Charles Koch

our show. Thanks for having us. Yeah, thanks, David, appreciate it. Now both of you have co authored a new book called Believing People. You are, Charles eighty five years old, and most people who are business people are eighty five years old are not writing books about social entrepreneurship or philanthropy. They're doing other things. Why did you decide at this age you wanted to write another book with Brian? Well,

actually it's uh. I started on this book or doing the research probably sixty years ago with these ideas and uh, and then I started writing at five years ago. And my gifts, whatever they are, are mainly in abstract concepts, math, other abstract concepts. So the book was mainly about theory and history. It wasn't measuring up in the meantime. Under under Brian's leadership at Stand Together, we were using these ideas to empower more people, to actually show how it

works today and transforms people's lives. And so I said at the end, I said, Brian, I don't have a book that I believe will do what I want. You need to come in and help me finish it, get it re re restructured. And that's what he did. The reason I wrote it is and I started on it five years ago, is is I wanted to help everybody have the benefit of the ideas that transformed my life and enabled me to achieve more than I ever believe

possible and have done so for many others. And those are basically what I call the principles of human progress. And those start with recognizing that everyone has a gift, everyone has something to offer, which they will do if they're empowered to do so. The essence of your philanthropic philosophy and your life philosophy, if I could put it in my words, is that it's bottom up, not top down.

In other words, empower people at the bottom and let them make decisions and let those filter up as opposed to people the top, telling people to bottom what they do. Is that more or less correct? Well, it's yeah, but it's I mean, this starts with with recognizing that everyone has something to offer and if they're not and they're not contributing, we need to work with them and we can to empower them so they all the institution in society need to be focused on that rather than telling

them what to do, in limiting them and stifling them. Okay, Brian. In addition to writing this book together, how have you two work together over the years. Well, I've I've worked with Charles in one way or another for twenty years now, and so Stand Together is a philanthropic community. We work with several hundred business leaders and philanthropists to try to improve our effectiveness and helping empower people to live better lives. Now, running Stand Together must be uh not easy. But you

have no gray hair? How come I hide it? Well? Hide it well to say, it's been twenty years and they've been productive, but long years. He gets to work with me, David, that's I mean, that keeps it. I I have all the gray hair. Well, it's like me, My hair is dark, but I diet grace. So I look more mature, Brian. Let me ask you a question. Um, I've been involved a bit in philanthropy myself, and when I decide I want to give money away to somebody, I call him up and they usually are only to

take it or something like that. Why does somebody need your organization to help them give away the money that they already have. What do you do for somebody that they can't do themselves? Well? The whole thesis of Stand Together, and what we've learned over the last twenty years or so is that as effective as individuals can be on their own, we can all be more more effective. We have a greater impact when we pool our knowledge and

we combined our resources. So give you an example. You know, one of the issues that we've worked on a lot is criminal justice reform and and criminal justice system, which is you know, full of terrible tragedies, has been kind of stuck in a rut for at least a generation, and there's been a lot of good attempts to try to make progress, but they tended to be kind of

narrowly focused. And the real breakthrough and criminal justice came when we combined a whole lot of different projects, A whole lot of different programs, and it was that combination that allowed us to kind of unstick the system and now make some real progress. So let's talk about racial related issues. The Black Lives Matter issue has brought racial

inequality to the forefront. How has your company tried to address this by being more inclusive or dealing with the problems that often people who are African American might have in our society, not only the company, but but stand together in our views on this is is we welcome this conversation about that about racial in qualities and what I look at the situation today, it's a case of the sins of the fathers being visited on the suns for seven generations. I mean, you look at at what

what this country practice. I mean slavery reconstruction with horrors, uh separate, not but equal, separate but unequal. And so today, whether there's racism in it or not, we have institutional bias that is holding Black Americans back. And so that's why we're working on criminal justice reform, on changing the educational system, changing regulations such as occupational licensure, which keeps people who start with nothing from competing, and so on

through through the through all the institutions in society. We're working to change those to bring that into UH, into true system of equal rights and mutual benefit. Now, the truth is most people in the world do not know Charles Coke for being a gigantic philanthropist. They know you for running this gigantic privately owned company. So I'd like to talk a little bit about how that came about. So you grew up in You were born in Kansas,

which which dot Kansas? Yes, you grew up there. Your father was a person who didn't say, you know, I'm gonna pamper you and I want you to have a nice, spoiled life. He made you work pretty hard. Is that right? Oh, my god, is that true. No. He he announced to me early that he didn't want me to be a country club bum. He wanted me to amount to something. So he had me work at in all my spare time, starting at age six. This is hard to believe, but

but we have photographs of me doing it. So you ultimately went off to um m I T a pretty good school. What did you want to be when you went down my T? I had no idea. Well, I knew the reason I went to M I t is the language was math rather than English, and I was so much better at math than English that I thought

I'd have a better chance of succeeding there. And so so I started taking different courses, and I took so many different ones, trying to find something I was good at, how I could apply this gift to help me contribute and succeed and uh, and I took so many that I couldn't get a degree in any specific subjects. So I got it in general engineering, and then I said, well, I need I need something more specific. So I thought nuclear was the wave of the future and I would

have entrepreneurial opportunities in the future from that. When I got in it got my degree, my master's degree in nuclear engineering, I learned that no IT people are really worried about safety, so it's going to be so controlled and regulated. I don't I won't have those opportunities. So I went back and got a master's in chemical engineering. Okay, so the last thing you wanted to do was to go back to Kansas and work for your father, I assumed, since he was a little bit of a hard task master.

So you went to work for Arthur D. Little, which is a consulting firm in the Boston area. Is that right? Right? I got in management consulting, and I got to consult on things that were abstractions, like strategies and innovation, and I said, wow, this is this is it. I need to be an unch pin and and and so there are a lot of companies coming out of m I t from professors and students I knew. I said, well, I'm gonna I want to join one of these startups

and invest some and and start a career as an entrepreneur. Okay, So how did your father lure you back from the Boston area to Kansas to work for him, which you didn't think was probably gonna be that much fun? Well, I told the first time he asked me, I said, I said, pop, no, I got, I got my career ideas and I want to be independent. And and so he called me back and he said, son, uh, as you know, my health is poor. It's so poor that

I'm not really able to lead the company anymore. And it's not doing well, and I don't have long to live. So either you come back to run it, or I'll sell it and I'll let you run this business that that you already own an interest in that makes fractionating trades. Uh, any way you want to start with, and the only thing you need my approval on is to sell it. And I said, well, I don't wow. I said to myself, I don't think I'm going to get a better opportunity

than this. So I came back and he was absolutely true to his word. He totally turned it over to me and then got me and the other businesses, and I was able to contribute from the beginning, but I still didn't feel whole. So everybody who's watching this will want to know, how do you take a twelve million revenue company to roughly a hundred and twenty billion revenue company withoutgoing public? What is the key secret to doing that? Well, the secret was that that I was, as I said,

I didn't feel I was fully using my capabilities. It's what what Maslow said, if if you're not fully developing your capacities and realizing your potential, you may be externally success full, but you will be deeply unhappy because you won't be fulfilling your nature. As he said, what you can be, you must be. And I hadn't read Maslow then, but that caused me to read Maslow and to search

for these principles of human progress. So I read everything I could from all different all relevant disciplines, all different perspectives to find principles that I could use and apply in the business and my life to enable me to believe in myself. And and I started apply them in business and they worked. They weren't beyond my belief and beyond anything I hoped for, and that absolutely transformed my life.

And so my whole life has been looking for principles that enabled me to contribute or improve the principles were implying and better apply them. And and so every day is like I'm reborn, okay, And you've said, over your dead body, with this company ever go public? Is that right? I didn't mean that literally, but every you're not intending to take in public? Right? No? Absolutely, no, it's uh. I don't We couldn't have done what we did if we were public. I don't believe. Um. I don't know

your company really that well. It seems to be in the oil and refining businesses, but things like that, a lot of technical things. But one of the companies you bought, the biggest acquisition you ever made, was Georgia Pacific. And when I read that in the newspapers, I said, what are they buying a forestry company for? And it seems I've worked out extremely well from reading the newspapers. Um,

what was your thinking about Georgia Pacific? I was just curious as a business matter, Well, are what drives us?

And what's made successful is we started UH by understanding and applying UH the principles of human progress, and then we we we took those and codified them into a management framework that we call market based management, and that's has five dimensions, and then we use that to create virtuous cycles of mutual benefit, which, as I say, starts with building capabilities that will all enable us to create value for others. So we've never considered ourselves as industry bound.

We consider ourselves capability bound. So we're constantly trying to build new capabilities that will open new opportunities. And then when we get UH getting a new opportunity, then that leads to us building new capabilities, which leads to new opportunities. And that's why we're all these things. And the only place where we're in producing UH fossil fuels is in refining. We're out of all the others. And that's now just a fraction of our total business, whereas a decade ago

it was like half. Now you point out in your book that you're a large producer of ethanol, refiner of ethanol which were used as corn and and so forth, but that you're against the subsidies the federal government is giving to ethanol. Now doesn't that cause you some problems in your business world when you're against the subsidies but

you're actually doing a lot of the ethanol production. We oppose all subsidies, all all restrictions on competition, innovation, or are providing opportunities to people who start with nothing we're we oppose all those and and and it's not just ethanol, Like we opposed the border adjustment tax, although that would make us a lot of money by raising the price of our consumer goods for our customers. And because we believe, I mean it's not outruistic. It's because we believe we

succeed by creating value for others. I mean, we want to be the preferred partners of all our constituencies, everybody in every group that's important to us. And the way you do it is by creating value for them applying mutual benefit. So, Charles, Um, you are a teenager by the standards of some people who are running companies. Warren Buffett,

I think it's just celebrate his ninetieth birthday. So you're, you know, five years younger than him, and so I assume you could keep doing this for quite a while. Do you have any plans to make certain that the company will be can continued to run by a family? Your father started the company, You've been running it for a long time. Uh, your family have any interest in running it or you're gonna eventually turn it over to

a professional managers. We have multiple people who could lead it, and but I won't be the one deciding that it will be the board of directors. And my son wouldn't want it unless he felt that he was the best one who could make the most company most successful in in in continuing to apply these ideas to create value

in society. So a number of years ago, Um, you decided to get involved a little bit more than you had been in politics by supporting candidates or so forth, And as a result of that, your image became very much let's say right wing and let's say anti democratic in some respects. Some people might say, how are you now trying to change what you did a number of years ago getting involved in in political causes or so forth.

Well I was. I started in this work uh nearly sixty years ago, and for the first fifty I wasn't involved in politics at all. And then we we decided we needed to get policies as well as these has worked with these other institutions, uh that will empower people, that will move as closer to a system of equal rights and mutual benefit. And so we got into it, uh by some uh in a partisan way in in

two thousand and ten. That was the first election we we got in and so we tried that for a few years and it wasn't that successful and it was many ways counterproductive. So now are our work in in politics is is on a nonpartisan basin. We're looking for champions who will who will advocate for policies that will empower people rather than get try to get power over them,

which stifles people. The thing about it is, and as we go into in the book, you know, at any given time, politics has never been more than ten percent of all of the efforts that we've been involved with. But has taken an outside uh view in terms of people's understanding of our work. When when we did get involved in politics, we learned quickly that partnership works a whole lot better than partisanship. And so, as Charles says, that's the approach we're taking now in public policy and politics.

Not doesn't matter if you're a Republican or a Democrat. If you've got a vision for policy that can improve people's lives, we want to partner with you. And we found that that works really, really well, even under some pretty challenging circumstances. Obviously, most people like to be liked by other people. I think that's the case. And so for a while when you were involved in politics, you were the ogre for some people on the deft Democratic Party side of the left side. Did that bother you?

And are you trying in any way to change the image that you got or you basically saying I'm doing what I'm gonna do and I don't care about the image so much. Well, I mean, we need to we need to attract support, so we want that. But as I've said, my main driver through my life is to believe in myself, and so I have to do what I think is right. What what will allow me to to fully develop my capabilities and use them to contribute.

And so that's what I do. And but I when we have criticisms, and I to me, that's Carl Popper's uh scientific method. Develop a proposition or innovation and then not go around and find things to support it, but find challenges to it, encourage challenges to it, to find the flaws in it. So when when when we're criticized and attack, we look at, Okay, what are we doing wrong? And then part of what we saw, well, we're approaching this in a partisan way. That's wrong. We've got to

approach this in a in a nonpartisan way. So Charles, let me ask you. Um, I noticed from politics, reading the pet papers that you were not involved in a Republican campaign for president. But President Trump you were not in involved with his campaign as far as I can see, and so forth, and um, so you you know you've distanced yourself from that Republican president supposed to new were president elect, uh Joe Biden were to call you and say, look,

I'd like to hear your views. I want to buy partisanship, what would you tell him he should do and would you be willing to consult with him? Oh? Absolutely, and we hope to find ways and and we were we believe there are number of ways that uh, that we

can find common ground on. Uh. And that what I would say, Okay, let's uh, we can help you when when you're pushing policies that that show you believe in people, that you want to empower people so so they so they can contribute and succeed and and and when you're when you have policies that we believe will stifle people and and keep them from realizing their potential, then we'll oppose that. And that's what we've done with with every president.

But I've I've never I don't think I've never talked to or met a president elect or a president. I have met him before and after they were presidents, but never when they were So that's not what I get engaged in. Given your wealth, given your prominence, I would have thought by now some presidents would have invited to a state dinner or asked you to come and advise them.

So you know, Ronald Reagan or George Herbert Walker Bush or George W. Bush, they never invited to the White House for a state dinner and or you didn't want to go, or you just don't have been invited. But I've asked the question, not duringly with the President, of course, but I've asked the question, well, what is it. Are we gonna talk about substance? Or is this just meeting and greet and and show? And it was it's for show, And I said, well, I'm not interested in show. I'm

interested in getting something done. So I have not gone to any of them. I don't think I've ever been in the White House in fact, So you have any interest of President Biden invited you just to come and take a tour of the White House. You wouldn't want he interested in that just to see what it looks like. No, I would. If he wants to talk about how to empower people, boy, I would be there in a nanosecond. If you had a chance to talk again to your father and say, look what I did. What do you

think he would say to you? Was he proud of what you did? You want him to be proud? Would you want to be proud of what you did? I think he would be blown away, just as I am. I mean, I I can't believe it that we've done and I haven't done him What's what's accomplished this or these ideas? Are these principles? So I just I happened to learn them and be turned on by him, and and then they applying them and everything we do and and then the people do it. That's the key. No

one person can do all this. You do it by powering people, empowering your employees, and empowering people through society so they can contribute, they can innovate. So if somebody is watching this and they say, our Charles Coke as a leader in philanthropy, he's a leader in business and so forth, I would like to be like Charles Coke? What is it the meaning of leadership? You? How do

you become a leader? A true leader is someone who makes the people around him better, around her better, and so so what you have to do is find what you're good at, what your gift is, and focus on that and then partners partner with those who with him you share vision and values and have complementary capabilities. And

that's what I've done. So I have a narrow range of abilities, and I've where I've succeeded is when I partnered with people who were good at all the other things that needed to be done that I wasn't good at, and I focused on that and then and then to draw on their knowledge and empower the people around you, so you get the benefit of everybody's knowledge and ability. That's what a leader does, and you focus on not what is good for you, but good for the overall

organization and good for society. Charles and Brian, I want to thank you very much for interesting insights into your business life, your philanthropic life. Congratulations and all the philanthropic things you've done. And I'm going to try to take some of your business secrets and see if I can apply to my own business. I don't think I can do as well as you have done, but congratulations, Thank you David. Thanks for listening to hear more of my interviews.

You can subscribe and download my podcast on Spotify, Apple, or wherever you listen.