Charles & Chase Koch on How They Quietly Built a $150B Empire

**David Friedberg** (0:00)
What an honor to be here. Thank you for hosting us, Forbes, and welcome. This will be put out of the All-In interview, so I'm really excited to share this conversation with everyone on the world, on the Internet, and to get some time with Charles Koch, Chase Koch. Chase and I have known each other since 2013, when we overlapped in the agriculture industry, got to know each other. We've been business partners, and Charles and I have gotten to know each other a few times over the years. And I'm really excited for this conversation tonight. So Charles, thank you for being here.

**Charles Koch** (0:31)
Thanks for having us.

**David Friedberg** (0:32)
It's an honor.

**Chase Koch** (0:33)
I'm going all in.

**David Friedberg** (0:38)
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In Silicon Valley, entrepreneurs and even mature company CEOs always like to learn about the story of other businesses and the success of those businesses. I've always felt like Koch Industries was that untold story.
Probably the most profitable private family-owned business in the world. Maybe I'm off on a couple of points, but certainly up there. And one of the most impressive business stories because of the evolution of the business, which I'm hopeful we can hear a little bit about how that evolution came to be tonight. And just for some statistics, if Koch were publicly traded, the revenue would put it easily in the top 25 of the Fortune 500 It's a family-owned business based out of Wichita, founded in 1940 by Fred Koch, with businesses ranging from energy, agriculture, chemicals, building products, consumer products, even cloud computing. And a very active minority investment portfolio, with 120,000 plus employees, that statistic might be off across 60 countries. Very unique operating model which we'll get into today, including principles around disruptive innovation of the business, reinvesting 90% of profits in new businesses and growth, meritocratic values. And I'm hopeful that tonight we can take an opportunity to hear about the evolution of the business and talk about some of those principles. And maybe we can get started, Charles. If you could give us a sense of the scale of the business, what are the business lines that you operate today and maybe, you know, provide a little more color to those high-level statistics I shared today.

**Charles Koch** (2:35)
I can go back through some of the history and the failures and successes, but I'll go through what we've grown since the early 1960s.
And then we had 300 employees. Now we have more than 130,000 in 60 countries. And we have increased in value 9,000 times over that period.

**David Friedberg** (3:08)
When did you join the business?

**Charles Koch** (3:09)
1961, full-time, I had been working. Well, my father, we lived on a farm, and he told me at age 6, he didn't want me to be a country club bum. So it made me work in all my spare time, which I hated. And so I was always in trouble.
And so he was kind of tough on me, rightfully so. And thank God he did. Years later, I asked him, Pop, why were you so much tougher on me than you were on my younger brothers? And he said, son, you plum wore me out.

**David Friedberg** (3:50)
When you came into the business, what was the scope of the business? What was the business operated?

**Charles Koch** (3:56)
We had two main businesses. One was to design and make fractionating trays. That is that they separate liquids by differences in boiling points. And then our largest business was a crude oil gathering system in Oklahoma. And so my father, and I had finished just a few years earlier, finished MIT. And I was working for Arthur D. Little, then a leading consulting firm. And I was, and you'll think this is a joke, at age 25, I was doing management consulting. I mean, I have to laugh at the absurdity of that.
But they were paying me for it, believe it or not. So my father called me and he said, son, I want you to come back and join the business. And it's tough as he had been on me, and as I say rightly so, I decline. So he called me a few weeks later and he said, son, either you come back to run the company, or I'm going to have to sell it, because my health is bad, and the companies aren't doing well, and I don't have long to live.