How Ingvar Kamprad Made His IKEA Billions

This man is worth billions

• This is IKEA tycoon Ingvar Kamprad, age 88.

• The IKEA empire is worth $53 billion.

• The Kamprad family owns the whole thing.

• For tax purposes, the Kamprad family’s reportable wealth stops at $4 billion. More on IKEA’s extreme tax efficiency in later slides…

Image source: IKEA.

Time’s your friend when you start early

• Kamprad started small, buying matches by the box and selling them piecemeal at a higher price.

• Ingvar was small, too -- only 5 years old.

• He founded IKEA at age 17, using a cash reward from his father for getting good grades.

• IKEA originally sold low-cost household trinkets, like wallets and picture frames.

The first few tables and chairs• Kamprad introduced furniture to IKEA in

1948, five years after starting the company.

• Early IKEA furniture was locally sourced and manufactured, then sold at low cost.

• But manufacturers started boycotting IKEA in 1955, pressured by established furniture giants as price wars with IKEA crushed their margins.

• That was the start of moving furniture builders abroad, keeping costs low without losing control of the process.

Image source: IKEA.

The global market is bigger than Sweden!• IKEA started expanding

internationally in 1963, opening a store in Norway.

• The first American store opened in Philadelphia in 1985.

• China got its first IKEA store in 1998.

• The store pictured here is a 45,000-square-foot monster opened recently in Chongqing, southwest China.

Image source: IKEA Franchising.

Where IKEA stands today• Today, there are more than 300 IKEA stores in 26 countries, with about 50 in North

America and nearly 20 in Asia.

• $40 billion in 2013 sales is nothing to sneeze at, but the company aims for $70 billion in 2020.

• Investors everywhere would jump on a chance to own the stock, but IKEA remains a fiercely private company.

• “I decided that the stock market was not an option for IKEA,” according to Kamprad. “I knew that only a long-term perspective could secure our growth plans and I didn’t want IKEA to be become dependent on financial institutions.”

• So the IKEA billions will stay in the Kamprad family… maybe not forever, but at least as long as Ingvar has a say in the matter.

Two ultra-wealthy peas in a pod?Ingvar Kamprad has a few things in common with master investor Warren Buffett:

• Buffett is known to love burgers with cherry Coke; Kamprad gorges on IKEA meatballs.

• Both have driven old clunkers and live in modest bungalows.

• Buffett asks billionaires to give lavishly to charity, and leads by example. The IKEA group includes the Stichting INGKA Foundation -- at $36 billion, the wealthiest charitable organization in the world.

• Running value-driven businesses must be easier when you follow similar rules outside the office.

Image sources: Wikimedia and IKEA.

One global empire, three Dutch foundations

Image source: IKEA.

• The IKEA Group actually includes three foundations in an elaborate tax-management structure.

• The company left Sweden’s high taxes in 1973, moving headquarters to Copenhagen, Denmark.

• Headquarters eventually ended up in Delft, Netherlands, as Kamprad donated his IKEA shares to the Delft-based INGKA foundation.

• Wholly owned by the Kamprad family, the INGKA foundation owns the business operation companies and can only use its cash in two ways: charitable causes and supporting IKEA operations.

• Think of the Netherlands as a European Delaware – a popular location for registering businesses thanks to company-friendly regulations.

Kamprad faces some controversyFor all his folkiness, Kamprad also has his fair share of critics and scandals:

• As a young man in the mid-1930s, he supported a Swedish Nazi-style party and befriended its leader.

• IKEA opened its first Israeli store in 2000, and Kamprad spent two chapters of his book, Leading By Design: The IKEA Story, apologizing for the Per Engdahl episode. Regardless, some will never forgive him.

• IKEA’s extreme tax efficiency doesn’t seem to fit with Kamprad’s gung-ho support for Sweden elsewhere. IKEA spokespeople say it’s just good business sense.

It’s never too late to go back home…• Ingvar Kamprad is back to his roots after a long trip abroad.

• He moved to Switzerland in the 1970s, with loud protests against the heavy Swedish tax burden.

• But since the fall of 2013, he’s back in Småland, Sweden -- where it all began.

• Far-right governments have reduced the Swedish tax load in recent years.

• Kamprad’s second wife, Margaretha, died in 2011, leaving him with few real ties to the Swiss homestead.

• As IKEA keeps expanding across the globe, its aging father simply went back home. It’s really a small world sometimes.

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