Meet Mr IKEA - the billionaire who still flies economy
IKEA founder Ingvar Kamprad made his billions from flat-pack furniture, but at 89, he still lives a modest life.Peter Iantorno August 19, 2015
As the billionaire founder of IKEA, Ingvar Kamprad, once said: “Nobody ever got rich by wasting money.” And he would know – he still flies economy, stays in cheap hotels and drives the same Volvo he bought 20 years ago!
When he founded IKEA in 1943, Kamprad couldn’t possibly have imagined quite how successful his business would go on to be.
What started as a little shop selling basic household items has now grown into a massive multinational conglomerate, with 373 stores in 47 countries, selling everything from flat-pack furniture to food from Adelaide to Abu Dhabi, and Detroit to Doha.
While not even Kamprad could have predicted the extent of his success, even from his early years, the signs he would make it in business were encouraging to say the least. At just five years old, the already business-savvy Swede got his first taste of making money, when he realised he could buy matches in bulk and sell them on in smaller batches for a profit.
By the time he was 10 Kamprad had expanded his fledgling empire into selling everything from stationary and seeds, to fish and Christmas tree decorations. The enterprising youngster clearly had an instinct for business.
As well as his business nous, Kamprad also excelled in his studies and, under the promise of a cash reward from his father if he was to achieve good grades at school, he managed to pass all his exams, despite suffering from dyslexia.
With the reward money from his father safely earned, in 1943 Kamprad left education at the age of 17. Now, at this point any normal teenager who had left school with a stack of cash burning a hole in his back pocket would probably have frittered it away, but Ingvar Kamprad was no normal teenager.
Grasping the opportunity, Kamprad decided to take his small-time selling operation up a few notches and launch his own company: IKEA. The name is an acronym for Kamprad’s initials, plus the initials of the family farm where he was born (Elmtaryd) and the nearest village (Agunnaryd).
For the first five years IKEA carried on the good work Kamprad had started in his childhood business, selling photo frames, wallets, and stockings – anything he could turn a profit on - and in 1947, Kamprad introduced furniture to the IKEA product line.
While IKEA enjoyed reasonable success in its early years, the move that really catapulted it into the big time came in 1956, when Kamprad introduced the concept of flat-pack furniture.
While it might seem like a terrible idea when you’re wrestling with a wardrobe or corralling a coffee table, the flat-pack concept was a real game-changer in the business. Suddenly furniture was far cheaper to produce, store and transport, meaning those savings could be passed on to the customer.
Needless to say the success has been astounding. Although the complex structure of IKEA and its various offshoots and subsidiaries make calculating Kamprad’s wealth complicated to say the least - with estimates varying from $3.5 billion to more than $48 billion - even at the most conservative end of the scale, he is more than comfortable.
It is worth remembering that aside from his outstanding business career, Kamprad hasn’t been immune from controversy. In 1973 he made the unpopular move of shifting the IKEA headquarters from Sweden to Copenhagen, Denmark, in order to avoid unfavourable tax rates. He also moved himself and his family to Switzerland to dodge the strict Swedish taxes.
And then there’s the time he refers to as “the greatest mistake of my life” – the brief period in his teens when he became involved with the pro-fascist New Swedish Movement. After his former affiliation was made public during the 1990s, he wrote a letter to his employees asking for forgiveness. He also devoted two chapters in his 1998 book The History of IKEA to apologise for his past, which he put down to him being influenced by his grandmother who was, “a great admirer of Hitler”.
However, despite his controversial past, which will always tarnish his reputation somewhat, the way he acts with such humility today, living a simple life, resisting the urge to make audacious purchases with his vast wealth and continuing to drive that beaten-up Volvo, is a breath of fresh air.