An interesting news tidbit arrived in my inbox a few days ago, with an irresistible headline: “Create Ikea, make billions, take bus — IKEA founder Ingvar Kamprad flies coach, takes the subway and drives an old Volvo, but could he be the richest man in the world?”
Apparently, the celebrated entrepreneur is also a closet cheapskate! Kamprad built Ikea from a one-man operation by first using his village’s milk van to deliver his products into the world’s largest
furniture retailer, with annual sales of $12.2 billion. However, he still apparently takes the subway to work, drives a 10-year old Volvo, and is rumored to replace expensive hotel mini-bar Coca Colas with cans bought from the store, to avoid overpaying. The notoriously press-shy Kamprad admitted in a 1989 Fortune interview that his frugal tendencies were loosening up a bit: “I seldom wash disposable plastic glasses anymore.”
People chuckling at this will probably sit up a bit straighter when they realize that Kamprad’s net worth is estimated at anywhere between $53 billion (Swedish sources) to something a bit lower by
Forbes, which ranked him at No. 13 on its list of the world’s richest persons. While the $52.5 billion would rank Kamprad higher than Bill Gates ($46.6 billion), there is no doubt that Kamprad’s burn rate is much slower than Gates’s.
I was both inspired and encouraged by this article, as it offers a rare association of frugality with wealth. While there is no doubt that many other factors (including timing, ability, luck, and the strong Swedish krona) played a much greater role in creating Kamprad’s wealth, something inside me believes that his careful spending habits and frugal outlook helped create what is special about Ikea today — quality furniture at an attractive price. Conscientiously pinching pennies alone will not create wealth — eventually, a higher income, regardless of how it is achieved, becomes necessary. However, careful spending habits can help build wealth more quickly, and also make it last longer.
I’m not encouraging everyone to start washing out their plastic cups (I choose to wash out Ziploc bags!) or denying themselves an occasional celebration of their success. But the example of Mr. Kamprad does provide a fascinating view on how it is possible to be a “frugal billionaire.”
To check out the original Fortune article, see: Create IKEA, Make Billions, Take Bus
© 2004 Wendy J. Imura.