demonstrated that it's better than teachers.
But the impediment to that would be what do you think?
Like, why wouldn't people do it?
What would be the argument against it?
I don't know why people would do it.
They should do it.
I mean, they so should do it.
What's the most important data you look at these days?
I don't have like just one or two data sources.
I read just a lot of newspapers.
And I think what's going on in the world now is just so incredibly fascinating and it's so exciting to be alive, you know.
And so I just wake up at five and I just spin out of bed.
I just can't wait to get out of bed to start to read the papers.
And then I just start.
You know the Financial Times, Wall Street Journal, New York Times, all these things.
And wow, the stuff that goes on now is just incredible.
Things that you didn't think was possible, you know, a year ago, that's now happening, right?
So I was up in a forest a few weeks ago with seven of my best friends.
And we were predicting, okay, what's going to happen over the next 12 months.
So we tape it.
We tape record it.
And then we were playing our predictions from last year.
And, you know, these are really clever people.
And how do you think we did?
Terrible.
Terrible.
Terrible.
I mean, we were like 80% wrong.
You know, we didn't. didn't predict that trump would win the election a few weeks later we didn't we didn't think about like tariffs and the relationship between the us europe you know what's going on now in the us in europe in india in china we have no clue and so i think trying to predict in this world is just more and more you know useless so what you need to do you just need to work on speed and agility Go deeper on that for a second.
How important is speed and agility?
Well, I have a big thing with speed.
Speed is a mindset, and it is.
It struck me again coming back to New York.
Every morning I buy this egg and ham roll, and just speed, the way in which they wrap it.
I mean, my.
So the speed in New York is very high.
But speed generally, I think, is super important.
It comes to this first principle.
Things shouldn't take longer than they need to take.
You save time by being fast.
So this sounds a bit strange.
But if I send you an email and you answer within one minute, how long does that email need to be?
Two words, right?
And I'm impressed because you answer really quickly.
If you answer the next day, how long does it have to be?
A paragraph.
And you answer a week later, it needs to be a page, right?
So you just save time by being quick.
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How do you think about urgency?
That's one thing we didn't.
That was not a word we used when we were sort of like thinking about American versus European mindsets.
Yeah, I just think, you know, urgency is, I try to build urgency into most things.
You know, in my office I have this watch, this kind of clock, and it counts down the number, the days I've got left in my job.
So it's not because I look forward to work to stop working, because i love my job, but i have this thing on the wall.
And so you come in and say hey nicolai, we we're going to work on this.
And um, do you know, i'll sort it by january.
And i said january, look here, i've got 1765 days left.
We need to do it now.
And then you say, oh really, you only have 1765 days left.
Yeah, let's do it now.
Let's do it now.
So you just you build urgency into these tasks.
I love it.
I like that.
That's a really good idea.
When I was talking with Charlie Munger about predicting, he basically said it's a fool's errand.
It's better to position and have agility.
But you kind of have to mix that with a stubbornness too.
Yeah.
How do you think about that?
So I think the most important thing to have in investing is you need to be stubborn, but you need to have the ability to change your mind.
Very few people have that.
Somebody like Stan Druckenmiller has it.
The combination is rare.
You need to be stubborn, you know, in order to do the opposite of everybody else.
Um, and when you are, when you do these kind of contrarian investment investments uh, there will be periods where everything goes against you and it's stressful, but you need to hang in there.
Do you think you can teach people to change their minds?
Um, i think you can.
To a certain extent, you can teach them.
It's um easier as you get older, i think, because you've seen more cycles, but it's difficult to find people who are really contrarian now, because it's you need to.
You need to live in a, in a space where you are, where people don't agree with you and we, you know, in in today's world, everybody wants to be liked and you know, have 100 like, you know likes on facebook or whatever, and so to be to be different from other people is, It's tough.
So now when I give presentations at universities I ask people hey, anybody here who thinks differently from other people, who kind of think that they are weird, that nobody understands them?
Hands up.
So typically less than 10%.
I said, you guys, you're great.
We'd love to hire you.
Can everybody else put their hands up?
And then the other 90% is just like, you know, sorry, guys.
You're just like everybody else.
You're never going to make much money.
But there is hope.
You can change.
And I kind of think people, hopefully they go out of that room and think you know what I want to be different.
It's something we should really treasure and love where it is good, right?
Go deeper on that for a second.
In terms of I think a lot of people optimize their lives not necessarily to be liked, but definitely not be hated or disliked by people.
And that causes all these weird societal distortions.
You don't have to be disliked even though people disagree with you.
But in my mind, life is not a popularity contest.
So my wife says that only people without friends say that.
But I don't think so.
I think life is for sure not a popularity contest.
You're definitely not popular all the time.
You have that big number on the screen.
You can't be popular all the time.
And you have to.
You know you have to be used to the fact that whatever, even if you're right, 10 will disagree with you.
Do you read the comments that are negative about you?
No.
But I also don't read the positives.
And I don't believe them, you know.
I don't believe the positives.
I don't believe the negatives.
So when you read the newspapers, like how do you read them?
Are you reading headlines and then if it catches you, you read the article?
Or is there a different way that you skim or process that?
I read, I go through headlines and I drill down.
It's either something I am interested in or something I know I should know more about.
Or if I'm going to meet somebody who's interested in that particular field, or I know somebody's interested, then I pass it on to somebody else.
Or if I met the person, or I had him on our podcasts, how do you test your assumptions before making a big investment?
So that's where we, that's where I think we can be better, and i think we can develop this and i think the by using more of a scientific method.
Um, i think we can be better and i do think that there is.
I think there is something cool, i think there is an objective truth, i think there is something which is correct and we need to, we need to find it and um, so i have much more of an open mind now than i had in the past.
I think i listened to more different types of input and opinions And I try not to jump to conclusion.
Has that made you a better or worse investor based on returns?
Well, so I don't run money myself now.
I'm running a company where we have a lot of people running money.
But for sure it's going to make you a better investor if you take more of the different opinions into the equation.
If you are a lonesome thing, you listen to the shorts and vice versa.
I mean, there really is a truth, you know?
Don't you think?
Do you think there is an objective truth?
I would like to think so, yeah.
I think that that's.
But how do we get at that?
Truth is the Well, by listening to different types of people.
Yeah, but then you're making a judgment call at some point on what's closer to the truth and what's not.
Of course.
And then you have to kind of Well then you link in analysis and you know some pattern recognition and and so on, and hopefully you get to something which is correct.
I think the source of most of our poor decisions is just blind spots.
There's information we're missing, there's something we don't see, and our job is to reduce our blind spots.
I don't know if we can completely eliminate them, but we can definitely reduce it.
And then we reduce it through talking to people and getting different perspectives.
And it's just like if you and I were standing beside each other right here and you took a photo and I took a photo.
Both of those photos are 100 accurate, but if we add them together, we get more of a picture than we do individually, because they'll be slightly different, because we're standing at slightly different angles with different offsets.
How has your attitude towards risk changed?
It's um, it it's a difficult one.
I am probably in some ways become more risk averse.
On the other hand, there are some risks i probably take more of now than i did in the past, right?
So the risk, people's risk appetite uh, depends on many things.
Um, i mean, everything else being equal.
Men take more risk than women, which is why we crash our cars much more right?
Um, young take more than older people.
Extroverts take more than introverts.
It's geographically based, right?
American people take more risks than, let's say, Asian people.
And I'm sorry, I'm not, I'm not the one who has invented this, okay.
Because I did a degree in social psychology and one of my papers was on exactly this is just how his risk appetite linked to the big five.
You know.
And so as you get older, on average, you take a bit less risk.
But as you also as you build wealth, you take a bit more risk, sometimes.
So I'm sorry, this was a long answer.
I'm not sure I have a very clear answer here.
So risk is interesting, right?
So then you talk to some people.
So let's say you do private equity and you interview somebody like Steve Schwartzman, which we did on our podcast right,
So it's really important not to lose money.
So you need to really look at the downside.
Now in venture capital, It doesn't matter whether you lose money on a lot of stuff, as long as you capture the really big winners right.
So you can lose 9 out of 10 as long as you get the one right, which is just like going up like a rocket.
The issue here is that the rocket, the entry ticket for the rocket, which was 1 million in the past, that's not like 500 million.
So that rocket better go up, right?
And you guys do mostly, it's like index plus?
Yeah, we are very indexed there.
We got a really great investment mandate from the Minister of Finance.
It tells us roughly how we are going to be positioned.
It gives us a risk budget, and then we are pretty close to that.
And that's important for many things, but it's also important because it limits how much money we can lose.
So how does that work in practice?
You basically like, start with 100 in the index and then you're like okay well, we're gonna take a little less of this and a little more of that, or yeah, pretty much right, so we would.
I would say we have 20 of the active, 20 of the capital we would run in a very active way, and the other one, the other part of the capital, will do smaller tweaks.
But you, you have a lot of money coming in every year.
I would imagine it's probably on the order of 100 billion-ish, if not more.
Well, it depends on the energy prices, but generally there's been inflows.
And so do you take that new, no matter what the price is like, say today, where you have.
You know, the top seven stocks account for 46 of the US index.
Do you just, how do you allocate that new money coming in?
Do you just sort of like pop it into the index?
Kind of.
We get the inflows or outflows, they're monthly, right?
So you get the money on a particular day and then you have to think when do you deploy it into the market?
You do it a bit beforehand or a bit afterwards or a bit before and after.
And we use AI to optimize those type of decisions.
Do you try to front run index changes?
Yeah.
Using AI, I would imagine.
Yeah.
What's gotten harder in investing?
Everything.
Nothing's gotten easier.
No.
Everything's gotten harder.
I mean, everything is going to happen.
I would say what's getting easier is research, right?
Because of the deep research functions in some of the models, you get incredible, incredible amount of knowledge within five seconds.
It would take you ages to do that before.
And it's well-structured and you can play around with it.
And so that's just phenomenal.
It's just phenomenal.
How do you think about the rise of passive investing when it comes to retail?
What are the pros and cons of that?
Well, the pros is that it's cheaper, so people don't pay that much fees.
It's difficult to beat the market.
The negatives is that you will.
I mean they would typically perpetuate bubbles because more passive money they go into you know, stocks which have done historically well and they perpetuate the moves.
Is your goal active return, like a active um or total return, absolute return, or is it sort of relative to the end?
Relative relative.
So we are measured against the reference index which is uh, constructed by the ministry and then we try to beat that.
Historically, over the last close to 30 years we've had 25 basis points of performance.
So you would say, hey, that's not so much.
Well, the thing is that if you have a lot of money, it ends up being pretty big.
You know absolute amounts.
And when you were running your own fund before that, what was the worst sort of investing mistake that you made and what happened?
The worst mistake was during the financial crisis.
We were in a subprime lender and it turned out that there was accounting fraud and um, it was a big position and that's that's the worst.
That's the worst investment i've ever made.
Uh, and what i learned was that um, you don't want to go into dubious business models.
And so brian, you can say you know, it's not really um, certainly the type of company we were interested.
I would say it's not really.
I mean, is it ethical to lend money to people who are in a tough situation in life?
Well, i don't know.
It certainly was a really bad investment.
I wouldn't invest in that type of company.
Now, what would you like?
What was the lesson you took away from that?
Is it the business model?
Is it?
Yeah, it's just a business model and it's just.
I just don't want to.
I just don't think you should profit from people who have a tough time.
What would be the counter argument to that if you were to argue with yourself?
I don't think there's a good counter argument.
The pushback.
Wouldn't it be like, maybe I'll play devil's advocate here for a second, but wouldn't it be that people all need credit?
We've all been down on our luck and maybe we don't have the best credit rating.
But it's just how you do it and how you go about it and what you charge for it.
Yeah.
There shouldn't be sort of usury rates for sure.
Did you do a postmortem after that?
Totally.
And then how do you have the confidence to sort of come back and take big swings after you lost a lot of money on that one?
Because as long as you don't do the same mistake.
I mean, why make the same mistakes when there are so many mistakes to take from, you know?
You find some new ones.
That's originality and mistakes.
I love it.
But, you know, okay, so the risk-taking is really interesting.
So most people take less risk when they lost money.
Mm-hmm.
Even though you should take the same amount of risk.
So here we use a sports psychologist.
I sail and I did a lot of competition when I was a bit younger and I sailed with some of the British Olympic sailors and they were just really, really good right.
And so I asked him, hey, why are you so good?
Well, you know, we have two reasons.
One, we have a very great, we've got a really good debrief system.
And also we work with sports psychologists.
You know to work with a mental type of, you know, strength.
And so what is important in sailing is that you know you can be number one, and then the wind direction changes, and then suddenly you're the last one.
Now, next race, you need to take the same type of risks.
You cannot let it impact you.
And that's the same way it is with investing.
Just because you lost, you need to get back on your horse and take the same amount of risk.
And it's very difficult.
And that's why you need some psychologist to help you with this.
I did a podcast with Magnus Carlsen, the chess player.
And so I asked him, hey, what happens when you lost a game?
Do you take more risk?
So he takes more risk in the next game, which I think is interesting.
But normally people take less.
That's fascinating, because I was thinking, as you were saying that a little bit, that the worst people would take less or more risk.
Because isn't that the?
I just picture this guy or girl, I guess, or whatever, at the gambling table in Vegas and they lose and they keep.
You know, double down, double down, double down.
Investors don't do that.
Why did you take this job?
Like what did you see?
Why did you want it?
Oh, my.
It was my dream job, right?
So I had run this investment company called AKO Capital.
I set it up and it kind of turned 15 years.
And I thought it was time to pass it on to the next generation and do something else.
So I wanted to go back to university and do another degree and learn some more things.
And then I had just before that done a degree in social psychology and organizational development.
And so when this job came up, I was just like, wow, it combines asset management.
And asset management is the most interesting thing you can do in life, because it's about everything that moves everything you eat wear drive, all that kind of thing.
It's about psychology.
It's about markets.
It's about greed and fear.
It's about macroeconomy, geopolitics, defense.
It's about everything, right?
So it is the most incredible game you could ever construct.
Then I could combine it with organization development and really see whether we could take this organization to a place that it hadn't been before and then do something great for the country.
So all my interests came together in one job.
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I'm a huge proponent in sovereign wealth funds.
How would you advise the United States or Canada to set one up, knowing what you know now?
I think I'm too humble to advise anybody in that field.
What has worked well for Norway is to have a sovereign wealth fund which has broad political anchoring.
So the political parties generally agree on the big decisions, which means that when you have a change of government, you do not change the way you run the fund.
That's important.
Then transparency.
We are the most transparent fund in the world.
There is actually a world championship in that and we won it three times in a row.
It's a world championship which has been run by actually, a canadian company called sem in toronto.
And then the last thing is you have we have a spending rule which means that the politicians spend three percent of the fund every year.
Maximum of three percent.
So i think the You know the broad political anchoring, the transparency and the spending rule.
Those are three really important factors.
Are there any acute sort of political factors that go into this?
I imagine it would become political.
You're like 20 or 30 percent of the budget at this point.
Yeah, the fund is 25 percent of the state budget.
Well, the whole idea is that the fund should not be political.
And then, how do?
How does norway's politics work its way into how you might vote for your shares on things like esg or yeah well, so that's so.
That is not politically decided.
That's decided.
How is that decided?
Well, that is decided.
We got a group of people who sit and look at votes right, and they're very, very experienced people.
So, for instance, we look at pay packages.
Are they structured in a way which coincide with, Are they aligned with, our interests?
Are they long-term enough?
Are they equity-based enough?
Those kind of things.
Do those decisions come up to you or are you at least aware of the big ones?
I am aware of the big ones, but I deliberately do not make decisions here.
What was the thinking behind voting against Elon's pay package?
What was the rationale?
Um well, the team thought it was too, too big and uh, didn't have the right alignment with shareholders yeah, do you think.
And the fact that it was dilutive.
And you know, we own we own shares in 9 000 companies.
If, if all the ceos were going to have a billion dollars, that would be pretty expensive for us.
I like to think of it as you basically have a almost a 2 toll on the world economy at this point, or something similar.
Is that a fair way to think about it?
I think so.
I think that's really cool, personally.
How do you build long-term thinking into the organization?
It's very difficult because people want to do things, okay?
You know, I think...
Wealth is basically created by owning one or two really good assets, and then you just hold on to it for the very long term.
That's when you look at the wealth.
The really big pockets of wealth, that's basically how it has been created.
So you make money by doing as little as possible in terms of ownership and change of ownership stakes.
But imagine now you're a portfolio manager.
You come home from work on Monday and your husband asks you, hey, how was it today?
What did you do?
I did nothing.
Okay, and next day, Tuesday, it's like, hi, darling.
You know, what did you do today?
Nothing.
And the same thing on Wednesday, Thursday, Friday.
And it's just like at the end of the week, hey, did you do anything?
No, I didn't do a thing.
It's not intuitive that that's easy, right?
So very often, the most difficult thing is not to do anything.
And so one way to look at it is what I call the inertia analysis.
You take...
You take the portfolio from January Jan 1 and you see what would have been the investment result if I just stuck to that and not made a single change.
And then you look at your actual results for the year.
And so often you actually have detracted from your performance by the things you've done.
That is so true.
What does it mean to think long term?
Are there elements to that thinking that go into it?
Well, you have to figure out what's your time horizon, right?
Ideally, we should be thinking with a wealth fund, we should think 50 years ahead.
But that's tough because you haven't got a clue what the world is going to look like in 50 years time.
We don't even know what it's going to look like in.
I would say three years time is probably the max you can look into the future.
So it's very tough to be long-term in what you do.
I know Druckenmiller is widely known to take a position, then do research after.
Yeah.
Do you do that as well?
Well, I did.
I did that quite a lot.
And I think it's, why do you want to do that?
Well, first of all, if your gut feel is good and people don't believe in gut feel, if you call it gut feel,
If you call it pattern recognition, more people believe in it.
But if your pattern recognition is good and you see something that looks really interesting, the probability of that being a good investment is pretty high.
It's like way over 50%.
And by taking a position, you create some urgency in the research process.
And it's also easier to add to the position if it goes up, because you already have some shares right.
So it's just like mentally a bit easier to get going.
So I was in his camp.
Do you think you can teach intuition or pattern recognition, if you will?
No, you can't.
But you gain it with time.
So I did a research process when I studied social psychology.
I interviewed the 20 best asset managers in Europe.
And I asked them about pattern recognition.
When do you use it?
When don't you use it?
Well, first of all, you call it gut feel.
Nobody believes in it.
You call it pattern recognition.
A lot of people believe in it.
You don't believe in anybody else's gut feel, only your own.
You can't apply it when you're young because nobody believes in it.
You can't go to your boss and he's like, hey, you know what?
I think we should buy 100 million worth of Apple.
He's like, okay, well, why?
It's just a gut feel I have.
It doesn't work, right?
Nobody's going to listen to you.
So you need to be pretty senior.
And ideally, you want to be the boss because if you're the boss – you can actually do it.
And it gets better over time.
So the best people use a combination of the two.
They use a combination of pattern recognition and analysis, depending on the situation.
If you press for time, you're more likely to use pattern recognition.
And if it's a really complex situation where it's difficult to put numbers on the outcome, their pattern recognition is more important.
I think I remember an interview with Magnus where he said something like that.
Where it was, I have an intuition, like an intuitive recognition of what move I'm going to make.
And then the follow-up was, well, why does it take you like five minutes to move sometimes?
And he's like, well, I'm double-checking.
I'm slowing down.
So what he does, well, according to what he told me, is that his gut feel gives him like three different types of moves, and then he analyzes them. then he spends like five ten minutes but beyond that uh time he doesn't need time more than that because it doesn't add to to the outcome and we we over and a lot of things we over analyze by over analyzing you it doesn't often it doesn't improve the old company makes you more confident about the outcome which is also not always a good thing how do you like how do you think about chess which is sort of like a defined board defined rules Finite it's noble.
Everything's noble.
All the information is noble.
It's all visible, versus something like poker when it comes to intuition, Because you, if you listen to con men, I mean his argument was to really develop intuition, you need a constant environment, rapid feedback and a lot of iterations, and In investing, you definitely don't have a constant environment, feedback can sometimes take a long time and And you might not get a lot of iterations at the table.
Well, I would argue you get feedback all the time in investing.
How is that?
Because the share price tells you something.
But the share price tomorrow, like if you buy today, the share price tomorrow.
Is that feedback or is that sort of noise?
How do you think about that?
Well, it depends.
It depends.
It can be either.
So how do you know when you're wrong?
Generally speaking speaking, you know, with the share prices go against you.
That's an indication of the fact that you may be wrong.
But of course, you don't know for sure.
How do you seek out disagreement?
Well, first you have to create an environment where people are okay to disagree with you.
You need to listen.
You need to take what they say into consideration.
So you need to create that kind of atmosphere.
In the beginning, in my job, people didn't disagree with me.
They all agreed.
And that's not very good.
Now they disagree all the time.
It's really good.
How did you change that?
Because so often leaders get insulated.
No, by creating that, hopefully, security for people to be able to speak up.
I mean, is everybody telling me all the things they mean all the time?
No, of course they don't.
Because some people have respect for the CEO and that kind of stuff.
But we are creating ways of doing it.
For instance, I mean, you're Canadian, right?
So I'm sure you're into ice hockey.
No, we have these pucks, these things that you play with.
We have them on the table.
It's just like, hey, here is a straight puck.
I disagree with what you say.
I think you're wrong.
So then you put the disagreement into like a physical object and you take it away from the person.
So it's not personal.
It's just like, hey, you know what?
I think what you're saying here is just crap.
That's really good.
So in the front now we have like a straight puck award, so the people who's kind of talking up uh, you know, properly disagreeing with me gets a buck.
It's good.
I like that idea, i love it.
I think it's just really good.
What other ideas do you use internally that would be along the same lines, that may seem interesting or counterintuitive, that are actually super effective?
Well, you just have to work on getting a feedback culture.
We are working on it.
It's not easy.
It's not easy to give feedback and it's not easy to receive feedback.
So you just have to do it all the time.
I'm getting better at this.
I'm more of a straight talker.
I tell people more now that I disagree with them and I try to give them feedback straight after.
But it's not easy.
People are very sensitive, you know.
Is there anything you've learned about how you disagree with people that makes a difference?
Well, I mean, you can pack it in a touch, but I think you just want to be pretty straight.
Yeah.
A lot of people are sensitive when you... Totally.
I mean, but it's also the age, right?
I mean, young people are very, very sensitive.
In the Nordics, we are like hypersensitive.
And in the public sector, they are very, very sensitive.
You know?
Yeah.
And then the feedback you get is It's so interesting because a lot of these conversations actually turn into that which is like I disagree with you.
And then it's, well, I didn't like the way you disagreed with me and you made me feel.
And then the whole topic of the conversation has changed from the actual thing where it's not like I disagree with you as a person.
I disagree with your opinion on this thing.
But now all of a sudden we're talking about how you feel about my disagreement.
And it sort of derails things.
It's crazy.
What do you look for when hiring?
Curiosity, intelligence, integrity, drive.
How do you test for curiosity?
What does that look like?
What are you trying to learn now?
What have you learned lately?
What have you learned lately?
Me?
I'm learning every day.
I've done a deep dive on you for the past two days.
Poor thing.
I've learned lots about you.
One of the favorite things that came up in my learning about you is you have an ice cream stand outside of your office or something.
Yeah, that's really good.
That's really good.
Yeah.
Why do you use that?
Because you want people to come by and talk to you.
And so I got a sofa next to the ice cream box and I kind of hang out on the sofa quite a bit, you know, like just chill there.
And then people come by to have an ice cream and say, hey, what are you working on just now?
And they tell me what they're working on.
And it's really interesting.
And sometimes it's like, yep, have you spoken to this guy?
I think he or she is doing the same thing as you.
Have you spoken to that person?
So I just learn a lot.
That's great.
I mean the payback on that ice cream box is probably I don't know a thousand times payback at least.
One of the other things I learned about you that I found fascinating, that I wanted to follow up on actually, is you had all these conversations after you started or right before you started?
You had hundreds of conversations with people.
I had 140.
140.
What was the structure of those conversations like?
Okay, so this is something I learned from a guy called Albert Beeney.
He was the head of a company in Switzerland called Geberit and another one called Lonza.
And he said, Nikolaj, because when I got the job, I thought, you know, gee, I got the job.
I mean, what do you do when you get a new job?
What do you do?
So I rang all the best CEOs I've ever met.
I said, hey, what do I do?
I got a new job.
I mean, how should I approach a new job?
You have a lot of conversations with people and you do them before you start, because after you started, you have, you won't have any time and um, and you do it because people need to get to know you and you need to get to know them and you need more data points so that you can make your decisions.
So that's very important.
So i sit down with 140 people and i just start hey, what's on your mind?
That's it, yeah?
And then people have stuff on their mind, right?
What do people think about?
That's very interesting.
But then, of course, you develop.
It's just like, okay, what are the good things here?
What would you change?
What's your advice to me?
Those kind of things.
And it's very clear.
The funny thing is that when you've had half of them, you've you get the general gist of what you need to do.
You've kind of triangulated, like the same thing is coming up over and over again.
So that's a strong signal.
Absolutely, i do the same now.
So i'm in new york for a month.
I sit down with everybody in the firm here we got 100 people and uh hey, what's on your mind?
And um, you know, there's a pattern emerging and i, if there is a problem, i try to well, i change it.
Do you ask people what you're doing?
That doesn't make sense?
Uh yeah, i do, but you probably should be even more, Because people do.
Generally speaking, we all do things which don't make sense.
And then inertia sort of like takes over.
Totally.
We make reports which nobody reads, right?
That kind of thing.
So that's the first thing you do when you talk to people.
So then you distill down okay, of everything I've taken from these 140 conversations, what are the three most important things?
And then you put together a leader group and you execute those three things.
And you take the time.
You spend the time it takes. leaders who fail, they try to do too many things too quickly.
And we were, in the beginning, we moved too quickly twice.
And then we got the message and we slowed down.
Go deeper on that for a second, because that strikes me as something really interesting, where a lot of people are trying to go faster and faster.
And I'm thinking, you know, specifically, my friend Kaz had a shirt on yesterday.
He did the open investor call.
And his shirt literally said faster, and he was all about increasing velocity and he had just taken over.
I think September 14th or 16th or whatever.
But like, how do you, how do you?
Yeah, just go deeper on that.
First of all, you need to, you need to execute change as a combined leader group, because if you, if you don't have, if you don't, if you aren't a combined leader group and you try to do something on your own and you'll trigger the immune system of the organization.
You know, the organization just want to have you out and they often succeed.
You know, you are isolated, you just don't get things done and so on.
So you need to, the organization needs to feel, okay, this is a combined leader group.
There is no, it doesn't make any sense to try to resist this change because it's going to come.
I can just as well just cave in and accept it, right?
And then you need to prioritize and you need to have not too many things and you need to over-communicate.
And the thing with over-communication, it's just becoming clearer and clearer.
You know, you think you've said it, you think they've heard it, they haven't heard it.
It's very, very tough to get something to really permeate through an organization.
And you think, gee, I've said it 10 times and I'm so bored of myself.
But then you're only halfway.
You just need to keep going, you know.
Same message over and over and over again.
And how do you evaluate CEOs from a competence point of view from the outside, just using public information?
What's your thought process when you're sort of evaluating whether this person's effective or ineffective?
I think it's difficult to see before they have been in the position.
Most people i see are competent, otherwise they wouldn't have gotten the job you know they are.
They are.
I mean, they know their stuff right, they know the company, they know the things.
But are they good communicators?
Are they good at executing?
It's tough to see from the outside how long after somebody has taken over.
Do you start to see it in the finances, like the analytic numbers, the quantitative numbers?
I think it depends.
It depends on the business cycle.
It depends on kind of the product cycle of a company.
But it takes time to turn around a company.
Totally.
I would say to change a culture is a 10-year project.
Oh, wow.
Yeah.
Why do you think it takes so long?
I've been in the job for five years now.
I think I'm roughly half the way in.
If you had to do it faster, how would you do it?
Is it a matter of force?
Like if we think of it from physics, it's like No, I think if you do it faster, you need to lay off people.
Then you need to change the people.
Right.
And in some businesses, you can do that.
But, you know, we can't do that.
I mean, in Europe, it's difficult.
And also, we got great people.
You know, we were amazing people.
I think we got an incredible lineup of you know very, very able, you know professionals, and so you know, but there just are a few things that we'd love to you know to change right.
We want to have more feedback into the system.
We want to move a bit faster, we want to have a bit less fear, we want to uh do these kind of things.
But that was, i mean, it was uh, it probably it wasn't working as well um, before you as now maybe um, but it's sort of like that's working when you think about yeah, i mean It was working well.
I mean, it's a great company.
There was nothing wrong with the company.
I mean, really good.
I mean, just had a fantastic performance, right?
But I just thought it needed some tweaks.
Yeah.
I mean, technologically, it was top-notch.
Compliance-wise, top-notch.
A lot of really, really good things.
It's the envy of the world now.
Well, it's a good company.
You've taken, I mean, just in the sense of the sovereign wealth fund too, right?
You've taken these reserves that you have and you've turned them into perpetual wealth, not only for all your citizens, but global influence and a toll bridge on the world economy.
I mean, I think that's amazing.
Well, so I would say that's really the, that's to the credit of the politicians.
You know, the politicians decided when they found oil and Back in 69, I mean they decided after they found the whole list.
We should put this into a fund.
And so in 96, they set it up.
First deposit was, you know, relatively small and now it's grown a lot, right?
But the politicians were really foresighted and they've been good ever since, to be true to the principles.
What are you trying to learn right now?
Lots of things.
I...
I just feel I know so little.
And you know, I'm just looking at the podcasts I'm doing over the next few months and I'm learning about all these kind of things and I needed to learn them anyway.
But that kind of makes it urgent.
I really need, you know, by next week, I need to know more about networks.
I need to read up on crypto.
I need to I need to read up on IMF.
I need to... Oh my, there is just so much I need to learn.
It's incredible.
You guys don't invest in... No, we don't, but I'm talking to somebody who's in that space.
In crypto at all.
Yeah, and I just don't understand.
I don't understand it, so I need to learn.
Is it that you don't invest in the coins themselves, or you sort of like a Bitcoin, or you don't invest in the exchanges like Coinbase or something?
Well, we have some ownership stakes in some of the infrastructure because it's in the index and we are, you know.
So we would own it in a bit more of a passive way.
How much do you work?
I work all the time. but it's not work.
It's like Jensen.
Is it like Jensen, you wake up at five and you're like, go, go, go until nine.
And then, you know, for him, it doesn't feel like work.
It's just, I mean, that's what he, that's what he told me.
And I kind of I I mean he works more than he, works a lot more than me, because he works every holiday and every Saturday and every Sunday and all the time.
But you know I tend to wake up at five and then I read papers and try to understand what's going on in the world.
And then I start to shoot mails and uh, you know, i have a notepad at the at the side of my bed, because if i wake up in the middle of the night, i typically have some ideas and if you don't get them down a piece of paper, you're going to forget them, right?
So i do that, and then i work at meetings um, and i read in the evenings and, you know, check out the papers from the next day, and but it's not work, You know, it's just like it's life.
So many people, Michael Ovitz gave me this phrase, but it's like so many people fight their job.
And so it's more of like a transaction than an integration between work and life.
It strikes me that having the view that you have towards work is much healthier.
And Yeah, but not all people.
I mean, hey, it's not like everybody has the opportunity to work with what they love.
Not everybody is that fortunate, but I've been really fortunate in that I've ended up with the things.
I just cannot think of anything more interesting in the world.
Who do you go to for advice?
I go to lots of people.
I speak with as many people as I can.
The funny thing when you ask people for advice, what do they think about you afterwards?
Do you think they think that you are more clever or less clever?
More, more clever?
They, because you must be very clever.
Who asked me for advice?
You know he must, he must be really clever.
He understands how clever i am and therefore he wants to have my opinion.
What surprised you the most this year?
Everything that goes on in geopolitically.
You didn't see it coming or just continues to like push the limits of what you thought was possible.
Yeah, that's makes life interesting to live.
You know you can be, you can do what to do.
If you don't like what's going on, you can be really depressed about it.
Or you can put on your student hat and just think, oh my my, i can't believe i'm alive to see these things.
You know it's so interesting and i think it is like super interesting and technology, you know.
So the thing is that everything is coming together at the same time.
You know the technology development now is just like totally, totally phenomenal.
What a time to be alive.
I wake up every day.
It's the best.
Yeah, and I remember it wasn't.
It was only a couple weeks ago where AI actually made the first sort of bio advance that humans hadn't made.
It's on cancer research and they tested the hypotheses and it was true and it was like this is like Neil Armstrong stepping on the moon.
Like this is.
This is incredible.
This is the first stage of The first real thing.
I thought that was amazing.
I was so excited about that.
We always end with the same question, which is what is success for you?
Success is to make an impact in other people's life in a positive manner.
That's a great answer.
Thank you for taking the time today.
I really appreciate it.
Thank you.
