The $2 Trillion Mind | Nicolai Tangen

Nicolai Tangen is the CEO of Norges Bank Investment Management, the world’s largest sovereign wealth fund. He is responsible for managing $2.1 trillion. That's roughly 1.7% of every listed company on earth. In this episode, we explore the intersection of massive wealth, high-speed decision-making, and the psychological traits required to survive the AI revolution. ----- Approximate Timestamps: (00:00) Introduction (01:09) What Are You Leaning Against? (03:17) Tech Sector Evolution (04:15) The AI Bubble (05:44) Will AI Replace Humans in Investing? (06:24) Lessons on Listening (09:15) American vs. European Mindset (12:09) Prime Minster For a Day (14:27) Most Important Data (16:00) Speed and Agility (17:05) Ad Break (18:35) Using Urgency as a Tool (20:12) Can You Teach People to Change Their Minds? (22:14) Positive and Negative Comments (22:56) Testing Assumptions Before a Big Investment (25:07) Attitude Towards Risk (28:33) What’s Gotten Harder in Investing? (29:07) The Rise of Passive Investing (33:42) Why Did You Take This Job? (35:04) Ad Break (36:14) Sovereign Wealth Funds (38:24) Voting Against Elon Musk’s Pay Package (39:08) Building Long-Term Thinking (43:17) Slowing Down Decisions (45:13) Seeking Out Disagreement (48:08) Hiring Checklist (49:15) 140 Conversations To Prepare For A Huge Role (53:33) CEO Evaluation (01:01:25) What is Success For You? ------ Newsletter: The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ------ Follow Shane Parrish: X: ⁠⁠⁠⁠⁠⁠https://x.com/shaneparrish⁠ Insta: ⁠https://www.instagram.com/farnamstreet/⁠ LinkedIn: ⁠https://www.linkedin.com/in/shane-parrish-050a2183/⁠ Follow Nicolai Tangen: LinkedIn: https://www.linkedin.com/in/nicolai-tangen/?originalSubdomain=no Learn More: https://www.nbim.no/en/about-us/leader-group/leadergroup-persons/nicolai-tangen/ ------ Thank you to the sponsors for this episode: +Granola AI, The AI notepad for people in back-to-back meetings: https://www.granola.ai/shane Check out the Granola Notes +Download The League App today and find your perfect match! https://click.theleague.com/qmhm/0vdzsmj5 +Shopify: https://shopify.com/knowledgeproject Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  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.

• 0:08Shane Parrish?

  Where do you think the tech sector evolves from here?

• 0:11Speaker 00

  Well, that's the trillion dollar question, right?

• 0:14Shane Parrish?

  Luckily, you manage, what, two trillion?

• 0:17Speaker 00

  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%, she's 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

• 0:36Shane Parrish?

  Yeah, of course.

• 0:37Speaker 00

  It's totally not political. But if I were like Prime Minster for a day, I would inject AI everywhere. If you look at the golden ages we've had, and you look at, you know, the real powers we've had during the years, you know, Rome, Venice, they were open economies, free trade,

• 0:56Speaker 00

  free movement of labor, thought, and so on. What they all have in common in terms of the end of the golden ages is

• 1:09Shane Parrish?

  What are you leaning against right now?

• 1:11Speaker 00

  Well, I think the stuff to lean against, if you really want to do the opposite of everybody else, would be to, you know, do less AI-related investments and more real estate investments.

• 1:21Shane Parrish?

  How do you see real estate playing out?

• 1:24Speaker 00

  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.

• 1:38Shane Parrish?

  What do you think of office? I guess that's the worst real estate class.

• 1:42Speaker 00

  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, you know, part of the banking system. You had rates, you know, being relatively high. And so you've had a few factors there impacting it negatively.

• 2:06Shane Parrish?

  How do you think about rates? I mean, historically, there's been a, I think the average is 6% or something, somewhere thereabouts. And we've been lower than that for almost 20 years now.

• 2:16Speaker 00

  Yeah, we've been very low and for a very long period of time. I think there were 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, you know, people don't talk so much about just now is, is the impact on climate, you know? So climate is impacting harvest, is impacting prices for a lot of, you know, raw material and, and input factors in particular to the food side. So be it, you know, chocolate, coffee and so on. And you've got various fires. You, you just, you've just got a lot of kind of impacts from climate on pricing structures.

• 2:58Speaker 00

  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?

• 3:17Shane Parrish?

  Where do you think the tech sector evolves from here?

• 3:23Speaker 00

  Well, that's the trillion dollar question, right?

• 3:26Shane Parrish?

  Luckily you manage, what, two trillion?

• 3:31Speaker 00

  It's pretty, pretty hot, right? That, I think we can agree on that. And I think it's quite interesting. So you have Janssen Huang, the CEO of N Media, 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, 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's just indicates to me that this is now a very, very hot sector when things like that happen.

• 4:15Shane Parrish?

  What would be your argument for the fact that we're in an AI bubble and then against the fact that we're in?

• 4:21Speaker 00

  Well, I think, um, okay, AI bubble, you would look at things like valuations, you'd look at circularity in terms of ownership and, and, uh, you know, vendor financing, uh, these type of things. Um, you'd look at, uh, news coverage, uh, you look at things like what happens when they eat, you know, chicken at a restaurant. So you just kind of just look at how frothy a sector is. On the other side, it has huge, um, ramifications for how we live our lives. And we see in our firm, we are increasing productivity probably by twenty percent just by utilizing it more. And we're just stuffing it in wherever we can. And it's making a huge impact.

• 5:01Shane Parrish?

  How does that show up, the increase in productivity?

• 5:04Speaker 00

  Well, we chose up, um, in that we do more with the same amount of people. You know, we have, we are keeping headcount now flat. And we are just producing more and producing better quality.

• 5:17Shane Parrish?

  What do you think would cause inflation to come back?

• 5:20Speaker 00

  Um, slower world economy, uh, you know, AI, leading to more productivity gains, uh, humanoids, so increased use of robotics, which is just a cheaper labor supply.

• 5:33Shane Parrish?

  Is AI making decisions now at the firm or is it?

• 5:38Speaker 00

  No, we are, there is always a human in the loop. But it's helping us, it's supporting our decision making.

• 5:44Shane Parrish?

  Do you think it'll ever replace humans in investing?

• 5:46Speaker 00

  I am not in over place, um, but clearly in some places, right? You have, uh, fully automated, uh, uh, you know, investment models in a lot of places.

• 5:59Shane Parrish?

  What skills do you think will matter more in an AI world?

• 6:02Speaker 00

  Interpersonal skills, uh, you know, the ability to talk to people, the ability to listen and, uh, you know, empathy. I mean, these, these things have always been important, but they are just even more important, you know? And I'm just, I'm just seeing it so many places. It's really, really interesting.

• 6:22Shane Parrish?

  You talked about, uh, the ability to listen, I think, in your, uh, Wharton commencement speech?

• 6:28Speaker 00

  Yep.

• 6:28Shane Parrish?

  Um, how would you teach somebody to do that?

• 6:35Speaker 00

  Well, that's a tough one. Um.

• 6:38Speaker 00

  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 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 you got two ears and. Um, but um. It's super important.

• 7:06Shane Parrish?

  A lot of people think they're listening, but they're not actually listening.

• 7:10Speaker 00

  Yeah, they're just processing stuff and can't wait to get to the next questions themselves, you know? So there is there is little listening.

• 7:21Speaker 00

  Um, I um, 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 all the problems, we 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.

• 7:54Shane Parrish?

  Would you say that's the biggest problem in society?

• 7:57Speaker 00

  I think that one of the biggest problem now is um, is the fact that we we close up, you know, we um. If you look at the golden, if you look at the golden ages we've had. And you look at, you know, the real powers we've had during the years, you know, Rome, Venice. Uh, you know, the Song Dynasty, the Netherlands, you know, these. These places which did really, really well. They were open economies, free trade, um. Free movement of labor, thought and so on, and. What has, what they all have in common in terms of the end of the golden ages is. Closer free trades, tariffs.

• 8:38Speaker 00

  Um, end of immigration, end of free thought, the rise of the strong man. Uh, attack on, you know. Freedoms of all types of, you know, sorts, and we are seeing that in many places of the world. And uh, and that's a native.

• 8:55Shane Parrish?

  Which one of those concerns you the most?

• 8:58Speaker 00

  All the above.

• 8:59Shane Parrish?

  For me, it's free speech. It's like that seems to be the big limiter.

• 9:05Speaker 00

  Yeah, but you need you need new ideas, you know, you need to rejuvenate countries and societies. But clearly, free speech is important.

• 9:15Shane Parrish?

  How do you see the difference between American and European mindsets?

• 9:20Speaker 00

  So this is super interesting, right?

• 9:25Speaker 00

  And now I'm in New York for a month and, you know, wow, the energy here.

• 9:32Speaker 00

  The entrepreneurship, the drive, you know, I just get so much energy just living here. Level of ambitions, super high.

• 9:44Speaker 00

  Versus Europe, where there is, I mean, Europe is a fantastic place too, right? But for different reasons.

• 9:51Speaker 00

  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 in America, five, I mean, do you think five is a high number or a low number?

• 10:18Shane Parrish?

  For what?

• 10:19Speaker 00

  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 and so on.

• 10:45Shane Parrish?

  Do you think that's good or bad?

• 10:47Speaker 00

  I 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.

• 10:55Shane Parrish?

  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.

• 11:01Speaker 00

  Yeah.

• 11:02Shane Parrish?

  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 it a culture shock when you came to Wharton?

• 11:12Speaker 00

  To Wharton?

• 11:13Shane Parrish?

  Yeah.

• 11:13Speaker 00

  Absolutely, absolutely. Well, you see, the in a way, Norway is the opposite of Wharton. Um. Because in no way, everybody's supposed to be the same. You have this thing called Janteloven. It's just like, don't, don't think you are fantastic in any way, shape or form. Uh. So you come to Wharton and I sit there in a class and it's just like, hey, what do you guys want to achieve in life? And one, one of the, 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. You know, at Wharton, but i- it's not particularly normal in where I'm from.

• 11:49Shane Parrish?

  How would you change that to add more ambition?

• 11:52Speaker 00

  Yeah, I don't think you can change it. You can't, you can't change a, 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.

• 12:10Shane Parrish?

  How would you go about it if you had to, if that was your task?

• 12:13Speaker 00

  Okay, so I never do politics because my job is

• 12:15Shane Parrish?

  Yeah, of course.

• 12:16Speaker 00

  It's totally not political. But if I were like a prime minister for a day.

• 12:22Shane Parrish?

  And your only job, just ambition, nothing sort of like?

• 12:25Speaker 00

  I would, I would inject A I everywhere. Um. I would.

• 12:33Speaker 00

  I would just go all in. I would do what they did. You know, in Sweden in the eighties, they had something called home P C. So they bought eight hundred thousand P C's in a country of, I don't know, at that stage, let's say it was six, seven million or something eight. Um. 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? No, probably not. But you know, they, they, they increase the digitalization. Now they're doing the same thing with A I. Now they're doing the same in Iceland. In Iceland, they are, they just did a, they announced a cooperation project with, um. Uh, you know, with Entropics, 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 high, highly digitalized country.

• 13:18Speaker 00

  And where people think it's pretty nice to have a lot of spare time. And of course, A I helps you with that.

• 13:26Speaker 00

  And it's a once, you know, you you read the book about Nvidia, for instance, and Janssen 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.

• 13:41Shane Parrish?

  And if you don't do that, you're sort of going to be left behind if people do.

• 13:44Speaker 00

  Totally.

• 13:44Shane Parrish?

  Yeah, there's two, I mean, Alpha School, I guess, is one of them who's 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 two 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?

• 14:22Speaker 00

  I don't know why people would do it. They should do it. I mean, they should do it.

• 14:27Shane Parrish?

  What's the most important data you look at these days?

• 14:33Speaker 00

  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?

• 15:07Speaker 00

  So I was up in a forest a few weeks ago and with seven of my best friends and and we were predicting, okay, what's going to happen over the next 12 months? So we tape it, we tape recorded. And then we were we were playing our predictions from last year.

• 15:25Speaker 00

  And you know, these are really clever people. And how do you think we did?

• 15:28Shane Parrish?

  Terrible.

• 15:29Speaker 00

  Terrible, terrible. I mean, we were like eighty percent wrong. You know, we didn't, we didn't, we 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 had no clue. And so I think trying to predict in this world is just more and more, you know, useless. So what do you need to do? You just need to work on speed and agility.

• 16:01Shane Parrish?

  Go deeper on that for a second. How important is speed and agility?

• 16:04Speaker 00

  Well, I have a big thing with speed, you know, as speed is.

• 16:08Speaker 00

  Well, I mean, speed is a mindset and it is, you know. Um, he struck me again, going back to New York, you know, I buy this every morning, I buy this, uh, you know, egg and uh, egg and ham roll and just speed with which they wrap it. I mean, my, so the speed in New York is very high. But speed generally, I think is is super important, you know. Um, it comes to this first principle, things shouldn't take longer than than they need to take. You know, um.

• 16:39Speaker 00

  You save time by being fast. So this sounds a bit um strange, but you know, if you answer, if I, if I send you an email and you answer within one minute, how long does that email need to be? Two, 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, so you just save time by being quick.

• 17:05Shane Parrish?

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• 17:50Shane Parrish?

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• 17:56Shane Parrish?

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• 18:35Shane Parrish?

  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.

• 18:43Speaker 00

  Yeah, I just think, you know, urgency is, I try to build urgency into most things. You know, in my office, I have a, I have this, this watch, this kind of clock and it counts down the number, the days I've got left in, in my job. So it's not because I look forward to, to stop working because I love my job. But I have this thing on the wall and so you come in and say, hey, Nicola, we, we're going to work on this and you know, I'll sort it by January. And I said, January? Look here, I've got 1,765 days left. We need to do it now. And then you said, oh, really? You only have 1,765 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.

• 19:24Shane Parrish?

  I like that. That's a really good idea. When I was talking with Charlie Munger about predicting and 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.

• 19:38Speaker 00

  Yeah.

• 19:38Shane Parrish?

  How do you think about that?

• 19:42Speaker 00

  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.

• 19:52Speaker 00

  Somebody like Stan Druckenmiller has it.

• 19:56Speaker 00

  But the combination is rare. You need to be stubborn in order to do the opposite of everybody else.

• 20:03Speaker 00

  And when you are, when you do these kind of contrarian investments, there will be periods where everything goes against you. And it's stressful, but you need to hang in there.

• 20:12Shane Parrish?

  Do you think you can teach people to change their minds?

• 20:15Speaker 00

  I think you can, to a certain extent, you can teach them. It's 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, I have hundred like, you know, likes on Facebook or whatever. And so to be, to be different from other people is, is tough. So now, when I have, when I give presentations at universities, I, I ask people, hey, anybody here who thinks differently from other people, who kind of think that they are weird, that they, that nobody understands them, hands up.

• 21:00Speaker 00

  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%, it's 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, you know? And I, I kind of think people, hopefully, they go out and I really think, you know what? I want to be different, you know? It's something we should really treasure and, and love. I, you know, it's, wear is good, right?

• 21:27Shane Parrish?

  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, you know, hated or disliked by people. And that causes all these weird societal distortions.

• 21:42Speaker 00

  Yeah, you, you don't have to be disliked, even though you disagree, you know, people disagree with you. But you know, in my mind, in my mind, life is not a popularity contest. So my wife says that, well, only people without friends say that. But I don't, I don't think so. I think you, life is for sure not the popularity contest.

• 22:00Shane Parrish?

  You're definitely not popular all the time. You have that big number on the screen.

• 22:04Speaker 00

  You can't, you know, 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.

• 22:14Shane Parrish?

  Do you read the comments that are negative about you?

• 22:17Speaker 00

  No.

• 22:18Shane Parrish?

  Do you read?

• 22:19Speaker 00

  But I also don't, I also don't read the positives.

• 22:20Shane Parrish?

  Okay.

• 22:21Speaker 00

  And I don't believe them, you know, I don't believe the positives, I don't believe the negatives.

• 22:24Shane Parrish?

  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?

• 22:33Speaker 00

  I read, I go through headlines and I drill down. If it's either something I am interested in or something I know I should know more about.

• 22:45Speaker 00

  Or if I'm going to meet somebody who's interested in that particular field, or I know somebody who's interested, then I pass it on to somebody else. Or if I've met the person, or I had him on our podcast.

• 22:57Shane Parrish?

  How do you test your assumptions before making a big investment?

• 23:01Speaker 00

  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 morally scientific method.

• 23:12Speaker 00

  I think we can be better. And I do think that there is, I, I think there is something called, I, 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 so I have much more of an open mind now than I had in the past. I, I think I listen to more different types of input and opinions. And I try not to jump to conclusion.

• 23:36Shane Parrish?

  Has that mean you're a better or worse investor based on returns?

• 23:40Speaker 00

  Well, so, so I, I don't run money myself now. I'm, you know, running a, 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, into the equations. If you are long something, you listen to the shorts, you, and vice versa. I mean, there, there really is a truth, you know, don't you think? Do you think there is an objective truth?

• 24:05Shane Parrish?

  I would like to think so, yeah. Yeah. I think that that's, but how do we get at that truth is the?

• 24:11Speaker 00

  Well, by listening to different types of people.

• 24:13Shane Parrish?

  Yeah, but then you're, you're making a judgment call at some point on what, what's closer to the truth and what's not.

• 24:20Speaker 00

  Of course, and then you have to kind of, uh, 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.

• 24:30Shane Parrish?

  I think the, 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. There's something, and our job is to um,

• 24:42Shane Parrish?

  reduce our blind spots. I don't know if we can completely eliminate them, but we can definitely reduce it.

• 24:46Speaker 00

  Yeah.

• 24:47Shane Parrish?

  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.

• 24:58Speaker 00

  Yeah.

• 24:58Shane Parrish?

  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.

• 25:06Speaker 00

  Yeah.

• 25:07Shane Parrish?

  How has your attitude towards risk changed?

• 25:10Speaker 00

  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. Um, and I'm sorry, I'm not, I'm not the one who has invented this, okay? Because

• 25:55Speaker 00

  I, I did a degree in social psychology and one of my papers was on exactly this, is just how is 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. Um, 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 in, so let's say you, you private equity and you interview somebody like Steve Schwarzman, which we did on our podcast, right? So, okay, 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

• 26:38Speaker 00

  you lose money on a lot of stuff, as long as you capture the really big winners, right? So you can, you can lose nine out of 10, as long as you get the one right, which is just like going up like a rocket. The the issue here is that the rocket, the the entry ticket for the rocket, which was one million dollars in the past, that's not like five hundred million dollars.

• 26:57Shane Parrish?

  Yeah.

• 26:57Speaker 00

  So that rocket better better go up, right?

• 27:00Shane Parrish?

  And you guys do mostly, it's like index plus?

• 27:03Speaker 00

  Yeah, we are, we are, we are very indexed now. We got a very, uh, we got a really great investment mandate from the Ministry of Finance. It tells us how we're going to be, 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 that's important for many things, but it's also important because it limits how much money we can lose.

• 27:21Shane Parrish?

  So how does that work in practice? You you basically like start with a hundred percent 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?

• 27:29Speaker 00

  Yeah, pretty much, right? So we would, I would say we have twenty percent of the active, twenty percent 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.

• 27:40Shane Parrish?

  But you you have a lot of money coming in every year, I would imagine. It's probably on the order of a hundred billion-ish, if not more?

• 27:47Speaker 00

  Well, this, um, it depends on the energy prices, but generally there's been inflows.

• 27:52Shane Parrish?

  And so do you take that new, no matter what the price is, like say today where you have, uh, you know, the top seven stocks account for forty six percent 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 or?

• 28:08Speaker 00

  Kind of. We get, we get, uh, the the the inflows or outflows are they're monthly, right? So you get the money, uh, on a particular day and then you have to think here, when do you deploy it into the market? You do it a bit beforehand or a bit afterwards, or, you know, a bit before and after. And we use AI to optimize those type of decisions.

• 28:27Shane Parrish?

  Do you try to front run index changes?

• 28:29Speaker 00

  Yeah.

• 28:30Shane Parrish?

  Using AI, I would imagine?

• 28:32Speaker 00

  Yeah.

• 28:32Shane Parrish?

  What's gotten harder in investing?

• 28:35Speaker 00

  Everything.

• 28:36Shane Parrish?

  Nothing's gotten easier?

• 28:37Speaker 00

  No.

• 28:37Shane Parrish?

  Everything's gotten harder?

• 28:39Speaker 00

  No, I mean, everything is going harder. I would say what's getting getting easier is research, right? Because of the deep research functions in some of the models, you get incredible, incredible amount of knowledge within within five seconds. I would take you ages to do that before. And it's well structured and it's, um, and you can play around with it. And so that's, I mean, that's just phenomenal. It's just phenomenal.

• 29:07Shane Parrish?

  How do you think about the rise of passive investing when it comes to retail? What are the pros and cons of that?

• 29:13Speaker 00

  Well, the pros is that it's cheaper. So people don't pay that much fees.

• 29:21Speaker 00

  It's difficult to beat the market. The negatives is that you will, I mean, they would typically perpetuate bubbles. Because with more passive money, they go into, you know, stocks which have done historically well and they perpetuate the moves.

• 29:38Shane Parrish?

  Is your goal active return, like a active? Total return, absolute return, or is it sort of relative to the index?

• 29:46Speaker 00

  Relative, relative. So we are measured against a reference index, which is constructed by the ministry. And then we try to beat that. Historically, over the last close to thirty years, we've had twenty five 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's, these are pretty, they, it ends up being pretty big, you know, absolute amounts.

• 30:08Shane Parrish?

  And when you were running your own fund before that, what was the worst sort of investing mistake that you made and what happened?

• 30:16Speaker 00

  The worst mistake was during the financial crisis, we were in a subprime lender. And it turned out that there was accounting fraud. And it was a big position and that's, that's the worst.

• 30:30Speaker 00

  That's the worst investment I've ever made.

• 30:33Speaker 00

  And what I learned was that you don't want to go into dubious business models. And so Brian, you can say, you know, it's not really.

• 30:43Speaker 00

  Certainly the type of company we're invested, 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.

• 31:03Shane Parrish?

  What would you, like, what was the last thing you took away from that? Is it the business model? Is it?

• 31:07Speaker 00

  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.

• 31:16Shane Parrish?

  What would be the counter argument to that if you were to argue with yourself?

• 31:19Speaker 00

  I don't think there's a good counter argument.

• 31:22Shane Parrish?

  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 and?

• 31:33Speaker 00

  But it's just how you do it and how you go about it and what you charge for it.

• 31:37Shane Parrish?

  Yeah, there shouldn't be sort of usury rates for sure.

• 31:40Speaker 00

  No.

• 31:41Shane Parrish?

  And did you do a postmortem after that?

• 31:44Speaker 00

  Totally.

• 31:45Shane Parrish?

  And then how do you have the confidence to sort of come back and take big swings after you like you lost a lot of money on that one?

• 31:52Speaker 00

  Because you, as long as you don't do the same mistake. I mean, why, why, why make the same mistakes when there's so many mistakes to take from, you know? You find some new ones.

• 32:02Shane Parrish?

  That's the originality of mistakes. I love it.

• 32:05Speaker 00

  But, you know, okay, so, so the risk taking is really interesting. So most people take less risk when they lost money.

• 32:12Speaker 00

  Even though you should take the same amount of risk. So here we use a sports psychologist. I, 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 them, hey, why are you so good? Well, you know, we, we have two reasons. One, we have a very great, we 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, the wind direction changes and then suddenly you're, you're the last one. Now, next race, you need to take the same type of risks, you know? You cannot let it impact you.

• 32:56Speaker 00

  And that's the same way it is with investing. You know, 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 psychologists to help you with this.

• 33:09Speaker 00

  You know, I did a podcast with Magnus Carlsen, the chess player. And so I asked him, hey, what happens when you, when you lost, you know, a game? Do you take more or less? Well, he takes more risk in the next game, which I think is interesting. But normally people take less.

• 33:22Shane Parrish?

  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 at the, 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.

• 33:39Speaker 00

  Investors don't do that.

• 33:41Shane Parrish?

  Why did you take this job? Like, what did you see? Why did you want it?

• 33:46Speaker 00

  Oh my, it was my dream job, right? So I had um I had run uh this investing company, investment company called AKO Capital, set it up and um it kind of turned fifteen years and 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, more things. And then I had just before that, taken a degree in, done a degree in, in social psychology and organizational development. And so when this job came up, I was just like, wow, you know, it combines uh you know, asset management. And asset management is the most interesting thing you can do in life.

• 34:30Speaker 00

  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, uh it it's about everything, right? So it is, it is the most incredible game you could ever construct.

• 34:49Speaker 00

  Then I could combine it with organization development and really see whether we could take this organization, you know, 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.

• 35:04Shane Parrish?

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• 35:47Shane Parrish?

  Businesses that sell more, sell on Shopify. If you're serious about selling, The tech behind the scenes matters as much as the product. Upgrade your business and get the same checkout that I use. Sign up for your $1 per month trial period at Shopify.com/knowledgeproject, all lowercase. Go to Shopify.com/knowledgeproject, upgrade your selling today. Shopify.com/knowledgeproject. 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?

• 36:22Speaker 00

  I, I, I, I'm, I think I'm too, 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, on the, 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. And there is actually a world championship in that, and we won it three times in a row.

• 36:56Speaker 00

  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

• 37:08Speaker 00

  the politicians spend 3% of the fund every year, maximum of 3%. So I think the, you know, the broad political anchoring, the transparency and the spending rule, those, those are three really important factors.

• 37:20Shane Parrish?

  Are there any acute sort of political factors that go into this? I imagine it would become political, you're like 20 or 30% of the budget at this point.

• 37:31Speaker 00

  Well, yeah, the fund is 25% of the state budget. Well, the whole idea is that the fund should not be political.

• 37:35Shane Parrish?

  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?

• 37:46Speaker 00

  Yeah, well, so that's, so that is not politically decided, that's decided.

• 37:50Shane Parrish?

  How is that decided?

• 37:51Speaker 00

  Well, it is decided, we got a group of people who sit and look at votes, right? And they are very, very experienced people. So for instance, we look at pay packages. Are they structured in a way which coincide with, with a way, you know, I mean, are they aligned with our interests?

• 38:10Speaker 00

  Are they long term enough? Are they equity based enough? Those kind of things.

• 38:15Shane Parrish?

  Do those decisions come up to you? Or are you at least aware of the big ones?

• 38:19Speaker 00

  I am aware of the big ones, but I deliberately do not make decisions here.

• 38:24Shane Parrish?

  What was the thinking behind voting against Elon's pay package? Like, what was the rationale?

• 38:30Speaker 00

  Um, well, the team thought it was too, too big. And uh, didn't have the right alignment.

• 38:38Shane Parrish?

  With shareholders?

• 38:39Speaker 00

  Yeah.

• 38:40Shane Parrish?

  Do you think?

• 38:40Speaker 00

  And, and the fact that it was dilutive and.

• 38:45Speaker 00

  You know, we own, we own shares in nine thousand companies. If. If all the CEOs were going to have a billion dollars, that would be pretty expensive for us.

• 38:53Shane Parrish?

  I like to think of it as you basically have a. Almost a two percent toll on the world economy at this point, or something similar. Is that a fair way to think about it?

• 39:02Speaker 00

  I think so.

• 39:04Shane Parrish?

  I think that's a, I think that's really cool personally. How do you build long term thinking into the organization?

• 39:11Speaker 00

  It's very difficult to. Because. Because people want to do things. Okay? You know, I think wealth, 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, when you know, 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, how was it today? What did you do? I did nothing. Okay, and next day, Tuesday, it's like. Hi darling, um, you know, what did you do today? Nothing.

• 39:53Speaker 00

  And the same thing on Wednesday, Thursday, Friday. And it's just like at the end of the week, hey, did you, what did you do anything? No, I didn't do a thing. It's um, 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, inertia analysis. It mean, you take. You take the portfolio from January, Jan one. And you and you see, what would have been the investment result if I had 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.

• 40:29Shane Parrish?

  That is so true. What does it mean to think long term? Like, if you were to, are there elements to that thinking that go into it?

• 40:38Speaker 00

  Um, well, you have to figure out what's your time horizon, right? Ideally, we should be thinking with a wealth fund, we should think fifty years ahead. But that's tough, because you haven't got a clue what the world is going to look like in fifty 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, you can look into the future. So it's very tough to be, it's very tough to be long-term in what you do.

• 41:06Shane Parrish?

  I know, um, Drucker Miller is widely known to take a position, then do research after.

• 41:12Speaker 00

  Yeah.

• 41:12Shane Parrish?

  Uh, do you do that as well, or?

• 41:14Speaker 00

  Well, I did, I did that, uh, quite a lot. And I think it's, why do you want to do that? Well, um, first of all, you, if your gut feel is good, and you know, 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, 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. Okay, it's like way over fifty percent.

• 41:42Speaker 00

  Um, and by taking a position, you create some urgency in the research process. And it's also easier to add to, but to add to the position, you know, if it goes up, because you already have, you already have some shares, right? So it's just like mentally a bit easier to get going. So I, I was in his camp.

• 42:00Shane Parrish?

  Do you think you can teach intuition or pattern recognition, if you will?

• 42:06Speaker 00

  No, you can't, but you can, but you gain it with time. So I did, uh, I did a research process when I studied social psychology. I interviewed the twenty best asset managers in Europe. And I asked them, you know, about pattern recognition, you know, when do you, when 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 it's just, you know, buy a, you know, a hundred million worth of apple. It's like, okay, well, why? Ah, it's just a gut feel I have. It, it doesn't, it doesn't work, right? Nobody's going to listen to you. So you need to be pretty senior.

• 42:50Speaker 00

  And ideally, you want to be the boss, because if you're the boss, uh, you can actually do it. And it gets better over time. So the best, the best people use a combination of the two. They use a combination of pattern recognition and analysis, depending on the situation. If you are, if you're pressed for time, you, you are, you're more likely to use pattern recognition. And if it's a really complex situation, where, where it's difficult to put numbers on the outcome, their pattern recognition is more important.

• 43:17Shane Parrish?

  I think I remember an interview with Magnus where he said something like that, where I have an intuition, like an intuitive recognition of what move I'm going to make.

• 43:25Speaker 00

  Yeah.

• 43:25Shane Parrish?

  And then the person, 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.

• 43:31Speaker 00

  Yeah.

• 43:31Shane Parrish?

  I'm slowing down.

• 43:32Speaker 00

  So what he does, uh, well, according to what he told me, is that he, his, uh, his gut feel gives him like three moves, three different types of moves, and then he analyzes them. And then he spends like five, 10 minutes, but beyond that, uh, time, he doesn't need time more than that. Cause it doesn't add to, to the outcome. And we, we over, and there are a lot of things we overanalyze. By overanalyzing you, it doesn't, often it doesn't improve the outcome, but it makes you more confident about the outcome, which is also not always a good thing.

• 44:07Shane Parrish?

  How do you, like, how do you think about chess, which is sort of like a defined board, defined rules, uh, finite? It, it's knowable, everything's knowable, all the information is knowable, it's all visible versus something like poker. When it comes to intuition, cause you, if you listen to Kahneman, 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 you might not get a lot of iterations at the table.

• 44:44Speaker 00

  Well, I would argue you get feedback all the time in investing.

• 44:48Shane Parrish?

  How is that?

• 44:49Speaker 00

  Because you, well, because you you just, the share price tells you something, right?

• 44:53Shane Parrish?

  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?

• 44:59Speaker 00

  Well, it depends. It depends, it can be, can be either.

• 45:02Shane Parrish?

  So how do you know when you're wrong?

• 45:04Speaker 00

  Generally speaking, uh, you know, with the share prices going against you, that's an indication of the fact that you may be wrong. But of course, you don't know for sure.

• 45:13Shane Parrish?

  How do you seek out disagreement?

• 45:16Speaker 00

  Well, first, you have to create an environment where people are okay to disagree with you. You need to listen, um, you need to take what they say into consideration.

• 45:29Speaker 00

  Uh, so you need to create that kind of atmosphere.

• 45:34Speaker 00

  In the beginning, in my job, people didn't disagree with me. They all agreed. And that's not very good. Now that I disagree all the time, you know, it's really good.

• 45:44Shane Parrish?

  How did you change that? Cause so often leaders get insulated.

• 45:49Speaker 00

  No, by creating that's hopefully a 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, you know, 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 you are, you are, I'm sure you are, you know, into ice hockey. No, we have these pucks, is, you know, things that you, you know, 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. And that's really good. So in the front now, we have like a straight puck award.

• 46:33Speaker 00

  So the people who is kind of talking up, uh, you know, properly disagreeing with me gets a puck. It's good.

• 46:41Shane Parrish?

  I like that idea.

• 46:42Speaker 00

  I love it. I think it's just really good.

• 46:44Shane Parrish?

  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?

• 46:52Speaker 00

  Well, you just have to work on getting a feedback culture. You know, 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, at this, you know, I'm, I'm, I'm more of a straight talker. I tell people more now that I disagree with them and, uh, and I try to give them feedback straight after, but it's not easy. People are very sensitive, you know?

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• 48:18Shane Parrish?

  Is there anything you've learned about how you disagree with people that makes a difference?

• 48:22Speaker 00

  Well, you can pack it in a touch, but I think you just want to be pretty straight.

• 48:27Shane Parrish?

  A lot of people are sensitive when you sort of...

• 48:29Speaker 00

  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?

• 48:41Shane Parrish?

  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?

• 49:12Speaker 00

  Curiosity, intelligence, integrity, drive.

• 49:16Shane Parrish?

  How do you test for curiosity? Like, what does that look like?

• 49:19Speaker 00

  What are you trying to learn now? What have you learned lately? What have you learned lately?

• 49:24Shane Parrish?

  Me? I'm learning every day. I've done a deep dive on you for the past two days.

• 49:28Speaker 00

  Poor thing. It's terrible.

• 49:30Shane Parrish?

  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.

• 49:36Speaker 00

  Yeah, that's really good. That's really good.

• 49:37Shane Parrish?

  Yeah. Why do you use that?

• 49:39Speaker 00

  Because you want, 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 uh just chill there and then uh people could buy it to have an ice cream and say, hey, what are you working on just now? And they tell me what they're working on. 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. It's great. I mean, the payback on that ice cream box is probably, I don't know, thousand times payback at least.

• 50:15Shane Parrish?

  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.

• 50:26Speaker 00

  I had a hundred and forty.

• 50:27Shane Parrish?

  A hundred and forty. What were those? What was the structure of those conversations like?

• 50:32Speaker 00

  Um, okay, so this is something I learned from a guy called Albert Behny. He was the head of a company in Switzerland called Gebreit and another one called Lonza. And he said, Nikolai, when you, 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, how do you 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.

• 51:12Speaker 00

  So that's very important. So I sit down with a hundred and forty people and I just start, hey, what's on your mind?

• 51:20Shane Parrish?

  That's it.

• 51:22Speaker 00

  Yeah. And then people have stuff on their mind, right? Yeah. What do people think about? That's very interesting. But then, of course, you you develop. It's just like, okay, what is, what are the, 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, you know, when you, the funny thing is that when I had, you know, when you've had half of them, you've, you get the general gist of what you need to do.

• 51:47Shane Parrish?

  You've kind of triangulated, like the same thing is coming up over and over again. So that's a strong signal.

• 51:52Speaker 00

  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 go to a hundred people. And hey, what's on your mind? And you know, there's a pattern emerging and I, if there is a problem, I try to, well, I change it.

• 52:06Shane Parrish?

  Do you ask people what you're doing that doesn't make sense?

• 52:09Speaker 00

  Uh, yeah, I do, but I probably should be even more. Because people do, generally speaking, we all do things which are, which don't make sense.

• 52:16Shane Parrish?

  And then inertia sort of like takes over.

• 52:18Speaker 00

  Totally.

• 52:19Shane Parrish?

  We're doing it.

• 52:20Speaker 00

  We make reports which nobody reads, right? That kind of thing.

• 52:22Shane Parrish?

  Yeah.

• 52:22Speaker 00

  So, so that's the first thing you do when you, when you talk to people. So then you distill down, okay. Of everything I've taken from these hundred and forty conversations, what is it? 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. People, leaders who fail, they try to do too many things too quickly. And we were, in the beginning, I, we moved too quickly twice. And then we, we got the message and we slowed down.

• 52:53Shane Parrish?

  Go deeper on that for a second because that, 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, uh, my friend Kaz had a shirt on yesterday. He did the, uh, open investor call. Um, and his shirt literally said faster and he was all about increasing velocity and he had just taken over, I think, uh, September fourteenth or sixteenth or whatever. Um, but like, how do you, how, how do you, yeah, just go deeper on that?

• 53:24Speaker 00

  First of all, um, 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, you'll trigger, uh, 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, 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, and accept it, right? And then you need to you need to prioritize and you need to have not too many things and you need to over communicate.

• 54:07Speaker 00

  And the thing with over communication, it's become 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. So we do. But then you think, gee, I've said it 10 times and I nearly I'm so bored of myself. But then you're only halfway, just need to keep going, you know?

• 54:29Shane Parrish?

  Same message over and over.

• 54:30Speaker 00

  Over and over again.

• 54:32Shane Parrish?

  Yeah. 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?

• 54:47Speaker 00

  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.

• 55:11Shane Parrish?

  How long after somebody has taken over? Do you start to see it in the finances, like the analytic numbers, the quantitative numbers?

• 55:20Speaker 00

  I think it depends. It depends on the it depends on the business cycle. It depends on kind of the product cycle of a company.

• 55:29Speaker 00

  But it takes time to turn around a company.

• 55:31Shane Parrish?

  Totally. I guess the.

• 55:33Speaker 00

  I would say I would say to change a culture is a 10 year project.

• 55:37Shane Parrish?

  Oh, wow.

• 55:38Speaker 00

  Yeah.

• 55:38Shane Parrish?

  Why do you think it takes so long?

• 55:40Speaker 00

  Well, I mean, this year, I've been in the job for five years now. I think I'm roughly half the way in.

• 55:45Shane Parrish?

  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.

• 55:50Speaker 00

  No, I think if you do it faster, you need to lay off people, then you need to change the people.

• 55:55Shane Parrish?

  Right.

• 55:56Speaker 00

  And in some in some businesses, you can do that, but but I but, you know, we can't do that in, I mean, in Europe, it's 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.

• 56:28Shane Parrish?

  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.

• 56:37Speaker 00

  Yeah, I I mean, it was working well. I mean, it was, it's a great company. There was no 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.

• 56:50Shane Parrish?

  Yeah.

• 56:51Speaker 00

  I mean, technologically, it was top notch, um compliance wise, top notch, a lot of really, really good things.

• 56:59Shane Parrish?

  It's the envy of the world now.

• 57:02Speaker 00

  Well, it's a good, it's a good company.

• 57:04Shane Parrish?

  You've taken, I mean, just in the sense of the sovereign wealth fund too, right? You've taken these these reserves that you have and you've turned them into perpetual wealth, not only for all your citizens, um but global influence and a toll bridge on the world economy. I mean, I think that's amazing.

• 57:20Speaker 00

  Well, I, well, I, so I would say that's, that's really the um, that's to the credit of the politicians. You know, the politicians decided when they found oil and back in sixty nine, I mean, they decided after they found oil and listen, we should put this into a fund. And so in ninety six, 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 uh and they've been good ever since to be true to the principles.

• 57:51Shane Parrish?

  What are you trying to learn right now?

• 57:53Speaker 00

  Lots of things. I

• 57:57Speaker 00

  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 but that kind of makes it urgent. I really need, you know, by next week, I need to know more about uh networks.

• 58:20Speaker 00

  I need to read up on crypto. I need to uh read up on IMF. I need to

• 58:35Speaker 00

  Oh my, there is just so much I need to learn.

• 58:38Shane Parrish?

  You guys.

• 58:39Speaker 00

  Incredible.

• 58:39Shane Parrish?

  You guys don't invest in.

• 58:41Speaker 00

  No, we don't, but I'm talking to somebody who's in that space.

• 58:43Shane Parrish?

  In crypto at all.

• 58:44Speaker 00

  Yeah, and I just don't understand. I don't understand it, so I need to to learn.

• 58:48Shane Parrish?

  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?

• 58:56Speaker 00

  Well, we have, we have some, we have some ownership stakes in in some of the infrastructure.

• 59:03Speaker 00

  Because it's in the index and we are, you know, so we would own it in a in a bit more passive way.

• 59:09Shane Parrish?

  How much do you work?

• 59:12Speaker 00

  I work, I work all the time.

• 59:17Speaker 00

  But it's not work. It's.

• 59:19Shane Parrish?

  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.

• 59:26Speaker 00

  It's a bit to say, 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, you know, I have a notepad 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 on a piece of paper, you're going to forget them, right? So I do that and then I work at meetings.

• 1:00:03Speaker 00

  And I read in the evenings and, you know, check out the papers from the next day and.

• 1:00:11Speaker 00

  But it's not work.

• 1:00:12Shane Parrish?

  Yeah.

• 1:00:13Speaker 00

  You know, it's just like, it's life.

• 1:00:16Shane Parrish?

  So many people, Michael Ovitz gave me this phrase, but it's like so many people fight their job. And so that 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.

• 1:00:32Speaker 00

  Yeah, but not all people, I mean, hey, it's not like everybody have the opportunity to work with what they love. And, you know, not everybody is that fortunate, but I've been really fortunate in that I've ended up with the things I, I just cannot think of anything more interesting in the world.

• 1:00:46Shane Parrish?

  Who do you go to for advice?

• 1:00:48Speaker 00

  I go to lots of people. I.

• 1:00:52Speaker 00

  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?

• 1:01:03Shane Parrish?

  More.

• 1:01:04Speaker 00

  More clever. Because you must be very clever. Who asked me for advice? You know, he must be really clever. He understands how clever I am and therefore he wants to have my opinion.

• 1:01:13Shane Parrish?

  What surprised you the most this year?

• 1:01:15Speaker 00

  Everything that goes on in geopolitically.

• 1:01:20Shane Parrish?

  You didn't see it coming or it just continues to like push the limits of what you thought was possible?

• 1:01:25Speaker 00

  Yeah.

• 1:01:28Speaker 00

  But that's makes life interesting to live, you know? You can be, you can do one or two. 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.

• 1:01:52Shane Parrish?

  What a time to be alive. I wake up every day.

• 1:01:55Speaker 00

  It's the best.

• 1:01:56Shane Parrish?

  Yeah. And I remember it wasn't, it was only a couple of weeks ago where AI actually made the first sort of bio advance that humans hadn't made. So in 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.

• 1:02:25Shane Parrish?

  We always end with the same question, which is what a success for you.

• 1:02:31Speaker 00

  Success is to make an impact in other people's life in a positive manner.

• 1:02:36Shane Parrish?

  It's a great answer. Thank you for taking the time today. I really appreciate it.

• 1:02:39Speaker 00

  Thank you.