Transforming Veritas and why Finland must reform

3 takeaways from the conversation with Carl Haglund

Even in regulated industries, customer experience can be your biggest advantage

Veritas operates in a conservative, highly regulated market where pricing and product are nearly identical across competitors. Instead of trying to reinvent the product, Carl focused on service: dedicated account managers, fast response times, and actually picking up the phone. That shift helped Veritas attract thousands of new clients, especially among small and midsize businesses.

The CEO is the number one salesperson

Carl has a clear view on leadership: if you’re not spending time with customers, you’re focusing on the wrong things. He regularly travels to meet clients and sees those conversations as critical for understanding the market, motivating the team, and shaping strategy.

Finland needs structural reform, not just new policies

Despite having the ingredients for success (talent, safety, clean energy etc) Finland’s economy has been stagnant for over 15 years. Carl argues that the public sector is too large, debt levels are unsustainable, and the country risks losing talent and capital if it doesn’t make bold changes.

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Podcast transcript

Josua: Carl, welcome to the show. Thank you. Uh, you have a [00:00:30] really interesting background, very varied. Well, I’m sure we’re gonna get to some of that, but, uh, right now you’re the CEO of Veritas. Um, so I, I’m always very curious kind of how, how people got into the roles that they are today. So what was it that attracted you to that [00:00:45] role?

Josua: I think you started in summer of 2022. Um, and what was it like the first kind of like six months stepping into this role as CEO?

Carl: Yeah. So as we all know, you sort of many times slip into things sort of a [00:01:00] bit by accident or incident, meaning that you don’t plan for it too much. Uh, this is my fourth year now, uh, starting and, um, the, uh, person who was the CEO before me got a new [00:01:15] job.

Carl: They needed a new CEO. I’ve been working with Accenture Global large, probably the largest consulting company in the world by many. Ways of measuring it. Uh, uh, work with financial services. Did a lot of [00:01:30] transformations in banking and insurance. So been exposed to the finance industry a lot and I’d been, uh, on a number of board directors positions in, in the industry.

Carl: So then, uh, one day I was driving my son to one of his hobbies. I remember at the sea [00:01:45] there was a headhunter calling saying that you. Should consider, uh, discussing this position with me, which I then ended up doing. And, uh, it was not a obvious decision because I had just fairly recently [00:02:00] had a promotion and really interesting task within Accenture where I was working with, uh, global Telecom and had exciting clients in Japan, China.

Carl: Uh, foremost Silicon Valley, uh, and here in [00:02:15] the Nordics with Nokia Erickson and other big players. So really interesting portfolio of work where I just six months before, uh, quit my task within financial services to, to take on this. Task. [00:02:30] And that was, and the pandemic was just at that point, calming down and, uh, had to foresee myself spending a lot of time in Silicon Valley.

Carl: Mm-hmm. Felt really excited about that. So, [00:02:45] uh, it was a, a quite, uh, challenging discussion I had with myself. Uh, considering whether to do this or not, because I really was, uh, kind of excited about what I was about to do within Accenture. Had just [00:03:00] started it, but then something still caught my interest and, uh, felt that, uh, this was a, a really interesting opportunity.

Carl: Uh, a long company with good reputation and, uh, a [00:03:15] company that was of a size that was still sort of. Yeah. Not easy, but, but, uh, uh, manageable in a sense. Yeah. Accenture, for instance, huge, really, really nice company in many ways, but we were like [00:03:30] half a million people there. Mm-hmm. So whatever you would do, it would be like a huge ship to try to turn to one direction or another.

Carl: And here you would be maybe more. Uh, hands on to get from one place to another, which we’ll come back to later on, I [00:03:45] presume. But, but I think that was probably one of the dimensions that ri then ended up

Josua: Mm,

Carl: affecting my decision to say, yes. Okay. I’m willing to, to be part of the process to become the new CEO.

Carl: Uh, and then in the recruitment process, I, [00:04:00] I was a bit, maybe not bullish, but quite bold where I said that you guys need to change. We need to. The, the, the market was changing because of new regulation that was, uh, making the pricing [00:04:15] of the pension company insurance companies more transparent. Yeah. Where you’d be able to compare apples to apples.

Carl: So at least almost, and, uh. I portrayed a situation for the board where I said that we’re gonna have to [00:04:30] do quite a lot of changes in this company if we’re gonna be able to survive and even grow. And I was a bit bold and I figured, well, I have nothing to lose. I have a nice job. I like my job. So if I’m gonna do this.

Carl: It has to be in a way which I [00:04:45] believe in and I see the possibilities and to my, I don’t know, surprise is maybe not the right word, but, but, uh, yeah, the board was very, I would say progressive and also saw a need to, to do changes, so to, so they were very sort of positive to my [00:05:00] ideas, even though they were maybe on a scale of a quite conservative pension company.

Carl: A bit bold. Yes. So when I realized that they liked my thinking, that was probably the point where I realized I wanted the job. Yes. When it resonated so well with [00:05:15] them, because I haven’t maybe anticipated that they would be as positive as they were.

Josua: Mm-hmm.

Carl: And with that, we really found each other in the dialogue with the recruitment group that was, uh, uh, discussing with the candidates that were in the [00:05:30] process and, uh, and um, then.

Carl: It was, uh, I think a good match and we found each other. So then I, I ended up getting the job and, and leaving Accenture, which was not at all in my plans.

Josua: Hmm.

Carl: So that’s almost four years ago. So here we are.

Josua: Very interesting. Completely [00:05:45] different. I mean, going from like. In big international company clients, Silicon Valley, to now focusing mostly on finished SMBs.

Josua: I guess, um, you mentioned you, you presented these ideas for change and I think maybe for people who don’t know, I mean, you’ve had a lot of, [00:06:00] you’ve had a lot of success with Veritas in the last, last four years. Um, lots of, lots of improvements, growth. Um, just now, or just last year was the record breaking in terms of customer acquisition, I believe.

Josua: Um, and it, it is a very conservative industry and [00:06:15] it’s a very tightly regulated industry. So what were the things that you presented to the board that, what was the kind of strategy and is it the same strategy that you’ve been executing now for the last four years?

Carl: Yeah. A refined version of it. What we did then was that [00:06:30] we, I said they were gonna have to do a one year program of change.

Josua: Mm-hmm.

Carl: Like a one year turnaround program. Quite, uh, tough program. Uh, I had been a strategy consultant, so I mean, all these [00:06:45] strategy consultants have these playbooks where you do like a turnaround type of playbook. So, uh, we did a one year change program, which we started in, um, 21. And then, uh, we, after that, did a three [00:07:00] year growth strategy, which is then 23, 24, and this year, 25, uh, we already last year, we can come back to that as well, maybe later on.

Carl: But we already last year in 24, sort of reached the goals that we had set for the end of this year. So we’re sort one year [00:07:15] ahead of the program. But, so we will exceed our, our goals quite substantially. Um, because we’re, we, we have already also had a really good Q1 now. Which is almost over two weeks, uh, to go, but it looks really [00:07:30] promising.

Carl: So I’m, I’m, uh, quite optimistic around 25 as well, even though we need to be always, always humble around those things, but, but fairly optimistic. Mm-hmm. And, um. Meaning that, uh, we have had a growth strategy, [00:07:45] yes. But for first it was a change program. The change program was about becoming as competitive as possible.

Carl: We had a, a cost structure that was not geared to support the growth.

Josua: Mm-hmm.

Carl: Because, uh, we moved from [00:08:00] the, the industry shifted from having a system where. An employer would always pay the same fee to all pension companies, and then later on you would get reimbursements based on how much money was sort of [00:08:15] left over for the pension partner.

Carl: And that was not very transparent, and it was really hard for employers to really understand how much they were paying for the services. The big chunk of what you pay is the pension fee, and that’s of course fixed, but then the little premium that [00:08:30] you pay for the. So the management of the pension services, which you pay to the pension provider, uh, that was geared in a very untransparent way before.

Carl: And then when this transparent legislation mm-hmm. [00:08:45] Uh, which, uh, uh, was changed. And the first year when this was applied was 23. So this is not a. Third year when this new legislation is in place. So when we [00:09:00] started this change program in 21, we realized we have a bit more the year to get to a place where we can say that we have an attractive pricing.

Josua: Mm-hmm.

Carl: We had two very high cost structure, and then I saw a few really basic [00:09:15] things. There was not a focused idea around. Growth, meaning we didn’t, we haven’t defined for ourselves that which type of clients are the clients where we can best serve them. Mm-hmm. There was not enough focus on the sales, there was not enough focus on [00:09:30] the customer experience in the so-called sweet Spot group.

Carl: And the whole client sort of promised what is it that we’re actually selling? What is the unique selling proposition in relation to the three other companies in the industry? Um. We have three [00:09:45] competitors, only four companies in this industry in Finland anymore, and that with this, we had the lack of focus.

Carl: So the start was a lot around cost takeout, but also around working on delivers and the unique [00:10:00] selling proposition. So we did a really radical first year cut costs more than 20% in one year with layoffs and outsourcing. And, uh, a lot of it changes, process [00:10:15] changes, re reorganized, all the basic processes we have in the pension process, in the insurance process.

Carl: So a lot of activization, uh, a lot of focus on productivity, but in parallel, a [00:10:30] very. Sort of future oriented work around how do we make ourselves the most attractive player in the market. Uh, so it was an interesting parallel work, which one was quite sort of harsh cost cutting and, and making ourselves sort of as effective as [00:10:45] possible.

Carl: And on the other hand, then knowing that we’re gonna soon start boosting sales and, and focus on, on the experience, there was a really good basis and foundation to build on because we had still the. Big strength we had was that [00:11:00] we had always, historically as well ha been a, a, a company that really focused and did this customer experience part well.

Carl: So we had a lot of happy customers. Uh, so there was a foundation to build on. [00:11:15] Uh. So that’s pretty much the story. And then we did a, uh, this one year fairly harsh and effective transition program. We, we were able to conclude that on time. And then we adapted a growth strategy in August of [00:11:30] 22, which we practiced speaking, started working with already then, but formally it was like a strategy from 23 January onward.

Josua: Mm-hmm.

Carl: So now we then, then we did. Our best year ever in 23. And then we were able to beat that last year in [00:11:45] 24, and I’m pretty certain that we’re gonna beat 24 this year. Um, so, um, really nice, nice journey. So, so far, yeah. Uh,

Josua: it seems like, uh, it’s always, I’m [00:12:00] amazed by how much you can accomplish when you focus on the mo, just a few basic things and execute really well on them consistently.

Josua: And like systematically and do things in the right order and then you can, uh, because it doesn’t sound like you did anything that was, uh, necessarily like very out there. It [00:12:15] was just realizing kind of your natural position in the market and then then doubling down on that.

Carl: Pretty much. So, yes, and I think that’s a good sort of conclusion that, I mean, we haven’t done anything that’s rocket science in the sense that we, we, [00:12:30] in almost any business, you need to be productive and effective.

Carl: It’s, it’s, uh, rare that you can. Be something else, but we had not been enough focused on productivity and, and hence we, our price point was not good enough. That’s [00:12:45] one very basic thing. And then it’s created when you have a product, an insurance product that is, uh, mandatory by law in this country. Yeah.

Carl: And, and, uh, terms and conditions for the insurances are also set.

Josua: Yes.

Carl: [00:13:00] Uh, by the authorities, meaning that you cannot differentiate yourself with yes, more attractive insurance policies or other, other things in relation to your competition. It means that you will be [00:13:15] competing a, a bit with the price, but then with, uh, how you.

Carl: Uh, meet the client, how you ensure that the client gets a good customer experience. And with the fairly narrow scope we have around supporting our [00:13:30] employer clients with, uh, with how they support their own employees in, in, in, uh, their ability and, um, uh, to, to, to work. Where we have a lot of people who get burned out in this [00:13:45] country.

Carl: A lot of people, too many people who have to leave. Mm. The job market too early because they don’t cope with their job or they have problems, physical problems. But unfortunately the large proportion of those who don’t feel that they can work any [00:14:00] longer, it’s around mental. Yeah. And psychological health issues, so burnouts and other type of things.

Carl: Mm. Uh, so we have a team working really tightly with our clients around supporting them in preventing, [00:14:15] uh, those type of challenges to, to. To occur. Of course, you can’t prevent everything. But then also ensuring that when you have challenges, that you get support also from us on an early stage in order to still be able to, to [00:14:30] turn the tide and, and help those individuals to get back to work, to rehab and other things, which we do.

Carl: Uh. So with all of this, uh, you can differentiate yourself a bit, but also that part is fairly [00:14:45] regulated. Yes. But nevertheless, so, so we, we worked a lot with the differentiation and I have been, I think, successful there. Um, so those, it’s, it’s been a really interesting journey [00:15:00] so far.

Josua: Yeah. One thing that, because I said it’s, I mean.

Josua: The, the basic service that you offer is fixed by law. There’s three other players, all of them bigger than you. Um, so you have to focus really on the differentiation and providing some kind of value added services. And [00:15:15] clearly it’s worked because I think last year we had 6,000 new I think customers, um, which is a lot in Finland.

Josua: It’s not a very big, very big country. Um, uh, so my mind immediately goes to like, ’cause I’ve always also seen you be very active [00:15:30] in meeting customers, traveling around. Peek into all kinds of different companies. Um, is that like a core part of that informs your strategy? Like the insights that you get from customers, talking directly to them, hearing how the problems that they experience does that [00:15:45] kind of drive not just you of obviously across the whole org organization, but those kind like customer conversations, drive, generate insights that, uh, that you use to further kind of refine your.

Josua: Your service, your value added services?

Carl: [00:16:00] Absolutely. I mean, first of all, when we meet clients, we hear about, um, their needs on how, how they are able to support their own employees in being able to able and having the energy to, to work, uh, et cetera. [00:16:15] So in that respect topic we’re just discussing definitely you always get new ideas and, and, and that, but then I think, uh, being close to your clients is.

Carl: Really, really important. Those, when we look at the loyalty [00:16:30] perspective Yeah. Uh, that your clients really feel, uh, and I mean we are genuinely very interested in our clients. And, and, and if you just send them a little email here and there, they get some info email that [00:16:45] is sent to all your clients, they don’t really necessarily feel that important because everyone does that.

Carl: So sort of being really also physically close to your clients, uh, has. Uh, huge. Uh, it’s of huge importance. It’s really valued and [00:17:00] appreciated. We are the only pension provider in this country, in, in the competition of four, where we are the only ones who actually, uh, designate, uh, dedicated client, uh, responsible, uh, [00:17:15] person to every client.

Carl: So to get your own client service person, which also means that when clients. I have a need to discuss something in relation to their pension issues. They really know how to turn to whom to turn to [00:17:30] because, um, we have this stereotype, which, uh, is unfortunately just a stereotype, but it’s reality into many financial services company.

Carl: I’m just not just talking about pension companies, the about banks and other insurance companies where [00:17:45] it’s really hard. You have to really make an effort to. Get to talk to anyone mm-hmm. To get a meeting with your bank or your insurance company. And this is something that many people, normal people, will, will recognize and, and even a bit cynically sort of, uh, [00:18:00] comment that it’s really, really, uh, challenging to get a meeting.

Carl: And we give them a direct number that. This is your person. Mm-hmm. We, we pick up the phone, if you call, which we do, and we have given a [00:18:15] promise that we pick up the phone in less than 20 seconds. I think the average has been around 11, uh, last year. So we really pick up the phone and people get. The help they need.

Carl: And already that is a huge, unique selling point that you get help [00:18:30] and that you don’t have to sit there for hours to wait for someone to pick up the phone. Yeah. So this is really simple in a sense. Uh, it’s a bit old school even. I mean, yeah. Yeah. Uh, then we have a, we, we’ve also invested a lot in our [00:18:45] digital services and, and actually a bigger and bigger proportion of our clients handle their own issue, own things.

Carl: Logging onto our, our, our, our, our services and, and they can serve themselves and they’re really happy to do so, but I think [00:19:00] they’re still deep down happy to know that if there’s something that you can’t handle yourself or you need support or help or advice, that you can pick up the phone. Either when you’re on the website, which is quite normal, that you log in, then there’s something, [00:19:15] and then you might call while you’re there and you get the advice and you can finish it off yourself.

Carl: That. You know that you’re gonna get the Yeah. Service and, and advice you need, uh, without a huge delay, uh, and without [00:19:30] spending a lot of your time. So I think that’s probably the most important change, uh, that we, we did. I mean, we, we had this before, but we had it maybe articulated it enough. Yeah. Uh, and, uh.

Carl: Then the other thing was around that we, I mean, Finland [00:19:45] is a, a small country, but still big in many ways, both geographical distances, but also we have a huge variety of companies where we have big global companies and then we have a lot of entrepreneurs and SMEs. Uh, [00:20:00] and we have, I think, been able to define for ourselves that what type of companies, what profile companies or companies that mostly value our.

Carl: Service concept and have folks do out of our sales on that. Uh, and, [00:20:15] and, uh, it’s created, it resonates that, uh, certain size of clients, this, the type of clients that are already big enough to have employees and they have a number of, uh, regular issues that they need to handle. So they have a [00:20:30] certain service need, but they maybe tend to be a bit too small to be attractive.

Carl: As a focus group for our bigger competitors. They of course, also have clients of that nature more than we do in numerical speaking, but clearly not maybe [00:20:45] focusing or not necessarily always succeeding in making these clients feel that they’re really important, that we, we have shown these clients this size of companies that they are super important to us and they get the premium service that they deserve, [00:21:00] and they are very loyal and they also tell their.

Carl: Many entrepreneurs hang out with entrepreneurs. So we see a phenomena growing where clients come to us, even though we have a lot of sales efforts going on all the time, but it’s really nice to have phone [00:21:15] calls, not just me, but more many of my colleagues and our, uh, people call the company and that people come to us as well, saying that we, they heard that from someone else.

Carl: That here you get a good. Client experience. So they [00:21:30] actively want to become our clients. And that’s a nice phenomena. We’ve seen a lot about really recently seeing that phenomena. Uh, uh So it’s a bit of a snowball effect.

Josua: Yeah, exactly. Exactly. Do you, um, because what you said makes so much sense and, and it [00:21:45] also like ties back into what you said about the cost cutting in the beginning because to dedicate those resources and given that customer experience, you can’t have this huge overhead because at some point it’s not gonna work out.

Josua: But, uh, do you find that companies. Generally don’t [00:22:00] understand or appreciate the importance of what you just said. Kind of like the old school way, because I, I, I, I assume most CEOs, CEOs don’t spend as much time with their customers. Maybe as you do, they don’t travel to meet them. Maybe there’s [00:22:15] always other things to do.

Josua: So I’m not, I’m not surprised that, that they don’t have the, can’t find the time. But, um, do you find that companies generally do, they just don’t understand that there’s a real. Benefit, financial benefit to making those types of investments that you’ve been doing at Veritas?

Carl: Well, [00:22:30] first of all, I have the sort of very strong conviction that the CEO is the number one salesperson and number one customer experience officer in the company.

Carl: And if you are not there in the client interface, then you’re not [00:22:45] gonna succeed. No matter if you sell cars or pension services or mobile phones that. Uh, my strong conviction is that you need to bear there in the front line. Yeah. And you also get your PI mean, I [00:23:00] have the most wonderful colleagues, and, and I, I think that, that the fact that you’re all in.

Carl: They’re in the front line, they that, that also inspires them and they go there with you and they wanna do [00:23:15] it all. They also wanna do it. They get in inspired to do so. But I mean, my conviction is that they, they can be too many other important things for CEO than his or her clients. Yeah, customers, sales and, and client service.[00:23:30]

Carl: So I, I see myself, and that is my most important task. Then of course, I spend. Few days a week-ish on different kind kinds of investments. We have a huge investment portfolio, but I have a really professional team and their core task is to do that. But in the end, I have the [00:23:45] responsibilities. So a fair proportion among time is around our investments.

Carl: Um, and that has to have enough time as well. So it’s a balance, but it’s a balance that works. And then as all CEOs, I have a lot of administrative. [00:24:00] Tasks, some of them more inspiring than others, but I think it’s a matter of priorities that no business is, is like another one. So it’s not easy to start giving really good advice to someone else.

Carl: They usually know their business better than I would do, but, but I [00:24:15] would still think that A CEO that doesn’t have time for his clients or sales or client experience is probably focusing wrong. That would be my a bit provocative yeah. Statement. Um. So I’ve just decided that I have time for our clients [00:24:30] and I spend a certain part of my time and my assistant to help me with my schedules.

Carl: Has sort of dedicated a fair amount of time just for client work and there’s always clients who want to meet, but [00:24:45] proactively, meaning they contact us, invite us to come there. Or then involved in sales or, or we actively contact also clients and, and offer a possibility to meet the leadership in a company and they’re usually very happy to meet us.

Carl: So,

Josua: [00:25:00] yeah,

Carl: and you get so much from meeting these, and also since we are in the investment business in the sense that we’re also in a sense an asset manager, asset manager. We have 5 billion of assets that we manage. [00:25:15] We. Uh, meeting so many different type of companies also gives you a really good feel on where the economy is going.

Carl: So it’s really supporting for the investment business.

Josua: Yes. Yeah. It’s pretty unique in that sense. So what’s your, what’s your kind [00:25:30] of feel when you, you’ve spoken to so many different types of companies, like you said, in Finland We have a big variety, uh, in all kinds of different industries, and we have lots of companies that are top like world leaders in their.

Josua: Specific field. What’s your kind of sense [00:25:45] of, of the Finn um, Finn economy and maybe the Finn potential, given that we have had very little growth since 2008? Um, why is that the case and what, what needs to change for that to change?

Carl: Well, this is the sort of thousand dollar [00:26:00] question, or actually it’s the billion dollar question.

Carl: Yes. Yeah. Or even bigger than a billion, unfortunately. Um, we’ve had this spring, um, a number of growth, uh, groups, [00:26:15] working groups, uh, engaged by the government and others to sit down and really try to scratch their heads around this big question that you’re posing. And I think the answers from the groups.

Carl: That has been working this year and last year around this topic sort of [00:26:30] showed that there is no one easy answer because the road groups that ha ha had gotten a, a task to deliver answers and suggestions and propositions around what should be done, what type of initiatives would, would change [00:26:45] the direction of Finland.

Carl: There were very few new ideas, I would say. Hmm. And, uh, many of them were quite conventional, some of them more bold than others, but, uh, shows that there is no sort of [00:27:00] easy answer, clear medicine or, or not. Just one pill that you can take that will take away the pain. Um, but I would say that.

Carl: I mean, I, I have background of, of working in the public [00:27:15] administration I’m been member of, of a few governments, et cetera. So I, in a sense, taken a position that I, I one shouldn’t start sort of doing politics as a company, CEO. Mm. So I normally try to avoid this question, not because I [00:27:30] don’t have views, but because it’s sort of not my cup of tea anymore.

Carl: But I would in, in general, believe that we, first of all. Need to come get away from a, a, a world and a society that is too driven by the state and the public sector. The, the, the proportion of the [00:27:45] GDP in Finland that is public sector is too big.

Josua: What is it roughly like 30, 40%?

Carl: No, it’s more, and, uh, I haven’t, I’m not gonna give you the last number because it’s probably gonna be wrong, but the point is that it, it’s been growing.[00:28:00]

Josua: Yeah.

Carl: And, uh, it’s in European or global standards High. Yeah. Um, and, uh, we are not rich enough or productive enough to carry that cost. [00:28:15] And that’s why the public sector economy is so badly on red numbers and we have a moral problem against, I mean, I have small children, maybe you have as well, I don’t know, but those of us who have small children have, uh, I think [00:28:30] moral responsibility to ensure that also future generations of fins.

Carl: Have a good society and country to live in. And if we take more and more depth on at some point it’s not gonna be sustainable. And then you’re gonna have a huge burden to carry [00:28:45] for the next generations. And I always find that sort of morally questionable and hence we would be, we would need to be doing now to, to make prioritizations where we would also need a conversation around what are the [00:29:00] priorities for the public sector.

Carl: Uh, sort of still to your question around the growth Yeah. Topics. All in all these groups that came now with all these initiatives now during the winter and, and, and early spring, there were a [00:29:15] lot of good suggestions, but then many of the comments around these initiatives were that yes, really good initiative, but that’s kind of cost a lot of money.

Josua: Hmm.

Carl: So my point would be that we would really need to get. Boil down to [00:29:30] that what is the core task of the public administration and uh, what we call welfare state. And we would need to focus on doing those things well. And then we would need to also accept that we will prioritize away a lot of things in order to make room for [00:29:45] maybe those costs that will be, uh.

Carl: Generating growth potentially. And then I think the other, so we need to get away from this really state centered thinking that I think would be the most sort of on an overarching level, the, the, the [00:30:00] thing we need to get to. And then also this strong belief in that the state can generate growth. Mm-hmm.

Carl: The state is an enabler at best, where the enabling factors are probably making sure that we have an educated labor force [00:30:15] that the. Tax regime is attractive, which in many ways it is, but in many ways it’s the other way around. So we have certain parts of the tax regime that seems to be quite attractive, but then we have also parts of it that it’s very unattractive and that needs to be addressed.[00:30:30]

Carl: And then we need interesting infrastructure, you know, all the basic Yeah. Uh, sort of levers that enable growth. And I think we haven’t really focused on the. On the [00:30:45] core.

Josua: Hmm.

Carl: And we haven’t been able to prioritize what the public sector actually can and should do when we actually have less, at least for now, we have less resources, less uh [00:31:00] uh, we should have a smaller budget because we’re living.

Carl: Beyond our means right now.

Josua: Yeah.

Carl: Um, so I think we, uh, we haven’t really seen the conversation. I at least would’ve hoped [00:31:15] when we, uh, a year ago heard that the government was planning all these growth measures. So personally, not too optimistic around bigger changes right now. Mm-hmm. Which is a, a [00:31:30] direction that, uh, is challenging in the sense that the Finland.

Carl: Development has been going in the wrong direction for a very long time, as you alluded to before. Uh, so we would need a lot of fundamental changes where it’s created, its entrepreneurs [00:31:45] and companies who create growth. The state ain’t gonna do that.

Josua: Yeah, I, I agree completely with everything you said, and I think it’s really interesting that you, you didn’t go to any specific policy like, we need to make this change here, or we need to make this investment, but it’s more so fundamental [00:32:00] understanding the, the public conversation.

Josua: Need to change. And I feel like in Finland, we don’t really think, we don’t really understand, we haven’t internalized how serious the situation is because we’re still, you know, we think about the piece of results from like way back when. We [00:32:15] still have in many ways like a incredibly high functioning society.

Josua: Like, but, but we can’t afford it, you know, because like someone living, living out of a, with a credit card, like it’s a great one. I guess you, as long as you, um, you keep doing it, but at some point you gotta pay the [00:32:30] bills and.

Carl: If it weren’t in a Euro zone, I mean, this is getting into sort of a more GDP type of conversation, more sort of macro level, uh, macroeconomic discussion.

Carl: But if it weren’t in a euro zone, if it would be a a, a non euro zone [00:32:45] country, I would claim that we would already have come to a point where our spreads our, the price Finland pays for taking on more state debt would’ve gone so high already that we would be in [00:33:00] trouble. Meaning that we would either pay too much or not get any loans.

Carl: So I think we are already sort of past the point where this is healthy. Hmm. And I, I, I agree personally very much with you that people haven’t internalized it, or too few [00:33:15] have. There are those who have, Hmm. My bigger concern would be that there will come a generation, a younger generation, that will realize this and they will vote with their feet.

Josua: Yeah.

Carl: This is a global world. We have a European labor [00:33:30] market. It’s really easy to go somewhere else. Yes. So we’ll also lose a lot of good people because they will see that this is gonna be an expensive place to live because taxes will remain really high, et cetera. So, so I’m, I’m [00:33:45] quite worried, but. At the same time, we have so many really inspiring good entrepreneurs and companies in this co country.

Carl: So we have a lot of potential and we have a lot of things going for us. We are a safe society. We have good schools, we have a clean environment. [00:34:00] We have a lot of potential in the energy sector. Uh, green energy, uh, climate friendly energy, a lot of levers and potential that is partially untapped. So. Uh, just doing things [00:34:15] right, but I would still claim that sort of, we need a thinking around a, a more focused state, more focused municipality, and sort of getting to what is the ba, what are the basic things that we can afford to take care of?

Carl: And [00:34:30] those things to, of course be, of course, be taken care of in, in a professional, really good way. But then we need to also be able to prioritize things that we won’t do anymore. Yes. In order to create room for growth. Because if you believe that we’re just gonna [00:34:45] carry on more taxes and then the state will decide that here we’re gonna have some growth.

Carl: That’s a bit of the thinking that we have now.

Josua: I agree.

Carl: And that’s been the way of doing things for a long time and it hasn’t worked.

Josua: Yeah.

Carl: And have the highest [00:35:00] respect for our decision makers in our parliament and government. But they’re, they seldom know how to create growth, and that’s maybe not their task even.

Josua: Like you said, the, I I think, I mean, we have all the prerequisites [00:35:15] to be a great enabler. Like you mentioned all the assets and we have rule of law, very stable society. I’m guessing like the corporate structure. I mean very high trust. Um, so we could be a society that becomes really attractive for, um, for companies to, to [00:35:30] locate here.

Josua: And I think it’s interesting with the voting of the feet, um, because I don’t think also people realize how fragile a country like Finland can be. Um, I remember I did, I looked into the numbers, I forget why, but in California for instance, they had a lot of people leave during covid. Um, [00:35:45] California’s a big state, 40 million people.

Josua: But if you look at income tax revenue, which is a big part of the state, total revenue, I think it was 40,000 people in California are like 40 or 50%. Of the, uh, personal income tax. So if those 40 or [00:36:00] 50,000 people leave, it’s a small percent of the total. But, you know, basically the state is bankrupt. So we’ve got like a pretty small number of people who are responsible, not just for income tax, tax income, but for a huge part of like investment and, and productivity.

Josua: And if [00:36:15] they go to, as you know, I mean, there’s a lot of options they could go

Carl: and we, I mean, we already see that even though we, we had this, uh, I mean the most. Interesting, or maybe not the most interesting, but the question that has gathered the [00:36:30] most interest during this winter and spring and this growth conversation that we’ve had in the public sphere in Finland was around the inheritance tax and yeah, how much tax you pay if you inherit money from your parents or you, uh, have a [00:36:45] family company that will move to the next generation.

Carl: Um, the reason why this is topical. Then it’s for political decision makers to decide what they wanna do with the tax. But it’s that we already see a phenomena and we [00:37:00] have seen where a lot of the families and people who have capital have relocated and we’ve lost so much, uh, capital from this country and we’ve never been a very capital intense country under contrary.

Carl: [00:37:15] So we need to figure out how we. Get private capital to feel that this is the best place to, to keep your capital. And, and, uh, and, and that, that is a really, really topical question. Um, and I [00:37:30] think that’s why, uh, but I, I believe that the question around the, the, unfortunately, excuse me, the discussion around it Mm.

Carl: Which we saw in the public was a bit angled in a, in an interesting not so good way, where it was a lot about whether it’s right or wrong that [00:37:45] if you inherit a company that you should pay tax or not. And I don’t question that dimension of the discussion. It’s definitely relevant, but my thinking would still be that we should have discussed it around the enabler factor of [00:38:00] what is the enabling factor of the dimension or fact that we would have or wish, or our goal that we would be able to, to reallocate or allocate back some of the capital that we’ve lost to more [00:38:15] interesting tax regimes.

Carl: And how do we attract new capital and capital to be allocated to Finland? And that’s the question that is the relevant question. Uh, and we, I think too little of a discussion was around that [00:38:30] dimension of it, which was Yeah, which is the original dimension to why this is on the table. But we’ll see what the decision makings will.

Carl: Conclude.

Josua: Yeah. It, it, it feels like another thing we haven’t [00:38:45] internalized is that it’s a global competition for talent and capital. Mm-hmm. And no decision that we make is in a vacuum. Everything, every, and people actually, like, you know, you can say, you can, one can feel that, you know, okay, we increase the tax on, on these rich people.

Josua: It, it shouldn’t [00:39:00] matter to them, but they’re individuals and, you know, they may find that it actually does matter and they may go with their feet like it’s. Like, I, like, like you said, there’s, there’s a moral aspect and you can talk about that, but there’s also just like, um, I mean, we can measure the impact.

Josua: When Norway [00:39:15] increased, uh, the wealth tax, the net, there was a net n negative effect immediately because people moved to Switzerland or, or France. You can criticize it, but you can also, from a Norway’s, you know, the state point of view. It’s that that was a bad decision. It did [00:39:30] not increase tax revenue. It decreased tax revenue.

Josua: Um, and probably there’s productivity losses that are gonna be very far reaching.

Carl: Yeah, it’s a very good example that’s been discussed a lot and it, it shows that, that the tax policy is one of the key enablers. [00:39:45] And, and then I think it’s a bit about ambition as well, that one of the challenges that I saw with all the discussion around the various growth initiatives were that the ambition level was always that kb.

Carl: Improve [00:40:00] this thing a little bit, so we tweak this just a little. I think we need to be a bit more disruptive in the thinking and a bit more bold. Yeah. And understand that Finland is, is as a, [00:40:15] on a macroeconomic economic level, we can say that Finland is actually in a very, very, very bad position. We are the new Greece.

Carl: Of the eu. We were the ones who 15 years ago, were very critical for good reasons to what was [00:40:30] happening in, in, in certain Mediterranean countries. Greece, of course, being an extreme example in the sense that there were also some tweaking of, of the public numbers that were reported, but they were west. The point was that they were living beyond on their means, and [00:40:45] we were one of the first ones as a, as a country to question that also quite vocally.

Carl: Yeah. But now we are the ones that have almost the worst numbers in the Euro zone, and that’s been going on for a long time. And that means that we actually need a bit of a more [00:41:00] disruptive approach. Take Ireland as an example, they were also in a really deep crisis 10, 15 years ago. Mm-hmm. More 15. And they were able to turn.

Carl: So it chose that you can win. So I would also from that sense, if you want to end on a more optimistic note, this part [00:41:15] of the discussion. Yeah, yeah. You can do, do, do. Arand is a, is a good example that you can. Change things.

Josua: Yeah.

Carl: And actually Greece as well, that was the sort of, they’ve also had a pretty good development.

Carl: They probably still have their challenges. So, uh, nothing is black and white. [00:41:30] Yeah. But I do believe that that, uh, the, they are encouraging examples.

Josua: Yeah. And one, one may be encouraging example is the, the stock market development here in Finland. From year to date, I don’t, you probably know the numbers, numbers, but it’s been good.[00:41:45]

Carl: Yeah. It’s been a really, uh, refreshing change. Yeah. I mean, and it’s been really odd. I mean, last year, 24, the US stock market was, uh, saw a really, uh, positive development [00:42:00] and, uh, awesome year in the US stock market last year. And then Europe was quite, uh. Uh, a disappointment and the most disappointing, uh, was the Helsinki [00:42:15] stock market.

Carl: And then now we’ve seen, uh, a sort of 180 turnaround where the US stock market has been really challenging. It’s been very turbulent as we know.

Josua: Yeah.

Carl: There is this new guy in the White House. He’s been, uh, uh, [00:42:30] disrupting a lot of things and uh, it’s been really a bumpy ride in the us. Stock market. But then on the other hand, Europe has been really yielding so far very well.

Carl: And, uh, then again, and then [00:42:45] Finland and, and, uh, Helsinki stock market has been, uh, really positive in the two, three, first months, but at the same time, a year is a long time. Yeah. Also, the US stock markets was really positive. The first, was it six, seven weeks of the year? And we, and [00:43:00] then now it’s been of course, really bad.

Carl: Uh. Meaning that we are now mid-March. So if you look at it from an annualized perspective, which many of us tend to [00:43:15] do in our work, and we look at the, uh, we have very long money in a sense, but we do sort of on a calendar year basis, look at our assets and how they yield. And, uh, anything [00:43:30] can still happen, especially in a world where you have a lot of.

Carl: Geopolitical challenges. You have wars, you have trade wars now with tariffs and all of that. So I would say that anything can still happen. Yeah. So very seldom [00:43:45] I felt that it’s as hard as it is right now to predict where this is gonna end. Mm-hmm. We have a lot of factors actually. Uh. Implying that there should be a lot of potential for a great [00:44:00] year as a institutional investor, but uh, then we have all these uncertainty factors.

Carl: Yeah. So, um, super hard to predict where this year will end.

Josua: Yeah. Like you mentioned earlier, you, you guys have 5 billion euros in, [00:44:15] in assets under management, and obviously there’s, there’s probably some regulation around how you need to diversify and so, but any kind of general thoughts about, like you said, it’s hard to predict, but, um, I’m thinking different, you know, different asset classes, you know, [00:44:30] Europe versus the US and maybe especially.

Josua: Technology, ai, uh, everything that’s happening there. What are your kind of general thoughts on where to where you think there’s gonna be some attractive returns to going forward?

Carl: Well, if you go back to last year, [00:44:45] I mean, we saw this magnificent growth of the sort of magnificent companies that are even named as a small group with that name, uh, partially driven by a bit of a boom or boost or hype.

Carl: [00:45:00] But at the same time, of course, companies like Nvidia really, uh, delivering from quarter to quarter, really impression growth, growth numbers at the same time, of course, getting the expectations to raised rise to [00:45:15] sky high. Yeah. Label. And then things like deep seek and other, uh, innovations coming in and sort of a bit challenging and even disrupting their, their, their position.

Carl: Uh, maybe healthy, [00:45:30] uh, who knows? But anyway, it’s clear that some of the technology companies in the US market have been, uh, coming to a point where they’re a bit overpriced. But then we also see that some of the [00:45:45] companies there, like Tesla wise, is under a bit of an attack because of ethical or principle reasons where the, uh, largest owner of the company and the CEO has been profiling himself a bit.

Carl: Outside the business sphere here lately, and that probably affects the [00:46:00] stock prices as well. Um, but we see then certain industries gaining from the geopolitical changes. For instance, the defense sector being one of course, but then we also see other. Uh, [00:46:15] tides a bit least turning in the short term. For instance, the US policy, that has changed quite a lot around climate change, uh, where you suddenly want have a rash regime or [00:46:30] a government in the US who wants to, uh, have more fossil fuels.

Carl: Um. The fossil fuels are great again, so to speak. Uh, and we can see that, for instance, one very iconic company, [00:46:45] Finnish nester, uh, biggest oil oil company or energy company here in that field, being one of the world leaders in renewable fuels, uh, finding it really hard to manage in this market well, but [00:47:00] demand and, uh.

Carl: Predicted Rema, demand for, for renewables is suddenly declining, all of it. This is very surprising in a sense. If someone would’ve said that five years ago that this will change, it would’ve felt like an unlikely, almost black swan type of [00:47:15] Yes. Development. So, so, uh, this is maybe a bit around the uncertainty and also showing that maybe companies and industries that haven’t been predicted as winners suddenly are, we saw these past days and.[00:47:30]

Carl: This can change when our listeners will see this spot. Maybe the world has changed again because it’s been so fast, but we had some of the steel companies in Finland and Sweden rising to really, they affecting ups and downs with the, the [00:47:45] potential tariffs that the US might put on the eu imported steel and, and then the prediction for these companies changing either to the positive or the negative.

Carl: So. Uh, this whole type of trade [00:48:00] war set up that we see rising again, which is a bit of a tide change. Where I think we’ve had still a long, the long term perspective is that we have, uh, decreased trade barriers globally [00:48:15] and we’ve had a globalization driven by lower and ro lower trade barriers. And now if, if this.

Carl: Seems to change, at least for the upcoming three, four years as the US government will be at least driving policies of this [00:48:30] kind for at least that time being. Then we’ll see what happens in the next US elections in three, four years. But that’s a different story, three and a half years to the next US presidential elections.

Carl: Then things could change, but. This is where we are for three, four years, and that sort of [00:48:45] winds the clock back around many things. So we can, can maybe see that, that companies that, that were portrayed as, as, as. A bit of a sunset business, maybe suddenly can get an upswing from that. And [00:49:00] I, I don’t think the long, long term perspective will change, but, but it’s gonna be very turbulent and many companies that have been portrayed as def, as clear winners might not be the winners that we believed.

Carl: Hmm. So, as investors, we, we won’t [00:49:15] revisit our values and we are a value driven investor, but. But we really need to revisit some of the beliefs around the big trends.

Josua: Yeah. It’s interesting, like you mentioned, like there are some big trends that have, have absolutely changed that felt like they [00:49:30] were rock, rock solid.

Josua: Like this is a mega trend that’s gonna play out over the next few decades. And now maybe at least there’s gonna be a pause. Mm-hmm. Um, you mentioned, uh, defense. Defense, so I want to go into that. Given, given that it’s, um. Well, especially given your background, you were [00:49:45] Minister of Defense in Finland, uh, in 2012, I think.

Josua: Mm-hmm.

Josua: You, you stepped into that role, so now there’s talk of 800 billion that’s gonna be spent on European level. Do you think that Europe is serious about re-arming? And what does it mean for, for Finland? I’m thinking, you know, [00:50:00] if we leave the security aspects, that’s a, that’s a, that’s a very long conversa podcast in and of itself.

Josua: But if you just the economic, uh, impact, what do you think? Well, I mean,

Carl: first of all, we do need to, to step up the game here. The US has [00:50:15] carried an unproportional responsibility of European security for decades, partially because they wanted to do so. So, uh, let’s keep that in mind as well. But, [00:50:30] uh, it’s good to say that now President Trump and his administration is, is accused of sort of leaving Europe and, you know, all that, uh, I’ve heard.

Carl: The same words from President Obama [00:50:45] with my own ears in the uh, NATO WA Wales Summit in 2014, which was my last big defense summit before I left politics and went back into business. So this is not a Republican or Trump [00:51:00] view that the US needs to focus on other things and that Europe needs to. Carry its own responsibility.

Carl: This was also the policy of the Democrats and Obama and Biden regime has had the same message with, of course, much more [00:51:15] soft way of, of, of, of passing on the message. But, um, we as Europeans or many European countries, and maybe as a collective, didn’t maybe [00:51:30] take the message seriously. And then we saw what happened in Ukraine.

Carl: First with, and then later on Luhan scan, and then now of more or less full scale war for the past three years. Um, [00:51:45] so it’s great that we should have had the taken the message serious with before. And, um, so it’s, it’s high time to to do so. Uh, Finland is a bit of the odd bird here because we just recently, as we all know, [00:52:00] joined NATO and historically have.

Carl: Uh, carried the responsibility of our national defense ourselves. So here locally in our country, things are quite well in relation and we have, we, we have a credible defense, uh, especially in our [00:52:15] top, top with the NATO membership. So, uh, I think our position is quite strong, uh, but we have many European countries who are big and economically fairly strong, uh, that haven’t, um, invested.[00:52:30]

Carl: In their defense. So this is a welcome change, even though the reasons for welcome change are tragic with the war in Ukraine. Still going on, uh. So this will definitely pose a big possibility for the defense [00:52:45] industry and we, we need a credible defense industry in Europe as well. We are also quite reliable.

Carl: I mean, we, we have so many, uh, US companies and it’s good. We, I still believe in global trade and I believe we’re gonna need a lot of US technology and US [00:53:00] defense companies will definitely also gain from the fact that Europe needs to invest more. But we also need to ensure that the European defense industry can.

Carl: Can, can, uh, develop and has room for, for development. So it’s gonna be an interesting sector. [00:53:15] Uh, as an investor to, to, to invest in. And it’s clear that it’s also, we, we have seen a lot of the discussion around whether it’s morally right to invest in defense. Many institutional investors have historically, uh, [00:53:30] ruled out investments in this sector.

Carl: And I would also rule out investments in nuclear weapons, chemical weapons, and those type of weapons. But in general, it’s still. So that it’s been proven now in the past decade, and especially in the past years with the war in Ukraine, [00:53:45] that defending democracy, rule of law and human rights is not only gonna happen to diplomacy, which is still the foremost and best way to, to, to do it.

Carl: But it also, [00:54:00] unfortunately, this has been proven that it, uh, also defense and the products that the defense industry produces are. Uh, necessary part of de defining the values that we stand for. And hence, it would be really wrong [00:54:15] for institutions like us to rule out also investments in this sector. And we have never, as a company, my employer done that, but many others have since created.

Carl: We also need capital investments in this sector to support this development, but [00:54:30] it’s created with the. Strong boost in demand that will come from, from change of policy. For instance, in Germany, that is the biggest economy in, in eu. It’s clear that that will have a, a profound impact on the demand. So a [00:54:45] big change ahead of us, clearly there.

Carl: And then hopefully with the change of policy, the US will also have a more moderate, less dramatic view on how they will. Possibly back out, so to speak, uh, in the [00:55:00] long term. I understand if the US want to have a long, smaller role, but I think it would be in our all interest if there, there is no drastic change there in the short term, but that’s more of a political question, but

Josua: yeah.

Josua: Yeah, yeah. Uh, that’s a great, great answer. Um, [00:55:15] we covered, we covered a lot during, during this conversation. Um, so, so basically, I mean, your kind of view of the economy, um, and, and the kind of the. The landscape for, for growth is kind of a, there’s some turbulence [00:55:30] ahead.

Carl: It’s two folded, I mean, for Finland there are, I mean, many predictions showing that the economy could grow this year.

Carl: I think that’s good news for everyone, but it will be modest growth. I mean, that’s clear. Yeah. And it’s also very evident that there are so many [00:55:45] questions around where the world economy is, is going. Yeah. So, uh, nothing that one would like to predict for certain, but. Finland needs growth. Uh, that’s, that’s, uh, something that it’s easy to, [00:56:00] to, to, to underscore and, um.

Carl: Uh, most likely I believe that the growth and the future of Finnish economy will be with small and medium, [00:56:15] medium sized companies. Yes, we do need, of course, uh, larger Finnish stock listing and non-listed, larger companies and corporates to grow, and they need to have their ability to grow as well with Finland as a [00:56:30] basis.

Carl: But, uh. We need to really also, and that, that’s maybe for our next conversation, but we, we have seen a number of really interesting startups grow quite strong and I. I believe that [00:56:45] many of the ingredients for understanding what the levers are mm-hmm. To support growth, are probably found around those companies and what they did.

Carl: Right.

Josua: Yeah. I, I just saw some stat that finished. Startups are generating an aggregate of 10 billion euros in revenue. Uh, [00:57:00] the vast majority is export. So that’s not a, that’s not a non-significant number.

Carl: Uh, uh, quite right. And, uh, we need to somehow double click on what they did. Right? Yes. And what, what we need to do.

Carl: For more of them to, [00:57:15] to grow and, and, uh, and, uh, for, for us to attract more talent and more, uh, uh, investments. Uh, there are, I mean, as we all know, number of [00:57:30] really inspiring phenomenas, like slush, yes. But we haven’t really, I think, untapped the whole potential from that. Agree. So, so we haven’t been able to really, uh.

Carl: They get to the next level there as a society. I mean, the event in itself, [00:57:45] yes. But what we could do out of that. So, so that’s, that’s in a sense, if you want to, again, get to a very positive note that shows that there, there is still the potential.

Josua: I totally agree. I feel like we’re definitely [00:58:00] punching a below our weight if you, if you can say that.

Josua: Yeah. But we haven’t un untapped all the potential that we have in the, in the human capital that exists in Finland. Uh,

Carl: quite right. I perfectly agree. We are definitely not delivering on the potential that we have [00:58:15] as a society, so, uh, we need to, to get there.

Josua: That’s a good, I feel like that’s a good, good note and end, end the conversation on.

Josua: So Colin, thank you so much for taking time. Let’s absolutely do a follow up episode sometime in the future and [00:58:30] hopefully, you know, we’re back to back to growth and a number of things have changed, but, um. Yeah. Thank you so much and, uh, good luck with, with the rest of the year. I hope you guys are able to, to exceed, um, exceed all the targets that you’ve set.

Carl: Uh, we, we are optimistic around that, [00:58:45] but uh, on top of optimism you need hard work and a humble attitude. So I think that will take us there and thanks for a really interesting conversation. Thank you.