Oct 21, 2015

CHARLES KOCH- ON MORAL VALUES, POLITICAL PRINCIPLES, HAPPINESS AND HIS NEW BOOK

 

CHARLES G. KOCH

 

CHAIRMAN OF THE BOARD AND CEO

Charles G. Koch is chairman of the board and CEO of Koch Industries, Inc., a position he has held since 1967. Since then, the company has been transformed into a dynamic and diverse group of companies employing more than 100,000 people worldwide, with about 60,000 of those in the United States, and a presence in about 60 countries. Since 2003, Koch companies have invested more than $70 billion in acquisitions and other capital expenditures. Based in Wichita, Kan., Koch Industries is involved in refining, chemicals, grain processing and biofuels; forest and consumer products; fertilizers; polymers and fibers; process and pollution control equipment and technologies; electronic components; commodity trading; minerals; energy; ranching; glass; and investments. From January 2009 to present, Koch companies have earned more than 1,000 awards for safety, environmental excellence, community stewardship, innovation, and customer service. Familiar Koch companies’ brands include STAINMASTER® carpet, LYCRA® fiber, Quilted Northern® tissue and the Dixie® brand of cups, plates and cutlery.

Much of Koch Industries' success can be traced to Mr. Koch's interest in and commitment to scientific and social progress, which led to the development and implementation of the Market-Based Management® business philosophy. Mr. Koch has written two books about MBM: “The Science of Success,” published in 2007 by John Wiley & Sons, Inc., and “Good Profit,” which will be released by Crown Business this October. “Good Profit” explains how any organization – including nonprofits – can apply the principles of MBM in a way that enables it to succeed by benefiting society as a whole. Mr. Koch is further developing the theories and expanding the practice of MBM, as well as other applications of the science of human action, not only throughout Koch companies; but also with scholars, non-profit leaders, government officials and other business leaders.

He has continuously supported academic and public policy research (including a number of Nobel Prize winners) for 50 years, with a special focus on developing voluntary, market-based solutions to social problems. This interest led Mr. Koch to found or help build a number of organizations, including the Institute for Humane Studies, Cato Institute, Mercatus Center at George Mason University, Bill ofRights Institute, Market-Based Management Institute, Charles Koch Foundation, and Charles Koch Institute.

As a reflection of his business leadership and community involvement, Mr. Koch has received a number of honors and awards. These include:

• William E. Simon Prize for Philanthropic Leadership, Philanthropy Roundtable (2011)
• Recognition Award, Wichita State University Alumni Association (2008)
• Herman W. Lay Memorial Award, The Association of Private Enterprise Education (2005)
• President’s Medal, Wichita State University (2004)
• Spirit of Justice Award, The Heritage Foundation (2003)
• Honorary Doctor of Science, George Mason University (2002)
• Uncommon Citizen Award, Wichita Chamber of Commerce (2002)
• National Distinguished Service Award, Tax Foundation (2000)
• Free Enterprise Award, The Council for National Policy (1999)
• Directors’ Award for Global Vision in Energy, New York Mercantile Exchange (1999)
• Governor’s Arts Patrons Award, Kansas Arts Commission (1999)
• Honorary Doctor of Commerce, Washburn University (1997)
• Wichita District Minority Small Business Advocate of the Year (1997)
• Individual Recognition Award, Wichita/Sedgwick County Arts and Humanities Council (1997)
• Honorary Doctor of Laws, Babson College (1996)
• Induction into the Kansas Oil and Gas Hall of Fame (1996)
• Distinguished Citizen Award, Kansas State University (1996)
• Wichita City Medallion (1996)
• Wichita State University Entrepreneur in Residence (1996)
• Distinguished Service Citation, University of Kansas (1996)
• Distinguished Citizen Award, Quivira Council of Boy Scouts of America (1995)
• Honorary Life Member in the Washburn Law School Association (1995)
• Outstanding Humanitarian Award, Greater Wichita Chapter of the National Society of Fundraising Executives (1995)
• Adam Smith Award, American Legislative Exchange Council (1994)
• Brotherhood/Sisterhood Award, National Conference of Christians and Jews (1994)
• Spirit of Excellence Award, The Urban League of Wichita (1993)
• Entrepreneurial Leadership Award, National Foundation for Teaching Entrepreneurship (1992)

Mr. Koch received a bachelor’s degree in general engineering (1957) and two master’s degrees in nuclear and chemical engineering (1958 and 1959, respectively) from the Massachusetts Institute of Technology.

His employment has been as an engineer, Arthur D. Little, Inc. 1959-61; vice president, Koch Engineering Company, Inc. 1961-63, president, 1963-71; president, Koch Industries, Inc. 1966-74; chairman and chief executive officer, 1967- present.

He was born in Wichita, Kansas. Mr. Koch and his wife of 42 years, Liz, have two children.

-machine transcript-

0:00

so how exactly did Charles Koch a man demonized by the president the former

0:05

Senate majority leader in the house minority leader to name a few

0:09

become so fear and so successful for the first time he tells us from his home in

0:18

Wichita banged up a little thanks to foot surgery wearing a cast decorated by

0:24

his wife ready to talk about life politics and his new book good profit

0:32

so your book good profit reads to me like a love letter to your father how

0:38

big an influence was he on you both my parents were tremendous influence on me

0:42

my father came from he decided well probably before we were born that as he

0:51

put it I'm not gonna have any kids who are Country Club bombs he worked you she

0:57

wanted to instill the work ethic and because he knew if you don't learn to

1:03

work to be more productive to to improve your efficiency to cooperate with other

1:10

people at an early age you may never learn those habits so you can't make a

1:16

contribution you can't be successful in years later I asked my father said pop

1:21

why are you so much harder on me than my younger brothers he said son you plum

1:27

wore me out later coke kept up the hard work

1:32

landing at the prestigious MIT his plan was not to take over the family business

1:37

started going back in working for him said he was such a disciplinarian

1:41

growing up I I had no idea I would do that but things changed he called me

1:48

said signed my health is not good I don't have that long to live either you

1:53

come back to run the company or I'm gonna have to sell it

1:56

tell us about the first piece of advice your dad gave you when you took over as

2:00

CEO of his first words to when I arrived is his son I hope your first deal is a

2:06

loser otherwise you'll think you're a lot smarter than you are but he had

2:11

tremendous values tremendous integrity humility work at the and and terrific

2:19

thirst for knowledge you weren't in the book about the trap of overconfidence in

2:24

a business and a person oh absolutely yeah yeah

2:29

hubris arrogance is is just one step ahead of the loss of integrity because

2:35

if you think you're better than other people you know more then you're you're

2:40

going to think as

2:41

as many leaders have that the rules don't apply to them so they lose their

2:46

integrity his new book good profit emphasizes integrity arguing it's fine

2:52

to make lots of money but how you do it matters

2:55

you say that you you have always prized values over talent in your hiring

3:00

decisions really absolutely I have the philosophy that the John Adams expressed

3:09

in in the kind of system they were trying to create in this country that

3:15

this is a system for moral people it will work for no other year telling me

3:20

some hot-shot salesman from new york could come down here

3:24

top of his game and you know I'm sure he may bend the rules here there but he is

3:29

a producer he wouldn't hire that guy who absolutely not

3:32

these go to bend the rules we won't have it and in the interview process that's

3:36

what we look for how how do you figure out somebody's values their integrity in

3:40

in in a job interview we put the candidate in in different situations

3:44

like we have somebody that the candidate doesn't think important taken down to

3:49

the cafeteria we see how they that the candidate treats that person how they

3:54

treat this the staff at the cafeteria and and we see how they answered

3:59

questions we ask did you have any problems for you weren't you make any

4:04

mistakes if they say no but the company was so screwed out but they wouldn't

4:09

listen to me

4:11

we don't want that what is the inability to admit mistakes tell you about

4:14

somebody they don't have any humility and probably don't have any integrity

4:17

humility and hiring also serves cook well then you want all the hotshot MBA

4:23

from Harvard and Wharton and elsewhere where we find we do better

4:27

from community colleges from Royal College it's like after I was the

4:35

president of Koch Industries are our next president were 11 didn't graduate

4:43

from college and the current president is from Emporia State Koch Industries

4:48

even you get evaluated is that true

4:50

that's true

4:51

how does that work it works great I learned a lot are you afraid of a

4:55

bruised ego

4:58

here's the thing and I think all of this need this attitude do you want to to

5:04

have your feelings hurt a little bit because you got some negative feedback

5:09

or do you want to continue down that disastrous trip track here on and have a

5:16

huge disaster we talk about a bruised ego

5:21

it may ruin your career is it true that any employee a coke can earn more than

5:25

his boss oh absolutely it's we try to reward people according to the value

5:31

they create value they create in society in the value they create for the company

5:36

and that you will hire based on talent even if you don't have an open spot

5:40

necessarily on values yeah hold to a budget under those circumstances we're

5:47

not we're not big on budgets the other message you want to send your employees

5:51

in your book is try new things

5:55

experiment and don't be afraid to fail or make mistakes but if you never fails

6:00

then you're probably not doing very much you're certainly not innovating you're

6:05

not improving because the only way to improve is to try new things but if

6:10

you're a big success and you don't want to risk it

6:12

that's one of my principles success is is is one of the worst enemies of

6:18

success because success tends to breed complacency and lack of humility when

6:25

companies are at successful coach says Uncle Sam should stay out of it

6:30

dismissing government subsidies loans and tariffs as quote corporate welfare

6:35

well corporate welfare thinks disaster for this this country it's it's

6:42

crippling our economy it's it's contributed to a permanent underclass

6:47

and corrupting the business

6:49

critics say what the coach really opposed his government assistance that

6:53

could hurt coax bottom line I charge coke denies we oppose corporate welfare

6:59

whether we benefit or not you will find that our policy positions mainly heard

7:06

our profitability rather than than help it what about china we've heard one of

7:10

the presidential candidate Donald Trump talked repeatedly about how they are

7:13

devaluing their currency and that the next president needs to put a stop to

7:17

that by perhaps imposing a tariff on their goods

7:22

well i i mean terrorists of disaster the way the principal way that that human

7:31

beings have gotten out of extreme property is is free trade when we return

7:39

Charles Koch addresses the attacks from the left the death threats and why he is

7:44

still working so hard at the age of 79 don't go away

7:48

not long ago President Obama himself came out attacked you it's not the first

7:53

time but he said that the Koch brothers are trying to prevent new clean energy

7:58

businesses from succeeding you came out and in a rare public statement said you

8:03

were flabbergasted by that accusation why the culture behind a number of

8:11

political action groups which have been demonized by the left

8:14

donors may remain anonymous under the law a source of consternation for coax

8:17

critics including President Obama not long ago President Obama himself came

8:23

out to check it out the first time but he said that the Koch brothers are

8:27

trying to prevent new clean energy businesses from succeeding you came out

8:32

and in a rare public statement said you were flabbergasted by that accusation

8:37

why because the opposite is true with all of our policies are based on where

8:44

there will make enable people to improve their lives or it will make their life

8:50

lives on the comments made by President Obama beneath the dignity of the office

8:55

I think it is too

8:59

to misrepresent what a company stands for and attacking private citizens for

9:04

trying to help people improve their lives

9:08

do you believe that the democrats including the president have tried to

9:11

make bogey man out of you and your brother david is a full-time job on

9:19

their part I mean I mean that's that's why I've never been that sound of a fund

9:25

of politics and only got into it recently kicking and screaming because I

9:29

don't think politicians are are going to reverse the director trajectory of this

9:35

country I think it's going to depend on the american people understanding what

9:41

is fair and and what makes their lives better why do you think they've been so

9:46

relentless in their attacks Harry Reid your brother David pointed out mentioned

9:50

the Koch brothers two hundred and eighty nine times from the senate floor they

9:54

have painted you as evil they actually put you the White House actually put you

9:58

on an enemies list back in the 2012 campaign

10:03

well i mean i mean that's very sad that that's that's what we're what we've come

10:11

to because in fact what we're trying to to do is the the opposite is it

10:17

dangerous I know gotten death threats ya get a lot of death threats but the way I

10:22

look at it is I feel I have a moral obligation to do the best I can to make

10:29

the country better for everybody and and that threatens certain people because

10:36

they don't have much less power i want the power to go back to people making

10:41

decisions over their own lives rather than some experts making it are you

10:46

libertarian no I'm I i'm I i have been a libertarian in my past but now I might

10:53

consider myself a classical

10:54

rural classical liberal what does that mean glasgow liberal is someone who who

11:01

want to society that maximizes peace stability tolerance and will be for

11:07

everyone one that opens opportunities for everyone to advance themselves

11:14

didn't want to reveal his opinions on individual candidates but we tried so

11:19

the L word we'll have people asking is he going to vote for hillary hillary

11:23

Clinton well I mean putting aside all the things that are said about hillary

11:29

today my my main difference with her is is on the vision of what kind of society

11:36

will make people's lives better so this is a vision of society in which people

11:42

are too evil are stupid to run their own lives but those in power

11:48

I'm perfectly capable of running everybody else's life because there's so

11:52

much smarter it's what had caused the fatal can see or William easterly called

11:58

the tyranny of experts because that's what it is it's so this discussion will

12:04

now have people thinking he likes Rand Paul he has libertarian leanings he

12:10

wants government out of our lives is random guy no I don't have a guy I have

12:16

to have these these principles and what I'm trying to accomplish and and what we

12:24

need it to me is a candidate that will help change the trajectory of of the

12:30

country from all this wasteful irresponsible spending that's heading as

12:36

for financial correct cliff not just by the democrats but by the republicans the

12:42

reason we tend to support republicans is they're taking the store the clip that

12:47

only seventy miles an hour and then the democrats are taking its a hundred miles

12:50

an hour they say that it's been nine hundred

12:53

million dollars on the presidential race this cycle is a true no no not not even

12:57

close

12:58

coke says it's actually more like three hundred million and not all will go

13:02

toward the presidential race as for the democrats charge that Koch's donor

13:06

network is shady everything I guess is pretty much as public you know not every

13:13

donor of once to urge willing to to get the kind of abuse and attacks that we do

13:19

or death threats so they're not willing to have their names and I think the

13:25

other side is pushing for that because they want to intimidate people so they

13:31

won't oppose it but Charles Koch is not intimidated and not slowing down anytime

13:36

soon

13:37

at 79 years old he still work nine hours a day you come home we'll have dinner

13:43

with Liz and then you work again okay thank you so much I why do you still

13:50

work so hard because I feel her passion for rotary trying to do mean I mean why

13:58

does somebody who's all his rider keep writing because that's who they are

14:03

that's their nature and to be happy you have to fulfill your nature that's

14:07

whatever style so many centuries ago that the the road to happiness isn't to

14:14

go drink more consumed more

14:17

the road to happiness is fully develop your abilities and then apply them to do

14:23

good and speaking of happiness Coke's father left his son's a bit of money

14:28

upon his death along with one final piece of advice if you choose to let

14:33

this money destroy your initiative and independence then it will be a curse to

14:38

you and my action and giving it to you will have been a mistake I should regret

14:44

very much to have you miss the glorious feeling of accomplishment remember that

14:52

often adversity is a blessing in disguise

14:55

and is certainly the greatest character builder stuff glorious feeling of

15:03

accomplishment yeah Charles Koch thank you thank you again create it