Charles Koch — CEO of Koch Industries (#381)

(Photo credit: Grant Miller)

“When goods don’t cross borders, soldiers will.”
— Charles Koch, quoting Frédéric Bastiat

This episode will no doubt surprise people, and my guest came to me through channels I wouldn’t have expected.


Charles Koch received a bachelor’s degree in general engineering and two master’s degrees, in nuclear and chemical engineering, from the Massachusetts Institute of Technology. 

He is chairman of the board and CEO of Koch Industries Inc., a position he has held since 1967. He is renowned for growing Koch Industries from a company worth $21 million in the early 1960s to one with revenues estimated as high as $110 billion by Forbes. It’s one of the largest privately held companies in the world, and by revenue, it’s larger than both Boeing and Disney. He has transformed the business into a diverse group of companies that employ nearly 130,000 people—making everything from Dixie cups to components in your cell phone. 

Charles credits the success of Koch Industries to applying proven principles of social and scientific progress, which led to the development and implementation of his Market-Based Management® (MBM®) business philosophy. He describes MBM and its applications in two of his books, The Science of Success and Good Profit.

Charles is now using those principles in philanthropy, as the founder of Stand Together, to tackle some of the biggest challenges in the U.S. Stand Together is partnering with thousands of social entrepreneurs to help them improve their effectiveness and scale at tackling poverty, improving K-12 education, bringing justice to our criminal justice system, and more.

Listen to the episode on Apple Podcasts, Spotify, Overcast, Castbox, Stitcher, or on your favorite podcast platform.


This episode is brought to you by ExpressVPN. ExpressVPN is an app you run on your computer or mobile device that easily secures your Internet connection, hides your public IP address, and lets you bypass regional restrictions on content. ExpressVPN is consistently rated the fastest VPN service on the market, and it’s incredibly simple to use. Just download the app, tap one button, and you’re connected to a secure VPN server. Visit my special link ExpressVPN.com/TIM, and you’ll get an extra three months of ExpressVPN protection for free!


This episode is also brought to you by ShipStation. Do you sell stuff online? Then you know what a pain the shipping process is. ShipStation was created to make your life easier — whether you’re selling on eBay, Amazon, Shopify, or over 100 other popular selling channels. ShipStation lets you access all of your orders from one simple dashboard, it works with all of the major shipping carriers, locally and globally, including FedEx, UPS, and USPS. Tim Ferriss Show listeners get to try ShipStation free for 60 days by using promo code TIM. There’s no risk and you can start your free trial without even entering your credit card info. Just visit ShipStation.com, click on the microphone at the top of the homepage, and type in TIM!


QUESTION(S) OF THE DAY: What was your favorite quote or lesson from this episode? Please let me know in the comments.

SCROLL BELOW FOR LINKS AND SHOW NOTES…

SELECTED LINKS FROM THE EPISODE

  • Connect with Stand Together:

Website | Instagram | Twitter | Facebook | LinkedIn

  • Connect with Koch Industries:

Website | Instagram | Twitter | Facebook | LinkedIn

Op-Eds:

Videos:

SHOW NOTES

  • What is Charles’s history with digging dandelions?
  • Charles talks about the letter from his father that hangs framed on his wall and why it’s important to him.
  • On being talked into returning to Wichita after graduating from MIT to run one of his father’s businesses, and how Charles switched from a mindset focused on instant gratification to one of long-term value.
  • The authors who have had the largest impact on Charles’ thinking.
  • How does Charles utilize scientific or engineering principles that he learned at MIT for business? Where do Karl Popper and Michael Polanyi figure into the process?
  • Specifically, how has Charles applied concepts from Polanyi’s “The Republic of Science” to his work?
  • Virtuous cycles of mutual benefit, creating value for others, and the two components of finding opportunities in this value.
  • Now that we know what good profit is, what is bad profit — and how does it reduce value and diminish opportunity?
  • Do Koch companies participate in bad profit?
  • What are the major market distortions that Charles opposes?
  • Within the company, how are disagreements hashed out? Is there a framework of principles in place to guide consensus?
  • Driving principles: personal knowledge versus conceptual knowledge, three-dimensional learning, comparative advantage, synergy, creative destruction, free speech, property rights, decision rights, market-based management, and the human action model.
  • If these principles seem so obvious, why are they so often ignored by countries, organizations, and companies?
  • What Charles has found to be the three requirements of a good, successful partnership.
  • How has Charles’ approach to policy coalitions changed over time, and what ground has been gained by finding common cause with former adversaries?
  • What is Stand Together, and what does it aim to accomplish?
  • How does Stand Together incorporate market-based solutions that have proven successful for Charles’ other endeavors?
  • A hopeful look forward at Stand Together capturing the national imagination with the same intensity and bipartisan support as prison reform is enjoying today.
  • Is Stand Together still accepting applications from social entrepreneurs?
  • Charles weighs in on capitalism, the ideal role of a business in society, environmental priorities, and politicized corruption.
  • The effect of higher taxes on GDP, the failure of trickle-down economics, and what Charles sees as the best course toward the pursuit of happiness.
  • Does Koch Industries fund propaganda to confuse people about climate change?
  • What does Charles consider to be the most legitimate existential threats to humankind?
  • The cause that unites the seemingly unlikely pairing of Koch Industries and George Soros.
  • For what would Charles be willing to bet his entire personal fortune?
  • What would Charles’ billboard say?
  • After whom was Charles named, and why?
  • Where did the nonintuitive (to most Americans) pronunciation of “Koch” originate?
  • Parting thoughts.

EDITOR’S NOTE: Dear listeners, timestamps will be added shortly.

PEOPLE MENTIONED