Speaker 1Hi everyone and welcome back to our Friday wrap-up. I'm Stille Martensgaard.
Speaker 2I'm Nikolaj Tangen.
Speaker 1This week you spoke to Eric Schmidt, his former CEO of Google and I would say one of the loudest voices on AI. Absolutely. I mean
Speaker 2he was very important at Google but he remains very important in the tech society, extremely well plugged in and very very knowledgeable and having seen the whole development and continues to be involved in AI also within weapon production and weapon development and very involved also in Ukraine.
Speaker 1A new AI model takes about six months to build and then it might be out of date in five months. How should we as an investor think about a business model like that?
Speaker 2Well that's the really big question when these companies come to the market. What's the sustainability of the business model? How long time does it take to depreciate the costs they put into it? How long is the model valid for? And I guess the same goes for the for the chips companies. What's the length of time one can use these chips for and how do you depreciate? It's really one of the biggest questions when it comes to valuing these companies.
Speaker 1What do you think about the changes to the labor markets we might see here?
Speaker 2Well I think it's very interesting. You know we have always said that we are not going to lay off people in the fund due to AI use. We'd rather use it to make the company more competitive, better. We can do more with the same amount of people and so that's how we are looking at it. And some other companies are doing that too. For instance IKEA are saying they're not going to lay off people. They're going to re-skill whoever is not needed in their current jobs and that's an interesting way of doing it. And then you've got other companies again which are going to lay off people. I think it's the journey of time. I think it's going to be a very long journey. I think the jury is out. We really don't know how this is going to pan out. We really don't. So it's one of the biggest societal questions we are facing just now.
Speaker 1And then he also talked about how we should think about this when it comes to regulation. He says Europe regulates before it innovates and it's something we heard other people say as well. What do you think about that?
Speaker 2Well I think that's for sure a fact. We regulate a lot in Europe we for instance in this country we were the first country to regulate away meta-glasses in public places. So we do regulate a lot. We have more regulations than AI whilst in the US they have more AI than regulations. I think over-regulating AI in Europe is a potentially very unfortunate thing because you can really stop the development before it started. And if there is one thing we need in Europe now it's really implementation of AI. Draghi mentioned it some weeks ago in an article in Financial Times that in order to keep competitiveness in Europe we really need to deploy AI wherever we can. I think it's interesting that Chinese competition is becoming increasingly forceful in many areas and to compete against that we really need to become more efficient and AI is going to help us doing that. And if you look at the stack we kind of lost out on the energy side, we lost out on chips, the cloud, the models and so application is where we still could have a possibility. It should be perfect for us in Europe because we are highly educated, we are digital and we basically hate working right. So the more efficient you can get the better it is. And the reason why this is important for us is that we have 25% of the fund invested in Europe. We want European companies to do as well as they can. We want them to be competitive so that they make more money and so that we make bigger gains in our portfolio.
Speaker 1So moving on to the fund and the markets and just to continue here with AI and then in the track of culture because Erik also said that most companies won't change their culture fast enough for AI. As an owner in thousands of companies, how do you think about that?
Speaker 2No, you need to change your culture much faster than you've done in the past and it's tough. Culture, you know, corporate culture, the definition of that is just how we do things, around here. And when you've done things in a certain way for a long time, it's very difficult to change. So cultural change is becoming more important. We need to increase the speed, the agility, the ability to change jobs and so on. And it's a very, very tough thing.
Speaker 1Any reflections on AI and the culture in the fund?
Speaker 2Yes, what we are seeing now and we're doing a lot of work on is the difference in use between men and women. And it was something that started with an article I read from, well, it was a study from Harvard Business School, which showed that women were roughly 20% behind in AI usage. And so we were running the token usage on the gender basis in the fund and saw some pretty worrying stats. First of all, if you look at it across the board, men use two and a half times as many tokens as women. Now we got some power users, which, you know, who basically consume a lot of tokens, and nine of 10 out of those people are men. So excluding that, still, men are using roughly 1.6 times more tokens than women. And I think it's a real worry because it is a productivity enhancing tool that we use. We do want to increase the proportion of women in the fund. And we need them, of course, to be as efficient as anybody else. But that requires AI use. And so we must just nurture it across all divisions. We do have divisions, actually, where women are ahead of men when it comes to token usage, for instance, over risk department and some other parts. But it needs to be at the top of the agenda everywhere. And it hasn't been so far.
Speaker 1And then token usage is, of course, not, well, it might not be a good example of what you achieve with it, but it's a signal. Yeah. It's one of those things that I think is really important.
Speaker 2It's one of the things that it's the one really easily thing to measure. And of course, outcome is not and success is not dependent on the number of tokens you use. But there is, of course, there is some relationship between the two. And so very important.
Speaker 1Yeah. So it's important to follow up on this and to give the support that is needed. Okay. So closing in on this segment, what have we been focusing in on the last week?
Speaker 2Well, we've had a very important piece of news lately in Norway. We had the so-called Jedrem Committee, which is looking at several things. It's looking at the weapon criteria for the fund. What should we be invested in? What should we be doing on the nuclear side and so on? And the other thing is just how should the Council of Ethics be structured? Should it be inside the fund, outside the fund? How should we publicize potential exclusions? How should we use ownership and so on? And so we've had a great report coming out. It's spurring a lot of discussions in Norwegian media. It's now going on. We've had a great report coming out. It's spurring a lot of discussions on hearing. It means that all the interested parties will come and comment. And then it will go into the White Paper and the political discussion in the spring. And this is really exciting times. And it will decide how we're going to work with these important issues going forward.
Speaker 1And then we will come back with our comment as part of that hearing. But it for sure will be interesting to follow and very important. So moving into the last part of the week, we're going to talk a little bit more about how we can get into the last segment, Nikolai. I would like to ask you some questions about how you're preparing for all your podcast conversations and the interview you do with CEO and business leaders.
Speaker 2Yeah, first of all, I get a lot of help from the great colleagues in the fund. And so typically, we have one person running the prep work, speaking to our industry analysts and get questions from there. Also, if it's about, let's say, technology, we will get input from our technology department. Sometimes I put out a general question for help on our internal communication channel. So for instance, when we did the one on Tinder, I have never used Tinder. And so I needed to ask my colleagues for help. And my kids, by the way. And so then we get like a framework. And then I continue to work on it. I listen into podcasts, which are relevant, which the people have done previously. I read the interviews that are done in the various papers. And then I think, what could be interesting questions, what could be interesting angles. And then sometimes I shoot emails to people I know who are in the same business or industry and they help me. So it's a lot of kind of crowdsourcing of ideas.
Speaker 1But how important is this research pace for you, for how you're developing your thinking?
Speaker 2Well, it's super interesting because, and important, it's how I read up on new businesses and new industries. Now, if you have a job like this, where you need to be generally informed about what's going on in society, to have this opportunity to read up and zoom in on all these various topics, it's incredibly important. You know, you have to zoom in on AI, on obesity drug, on utilities, on just all types of industries, Chinese car companies. Everything is really playing into what makes capital markets so vibrant and so dynamic.
Speaker 1And the research phase is, one thing is it's super important, but the other thing is it's much more interesting than one would think. And talking about this podcast, Nikolaj, because you have several upcomings particularly that you will do in new york yeah
Speaker 2absolutely we have a very cool lineup i'm interviewing henry cravis from the founder of kkr michael moritz who was at sequoia to talk about the venture capital industry schulman from verizon my friend richard shama who writes for the ft and who is always a very very popular guest and i'm doing one with jeff koons the artist because we want to explore also art as an asset class and i think that's going to be great fun if you have any questions you think we should ask these people please ping them through on linkedin and remember
Speaker 1to listen to the episode with eric schmidt thank you happy weekend
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