Trond Riiber Knudsen, former 25-year McKinsey Director in Norway and currently a startup investor at TRK Group, shares his thoughts on how to drive innovation both in the startup world and at large corporates.
Transcript:
BLAINE: Hello everyone and welcome to Business at the Edge – our video interview series with thought-leaders and practitioners at the intersection of edge computing, AI, IoT, and other innovative technologies.
My name is Blaine Mathieu and I’m CEO of Pratexo, the Edge Computing Platform as a Service. Now let’s get started!
Our guest today is Trond Riiber Knudsen, founder of TRK group. Thank you for the time and I think we’re going to have fun today.
TROND: Thank you so much for inviting me, I’m really looking forward – always so interesting to discuss with you, Blaine.
BLAINE: Absolutely. So for full disclosure, Trond is on the Advisory Board of Pratexo and it goes without saying, I always appreciate his wise advice. I think you’ll see why in a minute.
TROND: Thank you.
BLAINE: You’re welcome. So, Trond, you’re listed as the founder of TRK group. What is TRK group, what’s it about and what are you up to these days?
TROND: Well, I did spend 25 years as a senior partner with McKinsey and Company. I was a management consultant. But six or seven years ago, I saw that so many of the best people around me, the best talent in McKinsey, my very best clients, left to become entrepreneurs.
And this was a big shift particularly here in the Nordics. And I always wanted to be on the right side of driving change and suddenly I saw it was not happening as much in the large incumbents anymore, but more in the startup ecosystem.
So my idea was to be part of that. So I stopped being a consultant at McKinsey a bit earlier than people expected, and full time, dedicated myself to support entrepreneurs who would like to deploy cutting-edge technology against some of the biggest challenges we’re facing and opportunities for entrepreneurs. So that’s what we do with TRK Group.
And I decided to primarily focus on Nordic founders, who would like to build something global. I could recognize that from my days in McKinsey where I helped the Nordic companies grow globally and I always felt that was a good ambition.
And it’s also about kind of making certain that the business community here, particularly perhaps in Norway, are transitioning into a greener, more technology-driven, business environment.
To make certain that we are modernizing. We have been very reliant on resources here, as you know, oil and gas and but also you know, electricity and so forth. Yes, we needed to upgrade and I felt that someone in my position, who had relationships and a certain kind of credibility could raise my hand and say this is very important and get behind it.
BLAINE: And how many startups is TRK group involved with today?
TROND: Well it’s quite a few, I guess, we have something you could call a seed boutique, and that means that we like to get engaged early and rather in many companies.
So, we have a portfolio of close to 100 companies, and they are in different stages, as you can imagine, from a couple of people to companies that are listed on the largest stock exchanges and have become major unicorns and so forth, so it’s a good kind of array of companies.
BLAINE: And you do this all by yourself, or do you have help?
TROND: Well, after McKinsey I had this idea that I would like to have independence to be able to help people like you as much as possible.
And not develop the administration. So, it’s something I do because I’m very passionate about this and the people around me are people that like to co-invest, like to help out, like to be on boards, sometimes getting consulting engagements. So yes, we are a group. I don’t have employees.
BLAINE: Interesting. So you mentioned 25 years at McKinsey. Maybe tell us a little bit more about your backstory. How did you get to this position where you could be helping over 100 startups helping, you know, chart their path?
TROND: Well, the backstory started with me growing up in a family, where my mother and father were having a consulting company in engineering.
And, of course, my idea was to do the same as they did. So, I went to engineering school and so forth, but I realized that actually, the world was changing so much.
You know, Bill Gates and Steve Jobs created the IT industry, the wall came down in Berlin, you know, Deng Xiaoping opened up China. There was so much going on and I felt that the engineering bucket was too small for me. So, I had to find a nice escape from the family business, and escape, for me, was to go to Harvard Business School. And my parents never liked it, of course, but I came to Harvard and McKinsey found me because they wanted to build something in Europe.
And after a short conversation I joined McKinsey. So that was what was going on and for 25 years. I served primarily Nordic institutions who would like to become global players and upgrading, I would say, the quality of the larger companies here now.
BLAINE: I understand that you weren’t just a McKinsey consultant, but you actually were very involved in the leadership level and training new McKinsey consultants, is that correct?
TROND: Yeah I always had a big kind of a passion for people, mentorship and building capabilities and I would say, diversify McKinsey. McKinsey was not that diverse back in those days and one of my biggest initiatives for diversification was actually building functional capabilities, to get much deeper in functional capabilities.
And, to do that, for 10 years I led the marketing and sales practice globally, which ended up being around 20% of McKinsey in total. And I also led the whole Learning Initiative which, basically, is the capability building initiative at every tenure level in the firm, in McKinsey, from very young associates, you know all the way up to senior partners. You are always going to learn, it is very important, to keep a learning mindset.
And we created the learning staircase with lots of different initiatives and I was overseeing that, which I thought was a great initiative. And then this has also brought me, after I left McKinsey and still up to six weeks a year, I train new young McKinsey partners globally.
On the transition from being a consultant to being an inspirational partner. Yeah, which of course is a big, big shift.
BLAINE: And I bet you’re always watching up for the next startup founder or CEO right in these groups
TROND: That’s absolutely the case. And also connecting the startups in our portfolio to large corporations being served by the people I meet at these events.
Or I could say that a lot of the way I work is with a very broad portfolio and I know very many people from McKinsey to Harvard and also serve on corporate boards – I’m on six corporate boards, is that I can connect.
I can never, no I can never promise exactly what will happen but often good things are happening.
BLAINE: Yeah, no doubt.
TROND: Well, I’m sure your background and experience is very relevant to many of the people that are listening to this or watching this video. So tell us what particularly excites you these days about what’s going on at the intersection of Business and Technology?
BLAINE: What gets your blood going?
TROND: Well sitting here in Norway, I am basically quite excited about the enormous, I think, focus and capacity in terms of people and capital now going into building new, strong businesses. And we had a very big gap here. So when I started, six, seven years ago, amazingly, we spent 100 times more in oil and gas investments annually, than we did on venture capital in Norway. 1 to 100. So we had, you know, $20 billion in oil and gas investments and $200 million into venture. So this is shifting now: it’s more like a 10 or 15 times increase in venture capacity.
Over this short period of time that means that I’m very excited to see that, around our industrial base, there’s so much going on, and we have initiatives in areas of course like climate tech. The whole shift to electrification they’re quite early. We have the biggest penetration of electric vehicles in the world, it is pretty interesting for a mainly oil and gas producing nation. We have that.
We have some really interesting areas within food and ag-tech, not least because we have the largest fish farming industry in the world.
And there’s a lot of interesting tech development on AI, robotics, biotech, you know, around that industry, which I find very interesting.
And software development around the energy business, the oil and gas business, like Cognite, Arundo, Pratexo, you know, really, really interesting. So here, sometimes I feel that we are just too few people – we are only 5 million people here in Norway, that’s nothing.
And we just need to reach out and create global companies like we do together on Pratexo.
Now, Top talent here, talent in the US, talent in Asia, working together to create the next generation of tech-driven global champions that’s, I think, super exciting in that interface, Blaine. And I think if there’s one other thing in that interface, it would be, of course, how important it is for the large companies, the large incumbents to be open and curious to what’s happening in the innovation ecosystem, around these companies. And this has now become a core CEO capability, of course top team capability, to understand how you do that, how do you value venture-backed companies.
BLAINE: Yes, yes.
TROND: How do you integrate or not integrate? How do you run multiple initiatives, building on different technology bets. At the same time, kind of all these things are new capabilities for large companies. And, for us, we have been around for a while, after the dot com bubble, we remember how corporate venture capital was out of fashion and many of these companies sold their portfolios. Today there’s not one corporate who are not engaging and it’s enduring – it’s not gonna end. So I am also interested from that point of view, to bring that kind of insight to the large companies, I think.
BLAINE: Yeah that’s very, very interesting and I absolutely see that as well. By the way, for those that are wondering, Pratexo was born out of a venture incubator called Northscaler in Norway, which is, I think how we got our connection. And so one of the reasons you’re connected with Pratexo is we’re part of your Nordic theme as well, even though I am based in the US. So thank you again for being part of our journey as well, Trond.
So, are you seeing any theme in the startups you work with that relate to edge computing specifically or processing more data at the edge? Are you seeing more of that crop up? I’m interested in your general thoughts on the topic.
TROND: No absolutely, and in many of the industry areas and applications that are particularly, I would say, important here, we see it. So we have activities, for example in prop-tech. Where we see the edge becoming very important. Not the least because, in many of our prop-tech clients you get very specific IoT solutions, new sensors for the very specific, you know, solutions become very complex and then you have incumbency with all the equipment, with sensors, and then you have other types of data, lack of integrated data platforms often.
BLAINE: Yes, yes.
TROND: And you know coming into that we’d have kind of a mindset of creating platforms availability, but not least, processing capacity and capability locally and then you’re into edge immediately. And so I think in prop-tech we see a huge growth of edge. Just as an example.
BLAINE: And you must see a lot in the energy industry as well, generally, you know, not only oil and gas, but the electrification space where Norway is so far ahead actually than many other countries we work with.
TROND: Yeah and you know because you’re often getting into the challenges, of course, in addition, that you have lack of connectivity in certain situations like in mobility, we all know about that. And we have that also offshore. I mean in many situations where you just cannot totally trust the connectivity at every point in time and edge is important. You have latency issues in many applications where basically edge takes out the risk of latency. And that’s I think what we find is value in mobility, in oil and gas, and energy applications, and in prop-tech.
We are seeing edge all over the place, we are even currently developing, I would say, a next-generation hearing aid which is somewhere in between a traditional you know, on-prem old hearing aid. It’s been 30 years. And an earphone. None of them are connected to a kind of cloud and AI and edge computing. So we are bringing edge into this. And that opens up functionality, that we only could dream about.
You know if you’re a creative technology innovator today, I think you can even take kind of an edge mindset to many challenges that have not been fully resolved, and at least we’re trying, partly with edge, to do that in hearing aids and I thought that was pretty novel.
BLAINE: Absolutely, a very interesting example and I think it is a lot of these newer technologies that are combining edge, in other words processing close to where the data is being generated and cloud, right?
It’s about processing the data, where it’s most appropriate. A lot of the last 15 years, as you know, was all about taking everything and putting it in the cloud.
And that makes sense for some type of applications but you’re hearing aid example is a perfect example of, yes, you have to process some data locally in real time, but you don’t want your hearing needs to stop running because they don’t have a connection to the cloud right? But there are some things, probably some reasons that it does make sense for them to be connected – I can’t wait.
Very, very interesting. Well, this is one of my favorite parts of the conversation, where I often ask our guests to dispute some aspect of conventional wisdom. Is there some area where you know most folks are saying X, but you might say Y? What would that be?
TROND: Well Blaine, that feels like my full life in Norway for the last seven years!
BLAINE: Good good, and look where you ended up!
TROND: The model has to shift. And I think perhaps the one area where I’m spending the most time on this is the perception of, let’s say, financial risk. Where here is the kind of the ‘convention’ that if you have something built that is steel or concrete, it could be an oil rig, it could be a ship, it can be a building, a road, then you have something which is low risk. And you can use loans and you have collateral for the loans.
Then, on the other side, if you have something digital. You know something in the cloud, or whatever, you don’t really know what cloud is – you can’t even see the code. It is seen as very risky.
So what’s happening today? Well, what’s happening is that concrete and steel are stranded assets. And value in many cases, of that is plummeting. Like the need for oil rigs. And suddenly the companies that were built on that, wonderful companies like Seadrill, for example, that was worth up to $8 billion and owned by the richest man in Norway. It doesn’t get safer, huh?
BLAINE: Hmm?
TROND: It went bankrupt. It was taken out of bankruptcy court, you know, recapitalized. And then went bankrupt again. Wow! You know and then on the digital side, we create unicorns like crazy.
So, and here in Norway the State and Government is still very focused on protecting all the concrete jobs and the industry and not focused on the new because, you know, every lobbyist is of course focused on the old because that’s where the money is.
And sometimes in Norway I’m saying that, together with my friend at Innovation Norway, he and I are the only two now. All the time spending time on the new. Yeah and we need to be more people there, so I think that kind of dichotomy between what is perceived very scary and what is actually very risky – it’s shifting rapidly.
Hmm.
BLAINE: Very, very interesting perspective. And something that hadn’t occurred to me before but that I think, thank goodness for Norway and to the world that you are focused on shifting that perception right. Actually, speaking of the world, I did neglect to mention earlier that you are actually doing some very interesting work in Africa, right now. Do you want to tell us briefly what you’re doing in Africa, Trond?
TROND: Thank you, so I was born in Africa, I was born in Addis Ababa in Ethiopia and, when you’re born in Africa, you always carry Africa with you, as you know. So I was always very close to the continent, also in McKinsey and when I left and started my company providing, you know, support for entrepreneurship, job creation and working on climate challenges in Africa, it became very natural.
So we have launched a number of companies, particularly in East Africa where I’m from. And a couple of examples that I think, you know, shows what we’re trying to do, and here we work very closely with the Norwegian government on many of these initiatives.
One of them is that we brought Antler to Nairobi. Antler is a talent incubator that we started in Singapore, with three friends of mine from McKinsey, and myself, and some other people. Started Antler in Singapore – it’s where you bring people in who have perhaps 10 years of work experience. They would like to become entrepreneurs, but she’s never really doing it because the risk is perceived to be too high.
You don’t find the complementary co-founders with different skills and so forth; might not have a good enough idea, so you don’t do it.
So we tried to get after that, to create an environment, the platform where you can come into Antler, get a scholarship for two months, meet other people, create a company. Then we have a fund investment committee and we invest into the best companies and you build for three more months. That model we started in Singapore, and then we started in Nairobi.
So now in Nairobi, we are building 10 companies every year. And we created a fund, the first fund this is $15 million. Pretty much family offices from Norway, which is supporting this and we want to take it into more countries in Africa. The good thing about this is that it brings international capital into entrepreneurship in Africa.
It brings capability in to build what is state of the art, also from a global point of view, because when you bring digital technology in there’s no reason not to build at top level in the world. So we see that happening all the time and a lot of people come back to the continent, after being educated abroad, having worked abroad, going back to the continent to be with Antler – so that’s a good example.
In Addis Ababa we started the only really large paper recycler. There were 4800 people involved in the network. I mean we are migrating into overall management for the municipality, and then we get into the very interesting landfill
challenge, which is very much connected to the climate change. …coming out of the landfills as a very kind of contributor, negatively.
Trying to work on this by sorting waste and then being able to incinerate, to work with the biological, to create proteins, and so forth. And really modernize the whole thing. We are setting up a big cement factory and also Addis Ababa to burn waste and not coal and have a big positive effect on climate.
So we’ll be moving that into overall waste management, and I think if you can crack that in Addis Ababa, then we’d like to take that across the continent and that could be a very big contributor. I think on the sorting side that’s where we’d like to bring in computer vision sorting technology, edge technology. So we have to talk more about that.
BLAINE: Sounds great. That’s very interesting and so great that you’re applying your skills and your network to bring a lot of this innovation to Africa. So that’s why I had to ask about it.
Well, maybe to wrap up, do you have a key takeaway or a tip for a business or technology leader that wants to drive the transformation of their business using some combination of these interesting technologies that we’ve been talking about?
TROND: It’s interesting. I was asked that by my friend today, Tore Laerdal, who is the chairman and owner of Laerdal Medical, that is basically one of the biggest health education players in the world. And they saw technology coming in terms of AI, machine learning, VR/AR, all of these going to influence their business and what do we do? Number one, of course, is not to be overwhelmed by complexity.
And there are things you can do. You know typically one of the things you can do is to start to hire great talent.
Because many want to do this type of digital transformation, you want to make things happen you just have to have the right capability, the right talent. So we built basically in that case we built from 100 tech people to 650, including in Bangalore and Copenhagen. So capability became very important.
Secondly, we actually went through a very strict process of buy-vs-build. Because typically these large corporations, they are very much, I would say, in the pocket of the large IT consultancies and they will always tell you to create a roadmap and build build build build. But there are companies out there that already can deliver to you – Pratexo can deliver, Arundo can deliver, Cognite can deliver. You know? So you need to have a more open mindset as to where you actually tap into the, you know, wonderful ecosystem of innovation companies out there. And we have to actually build.
And be careful with the large IT consultancies. They have a very specific interest in bringing on these very long roadmaps. So be careful about that. Then the third level what I think we did, in that case, was that we actually started our own venture firm called the Laerdal Million Lives Fund. We have now four partners in Palo Alto and that fund is focused on investing into technology companies that support our vision of saving lives. So it’s connected to our corporate vision.
And by having that vehicle they get a deal flow and we get much more insightful as to what is happening in the innovation ecosystem around our company. And sometimes that can lead us to do an outright acquisition like we have done. In other cases we invest and follow the company and anyway, we get to look smarter.
So there’s a number of things, of course, you can do, but I think you know, don’t get overwhelmed by the complexity. That’s the place to get started.
BLAINE: Well, Trond, that was a lot more than a tip, that was a complete plan for how to be successful. That was incredible. I think that wraps it for us. Thank you so much for joining us today for this conversation – very, very insightful and really appreciated.
TROND: Thank you, Blaine, very much. It’s been such a great discussion, and thank you for inviting me.
BLAINE: You’re welcome. For those interested in hearing more about Trond’s thoughts I think it’s best to follow you on LinkedIn is that right?
TROND: Quite.
BLAINE: Good, excellent. And of course, you can reach out to me on LinkedIn as well or via email at edge@pratexo.com. Thank you again.
