The portfolios may change, but the dream is alive and well for the fourth generation of the Carlsons.
The American Dream, Carlson Style
Diana Nelson, chairman of the board of Minnesota-based Carlson, looks at the ups and downs of business cycles and quotes her mother and mentor, Marilyn Carlson Nelson.
“Mom says it’s absolutely true that when God closes one door he opens another, but it’s hell in the hallway,” said Nelson with a laugh.
The 79-year-old multinational business founded by Nelson’s grandfather, Curt Carlson, is in one of those hallways right now, with the 2016 sale of its hotel holdings, its refocus on its travel business and its transitions to accommodate retirements and new leadership.
The business, now known simply as Carlson, is facing the same generational shift that other businesses are grappling with, as baby boomers conclude their careers and millennials make their presence known.
But with Carlson’s family structure, the most senior and most junior stakeholders are blood relatives.
“We’ve been living the American dream, but my dad’s version of it,” said Carlson Nelson, 77, who rose to board chair and CEO as her father’s successor.
“Curt’s dream was multigenerational. His idea and focus was on creating a company that would work with family and that family would work with business over multiple generations.”
Headquartered in Minnetonka, Carlson has a presence in more than 150 countries and employs almost 20,000 people worldwide, 1,100 of them in Minnesota.
The business was founded in 1938 when Curt Carlson, the son of Swedish immigrants, used a $55 loan to start Gold Bond Stamps, an innovative grocery store loyalty program.
The entrepreneur went on to become a titan in the hospitality industry, buying and building hotel chains (including the Radisson brands, Park Plaza Hotels, and Country Inn and Suites) and restaurant groups, with TGI Fridays as a portfolio linchpin.
Carlson and his wife Arleen had two daughters, and today Marilyn Carlson Nelson and her sister Barbara Carlson Gage both consistently make the Forbes list of America’s wealthiest women.
“We grew up in unusual situation, a family compound. My aunt and uncle and our four Gage cousins lived on one side and my grandparents were on the other,” explains Wendy Nelson, 48, a director on the Carlson board who is Diana’s sister and Marilyn’s youngest child. “We were raised more like siblings than cousins, so we know how to work and play together.”
Seven in the third generation came of age. (Juliet Nelson was 19 when she died in a car crash in 1986). Those seven are now parents to 16 young people in the fourth generation, ranging in age from 12 to 25.
The eldest among the fourth generation are college graduates but none has yet taken their place in the business.
“We have a family policy that’s a good one — no one is invited to work in the business unless they’ve worked three years outside the business,” Diana Nelson, 54, explained. “It’s a win for the family if they choose to come in — and they all won’t, or shouldn’t. Those who do will bring a broader purview.”
The sprawling family always spends the holidays together, and stages an annual shareholder meeting with participation that includes the extended clan.
“We’re building from the inside out,” says Marilyn Carlson Nelson. “It’s good to have more decision-makers, but a challenge will come with that. With our youngest generation, the age range is broader and they inevitably will be more geographically dispersed. I’m grateful for the discipline we put in place to help us to accommodate the range of viewpoints. But no doubt, it will be different.”
The Carlson family is not only one of Minnesota’s wealthiest families, it’s also among its most generous.
A $25 million dollar gift to the University of Minnesota in 1986 established the Curtis L. Carlson School of Management, the entrepreneur’s way of paying back his alma mater for the education that he said primed him for success.
Near the end of his life, Curt Carlson established the Carlson Family Foundation and appointed his daughter Barbara as its first president and CEO.
“We feel a responsibility to give back,” says Gage, 75. “That’s part of our American Dream, too.”
The foundation gave away $83 million during Gage’s 21 years of leadership. She was no mere figurehead; Gage collaborated with nonprofit partners, dug into research to refine her philanthropic recommendations and made on-site visits to scores of grantees, often with a younger family member in tow.
Earlier this year, the third generation of the family selected Wendy Nelson to succeed her aunt as head of the foundation.
“My grandfather was always able to leverage something small into something big,” Wendy Nelson says. “As a foundation, we’re strategic, looking for places where we can have enormous or long-term impact. We look for opportunities where we can bring something special and can be a catalyst, ignite through our leadership, our reputation and our ability to convene.”
In the last five years, the foundation has dispersed $7-$8 million annually. Carlson has identified at-risk children as a priority, funding programs for homeless youth, schools that tackle the achievement gap and mentoring.
The company was out front in battling sex trafficking, winning international accolades for addressing the role of the travel industry in thwarting the problem.
“We are stewards who have the chance to make an impact and give money to leaders doing extraordinary work,” Wendy Nelson says. “These are powerful decisions and you know what? It’s a lot of fun, too.”
The next chapter
In the past year, the family exited the hotel business, selling its holdings for an undisclosed amount to HNA Tourism Group, a China-based conglomerate; Bloomberg News reported the deal closed for $2 billion.
That decision followed three years of debate and discussion.
“I can’t express how difficult and intense the work was around that strategic investigation,” says board chair Diana Nelson.
While the hotels were significant to the family’s wealth trajectory, Nelson recalls that the board ultimately voted to step away from the legacy. With stepped-up consolidation by the massive international hotel chains, the case was made that Carlson’s stake was not sustainable.
“Our company started with Gold Bond stamps, but that hasn’t been part of the business for decades. Times change and the portfolio evolves. My grandfather’s vision was collective family engagement over generations; he didn’t say ‘in the hotel business.’ He wanted latitude for each generation to navigate and be open to the moment.”
Carlson has kept Carlson Wagonlit Travel, buying out a minority partner while appointing a new CEO and reinvigorating its market strategy; CWT holds the number one position in the world in its sector. Nelson hints the search is on for the next phase of direct investment in smaller companies with growth potential.
Her mother thinks the decision to sell holds a larger lesson.
“Our model is one that could be instructive to other businesses. It combines respect for capital with long-term thinking,” notes Marilyn Carlson Nelson. “In every company there are business cycles with near-death moments. One of the lessons of a family business with a goal is to endure with patience.”
The second-generation sisters are now both officially retired, but will remain engaged with the business and foundation, serving as senior advisers and board members.
It’s a transition that’s more sweet than bitter.
“I can tell you that I have no regrets,” says Carlson Nelson. She paused and her voice turned slightly wistful. “Only that I wish I could be around for another 25 years to watch what’s going to happen.”
The Servant Leader
Marilyn Carlson Nelson’s next chapter
With her international education, prestigious leadership awards and years of experience heading a global business, nonprofits could never afford someone with Marilyn Carlson Nelson’s resume.
Fortunately for them, these days the billionaire heiress is working for free.
“I am having a lot of fun!” she says.
Nelson is entering an active volunteer phase after being out of the public eye following the extended illness and 2016 death of Dr. Glen Nelson, her husband of 54 years.
Now she’s back on the move with a busy year ahead as Minnesota Super Bowl Host Committee co-chair. She assumes the role 25 years after she held the same job when the NFL’s biggest game came to the Metrodome in 1992.
“We’re going to bring $430 million in economic stimulus to Minnesota in February. We’ll be able to show off our community and there will be so many events for people here to get in on and have a great time,” she promised.
In another case of deja vu, Nelson is also chairing the board of the Minnesota Orchestra. Years earlier, she had been set to assume the leadership position when her father selected her as his successor.
She savors her second chance serving the state’s world-class orchestra, in the boardroom and in the audience.
“The music is more important than ever in this disharmonious time when there’s so much noise and conflict,” she says. “I’m attracted at this point in my life because it is healing for me. Music is transcendental, food for the soul.”
Creating a Dynasty
The building blocks for Carlson’s multi-generational success: Could they work for you?
Although legendary entrepreneur Curt Carlson died in 1999 at age 84, his favorite aphorisms are continually quoted by his descendants.
“He used to say, ‘The harder I work, the luckier I get,” recalls his granddaughter Wendy Nelson.
“When we were kids, we never saw him on Saturdays,” adds his daughter Barbara Carlson Gage. “He would tell us, ‘You get along with five days of work and get ahead on the sixth.’”
But his most oft-repeated line wasn’t a saying, it was a warning.
Carlson was fond of uttering a proverb attributed to Andrew Carnegie, “Shirtsleeves to shirtsleeves in three generations,” he would say. “But that’s not going to be us.”
The idea that a fortune won by a determined scrapper is inevitably frittered away by his grandchildren seems to be universal. The cycle is noted by the Japanese, who say “Rice paddies to rice paddies in three generations,” the Brits, whose version is “clogs to clogs,” and the poetic Italians, who interpret the concept as “From stalls to stars to stalls.”
It’s more than just a saying. According to the Family Business Institute, only 3% of family businesses are viable into the fourth generation and beyond.
Curt Carlson’s acute realization of how vulnerable a passed-down enterprise can be helped to set the current family on its course to successfully beat the odds.
“My grandfather had a long time horizon,” says his eldest grandchild, current Carlson board chair Diana Nelson. “He became a student of what successful families have done. One thing he learned is that private companies that have both family and independent directors tend to perform better and last longer by bringing perspectives from outside the family. He hand-picked the first three and that’s been our structure ever since.”
Over the decades, the Carlson family has turned to consultants and advisers who work with families to help them develop staying power.
“One thing we hear from experts is that it’s important to make sure you continually tell the founder’s story, with all its drama, so the next generation knows where they come from,” explains Wendy Nelson. “My grandfather was the son of an immigrant. That still has impact.”
The family has woven its shared values into its infrastructure.
“We’ve created a family council, trusts, a mission statement, a vision statement. Those things become the glue that help you succeed in the good times and to stay the course in the bad times,” says Marilyn Carlson Nelson.
"Whatever you do, do with integrity; wherever you go, go as a leader; whomever you serve, serve with caring; whenever you dream, dream with your all; and never, ever give up."
CARLSON FAMILY CREDO
The family continually reinforces its intentions in what is known as the Carlson Credo. Copies of it hang framed in company offices; it’s posted on the Carlson website and family members utter it in unison when they get together. It reads, “We gathered and worked it out and wrote it down while my parents were still alive,” said Carlson Gage. “It’s helped us pass our values on to our family, our employees and the people we do business with. The optimism is contagious and it sinks in.”
“My kids quote the credo. Last summer we were on the lake and it was getting dark. One of them was trying to get up on one ski when I said, we’ve got to go in. Oh no, they told me, ‘we never give up.’” laughed Wendy Nelson. “It was a beautiful thing.”