
Ikea founder leaves fortune to no one, structures it to ensure it lasts forever - thinkloop
https://www.bloomberg.com/news/articles/2018-01-31/ikea-fortune-falls-to-no-one-after-billionaire-founder-s-death
======
bradleyjg
The development of no small part of English common law was the result of a
multi-century cat and mouse game between wealthy landowners that wanted to
keep their property in the family "forever" and everyone else that didn't want
to have the dead hand of the past control substantial portions of the
country's productive assets. Two groups in particular that didn't like to see
assets locked away were dissolute heirs and their creditors.

~~~
patentatt
See:
[https://wikipedia.org/wiki/Rule_against_perpetuities](https://wikipedia.org/wiki/Rule_against_perpetuities)

~~~
greensoap
Patent attorney? Me too. Have you read the malpractice case in California that
basically says that you can't be found to have practiced malpractice for
violating the RAP because its too convoluted?

~~~
sbierwagen
From that article: "It is notoriously difficult to properly apply: in 1961,
the Supreme Court of California ruled that it was not legal malpractice for an
attorney to draft a will that _inadvertently_ violated the rule." (Emph added)

Presumably California would look less kindly on someone saying to their
lawyer, "I want to lock up this money forever", and the lawyer in response
saying, "Yes, I will draft your will so that the money will only ever be spent
in the manner you command."

------
viraptor
> The foundation owns itself, so no Kamprad family members hold shares.

Late stage capitalism...

Anyway, I don't really get why the article claims he didn't care about money.
It's known for a while that IKEA avoids taxes in many dodgy ways. If he really
didn't care, the connected companies could pay a reasonable amount.

~~~
dagw
He didn't really care about money personally, or at least not the material
things money can buy. At least that's the image he worked very hard to portray
by driving an old Volvo, living in a modest house and wearing clothes bought
in a second hand store etc. He obviously cared a lot about his companies
making as much money as possible. Although if you asked him he'd probably say
that all that tax avoidance was just him being frugal.

~~~
chiefalchemist
Ok. But when why not donate the tax savings to an org that can use it? I just
can't see "I don't care" resulting in hoarding (so much money).

Maybe "Money doesn't motivate me" would be more accurate?

~~~
dagw
_Ok. But when why not donate the tax savings to an org that can use it_

Technically the IKEA Foundation (www.ikeafoundation.org) is that charitable
organisation. And technically they do donate a bunch of money each year to
various causes. Of course they're not the most transparent of organizations so
it's hard to really judge their philanthropic efforts.

 _Maybe "Money doesn't motivate me" would be more accurate?_

At the risk of trying to psychoanalyses a man know very little about,I'd say
that "personal wealth doesn't motivate me" is probably the most correct
statement. He obviously cared very much about his businesses and making them
as successful as possible, and as such probably cared deeply about money to
the extent that they're the 'points' used to judge who's winning that game.

~~~
chiefalchemist
Said better. Thanks. Words matters.

------
gadders
According to the Economist, the whole structure was created to minimise tax
[1]

"What emerges is an outfit that ingeniously exploits the quirks of different
jurisdictions to create a charity, dedicated to a somewhat banal cause, that
is not only the world's richest foundation, but is at the moment also one of
its least generous. The overall set-up of IKEA minimises tax and disclosure,
handsomely rewards the founding Kamprad family and makes IKEA immune to a
takeover. And if that seems too good to be true, it is: these arrangements are
extremely hard to undo. The benefits from all this ingenuity come at the price
of a huge constraint on the successors to Ingvar Kamprad, the store's founder
(pictured above), to do with IKEA as they see fit."

[1]
[http://www.economist.com/node/6919139](http://www.economist.com/node/6919139)

~~~
irickt
This article gives a much better explanation of the intricate arrangements.

------
fetbaffe
One have to remember why this was setup in the way it is, to protect the
company forever.

In Sweden during the 70-ties 80-ties the Social democrats was pushing a
radical socialist agenda ('löntagarfonder') to take over companies by taxing
profits and then buying shares with it, all controlled by trade unions.

Result of these policies was that many companies left Sweden to protect itself
(of course). IKEA, Tetra Pak and H&M to mention a few.

These socialist policies was one of many breaches of the so called Swedish
model that the Social democrats did during the 70-ties 80-ties. This was
beginning of the end of the Social democratic era and they started to lose
elections one after the other.

These funds was later abolished by the next right wing government.

[https://en.wikipedia.org/wiki/Employee_funds](https://en.wikipedia.org/wiki/Employee_funds)

~~~
akuji1993
This sounds so obviously stupid I wonder why nobody stopped and said "You
know, we might just make all these companies leave with stuff as ridiculous as
this."

~~~
vec
A someone who is broadly sympathetic to the idea of labor ownership of the
means of production, could I trouble you to explain what's so obvious about
the stupidity of this plan?

Taxes on corporate profits are generally seen as reasonable in the abstract,
and they're common all over the world. I could see setting an unusually high
tax rate being problematic, but that doesn't appear to be what happened.

And it doesn't appear that the state was seizing anything. They were buying up
shares off the public market. This doesn't seem more objectionable than any
other hostile takeover. If a business owner wants to maintain control of their
company then it's trivially easy for them to do so. All they have to do is not
explicitly sell it, which is what an IPO is after all.

And I'm having trouble seeing where the creeping socialism concerns come in.
The end goal, according to the wikipedia page, was that the companies would be
owned and operated by their own labor unions, which isn't an uncommon or
inherently controversial corporate governance model. The state appears to have
merely been facilitating the transfer.

With perfect hindsight we can of course see that it _didn 't_ work out, but I
doubt I would have been able to predict that in advance with any confidence.
Would this have been fine if the state used a different taxing model? Would it
have been okay if the labor unions managed to do it of their own initiative?
Is it that broadening ownership of a corporation is inherently objectionable
for some reason?

What am I missing?

~~~
JoeAltmaier
Labor running the company? This fails more often than it succeeds. Bread and
circuses are the result, then bankruptcy. Indeed obvious without the use of
hindsight.

~~~
vanderZwan
> _Bread and circuses are the result_

I'm not interested in debating the merits or lack thereof of socialism as a
system of government, but the "bread and circuses" thing applied to Roman
_citizens_.

Unless I was misinformed, the overlap between the people in the Roman empire
who were citizens and the people in the Roman empire who were the labour force
was very, very small.

~~~
JoeAltmaier
You get it; pedantry is pointless here. The folks benefitting from a thing
will vote themselves money and perks until the place is bankrupt. It takes a
different mindset to sign the front of the check, than to sign the back of the
check.

~~~
bomb199
>The folks benefitting from a thing will vote themselves money and perks until
the place is bankrupt

So, executive boards of companies?

~~~
pessimizer
Exactly. I tend to criticize plans like this because of their essential
similarities to current arrangements, not their differences.

The positive aspect is that it introduces democracy into the system (through
control by officeholders), if only for the moment that it takes for power to
recentralize (as any autonomy that the business has is lost due to patronage
appointments from the central government or larger unions.) Maybe this could
be prevented by handing control to the union of the workers in a particular
company, or a particular location, rather than large unions that cover entire
industries.

------
vanderZwan
> _Kamprad’s heirs now won’t have direct control of the firm. They will have a
> more meager fortune derived from family-owned Ikano Group, a collection of
> finance, real estate, manufacturing and retail businesses which had total
> assets of about $10 billion in 2016._

I do not think the word "meager" is really appropriate when we are talking
about $10 billion in assets.

~~~
joslin01
"More meager" meaning "lesser" and the word-choice was almost surely
intentionally facetious.

------
TorKlingberg
So, who ultimately appoints the directors? It sounds like it is Kamprad's
heirs, but through some layers of indirection that prevents them from meddling
directly.

~~~
hjnilsson
There have been many inquires into this by Swedish journalists over the years,
but it's a very dense structure of companies with unclear ownership and
structure. So who controls it is unknown.

It is also a great tax evasion schema since the ownership is a charity (that
donates money to "product design"), allowing IKEA to escape vast sums of
taxation globally.

~~~
charlesdm
Avoidance, not evasion. If you're a very frugal person, it seems pretty normal
to hate taxes. No point in saving on everything, yet then throwing x% away in
taxes (yes, I am aware taxes fund a lot of good things, but at the same time a
lot of money is wasted -- I'm sure Kamprad thought he could better manage and
deploy that money)

~~~
dna_polymerase
Please cut the ’avoidance, not evasion’ bullshit. This scheme is outright
evasion, legalized by lobbying in Brussels against national law. You know that
otherwise you wouldn’t care to point out this nuisance.

~~~
matthewmacleod
I understand the frustration, but I really think this is an important
distinction to make.

Evasion is solved by rigorously enforcing existing tax frameworks. Avoidance
is solved by closing loopholes. They're two different problems—although they
share some things in common—and they require two different solutions.

~~~
sooheon
> I really think this is an important distinction to make [...] they require
> two different solutions.

Agreed. The problem, and the source of the frustration, is that your average
poster on hacker news (or average human being on earth) has 0% influence on
either of the solutions. It is the mega rich who hold all the power, who have
the resources, energy, and clout to play these games.

It doesn't really matter how you distinguish evasion and avoidance, both are
driven by the same motivations, and where the line separating the two stands
in any given jurisdiction is defined less by the qualities of the actual
actions, and more by how much the rich have managed to encode into law vs. how
safe they feel openly breaking it.

~~~
matthewmacleod
An argument, if anything, for open, transparent, and responsible governance.
Certainly something that we are particularly struggling with at the moment.

------
melling
No medical or research institute, or Foundation, in there? It’s always nice
when someone donates to the sciences or arts in perpetuity.

[https://en.m.wikipedia.org/wiki/Perimeter_Institute_for_Theo...](https://en.m.wikipedia.org/wiki/Perimeter_Institute_for_Theoretical_Physics)

[https://en.m.wikipedia.org/wiki/Howard_Hughes_Medical_Instit...](https://en.m.wikipedia.org/wiki/Howard_Hughes_Medical_Institute)

[https://en.m.wikipedia.org/wiki/Getty_Foundation](https://en.m.wikipedia.org/wiki/Getty_Foundation)

~~~
_delirium
Officially there is. Among the web of foundations is a charity dedicated to
the art of furniture design. Less clear what it does in practice, since
furniture design also happens to be IKEA's business, and the charity owns
portions of IKEA.

------
cratermoon
I sort of feel like this should be the default required disposition of any
fortune. A little something for the heirs, the rest into public trust.

------
pipio21
When I was young and getting my driving license in Madrid I had to take a bus
to the place were exams were done, in the south of Madrid(Mostoles).

A friend of mine worked on IKEA and he told me that it was a lot of
expectation as the founder had gone to Spain and it was taking the same bus
that I took in order to visit the stores in Spain.

It was surprising to me that someone owning billions will take the bus, while
I was trying so hard to earn the necessary money in order to get rid of it.

~~~
aianus
The testing center had their own car? Is this standard in Spain/Europe? I had
to pay an instructor with a car to drive me to the testing center and let me
use his car for the test while he waited around.

~~~
JorgeGT
This is the standard in Spain. It is so because the learning car has a double
set of pedals so the instructor can operate them if the student messes up:
[https://img.milanuncios.com/fg/2560/05/256005093_7.jpg](https://img.milanuncios.com/fg/2560/05/256005093_7.jpg)

In Spain you usually enroll in a driving school where you have theoretical
lessons (there's a theoretical exam that you must pass) and then they give you
driving lessons with their adapted car.

When you're ready an official from the corresponding ministry joins you and
your instructor one day for a practical test on the street/highway.

~~~
closeparen
In the US, teenagers need to log tens/hundreds of hours driving under their
parents’s supervision (on a learner’s permit) between the instructor driving
sessions and the official road test. Do you really go straight from driving
school to road test with no learner’s permit phase?

~~~
dragonwriter
> In the US, teenagers need to log tens/hundreds of hours driving under their
> parents’s supervision (on a learner’s permit) between the instructor driving
> sessions and the official road test.

There is no US rule and the state rules vary considerably, many states have no
logged practice hours requirement, and it doesn't doesn't seem like any are in
hundreds of hours; I think 65 is the maximum and most with a requirement are
50 or less.

------
hellofunk
My understanding is that the Ikea corporate structure is much, much more
complicated than this article even hints at, and in fact it is owned by so
many different parties with different interests that go far beyond what is
suggested here. Additionally, I think the Dutch are now the main owners of the
main portions of the company that most associate with the name Ikea, as of a
few years ago.

~~~
kzrdude
Who exactly are "the Dutch"?

~~~
executesorder66
[https://en.wikipedia.org/wiki/Stichting_INGKA_Foundation](https://en.wikipedia.org/wiki/Stichting_INGKA_Foundation)

------
AndyMcConachie
It's all just tax games. [https://www.cnbc.com/2017/12/18/eu-regulators-to-
investigate...](https://www.cnbc.com/2017/12/18/eu-regulators-to-investigate-
ikeas-dutch-tax-deals.html)

~~~
gcb0
think those are unrelated. its about a headquarters shift in early 2000s to
hide tax.

------
mathattack
Interesting that the company essentially owns itself, as one of the defenses
of companies is any money going into them eventually findable their way to
people: taxes, employees, owners, or (recursively) employees or the taxes,
employees and owners of their suppliers. In the end it’s its people behind
them. But this breaks that mold.

------
bitL
Seems like either giving control to family nor professional managers is a good
option. Family usually has no clue about business and professional managers
succeeded in mastering the art of moving within company, not making it a
business. When a founder goes away, it's always uncertain where the company
ends up.

------
fapjacks
"They will have a more meager fortune ... which had total assets of about $10
billion in 2016."

------
dawhizkid
When will someone finally build affordable lightweight modular furniture

------
scandox
"Great are the stars, and man is of no account to them. But man is a fair
spirit, whom a star conceived and a star kills. He is greater than those
bright blind companies. For though in them there is incalculable potentiality,
in him there is achievement, small, but actual. Too soon, seemingly, he comes
to his end. But when he is done he will not be nothing, not as though he had
never been; for he is eternally a beauty in the eternal form of things."

Also would you like to buy a cheap but functional home office desk?

~~~
marmaduke
Do you have an attribution for the quote?

~~~
neolefty
Olaf Stapleton, "Last and First Men, & Star Maker: Two Science-fiction Novels"
(from Google book search)

~~~
stevekemp
[https://en.wikipedia.org/wiki/Last_and_First_Men](https://en.wikipedia.org/wiki/Last_and_First_Men)
is a good read, and very memorable if you've read it.

Not sure, off-hand, which of the two books the quote comes from which I guess
is my cue to re-read them both!

~~~
justin66
It's last and first men:
[https://books.google.com/books?id=ubHmCQAAQBAJ&lpg=PT351&ots...](https://books.google.com/books?id=ubHmCQAAQBAJ&lpg=PT351&ots=rw9kw36b9j&dq=%22Great%20are%20the%20stars%2C%20and%20man%20is%20of%20no%20account%20to%20them.%22&pg=PT351#v=onepage&q=%22Great%20are%20the%20stars,%20and%20man%20is%20of%20no%20account%20to%20them.%22&f=false)

------
egberts1
How long would it take to assemble an IKEA casket? #headuck

------
thinkloop
"The structure, which Kamprad established in the 1980s, assures that the
Almhult, Sweden-based company stays outside the family’s direct control."

"His wealth will now be dissipated "

"Kamprad was not interested in money"

Does anyone care about money less than Billionaires?

~~~
blowski
When you have $2.50 to your name, but you have to feed your family for the
next week, you care a lot about money because you might die.

I suspect billionaires see money more like kids collecting stickers. It's just
a game, constantly trying to get more, for no obvious reason.

~~~
adventured
Depends on the mission, the end goal (if any), as with so many other things.

If you're Gates, you likely feel an immense obligation to not destroy $100
billion (as with Buffett), as it's meant to be put to use as a public good.
That has also become his professional life. And ideally you conservatively
grow it further, to be able to bring that many more resources to bear on
extremely expensive problems.

~~~
davidgh
This is why my respect for Bill Gates has gone up so much over the years.

It’s cool when folks like Warren Buffett pledge to give away their personal
fortunes when they die. However, his personal sacrifice is actually quite
small, as he only gives it up when forced to by death.

Bill Gates, on the other hand has two valuable resources to offer and he is
actively giving away both right now: 1) much of his vast fortune, 2) his time,
expertise, and influence to champion causes for the greater good.

~~~
pmyteh
Buffett doesn't exactly spend it now (he's got famously cheap tastes). He's
also giving much of it away while still alive: $3bn more in Berkshire Hathaway
shares to the Gates Foundation last year. Forbes claims that's 40% of his BH
holdings given away so far. [http://fortune.com/2017/07/10/warren-buffett-
donates-gates-f...](http://fortune.com/2017/07/10/warren-buffett-donates-
gates-foundation/)

------
NiklasMort
I like how they wrote "They will have a more meager fortune ...of about $10
billion in 2016." tough life

~~~
INTPenis
I'm swedish and I didn't know that Ingvar was behind Ikano bank. It's a major
thing here, they have a bank, loans and property.

------
WillReplyfFood
Basically a lawyer DAO, with the little problem that the involved constituting
organelles have a interest of taking over and eating the uncontrolled host.

------
amelius
Warning: article contains auto-playing video.

~~~
forcer
like most of the articles on bloomberg.com

Its an easy fix you can set auto-play false on your browser. At least its easy
in Firefox, not sure about Chrome/Edge

------
_pmf_
How very convenient; that way, nobody will have to pay taxes.

------
sjreese
Well it won't last - greed will takeover when the employee realize he can be
fired - so what to do; OUTWIT OUTPLAY OUTLAST a coalition of family members is
how it all starts

------
kylnew
Am I missing something or couldn’t a big enough company just buy out 51% of
the owning companies and take over/shut down IKEA? This way his family still
could get a fast payout if they all work together.

~~~
Scarblac
It's held by a charity that doesn't have owners and no shares, there is
nothing to buy.

------
chiefalchemist
On one, this is honorable and impressive.

On the other, why hoard so much? Could he have been at least slightly more
generous all along? Wouldn't that, done earlier, create a positive sooner? A
positive that could have been compiling social compound interest (if you
will)?

I under the rules of the game (i.e., capitalism). That doesn't mean you have
to buy all in to those rules. There are (personal) alternatives.

~~~
zaptheimpaler
If IKEA can generate a higher return on capital than generally available, it
could make more sense to accumulate and compound the money for as long as
possible so he can donate a bigger amount later. Hard to quantitatively
compare to the utility of early philanthropy.

~~~
chiefalchemist
Capital? Maybe. Provided IKEA doesn't go tits up.

What I'm suggesting is a form of portfolio diversity.

And who's to say that if you invest in NPO X today that the "ROI" won't be
significant5 or 10 years from now. Why not try to put a value on lives saved,
impacted, etc.?

So yeah. Use Capital as your only measuring stick and you're correct. But the
real truth is, there's more to life than Capital. But of course the capitalist
doesn't want you to know this.

Note: I'm not suggesting better (or worse), just different. There are
alternative measurements.

~~~
zaptheimpaler
I agree that there's much more to life than capital/money.

What I'm saying is its very very hard to put a value on life saved/changed and
compare that to money. Is donating $1M to an NPO distributing malaria vaccines
today better or worse than donating $2M worth of malaria vaccines in 2 years?
Who knows? How would you even begin to compare those 2 scenarios? You'd have
to translate the subjective costs of being sick, costs of a life, all the
uncertainties around effectiveness of the vaccine, uncertainties around how
well the NPO uses its capital etc. into a dollar value to compare.. there is
no right answer there, its just too uncertain.

So if he did a similar calculation and decided more money later is better for
the world than less money now, well I can't fault him because that calculation
is infinitely complex. Seems like you are saying donating say 1% every year is
better than donating 0 and then 100% at the end, but it is very hard to tell.

~~~
chiefalchemist
I don't want this to sound snark / too direct but...

Bill Gates must have some sort of formula. My sense is also, some of that
formula is what he can contribute. You can't do much contributing when you're
dead :)

Nothing of value is easy. And big progress / big change takes (big) time. The
longer you wait the more difficult it is to move the needle.

My question is kinda like an A/B test. That is, instead of waiting til the
race was over, what would the impact had been had some of this started 20
years ago?

