00:00:00
What an honor to be here. Thank you for
00:00:01
hosting us, Forbes. And welcome. This
00:00:04
will be put out as the all-in interview.
00:00:06
So, I'm really excited to share this
00:00:08
conversation with everyone on the world
00:00:10
on the internet and to get some time
00:00:12
with Charles Ko, Chase Ko. Chase and I
00:00:15
have known each other since 2013.
00:00:18
>> Yep.
00:00:19
>> When we overlapped in the agriculture
00:00:20
industry, got to know each other. We've
00:00:22
been business partners. And Charles and
00:00:25
I have gotten to know each other a few
00:00:26
times over the years. But I'm really
00:00:28
excited for this conversation tonight.
00:00:30
So, Charles, thank you for being here.
00:00:31
>> Thanks for having us.
00:00:32
>> It's an honor.
00:00:38
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00:01:03
In Silicon Valley, entrepreneurs and
00:01:06
even mature company CEOs always like to
00:01:09
learn about the story of other
00:01:11
businesses and the success of those
00:01:12
businesses. And I've always felt like
00:01:14
Coke Industries was that untold story.
00:01:16
Uh probably the most profitable private
00:01:19
family-owned business in the world.
00:01:21
Maybe I'm off on a couple points, but
00:01:23
certainly up there. and one of the most
00:01:25
impressive business stories because of
00:01:27
the evolution of the business, which I'm
00:01:28
hopeful we can hear a little bit about
00:01:30
how that evolution came to be tonight.
00:01:34
And just for some statistics, if CO were
00:01:36
publicly traded, the revenue would put
00:01:38
it easily in the top 25 of the Fortune
00:01:41
500. It's a family-owned business based
00:01:43
out of Witchah. Founded in 1940 by Fred
00:01:47
Ko with businesses ranging from energy,
00:01:49
agriculture, chemicals, building
00:01:52
products, consumer products, even cloud
00:01:54
computing and a very active minority
00:01:57
investment portfolio with 120,000 plus
00:02:00
employees. That statistic might be off
00:02:02
across 60 countries. very unique
00:02:04
operating model which we'll get into
00:02:06
today including principles around
00:02:09
disruptive innovation of the business
00:02:11
reinvesting 90% of profits in new
00:02:13
businesses and growth meritocratic
00:02:15
values and I'm hopeful that tonight we
00:02:18
can take an opportunity to hear about
00:02:20
the evolution of the business and talk
00:02:21
about some of those principles and maybe
00:02:23
we can get started Charles if you could
00:02:24
give us a sense of the scale of the
00:02:26
business what are the business lines
00:02:28
that you operate today and and maybe you
00:02:30
know provide a little more color to
00:02:32
those highle statistics I shared today.
00:02:35
>> I can go back through some of the
00:02:37
history and the failures and successes,
00:02:39
but uh I I'll go through what we've
00:02:44
grown since the early 1960s.
00:02:48
And then we had uh 30 thou three 300
00:02:53
employees. Now we have more than
00:02:55
130,000.
00:02:57
and uh in in 60 countries and uh we have
00:03:02
uh increased in value 9,000 times over
00:03:06
that period.
00:03:08
>> When did you join the business? In
00:03:09
>> 1961 full-time I'd been working Well, my
00:03:14
father uh we lived on a farm and and he
00:03:20
told me at age six he didn't want me to
00:03:21
be a country club bum. So made me work
00:03:24
in all my spare time which I hated and
00:03:29
and so I was always in trouble and uh
00:03:33
and so he was kind of tough on me
00:03:35
rightfully so. And and thank God he did.
00:03:39
Years later I I asked him, "Pop, why
00:03:42
were you so much tougher on me than you
00:03:46
were on my younger brothers?" And he
00:03:47
said, "Son, you plumb me out
00:03:51
>> when you came into the business.
00:03:53
What was the scope of the business? What
00:03:55
was the business operating?
00:03:56
>> We we had two main businesses.
00:03:59
One was uh to uh uh design and make uh
00:04:04
fractionating trays. That is that they
00:04:08
separate liquids by differences in
00:04:10
boiling points. And then the our largest
00:04:14
business was a crude oil gathering
00:04:17
system in in Oklahoma.
00:04:20
And and so so my father uh and I I was
00:04:26
uh I had finished just a few years
00:04:29
earlier finished MIT and I was uh
00:04:33
working for Arthur D. Little then a
00:04:35
leading consulting firm and and I was
00:04:38
and and you'll think this is a joke at
00:04:40
age 25 I was doing managing cons
00:04:43
management consulting. mean that I have
00:04:46
to laugh at absurdity of that but I
00:04:51
but they were paying me for it believe
00:04:53
it or not. So my father called me and he
00:04:55
said son
00:04:57
uh I want you to come back and join the
00:04:59
business and as tough as he had been on
00:05:01
me and as I say rightly so
00:05:05
uh I declined. So he called me a few
00:05:08
weeks later and he said, "Son, either
00:05:11
you come back to run the company or I'm
00:05:14
going to have to sell it because my
00:05:15
health is bad and the companies aren't
00:05:18
doing well and uh and I don't have long
00:05:21
to live."
00:05:23
Uh so I agreed
00:05:26
because
00:05:29
uh I well for for a number of reasons.
00:05:33
one. The first one is uh I got three
00:05:36
degrees at MIT and engineering and I
00:05:38
sucked as an engineer.
00:05:41
I mean, get that. And what? So, how'd
00:05:43
you get through MIT? Because I was real
00:05:45
good at the math and the science and the
00:05:48
theory. And I was no good at making or
00:05:52
operating things.
00:05:55
So, I figured out pretty quickly that I
00:05:58
wasn't going to make it as an engineer.
00:06:00
So I need to be an entrepreneur
00:06:03
and uh and because I was good at
00:06:06
principles and that's why we led. So I
00:06:09
was always looking for principles that
00:06:11
would help me
00:06:14
uh contribute and and succeed
00:06:18
and and and that's what uh that's what
00:06:22
transformed our our company. So you you
00:06:25
come into the business couple hundred
00:06:27
employees you said at the time 300
00:06:29
employees
00:06:30
>> and how did you think was the mandate to
00:06:32
grow the business? Was it just to keep
00:06:34
it stable?
00:06:35
>> No, it was it was Could I take a few
00:06:37
minutes and go through those first two
00:06:38
business?
00:06:40
Okay, sounds great. Yeah.
00:06:42
>> Okay. The first one was uh uh making
00:06:45
fractionating trays, designing those.
00:06:49
Uh we had a president then who
00:06:53
who was uh was one of our principles.
00:06:56
You don't want to be a negative is top
00:06:58
down and obsessed with controlling
00:07:02
everybody. So he would send out a memos
00:07:05
every week demanding they on what they
00:07:09
spent, how did you spend it on, what did
00:07:11
you do, what did you do this right? So
00:07:15
they were frust matter of fact they
00:07:16
started ignoring him and then the whole
00:07:19
culture was protectionist
00:07:22
that is when you s when they sold
00:07:26
the internals for fractionating tower uh
00:07:30
they wouldn't tell them the design
00:07:33
and well we need to know the design so
00:07:35
we can correct it. No, they wouldn't
00:07:37
give it to them. And then and then
00:07:40
what's even worse to to satisfy the
00:07:43
European market, they didn't even build
00:07:45
a plant there. They uh they had multiple
00:07:50
subcontractors
00:07:51
do parts of a tray and then bring them
00:07:54
all together and assemble with another
00:07:56
contractor. Now, you can imagine how
00:07:59
that was for speed and cost. So we were
00:08:03
losing our ass if you excuse the
00:08:05
expression.
00:08:07
And so I changed the the management
00:08:11
and changed the philosophy. Okay, the
00:08:13
first thing we're going to focus on is
00:08:16
creating value for our customers.
00:08:19
And then then the second thing we're
00:08:20
going to empower our employees so they
00:08:23
want to to to do this. And the third
00:08:25
thing we're going to be do a plant we're
00:08:28
going to build a plant in Italy to
00:08:31
satisfy the European market. we're going
00:08:33
to do it all ourselves
00:08:35
and uh and so we got became profitable
00:08:40
and uh
00:08:42
and and then we started adding
00:08:46
uh related products
00:08:50
and and I I'll get to that later but uh
00:08:55
and and and so we started growing.
00:08:58
>> Can I ask a question?
00:08:59
>> Yeah. You come in at 25 plus or minus a
00:09:02
little bit and you see the problems at
00:09:04
the business. It's not profitable. It's
00:09:06
not being well managed and you overturn
00:09:08
the management team. How did you have
00:09:11
the confidence at this age coming with
00:09:13
the experience you had to take that
00:09:15
level of action that quickly? Well, I it
00:09:18
was life or death. And my father said,
00:09:22
"You can run this business any way you
00:09:24
want. The only thing you need me of my
00:09:27
approval on is to sell." That's the way
00:09:29
he talked me into coming back after I
00:09:32
said I didn't want to
00:09:34
uh or I wasn't going to.
00:09:38
And then and then in 1970, what really
00:09:41
helped is my brother, younger brother
00:09:43
David
00:09:44
uh uh joined the business and then and
00:09:48
then he continued that growth.
00:09:50
>> And then you're now running a profitable
00:09:54
operation. You've got a European
00:09:55
business. And at that point did you
00:09:57
start to think about expanding into
00:09:59
other products and other
00:10:00
>> Well, that's it. And this is so
00:10:02
>> I was learning all these different
00:10:04
principles
00:10:05
and I and what I saw we were doing not
00:10:09
here not just here but in other things
00:10:11
is we were
00:10:14
building capabilities that is I looked
00:10:17
at it we need to be capability bounded
00:10:20
not industrybounded
00:10:22
like okay you could say uh to a certain
00:10:25
extent because we were in crew oil
00:10:27
gathering we're in the oil industry oh
00:10:30
that means Everybody was saying you need
00:10:31
to be an integrated oil company. You
00:10:34
need to be in everything. And I was
00:10:36
applying divisional labor by comparative
00:10:38
advantage. No, you need to be in the
00:10:40
part of it of the of the industry in the
00:10:44
part of the value chain where you can
00:10:46
create more value than others.
00:10:47
Otherwise, you're going to fail. And
00:10:50
that's what we're seeing happening now.
00:10:52
There's more specialization by
00:10:54
comparative advantage. And so that's
00:10:57
what so so I I I started this created
00:11:01
this principle called uh uh uh creating
00:11:06
virtuous cycles of mutual benefit. And
00:11:10
what that led us to do is to to to start
00:11:15
this uh neverending cycle
00:11:19
of of uh of growth
00:11:24
uh innovation, success and failures.
00:11:30
and failures that
00:11:33
when we did it right that we learned
00:11:35
from and made us better and taught us
00:11:38
better how to apply principles to create
00:11:41
value and we're still going through
00:11:43
that. We have a lot of failures and
00:11:46
that's when you when you apply creative
00:11:47
destruction in your new things. If
00:11:49
you're not failing at everything, you're
00:11:51
not doing anything new.
00:11:53
>> Where did you learn that lesson? So,
00:11:54
what was the first major failure that
00:11:56
you know they always say you got to plan
00:11:57
until you get punched in the face. What
00:11:59
was the first punch in the face?
00:12:00
>> Well, I had a bunch of them with uh with
00:12:03
uh w with with that company. It was
00:12:05
called Coke Engineering then. And like
00:12:08
like I said, okay, we're when we got
00:12:11
into refining, we created petroleum
00:12:13
coke. So I said, well, let's come up
00:12:16
with a a way to to use that as base to
00:12:20
make activated carbon.
00:12:22
And that was a fair we spent a fair
00:12:24
amount of money on that. And I just we
00:12:27
had a whole bunch of those and we've had
00:12:30
we've had many more.
00:12:32
>> How did you make the decision to shut it
00:12:33
down or walk away some point? A lot of
00:12:36
entrepreneurs have this problem. They
00:12:37
they build something, they're too in
00:12:38
love with it and they don't know when to
00:12:40
say enough is enough.
00:12:42
>> Yeah. Well, that's when enough is
00:12:44
enough. When we lose our ass enough. No,
00:12:46
it's it's when we decide we don't have
00:12:49
the capability to create superior value
00:12:52
for our customers and that we're going
00:12:55
to be rewarded for. And sometimes it can
00:12:57
be the structure of a of a business like
00:13:02
uh like
00:13:04
the company that Case founded Coke
00:13:06
disruptive technology insight tech. It's
00:13:09
been it it does tremendous things but it
00:13:13
it is a structure that makes it hard to
00:13:16
make it profitable.
00:13:18
>> And so so that's the other thing is so
00:13:21
so that's another these are principles
00:13:23
that we've learned. Okay, we didn't
00:13:24
apply that. What were the principles
00:13:26
that we didn't apply that caused us to
00:13:28
fail? That's what I mean we learned from
00:13:30
failure. So the businesses we're you ask
00:13:33
the businesses we're in now and Jason
00:13:36
there's coke people here. You you all
00:13:38
can catch me up if I the ones I miss.
00:13:41
But uh we have uh uh engineered
00:13:45
projects, engineering construction.
00:13:48
We have uh uh we build uh solar plants.
00:13:53
We have commodity uh trading and and
00:13:57
distribution.
00:13:59
Uh we have uh fertilizers. We have
00:14:02
refined products. We have chemicals and
00:14:05
polymers. We have glass. We have uh uh
00:14:09
uh forest and consumer products. We have
00:14:13
four different uh investment firms with
00:14:17
different comparative advantages.
00:14:20
Uh and we we have electrical products
00:14:24
and we we have uh software uh systems
00:14:30
uh uh for management.
00:14:32
>> Dave, let me just hit one point
00:14:33
something. No, you got it. You did a
00:14:36
great job.
00:14:36
Um I mean basically like um eight eight
00:14:41
wholly owned um business unit platforms
00:14:44
that he described and then four
00:14:45
investment um uh different businesses.
00:14:48
But I just wanted to kind of really
00:14:51
drill a point home because when I when I
00:14:53
came out and when I started um really
00:14:55
hanging out with you and the whole tech
00:14:56
community and trying to like build that
00:14:58
network, a lot of people had the same
00:15:00
question that you did about who is Coke?
00:15:03
What are you guys all about? you know, I
00:15:04
know it's a large private business, but
00:15:06
being in Witchto, Kansas, we don't know
00:15:07
that much about it. I think this point
00:15:09
that is so different about Coke um
00:15:12
versus almost any other company out
00:15:14
there is what my father said on um being
00:15:17
capability bounded, not industry
00:15:19
bounded. And you know, how do you get
00:15:22
from a small crude oil gathering company
00:15:25
in southern Oklahoma to all of those
00:15:27
businesses that he described? And
00:15:29
there's I mean the principles obviously
00:15:31
throughout which we'll be talking about
00:15:33
um in this discussion but one of the
00:15:36
absolute core differences is that whole
00:15:39
approach to capabilities and um I would
00:15:42
encourage anyone that's in a business
00:15:43
and trying to scale think about it from
00:15:46
that lens. What capabilities have I
00:15:48
demonstrated that I can add value to
00:15:50
customers and then um point it at new
00:15:54
industries where I can experiment. This
00:15:56
is one of our um one of our principles
00:15:58
as well. experimental discovery, not
00:16:00
trying to do everything at once and
00:16:02
trying to conquer the world, but
00:16:04
experiment and test. Does the customer
00:16:06
value my product or not? Um, and then
00:16:09
along the way, you know, those those
00:16:12
core capabilities for us started off as
00:16:15
operations, logistics, trading in the
00:16:18
very early days of KO, that's what we
00:16:20
demonstrated we we were good at. We were
00:16:22
getting great customer feedback. But
00:16:24
then when we had the capability approach
00:16:26
to say okay we started in energy we
00:16:29
started in crude oil gathering pipelines
00:16:31
and refineries can we point those same
00:16:34
capabilities into natural gas can we
00:16:38
point those into chemicals let's
00:16:40
experiment there can we point those into
00:16:42
fertilizers because then we learned
00:16:44
about natural gas and then then the
00:16:46
Georgia Pacific uh opportunity comes
00:16:48
along and it's like hey these are wood
00:16:50
products it doesn't seem similar to
00:16:52
these other um businesses, but it's the
00:16:55
same core capabilities.
00:16:58
We buy Georgia Pacific and along the way
00:17:00
it was somewhat of a happy accident that
00:17:02
we started learning learning about
00:17:04
consumer products and branding. So
00:17:07
branding became a new capability for KO
00:17:10
through acquisition, but it started with
00:17:12
where do we think we can add value and
00:17:14
do a good job on that and collect new
00:17:16
capabilities along the way. So, I think
00:17:19
that's like a really simple way to think
00:17:21
about Coke and it's o over the course of
00:17:24
time like how we're different. One other
00:17:27
thing I'll mention too um because I I've
00:17:30
been asked many times it's like well so
00:17:32
is it sort of like um you know a
00:17:34
Birkshshire Haway where you have all
00:17:36
these different businesses and
00:17:37
conglomerate and um I would say no. I
00:17:40
mean obviously Warren Buffett and his
00:17:41
team have done an unbelievable job
00:17:43
operating the business the way they have
00:17:46
but we think about our business very
00:17:48
differently instead of operating them
00:17:50
all as independent businesses and almost
00:17:53
like in silos um think about it as a
00:17:56
republic of science. We're not a
00:17:58
conglomerate. We're an integrated set of
00:18:01
capabilities. Is it fair to say that you
00:18:03
wouldn't consider an acquisition or a
00:18:05
new business line if there wasn't some
00:18:07
relatedness to an existing competency at
00:18:10
the company?
00:18:11
>> It depends. I mean, as you see when you
00:18:14
read the book, we went through uh one
00:18:18
chapter on creative destruction
00:18:22
and uh and what Champer called all the
00:18:25
different ways to do that and one is to
00:18:28
create a new management approach. Okay,
00:18:32
that's our biggest one. So the question
00:18:34
is when we bought Molex makes electrical
00:18:38
connectors which has done fantastic and
00:18:41
at first it wasn't doing great. So we
00:18:44
said we think if we can get them to
00:18:48
apply these principles it will turn them
00:18:51
around and and we didn't we and the
00:18:55
problem when we do that they they they
00:18:58
tendency is to learn the lingo and so
00:19:01
you can call everything by these by
00:19:04
these names and you still do what you
00:19:06
always did and that's what was going on
00:19:08
there. And so finally we got in. No, we
00:19:12
we had changed the management
00:19:14
and and once we did that and and and uh
00:19:18
and and and they started applying these
00:19:21
principles, they took off and now
00:19:24
they're knocking it out of the park. But
00:19:26
let let me go back to failures. I
00:19:28
because I'm I mean we're understating
00:19:31
our our our great strength in failures.
00:19:36
And that is I I'll give you our worst
00:19:38
failures and what caused it. And it
00:19:41
caused us by by violating
00:19:45
the principle
00:19:47
of of of hiring people first on values
00:19:52
and second on talent.
00:19:55
And and what I've for years I told our
00:19:57
people, look, if you want to hire
00:20:02
somebody with bad values cuz you like
00:20:05
them or something, hire them slow and
00:20:07
stupid and so we can catch them real
00:20:10
quick and get them the hell out. Maybe
00:20:12
get them to go to work for our
00:20:13
competitors or something.
00:20:17
>> Maybe help them get a job.
00:20:18
>> But anyway, that was huge. And then we
00:20:22
made that even worse
00:20:25
by uh by taking people
00:20:30
who were ter had terrible values and
00:20:34
made them leaders
00:20:37
and and so what we call that is is
00:20:40
rather than we want everybody in the
00:20:42
company to be contribution motivated
00:20:46
that I want to succeed by by
00:20:48
contributing. I want to be rewarded for
00:20:50
my contributions, not for anything else.
00:20:53
And the value I create for our customers
00:20:56
or for the future.
00:20:58
And and so they would some of these
00:21:01
people were destructively motivated.
00:21:04
What they wanted was power or control
00:21:07
and and they would hide their failures
00:21:11
and uh and make up their successes.
00:21:16
And so I'll give you two examples. One
00:21:19
goes back to 1973. You remember the war
00:21:22
in the Middle East and everything. And
00:21:24
they had gotten us into all kinds of
00:21:27
wild reckless trade. So that could have
00:21:30
bankrupted the c the company. And then
00:21:33
later because I mean much later
00:21:38
shows you
00:21:40
that u that repetition penetrates even
00:21:43
the dullest of mind. So I needed this to
00:21:46
happen a bunch of times. So finally,
00:21:49
okay, I got it. I got it. God, don't
00:21:51
punish me anymore, please, for my stupid
00:21:54
mistakes. So So this was we we did it
00:21:59
about the same time, our a group.
00:22:03
We are we put leaders in who were
00:22:06
destructively motivated. And in
00:22:08
refining, we we we got in a leader and
00:22:12
they were destroying those businesses
00:22:15
and uh and and so it it didn't almost
00:22:20
bankrupt, but it almost wiped out all of
00:22:23
KO's earnings in the in the late uh
00:22:26
1990s.
00:22:28
>> You you'll appreciate.
00:22:29
>> So, does that give you a flavor?
00:22:30
>> Yeah. So, you'll appreciate this being
00:22:32
an a guy. To go a little deeper on what
00:22:34
happened in the late '9s um in our a
00:22:37
business, we uh we called it the
00:22:39
strategy the gas to bread spread. So, we
00:22:42
wanted to basically be in every element
00:22:44
of the value chain all the way from
00:22:46
pulling the natural gas out of the
00:22:48
ground, converting it into fertilizer,
00:22:50
making the nitrogen products to grow the
00:22:52
crops that would ultimately um then end
00:22:56
up on the grocery store shelves and
00:22:58
being bread. we got in pizza crust, all
00:23:00
this crazy stuff. When you look back on
00:23:02
like what the hell are you doing, right?
00:23:04
But um it was it was what he was saying
00:23:07
is like um like leadership thinking
00:23:09
about we can do we can do anything and
00:23:11
if we like basically kind of control the
00:23:13
the entire value chain like we can be
00:23:15
make that successful completely violates
00:23:18
probably all 41 principles in in the
00:23:21
book, right? experimental discovery,
00:23:24
knowing where your capabilities are,
00:23:26
right people, um, right roles, and so
00:23:29
the we yeah, we called it the gas to
00:23:31
bread spread. Some people called the as
00:23:33
to bread spread, too. Um, so,
00:23:35
>> and there's another one in there,
00:23:37
integrity,
00:23:38
>> because when they knew there were losses
00:23:41
in some of these and then they wouldn't
00:23:43
tell us, they wanted to go ahead anyway.
00:23:45
>> We had a we had a deal within that, you
00:23:47
know, like purina dog food. So one of
00:23:50
the thing one of the things that was
00:23:51
acquired was the large animal um uh feed
00:23:56
mainly hog.
00:23:57
>> Yeah. So hog hog feed and um did no
00:24:01
diligence and this is one of our
00:24:02
principles. Apply the scientific method.
00:24:04
So disprove your hypothesis as much as
00:24:06
you you try to prove it. And um and so
00:24:10
we we closed that acquisition and within
00:24:13
days we found out that we had hundreds
00:24:14
of millions of out- of-the- money um hog
00:24:17
contracts because we didn't didn't even
00:24:19
look at the contracts. So I mean that's
00:24:21
when I think this is really important
00:24:23
for founders that want to grow right you
00:24:25
have this growth at all cost mindset and
00:24:27
you start not like asking why not and
00:24:30
this is the kind of trouble that you get
00:24:32
get yourself in.
00:24:33
>> So let's go back to the management
00:24:35
piece. How do you take these principles
00:24:38
which you've applied successfully to I
00:24:40
would use the term iterate because for
00:24:42
me like failure is all about iteration
00:24:44
to success and finding paths that work,
00:24:47
finding businesses that work and
00:24:49
ultimately finding people that work. But
00:24:51
how do you drive that culture that
00:24:53
represents the principles? Because you
00:24:55
could create a book and give it to all
00:24:56
your employees and say, "Guys, here's 41
00:24:58
principles. We've sat down. We've
00:25:00
thought about it. We've written them.
00:25:02
They're going to work."
00:25:03
>> Yeah. but to actually live them to
00:25:05
realize them to hold people not just
00:25:07
responsible but accountable to them. How
00:25:09
do you how did you do that as you
00:25:11
develop these over the decades? Because
00:25:13
at first uh we tried to get them do it
00:25:15
through sheep dipping
00:25:18
that is you take everybody in you give
00:25:19
them a big seminar now go do this
00:25:23
and uh from Palani we if you want to
00:25:27
read a book that's hard to read I mean
00:25:30
if you want really hard one you can read
00:25:31
human action this is even harder called
00:25:33
personal knowledge
00:25:35
by Michael Palan who was a a chemist and
00:25:40
and then became a philosopher
00:25:43
and uh
00:25:45
and and he goes through what it takes to
00:25:48
to to develop personal knowledge. It's
00:25:52
it's you have to rewire your brain to
00:25:56
have it work differently, right? You
00:25:58
have a habit. So, you don't need to
00:26:00
think about it. And then if you want to
00:26:02
change like, do I brush my teeth first
00:26:05
or do I comb my hair first? No, I want
00:26:07
to start combing my hair first. And all
00:26:09
of a sudden you're back brushing your
00:26:11
teeth first and you because you're not
00:26:12
thinking about it. And so because your
00:26:15
brain gets I mean you know your body
00:26:18
let's say you're you're a weightlifter
00:26:20
and you want to be a marathoner. Okay
00:26:23
it's going to take work with intensity
00:26:25
over time to change your body. Well your
00:26:27
brain's part of your body. So you've got
00:26:30
to do the same thing. So we said, "Okay,
00:26:33
we've got to start with, okay, let's
00:26:35
find a group that's really interested in
00:26:38
this. They're struggling. They're having
00:26:40
problems and here are the principles and
00:26:43
we'll coach them. We'll help them
00:26:47
start doing it." And if they work with
00:26:48
intensity on it, and then they succeed,
00:26:52
then we don't need ship dipping because
00:26:54
then the other uh businesses and
00:26:58
capability says, "Gosh, I'd like to do
00:27:00
that." So you don't need to call them
00:27:03
in. Then then we have more demand for
00:27:05
people who can help them. And the
00:27:07
hardest thing is to have our people in
00:27:10
strategy or or our principalbased
00:27:13
management group who are really good at
00:27:16
helping them. And boy, they're in
00:27:19
they're in more demand than anybody.
00:27:20
>> So the best thing is success will drive
00:27:22
social mimicry. You'll see other
00:27:24
>> That's it. Here's another um like take
00:27:26
on what he's saying um that I think like
00:27:29
really connects about culture to your
00:27:31
question and that is like the essence of
00:27:34
like principalbased management and all
00:27:36
the principles in this book as well is
00:27:38
like what if you could um have a
00:27:41
business and a culture small, medium or
00:27:43
large where everyone knew what to do
00:27:46
without being told.
00:27:48
And so that's like hard to get your head
00:27:50
around, right? Because I think most
00:27:52
businesses come at it from top down.
00:27:55
There's the iconic leader that's the
00:27:57
smartest guy in the room building the
00:27:59
strategy and then telling everyone what
00:28:00
to do. And so I think one of the most
00:28:03
important principles in this that we
00:28:04
tell a lot of stories around is to flip
00:28:07
that on its head. And it's about
00:28:08
bottom-up empowerment with principles
00:28:11
and empowering your your talent, your
00:28:13
team, your leaders with these
00:28:15
principles. So, so that then you use the
00:28:18
collective knowledge of everyone, not a
00:28:20
couple smart guys at the top of the
00:28:21
company.
00:28:22
>> Most people in most enterprises that
00:28:24
aren't owner operators don't want to
00:28:26
fail. They want to keep their job. They
00:28:28
want to move up the ladder by being
00:28:30
repeatedly successful. And if you want
00:28:32
to create a culture of creative
00:28:34
destruction, if you want to create a
00:28:35
culture of failing and learning from
00:28:37
failure, it's very hard to get
00:28:39
individuals who live on an income on a
00:28:41
salary to do that because if they make a
00:28:43
mistake, if they fail and then they fail
00:28:44
again and they fail again, I'm worried
00:28:46
about losing my job. So what you
00:28:48
typically see in most scaled
00:28:49
organizations is middle management and
00:28:51
even senior management when founders or
00:28:54
owners don't operate it anymore saying,
00:28:56
"I'm going to take the less risky path.
00:28:58
I'm going to do the less creatively
00:28:59
destructive thing. I'm going to do the
00:29:01
thing that's least likely to fail
00:29:03
because I don't want to lose my job. I
00:29:04
want to keep my job, get my bonus, move
00:29:06
on to year two and go home to my kids
00:29:09
and my wife and take care of the family
00:29:11
or whatever the the family situation is.
00:29:12
And that's my objective.
00:29:14
>> But see, and that's and that's that that
00:29:17
approach creates perverse incentives.
00:29:20
And so we we try to align our incentives
00:29:24
that we want to reward people according
00:29:28
to their overall contribution to KO's
00:29:32
future.
00:29:34
So for example, if they have an
00:29:36
experiment and that doesn't mean doing
00:29:39
this thing in a where you buy all these
00:29:42
hogs and you lose hundreds of millions
00:29:45
of dollars over what that's not an
00:29:47
experiment. It's an experiment. A a a a
00:29:50
good experiment is where the value you
00:29:53
you what you learn from this is higher
00:29:57
value from this failure than the cost of
00:30:01
the experiment
00:30:03
and and so when we do that and we're
00:30:07
we're evaluating what the person you are
00:30:10
building capability for the future.
00:30:12
That's why we're so we we put so much
00:30:15
emphasis on are you building capability
00:30:17
and capability part of it is the culture
00:30:20
and what Chase did with with KO Labs
00:30:24
when he started Coke disruptive he said
00:30:27
Ko Labs I want every business to be a
00:30:29
laboratory for what we find both to help
00:30:33
us source
00:30:34
these these opportunities these tech
00:30:38
opportunities
00:30:39
and and then we'll that we'll we'll if
00:30:43
they're just trying some, we'll try it
00:30:45
out in that business. And being in all
00:30:47
these different businesses that that
00:30:49
touch almost every part of the economy,
00:30:52
it gives us a big advantage in that. So,
00:30:55
but that affected the whole culture. I
00:30:57
mean, on your business, don't you want
00:30:59
to be part of Coke Labs? We're we're an
00:31:03
experimental discovery group. We're just
00:31:04
not a bunch of grunts here grinding
00:31:07
stuff out.
00:31:08
>> Yeah. I think um the KDT example is a
00:31:11
really good one because you asked about
00:31:12
motivating and like what if you fail and
00:31:14
then what if you get fired and and all
00:31:16
that. Um we we tried to basically take a
00:31:20
little bit of the Silicon Valley
00:31:21
approach and bring the you know of
00:31:23
experimental discovery. You learn more
00:31:25
and you you pivot and learn have a
00:31:27
failure but then now I know what I don't
00:31:29
want to do. I'm going to pivot my
00:31:30
strategy to what may be working. I'm
00:31:32
going to keep trying. As long as you
00:31:33
don't go sink the company with some
00:31:35
massive bet, right? And I think um KDT
00:31:39
was a a great experience like I call um
00:31:43
you know when when we did that um when
00:31:46
when we made that those first
00:31:47
investments you know this in venture um
00:31:50
you're the the losers fall out first and
00:31:53
the winners take a hell of a lot longer
00:31:54
to to uh materialize. So if we would
00:31:58
have just judged it based on, okay guys,
00:31:59
you got three or four years to figure
00:32:00
this out, we would have shut down KDT
00:32:03
because we you had the but but it was
00:32:05
that experimental discovery principle
00:32:07
and mindset that we applied to it. And
00:32:09
oh by the way, we were learn we were
00:32:11
learning so much as Coke from seeing the
00:32:15
technologies that were coming around the
00:32:16
corner that might disrupt our core
00:32:18
business. And so we value that learning
00:32:22
and we rewarded the people that were
00:32:24
bringing that knowledge in. If you just
00:32:26
look at it on the bottom line basis in
00:32:28
the first couple years, you said just
00:32:29
shut this down, right? But then over
00:32:31
time like all these different things and
00:32:33
that and then the returns are starting
00:32:34
to come because we thought long term
00:32:36
about it. But it all came from that
00:32:38
experimental discovery one principle and
00:32:40
then creative destructions like if we're
00:32:42
not in the game on technology and we
00:32:44
don't see what's coming, something's
00:32:46
going to happen. Especially with how
00:32:47
fast uh techn is moving today, the u
00:32:51
some of our businesses are going to
00:32:52
become dinosaurs. How much of that risk
00:32:54
were you willing to take and did you
00:32:56
take on acquisitions? So, doing
00:32:58
homegrown experiments on new business
00:33:00
ideas and strategies and products can be
00:33:03
lower cost. But if you're going to do an
00:33:05
acquisition, do you have less room for
00:33:06
fail?
00:33:07
>> Well, how about this? We were a much
00:33:09
smaller company and we bought Georgia
00:33:10
Pacific for 20 billion.
00:33:12
>> Well, can just tell us what Georgia
00:33:14
Pacific is for those who don't know.
00:33:15
>> It's a wood products company and it's
00:33:17
got two uh big um pieces to it. Building
00:33:20
products and consumer products. Well,
00:33:22
it's got it's got a third one, but
00:33:25
>> Yeah.
00:33:25
>> Okay. I'm I'm generalizing,
00:33:28
>> but go ahead.
00:33:28
>> Sorry. No, no, I'll shut up. Shut up.
00:33:32
>> Shut up, you old guy.
00:33:33
>> No, no, no. Um, but but anyway, but on
00:33:38
on that one.
00:33:38
>> So, when did you buy it and how big of a
00:33:41
betting the company move was that?
00:33:43
>> 2005.
00:33:44
>> Well, that was Yeah, we were much
00:33:46
smaller in 2005.
00:33:49
I can't remember how much smaller but it
00:33:51
was a lot smaller.
00:33:51
>> It was a massive bed.
00:33:52
>> How'd it come up?
00:33:54
>> Okay, we were looking applying this
00:33:58
virtual cycles of mutual benefit. We
00:34:01
were saying okay what's uh one of these
00:34:05
uh these cycles
00:34:08
are chemical process industries
00:34:11
and and wood creating the pulp and stuff
00:34:15
was matter of fact we found in my my my
00:34:18
father's thesis
00:34:21
he he he did a a study in Maine on this
00:34:26
very thing on pulping I mean I found it
00:34:29
later but that that did his MIT thesis.
00:34:31
>> Yeah. Yeah.
00:34:32
>> Wow.
00:34:33
>> So, we said, "Okay, let's look at the
00:34:36
Oh, and they were they were saying they
00:34:38
need to spin off some of those pars the
00:34:42
pulping part."
00:34:44
And we said, "Okay,
00:34:46
let's buy that." And we bought that as
00:34:48
an experiment and we did real well with
00:34:52
it. And so we said, "Wow, they they have
00:34:56
other because that was a commodity
00:34:58
business and they were trying to get
00:35:00
their price to earnings ratio. It was
00:35:02
like six and if they became more of a
00:35:05
consumer products, they could get it up
00:35:06
to nine. So we proposed
00:35:10
we met with them and and proposed that
00:35:14
uh we uh
00:35:17
uh we buy the the uh the commodity part
00:35:22
and we'll pay them a high enough price
00:35:24
that then they can be all
00:35:28
consumer products and get their price.
00:35:30
and we showed them all the economics and
00:35:31
they said that's fine but we'll be cons
00:35:34
sued for constructive fraud because we
00:35:37
we all have this all these lawsuits
00:35:42
against us and and uh and so we can't do
00:35:46
it but we like the value and so we went
00:35:49
home and says well okay what if we just
00:35:51
offered the whole thing
00:35:53
and the a couple of them were getting
00:35:55
ready to retire and the senior officers
00:35:58
so they were really liking it and and
00:36:01
they were kicked out of all the board
00:36:02
meetings from then on. But anyway,
00:36:06
so we we sold them and that was a time
00:36:08
when money was tight and stuff so nobody
00:36:11
came in and and topped us. I'll give you
00:36:14
just one funny story. We sent one of our
00:36:18
people in to be the CEO, Joe Mohler, who
00:36:20
had been president of a company
00:36:24
and uh and and and he
00:36:30
They had it was totally top down
00:36:33
bureaucratic.
00:36:35
They were in Atlanta they had this
00:36:38
51story building. Was it 51? You can
00:36:41
correct me.
00:36:42
>> That's right. Yeah, you got it. I
00:36:43
>> help you. and and they had a private
00:36:46
elevator to get up there and you didn't
00:36:49
have to wear a coat and tie but if if
00:36:51
you came up to visit all the management
00:36:53
was on this 51st floor and you had to
00:36:56
put on a coat and tie and get permission
00:36:58
to come up there
00:37:01
and so Joe immediately
00:37:04
kicked them all out. Well, we fired a
00:37:05
bunch of them
00:37:06
>> and then set the remaining ones down to
00:37:09
work with their groups
00:37:11
>> and on the regular floor
00:37:12
>> and then regular floor and then turned
00:37:14
it all into offices. I mean into meeting
00:37:17
rooms open to anybody
00:37:19
>> and so that I mean you asked about how
00:37:21
you get culture change. A lot of it is
00:37:23
signals like that particularly when a
00:37:26
bunch of them get fired for being so
00:37:28
bureaucratic and hierarch. Would you say
00:37:31
that that business unit operates like
00:37:33
the rest of KO industries today?
00:37:35
>> Oh, absolutely.
00:37:35
>> For how long?
00:37:36
>> I mean, I I'll just say like that is
00:37:39
such a rare and difficult thing to pull
00:37:41
off. I mean, there's just countless
00:37:43
stories of acquisitions where the
00:37:45
acquirer thinks that they have culture,
00:37:47
thinks that they know how to transfer
00:37:49
culture, and literally no one seems to
00:37:51
be able to do it. This was one of the
00:37:52
insights from Warren Buffett is you find
00:37:55
great managers. You let them continue to
00:37:56
operate as owners of that business and
00:37:58
they get some profit share or whatnot
00:38:01
and they've got a durable moat so he can
00:38:02
make a long-term investment and he just
00:38:04
leaves them and
00:38:06
>> that's see that wouldn't work for us the
00:38:08
stuff we bought. Well, let let me give
00:38:10
give another one if I could that's was
00:38:14
even more difficult and that is
00:38:18
uh uh sadly my my father died not too
00:38:22
long after I came with the company in
00:38:24
1967 and we had owned an interest in a
00:38:28
small refinery in Minnesota
00:38:31
and uh and so but two years later we
00:38:34
were able to buy it
00:38:37
and
00:38:40
And it was not being operated very well
00:38:43
because the management had let the union
00:38:47
control how it was run. And so it was
00:38:49
run very inefficiently.
00:38:52
And so the first thing we tried to do is
00:38:55
change the work rules. So they went out
00:38:58
on strike.
00:39:00
And uh by the way that was at the start
00:39:02
of my honeymoon.
00:39:05
Thanks a lot guys.
00:39:07
And it was violent. I mean, they they
00:39:10
ran a switch engine and tried to knock
00:39:12
down one of our units. They shot high
00:39:14
power rifles in there and they blocked
00:39:16
the gates. I mean, it was impossible to
00:39:19
get in there. We had to take helicopter.
00:39:22
But we we were successful in operating
00:39:26
without the union workers
00:39:31
for nine months, bringing people in from
00:39:35
other plants. and it operated better
00:39:37
than they did. So, finally we got the
00:39:40
work rules changed
00:39:43
and then we uh then we said, "Okay,
00:39:46
we're going to empower the employees.
00:39:48
We're going to change the culture." Now,
00:39:50
you think at Georgia Pacific it was
00:39:52
tough. This was much tougher than that.
00:39:56
And and so we we we worked and worked on
00:40:00
it to try to make their jobs better, get
00:40:03
their opinions, get them to work as
00:40:06
teams, get them to come up with
00:40:08
innovations. And when they did, we
00:40:11
reward them and we got the union to to
00:40:13
agree with that and and like like one
00:40:16
they said a group of them said, "God,
00:40:19
we're buying all these spare parts we
00:40:22
need. uh we can if you if you'll build a
00:40:25
machine shop we can do it cheaper and
00:40:27
faster and they did and then other
00:40:30
things they saved ton of money for us
00:40:32
made things more efficient and now the
00:40:36
culture there is fantastic you I mean I
00:40:39
mean we're talking about we're not
00:40:41
talking about witchah we're talking
00:40:43
about Minnesota
00:40:46
>> so I mean we're so proud of what they've
00:40:49
done and it just uh it still blows me
00:40:53
away how how much they've taken these
00:40:56
principles to heart and using them to
00:41:00
make that place. So it's so we've
00:41:02
increased the capacity tenfold
00:41:05
and it's one of the best refineries in
00:41:07
the country.
00:41:08
>> Bob, wouldn't you say that? Um I mean
00:41:10
the common theme on all of these because
00:41:12
we have the same story on Molex, you
00:41:14
know, sim similar but different than
00:41:16
Georgia Pacific. This was a a technology
00:41:18
company, a a connector and cabling and
00:41:21
connector company, one of the largest in
00:41:23
the world. Um that makes products in
00:41:25
your iPhone and medtec products, your
00:41:28
automobile. And um when we bought that
00:41:31
in 2013, it was a a paradigm that needed
00:41:35
to be changed. You you described Georgia
00:41:36
Pacific top down versus bottom up. There
00:41:39
was a lot of that too, but it was
00:41:41
topline thinking versus bottom line
00:41:44
thinking. It was all about revenue
00:41:45
growth, right? this is a technology
00:41:46
company and it was also a public company
00:41:49
for 30 plus years as well
00:41:51
>> because what the market rewarded them
00:41:53
for
00:41:54
>> and so like the whole the
00:41:55
>> stock price
00:41:56
>> the public versus private uh discussion
00:41:59
is interesting here and it just what
00:42:01
we've learned is it takes a hell of a
00:42:04
lot longer than you think to change the
00:42:06
culture and almost in every case I mean
00:42:08
pop tell me if you agree with this but
00:42:10
in almost every case it requires
00:42:12
changing leadership that has the
00:42:14
paradigm of bottomup empowerment and
00:42:17
that learns and applies the principles.
00:42:20
Almost every time when we fail, it comes
00:42:22
down to ignoring the principles. You can
00:42:24
and that's what the the book is about.
00:42:26
You can kind of reverse engineer these
00:42:28
stories like well we missed that
00:42:29
principle, we missed this principle. Um
00:42:32
but it comes down to talent and the
00:42:34
right people with the right mindset. And
00:42:35
I want to share just one story with you
00:42:37
that really um shows like how we apply
00:42:40
this at COPE. Um he talked about our
00:42:42
talent vision being um you start with um
00:42:47
basically culture first, you know,
00:42:49
skills second, values first, skills
00:42:51
second. I always add a third dimension
00:42:53
to that as well. Values first, skills
00:42:55
second, credentials last. And that is a
00:42:58
very different mindset than than most
00:43:01
companies because most companies, I
00:43:03
think, look at it and say, I want I want
00:43:04
the guys, you know, that have the 40
00:43:06
from the Ivy League school and all that.
00:43:08
And there are some incredibly smart
00:43:11
obviously folks from that. But by by our
00:43:15
um experience and also is one of the
00:43:18
reasons why we stayed in Witchaw, Kansas
00:43:20
is that we can basically hire the farm
00:43:22
team, right? Kids that have grown up on
00:43:24
the farm that have that contribution
00:43:26
motivated mindset that work their tails
00:43:29
off and want to come in to make a
00:43:31
contribution as opposed to coming in
00:43:34
expecting all this stuff and coming in
00:43:36
with more of an entitlement mindset. So
00:43:38
we um case in point, our CIO today, his
00:43:43
name is Jared Benson. Um he start his
00:43:46
first interaction with KO was based
00:43:48
striping lines in our parking lot. So no
00:43:52
college degree whatsoever, but he found
00:43:54
his way into Coke because he
00:43:56
demonstrated that hey, he knows a little
00:43:57
bit about data science and he could help
00:43:58
us. This is about 20 years ago. And then
00:44:01
ultimately he came in, he proved
00:44:02
himself. He was running circles around a
00:44:05
lot of the team and like just you know
00:44:08
contribution motive mindset um adding
00:44:10
value. He saw the cyber security risk
00:44:13
and that wave coming built a whole
00:44:16
capability to protect us from cyber
00:44:18
attacks and then now he's CIO of the
00:44:21
company guy with no college degree. So I
00:44:23
mean that kind of mindset in terms of
00:44:26
our talent vision and like that values
00:44:29
first and someone that just wants to
00:44:31
come in and they they just love the job
00:44:33
and they want to make a difference.
00:44:35
>> Do you actually codify these principles
00:44:36
and everyone at the company has a
00:44:38
handbook that lists them out and then
00:44:40
they're part of the assessment process
00:44:42
for quarterly or annual reviews with
00:44:44
people?
00:44:45
>> Yeah, I mean obviously there's the book
00:44:47
and he's this is his fifth book. It's my
00:44:49
first but but so um good profit science
00:44:52
of success we have
00:44:54
>> it's my best book because of
00:44:56
>> hey Brian the one we did is pretty good
00:44:59
too
00:44:59
>> hooks won't like that
00:45:01
>> right
00:45:01
>> um but yeah no there is a there's a
00:45:04
discipline right and and really it comes
00:45:06
down to the leaders taking it seriously
00:45:10
and there the leader first
00:45:11
responsibility is to help their people
00:45:14
>> okay I'm going to put my analyst hat on
00:45:16
for a second and I'm going to say My
00:45:18
observation would I would create a
00:45:21
theory. We could test the theory right
00:45:22
now that being in Witchah being founder
00:45:26
or owner operated
00:45:29
and you know having this ability to be
00:45:32
isolated from a monoculture. I just feel
00:45:35
like Silicon Valley a lot of companies
00:45:38
replicate each other. You have to kind
00:45:40
of there's this term that's being used a
00:45:42
lot now over socialization. You have to
00:45:44
operate like everyone around you or
00:45:46
you're not part of the you have to fund
00:45:47
raise in the right way and do these
00:45:49
deals. You have to hire people this way.
00:45:51
You have to do this sort of vesting
00:45:52
schedule, this sort of equity.
00:45:53
Everyone's the same. And if you don't,
00:45:55
you're kind of a weirdo. But by being in
00:45:56
Witchah, you don't really have that
00:45:58
problem. You can think your own way. You
00:46:01
can challenge yourselves. You can
00:46:02
debate. You can come up with your own
00:46:04
principles without feeling like everyone
00:46:06
else is conforming to the groups around
00:46:08
you. But they can because they're a
00:46:10
bunch in Silicon Valley that are that
00:46:12
are a challenge.
00:46:14
>> Yeah.
00:46:14
>> So they're not all that way.
00:46:15
>> They're not all.
00:46:16
>> Yeah. And this this
00:46:18
>> But is is it is it always been a
00:46:19
competitive advantage? I mean, did you
00:46:20
ever think to move the headquarters to
00:46:22
New York City or
00:46:22
>> No, but the main thing the We've We've
00:46:25
never thought of that, but but what
00:46:27
we've uh Sorry about that.
00:46:32
I mean, there are advantages of being in
00:46:34
New York City. I mean, you have a great
00:46:35
mayor now, so we're good to go.
00:46:40
But anyway, so we we that's a compet
00:46:43
competitive advantage of us.
00:46:45
>> That'll be a
00:46:46
>> But but this is No, but the main the
00:46:48
main threat we've had is we we had songs
00:46:51
that wanted to go p take us public
00:46:54
and I said it' be over my dead body and
00:46:57
some of them thought that would be a
00:46:58
good idea
00:47:00
just like they're thinking that about
00:47:02
Trump. with a lot of people thought
00:47:03
still think about I get a lot of nice
00:47:06
notices of my imminent death
00:47:11
and and they say okay your brother died
00:47:14
we hope it was I know this is painful
00:47:17
but I hope it was slow and painful and I
00:47:20
hope Charles is even worse that's the
00:47:22
kind of crap we get u but anyway what
00:47:26
the the biggest is the uh push has been
00:47:30
for us to go public God will be worth so
00:47:33
much and stuff and but it
00:47:37
and I I think our view we never could
00:47:41
have accomplished what we've have first
00:47:43
of all we never have would have built a
00:47:46
principalbased framework and then we we
00:47:49
never would have been able to pull off
00:47:53
this uh capability bounded versus
00:47:57
industrybounded
00:48:00
because then I mean people don't
00:48:02
understand it. Now, if you're Buffett
00:48:03
and you've sold that long, then people
00:48:06
Okay, but but he wasn't trying to
00:48:08
integrate them the way we do. No one
00:48:10
would believe it. And and so what the
00:48:13
what and and and that's because uh
00:48:17
you've got to you got to have a story
00:48:19
that people the analysts can understand.
00:48:22
Otherwise, we would like Georgia
00:48:24
Pacific, we would have a low price
00:48:25
earnings ratio. And so being private,
00:48:29
being in Witchah, competitive
00:48:30
advantages, what about being owner
00:48:33
operated or founder operated? There's
00:48:35
this argument that the the the best
00:48:38
Silicon Valley companies are those who
00:48:40
are founderled for as long as possible
00:48:42
because the founders are willing to
00:48:43
destroy the business creatively. They're
00:48:46
willing to think about what's over the
00:48:47
hill, make the tough decisions, reinvent
00:48:49
the company, hire and fire as needed, be
00:48:52
willing to take the short-term financial
00:48:54
loss for the long term. Have you been
00:48:56
able to get that to distill down into
00:48:58
the organization? Because that's the
00:48:59
thing that most public companies that
00:49:01
are not owner operated deal with and
00:49:03
struggle with is managers that are
00:49:05
short-term incentivized and and aren't
00:49:07
and can't take the big risks and the the
00:49:09
risks of failure that that you're able
00:49:10
to embrace.
00:49:11
>> No, but I I think it depends on the
00:49:14
values of the owners.
00:49:17
If uh I'd like one of our principles is
00:49:20
that any good partnership of any kind
00:49:24
whether it's marriage, friend, employee,
00:49:28
partner requires three things. It
00:49:30
requires shared vision, shared values
00:49:34
and having complimentary capabilities
00:49:36
that you use to to make each other
00:49:39
better. And if you miss any one of
00:49:42
those, you're not going to have a
00:49:44
lasting good partnership. And so I I
00:49:48
remember I was I was to the YPO group in
00:49:51
Witchaw. I was presenting this is like
00:49:54
20 years ago presenting what we were
00:49:57
doing and why. And one of them said,
00:49:59
"Well, how do you get that to work in a
00:50:01
private company?"
00:50:03
And and I answered, "Well, no, it's
00:50:06
easier than in a public company, just
00:50:08
like I did." And then I I thought who it
00:50:12
was and he was talking about his father.
00:50:16
His father was a total dictator
00:50:19
and no way he could apply any of these
00:50:22
principles in that. So it all the ma
00:50:25
matters who the owners are and what
00:50:28
their values are.
00:50:30
>> Can a public CEO that doesn't have a big
00:50:32
ownership stake in the company adopt
00:50:34
these principles and transform the
00:50:36
culture of that company? If you can get
00:50:38
a if you can sell it like Buffett has
00:50:41
but I mean he wasn't doing these
00:50:43
principle but he had a different
00:50:44
principle and that is I'm going to buy
00:50:46
companies not going to take top price
00:50:50
but what meaning what's meaningful to
00:50:52
them is they run it so I'm going to buy
00:50:55
it and let them run it and so that was
00:50:58
his his value that he sold that made him
00:51:01
tremendous well that the other one was
00:51:03
buy insurance companies so you'd have a
00:51:06
lot liquidity to go do all these things
00:51:08
and those two things are what made him
00:51:11
successful.
00:51:11
>> Right. Chase, I want to just go back to
00:51:13
your getting involved in the business.
00:51:15
We didn't get into that, but how did you
00:51:17
get started at Coke? How and were you
00:51:20
always a believer in the principles from
00:51:22
a young age? Were you around the
00:51:24
organization around your kid?
00:51:28
>> I'm a chip off the old block.
00:51:30
>> It took me a while to come around.
00:51:32
>> No, this is the most remarkable
00:51:33
transformation. We've been talking about
00:51:35
them all even. This is the primo.
00:51:39
>> Here we go.
00:51:40
>> Unbelievable.
00:51:41
>> Do I get to tell my story?
00:51:42
>> From the absolute bottom to the absolute
00:51:45
top.
00:51:46
>> He'll correct.
00:51:46
>> No, he's blown beyond me. He's doing
00:51:49
things I wouldn't even dream of or have
00:51:51
the capability to do.
00:51:53
>> So, he'll correct he'll correct me 10
00:51:55
times as I tell the story. But, um,
00:51:58
>> well, cuz you're too damn humble.
00:52:01
>> Um, so I didn't start when I was six. I
00:52:03
started when I was 15, so he cut me some
00:52:05
slack, but it's because I was a pretty
00:52:08
competitive tennis player. And so
00:52:09
>> he was nationally ranked. See the
00:52:11
humility ranked. That's first first
00:52:13
time. Um so um but at 15 I got burned
00:52:18
out, you know, tennis like typical story
00:52:21
where I wanted to hang out with my
00:52:22
friends. I wanted to have a good time. I
00:52:24
was tired of playing six hours a day. So
00:52:26
I I started throwing tennis matches
00:52:28
intentionally to get out of it, out of
00:52:30
these tournaments. So, I go home and
00:52:31
party with my friends and and he uh he
00:52:34
said, "Look, your attitude is terrible.
00:52:37
You can either um give 100% on the
00:52:40
tennis court and apply yourself or I'm
00:52:42
going to get you a job." I said, "I'm
00:52:43
sick of tennis. I'm done with it." And
00:52:45
uh so I had his my the job was figured
00:52:49
out the next morning for me.
00:52:50
>> Yeah. But interrupt again because this
00:52:52
is important. He thought he would get a
00:52:55
nice cushy job in Witchah so he go out
00:52:58
and party with his friends at night.
00:53:00
Yeah.
00:53:00
>> Well, you know, I'm I may be old and
00:53:04
slow, but I'm not that slow.
00:53:07
>> Yeah, he was kicked out of a number of
00:53:08
school.
00:53:09
>> I was born at night, but not last night.
00:53:12
>> But yeah, so
00:53:13
>> probably a a parallel story movie that
00:53:16
could be made.
00:53:16
>> Yeah. No, seriously, there there really
00:53:18
is.
00:53:19
>> But basically, all my was packed for me.
00:53:22
>> Yeah.
00:53:22
>> And it was thrown in the back of a truck
00:53:24
and 6 hours later I showed up at a at a
00:53:27
feed yard and I lived in a single wide
00:53:29
trailer. the whole summer with with my
00:53:31
boss. I slept on the floor, worked seven
00:53:33
days a week, and uh just shoveled cow
00:53:36
shed and dug post holes.
00:53:38
>> And so that was my forgot about that.
00:53:41
Let's keep it. Let's keep it manageable
00:53:43
here. So, um, so anyway, um, but the the
00:53:48
the interesting part of that story, even
00:53:50
though I went from literally being like,
00:53:53
uh, you know, kind of country club rich
00:53:55
kid to to doing that within 24 hours, it
00:54:00
was an absolute transformation for me
00:54:02
that the fact that he kind of he made me
00:54:04
do that and I chose, but I didn't know
00:54:07
what I was exactly, you know, choosing.
00:54:09
Um, but by after, you know, I was a
00:54:12
month or two into this job, I started
00:54:15
like actually feeling like better my
00:54:17
better about myself, you know, I was
00:54:19
like I hadn't really made a contribution
00:54:21
up until that point in life. And then
00:54:23
I'm actually I'm working with a team.
00:54:24
I'm getting paid minimum wage. I'm
00:54:26
working my tail off. I'm adding value
00:54:29
even though it may be like just menial
00:54:31
work. Um and this is I go back to um a
00:54:35
letter that his father um you know wrote
00:54:39
to him and the and his other three
00:54:42
brothers.
00:54:42
>> No, no, my my older brother.
00:54:44
>> Your older brother
00:54:45
>> cuz I was 3 months old when you wrote
00:54:47
it.
00:54:48
>> This letter about basically like when I
00:54:51
pass on um you're going to get what
00:54:54
seems to be a large sum of money. Um I
00:54:57
hope you don't squander it. I hope you
00:54:59
don't use it for but I hope you actually
00:55:01
apply yourself because I want you to
00:55:03
feel the glorious feeling of
00:55:04
accomplishment
00:55:06
and um it's this it's a really amazing
00:55:09
letter. He has it hung in his office. Um
00:55:12
but uh I you know that was the first
00:55:14
time I felt that even though it was
00:55:16
working at a feedard I was like this
00:55:18
feels good actually. You know I could
00:55:21
have gone down the path of of you know
00:55:23
just kind of staying on the tennis
00:55:24
circuit. I have no idea where I'd end up
00:55:26
in life had I had I not gone down that
00:55:29
path. And so I basically worked every
00:55:32
summer for Coke from that summer on. I
00:55:34
worked in a gas liquids plant. I worked
00:55:36
in our refineries um all the way through
00:55:38
junior year in college. I always had a
00:55:40
Coke, you know, kind of summer job. But
00:55:43
um another So that was an absolute like
00:55:46
transformation for me in my life.
00:55:49
>> Let me I give you one more credit here.
00:55:52
See what he he has great humor which is
00:55:54
great but and that is Chase has I I have
00:55:58
this gift for abstractions.
00:56:00
He's he's like his mother. He has a gift
00:56:03
for people. He understands people and
00:56:06
can relate to them and he can go around
00:56:10
like like she can or Sterling Barner who
00:56:13
was our president in the early days who
00:56:15
by the way uh was born. His father had
00:56:21
ran mules in an oil field camp. And he
00:56:23
was born in a tent and there damn near
00:56:27
died.
00:56:29
Uh never went to college. And and
00:56:35
he could whoever he met with wanted to
00:56:37
do business with us. And that's the way
00:56:40
Chase is. He goes around meets these
00:56:42
people and all of a sudden they're
00:56:45
friends and they want to do business.
00:56:46
And that's true for stand together too.
00:56:49
Go people you think oh they don't they
00:56:51
don't want these these capitalists or
00:56:54
these free enterprise people to do
00:56:57
business with them and and and he gets
00:57:01
them on our side and shows them the
00:57:04
value of these principles.
00:57:06
>> Well let me let me make
00:57:07
>> is that fair
00:57:08
>> um with whatever you said.
00:57:12
No, I mean that's my job that that's
00:57:13
what I do uh now you origination and
00:57:16
partnerships and about the time I met
00:57:18
you that's when I started you know
00:57:19
getting into technology and trying to
00:57:21
build a new community so that we could
00:57:23
get access to the most disruptive um
00:57:25
founders. Um, but one quick story I want
00:57:28
to tell because I think it would be
00:57:30
helpful for for your audience as well
00:57:32
that we haven't touched on yet is the
00:57:33
principle of comparative advantage
00:57:35
because another meaningful like total
00:57:37
shift in my job at KO and my role at KO,
00:57:40
but also in my my personal life um was
00:57:45
when I was running the A business. This
00:57:47
was this was later on. We talked about
00:57:49
the late 90s, the the gas to bread
00:57:51
spread and all that. This is a separate
00:57:52
business uh with Coke fertilizer. I
00:57:56
spent 10 years in that business really
00:57:58
understanding the operations of a
00:58:00
business. I worked in sales and and in
00:58:02
marketing and um the accounting, the
00:58:05
finance, like every piece of it, the
00:58:07
trading and um I ran a lot of the
00:58:10
smaller business units, but at one point
00:58:13
my boss at the time wanted to add a
00:58:15
whole natural gas trading business to
00:58:16
it. So, he's like, "Hey, I got a want to
00:58:18
put a parent company called A and Energy
00:58:20
Solutions, and I want you I'm going to
00:58:22
throw you the keys to the fertilizer
00:58:24
business. you're ready to run it. And so
00:58:26
I was promoted to president of Coke
00:58:28
Fertilizer at that time. And about 9
00:58:32
months in, I realized that I was not the
00:58:34
guy for the job. And I walked in my boss
00:58:36
my boss's office and fired myself. And
00:58:39
the humiliating, right? It's like
00:58:41
especially being the boss's son and like
00:58:44
thinking about, oh my god, I'm a
00:58:45
failure. You know, I could I couldn't
00:58:47
make this work. The business was still
00:58:49
doing fine, but I wasn't doing a good
00:58:51
job as a leader. and I knew there was
00:58:53
someone else that had the comparative
00:58:55
advantage to be a great operator CEO,
00:58:59
you know, president um type role. And so
00:59:01
I learned through all that, you call it
00:59:03
a failure in in that job that um that I
00:59:09
wasn't an operator and I wasn't a good
00:59:12
optimization type leader and I was a
00:59:15
builder. Like all I wanted to do was go
00:59:17
work on the innovation stuff. That was
00:59:19
about the time I met you and I learned
00:59:21
about climate corp and all that. I just
00:59:23
wanted to go focus on that and and go
00:59:26
build the stuff, you know, this whole
00:59:27
idea of creative destruction that would
00:59:29
disrupt the core business that I was
00:59:31
running. And so that whole thing around
00:59:34
like understanding your comparative
00:59:36
advantage, what you're good at and what
00:59:38
you're not relative to others that could
00:59:40
be doing that job was a huge deal. And
00:59:43
like my hope was that that was a little
00:59:45
bit of an example for other like KO
00:59:48
leaders as well. It's like if you're not
00:59:50
in the right job, like you know, you
00:59:52
don't have to like fire yourself, but um
00:59:56
but figure out where what your power
00:59:58
alley really is and where you can
01:00:00
contribute and and um and add the most
01:00:03
value. So that experience for me, what
01:00:06
was amazing if you look at like what
01:00:08
happened after that, we we got a great
01:00:10
president to continue to transform the
01:00:13
fertilizer business. It's one of our
01:00:15
most exciting businesses today and we
01:00:18
keep we keep growing um with it. So that
01:00:21
that did better than it would have done
01:00:23
had I stayed in the role. But then all
01:00:24
of this led to Coke disruptive
01:00:26
technologies which we talked about which
01:00:28
is a totally you know an innovation
01:00:30
platform for KO to to see around
01:00:32
corners. So like that one move made one
01:00:36
large business much better and and also
01:00:39
created a whole new thing right and so
01:00:42
like I always think about it's like we
01:00:44
have 130,000 employees what if that one
01:00:46
principle comparative advantage what if
01:00:49
everyone like deeply understood that and
01:00:51
and redesign their role to where they
01:00:54
are truly like in their power alley and
01:00:57
what what would what are the results of
01:00:58
the business if we could do that you're
01:01:00
never you're never going to be perfect
01:01:02
but that's the vision that we have and
01:01:03
how we
01:01:04
>> organiz
01:01:06
thinking about individuals
01:01:09
>> how do I self-actualize how do I find my
01:01:13
path of purpose happiness success in
01:01:17
life by leveraging these sorts of
01:01:21
principles in a world that feels
01:01:23
radically transforming and continuously
01:01:26
constrained. I don't have infinite
01:01:28
flexibility. I'm not on the board of
01:01:30
Coke. I'm not on the board of my my
01:01:31
company that I'm employed by. How do I
01:01:33
find a path in this world? Because I do
01:01:35
think many people today are struggling
01:01:38
for that sense of purpose, for that
01:01:40
sense of identity, for that sense of
01:01:43
realizing their their their potential
01:01:46
and feeling fulfillment in work today.
01:01:48
Well, that's I I mean that's critical
01:01:50
and that's that's every all the we we
01:01:54
have what
01:01:56
20ome thousand supervisors
01:02:00
in the company and so this is one of
01:02:03
their top jobs is is making sure that
01:02:08
that each employee is in the right role.
01:02:12
for example, they're working hard and
01:02:13
trying and part of the work they're
01:02:16
doing well in and others not. Well,
01:02:18
rather than beating up, you got to keep
01:02:20
doing better. Like, like there's certain
01:02:22
things if you told me I had to do, I
01:02:25
mean, I'm I'm I'm good at at concepts
01:02:28
and logic and math and to go do
01:02:31
something else that's quite different. I
01:02:34
mean, I'd be a total failure. and you
01:02:36
could you could whip me till I was a
01:02:38
grease spot on the floor and I I
01:02:40
couldn't do better. And so that's the
01:02:43
role of the supervisors to not go tell
01:02:45
them, okay, your role is to go do this
01:02:48
and they're just trying harder and
01:02:50
harder and so you're making them
01:02:52
miserable and so they hate you, they
01:02:54
hate the company. And so that's that's
01:02:57
the way you empower them. That's what
01:02:59
what Maslo said. If he said that that if
01:03:05
everyone has capability
01:03:07
and and if if you don't develop it and
01:03:11
apply it in a way that creates value for
01:03:13
others, you will be you you may be
01:03:16
successful monetarily or in some way,
01:03:20
but you'll be deeply unhappy your whole
01:03:22
life because you won't be fulfilling
01:03:25
your nature. Your nature. And I know
01:03:27
what mine is. I know what makes people
01:03:29
say, "You're 90. Why don't you go out,
01:03:32
lie on the beach? I said, "What? You
01:03:34
want me to die? I'd be dead in in a a
01:03:38
week."
01:03:39
>> It's not your nature.
01:03:40
>> No, it's not my nature. My nature is to
01:03:43
is to I have this gift. And a lot of our
01:03:47
people here may say, "Yeah, you damn
01:03:49
right. You use it too damn much." So,
01:03:51
>> what keeps most people from realizing
01:03:53
their gift?
01:03:53
>> Well, I I think part of it is an
01:03:55
education system. So, the schools need
01:03:58
to be set up. Okay, we're going to help
01:04:01
you find your gift and what you're
01:04:02
passionate about and and and and what is
01:04:07
motivating to you. So the whole system
01:04:10
demotivates you and that's what the way
01:04:12
businesses are managed demotivate our
01:04:14
whole deal. That's why we we have five
01:04:18
dimensions in the in the way we apply
01:04:20
this. The first is vision. You got to
01:04:23
get the right vision like capabilities
01:04:25
of creating value for others. Uh then
01:04:28
then it's virtue and talents. We we've
01:04:31
talked about that. Then it's knowledge.
01:04:33
That's republic of sh of science. Uh
01:04:37
creative destruction. All those things.
01:04:40
And then the the final one is
01:04:41
motivation.
01:04:43
And so that's what we need to do. And
01:04:46
like Joe Lamont has created the schools.
01:04:48
He says it's 90% or 80% motivation.
01:04:52
And so you have games, you have other
01:04:54
things that the kids can do that they
01:04:56
learn from and enjoy doing. They want to
01:04:59
do more. And that's I mean I raised our
01:05:02
kids with these principles and I made
01:05:04
them do it. So I was piss poor at
01:05:06
applying the my principles in in
01:05:09
teaching them this and he's doing it. He
01:05:11
makes a game out of it. He has them
01:05:14
reading the book
01:05:16
and parts of it and then they have
01:05:18
competition on who can do it better and
01:05:20
who's who's living up to this better,
01:05:23
who's applying this principle better and
01:05:25
they're loving it.
01:05:27
>> Yeah. I'm not uh having my kids uh
01:05:29
listen to books on tape from Milton
01:05:31
Friedman when they're 10 years old.
01:05:32
>> No, Aristotle Aristotle. There was there
01:05:35
were plenty of them. Um but um but let
01:05:39
let me just make
01:05:39
>> you listen you were told or suggested or
01:05:43
encouraged to listen to Aristotle on
01:05:44
tape as
01:05:46
>> Yeah.
01:05:46
>> Yeah.
01:05:48
>> No, he wasn't encouraged. No, we'd go
01:05:51
Sunday evenings.
01:05:52
>> I got to take a note for my
01:05:53
>> Elizabeth and and Chase and I would go
01:05:56
into my library and I would play these
01:05:58
tape. I'd only play it for 10 minutes
01:06:00
because I knew Chase's attention span
01:06:02
little Elizabeth was on it. Boy, she was
01:06:05
on it. She ran circles around.
01:06:06
>> She was getting straight A's and
01:06:08
everything. And Chase would fall asleep.
01:06:10
And then then after 10 minutes, I'd wake
01:06:13
him up and Okay. What what was his point
01:06:17
here?
01:06:18
>> Is a test every 15 minutes
01:06:19
>> and then and then you may have seen on
01:06:21
on where was it? Well, you talked about
01:06:24
uh about you we we worked together to do
01:06:27
your error term paper.
01:06:30
>> Yes.
01:06:30
>> And why don't you tell that story?
01:06:32
>> Okay. Well, I mean, we had a it was like
01:06:34
a fifth grade paper. Like, choose your
01:06:36
philosopher, write about it. You know,
01:06:38
it's got to be 500 words or whatever.
01:06:40
So, I came I was like, I don't know like
01:06:42
what philosopher am I going to write
01:06:43
about. And so, he's like, you're going
01:06:45
to write about Aristotle and we're going
01:06:46
to work together on it. But, I learned a
01:06:48
hell of a lot about Aristotle in in
01:06:51
fifth grade. And um I turned in the
01:06:53
paper and um the professor um had a lot
01:06:58
of red ink all over it and said, "F, you
01:07:00
did not write this.
01:07:02
And I'm And so I'm like, "Oh god, you
01:07:05
know, this is so embarrassing." And so I
01:07:06
took it back to him and I told him, I
01:07:09
said, "Pop, um, we got an F on our
01:07:11
paper."
01:07:13
And
01:07:13
>> I know, you said, "You got an F."
01:07:15
>> Yeah. And, um, so, and then I didn't
01:07:18
think he was going to pick up the phone
01:07:20
and call the the teacher. So he said,
01:07:23
um, you know, Dr. Cohen, I'll never
01:07:25
forget this. I was hiding under the
01:07:27
table during this phone call. He said,
01:07:29
"Dr. Cohen, um, you know, I helped my
01:07:31
son write this paper and he learned a
01:07:34
lot from it and yet, you know, do you
01:07:36
not want me to help my son? Do you not
01:07:39
want any parents to help their kids like
01:07:41
learn? And and um, he said, you know, I
01:07:45
think you have a point, uh, Mr. Coke.
01:07:48
And so the next day, the next day I come
01:07:50
back and it had 99 written on the top.
01:07:54
>> See, I made a contribution. Let me let
01:07:58
me let me go back. It's a great story. I
01:08:01
know. But um let me go back to something
01:08:03
I think you were getting at um around
01:08:06
how do you remove more barriers for more
01:08:09
people? Um and this is really kind of
01:08:11
the stand together story. He mentioned
01:08:13
education. I just want to use one
01:08:15
example of how important we feel like
01:08:17
transforming education is. And we also
01:08:20
feel like it's a movement with
01:08:22
tremendous opportunity right now. And so
01:08:26
um our vision for education is to go
01:08:29
from a teachto test model teacher at the
01:08:33
front of the classroom teach you know
01:08:36
talking at kids to one that's
01:08:38
individualized education because we all
01:08:40
as we we talked about we all learn
01:08:42
differently.
01:08:42
>> Everyone learns differently.
01:08:43
>> Yeah. And our kid all of our kids learn
01:08:45
learn differently as well. So um we did
01:08:48
the research at Stand Together and prior
01:08:50
to co um
01:08:52
>> and Stand Together just
01:08:53
>> Oh yeah. Sorry. Stand. So stand together
01:08:54
for those that don't know this is really
01:08:57
um you know comes from my father's
01:08:59
efforts on social change which he's been
01:09:01
working on for for 60 years and stand
01:09:05
together in 2003 was created that really
01:09:08
um I think we had the insight of we can
01:09:11
do a lot more together versus do it
01:09:14
alone. If we operate in philanthropy and
01:09:16
social change in silos, we're just not
01:09:18
going to get the leverage to drive the
01:09:20
change that we want to. Um, and so Stand
01:09:23
Together is made up of, you know, close
01:09:25
to a thousand business leaders. It's
01:09:28
it's just like the name describes. It's
01:09:30
a community of business leaders that
01:09:32
align on vision and values on where we
01:09:35
want to see the country. And it's really
01:09:37
around this this this pretty simple idea
01:09:40
that every human has a gift, but there's
01:09:42
so many barriers across all of our
01:09:44
institutions. um education, uh you know,
01:09:48
broken education system, a broken
01:09:50
criminal justice system, um bad policy
01:09:53
holding people back so you can't chase
01:09:56
the American dream and build a business.
01:09:58
All of these things, right? So, we're
01:09:59
very broad in terms of the issues that
01:10:01
we focus on, but education is one of the
01:10:04
biggest ones. And so, I described the
01:10:06
vision of where where we're trying to
01:10:08
help take it and be a catalyst for
01:10:10
change. And one of the things that you
01:10:12
know we do a lot of research on where
01:10:15
public opinion is and uh prior to COVID
01:10:18
roughly 20% of families were open to a
01:10:20
new model of education very low right
01:10:23
and then everyone saw during co how
01:10:25
screwed up the system was and they saw
01:10:27
their kids come home they had learned a
01:10:29
hell of a lot more on YouTube learning
01:10:30
than they actually did in the classroom.
01:10:33
So after um after COVID three or four
01:10:36
years later, you look at that same data
01:10:38
and it's 70 to 80% families are open to
01:10:41
a completely, you know, to transform the
01:10:43
education system because everyone now
01:10:45
understands that it's just broken. So,
01:10:48
um, where we're supporting, we have
01:10:51
these amazing preferred partnerships as
01:10:53
my father described, whether it's Joe
01:10:55
Limont with what he's doing at the Alpha
01:10:57
School, like closing the motivation gap
01:10:59
and meeting kids where there are and
01:11:01
bringing like gamification and like the
01:11:04
principles of Fortnite into education in
01:11:07
a way that kids are like he's taking
01:11:09
kids that are failing students to top of
01:11:12
the class in 3 months because
01:11:14
>> meeting them where they're at. meeting
01:11:15
them where they they're at and solving
01:11:17
the motivation gap and like making
01:11:19
learning fun and cool, right? Sal Khan
01:11:22
did the same. He's a huge partner with
01:11:23
Khan Academy. And a really interesting
01:11:26
one uh that we uh we partnered with the
01:11:28
Walton family on is the Veila Fund
01:11:30
basically applying venture capital uh to
01:11:33
education entrepreneurs. So coming out
01:11:35
of co there were um thousands of
01:11:39
pissed-off parents and teachers that
01:11:40
were just fed up with the system like
01:11:42
I'm just going to create my own school.
01:11:44
You know these small micro schools and
01:11:47
so with a relatively modest amount of
01:11:49
money um over the last five six years
01:11:52
we've helped create and seed over 5,000
01:11:55
schools. So what's happening is there's
01:11:57
this huge movement where people see is
01:12:00
like my kids are learning the the um the
01:12:03
skills of what the the future is going
01:12:06
to be like not this teachest model where
01:12:08
you don't know how to interact with
01:12:10
people the reality is it's projectbased
01:12:13
learning they need to have exposure to
01:12:15
these AI models you don't ban them you
01:12:18
empower them with these models right and
01:12:21
um so so we're it's one of the most
01:12:23
exciting movements that I think stand
01:12:25
together is really leading on and uh
01:12:27
yeah, we we need more partners that are
01:12:29
are willing to to to get behind this.
01:12:31
>> I want to go back though, Charles. This
01:12:33
work at Stand Together is like taken
01:12:34
off. I know a lot of people that are
01:12:36
engaging with you, Chase, on this work
01:12:38
and everything you say is so sensible
01:12:39
and we're all it's also it always feels
01:12:41
so obvious. Can we go back to the work
01:12:44
you've done historically in social
01:12:46
change and what you got right, what you
01:12:47
got wrong? Because the the narrow view
01:12:50
of the word coke comes from a broad
01:12:53
public perception of political activity
01:12:55
that I think's been amplified and the
01:12:56
narrative's been written for you. And I
01:12:58
don't think I've personally seen a lot
01:13:00
of conversation publicly from you about
01:13:02
what you did when how you were thinking
01:13:06
about social change. Maybe you can go
01:13:07
back to the origins of the work you
01:13:09
started to engage in in trying to drive
01:13:11
social change and over time what you got
01:13:14
right, what you got wrong.
01:13:15
>> Well, it started with these these
01:13:17
principles. I mean the to me they're the
01:13:20
principles of human progress. But rather
01:13:22
than
01:13:24
than as Frederick Douglas say, I'll work
01:13:27
with anyone to do right, no one to do
01:13:29
wrong. I I I was only working with
01:13:33
uh the people who believed to in all of
01:13:37
these
01:13:39
and and so we were limited. I mean with
01:13:43
work I work with the limit libertarian
01:13:45
party and that got so narrow and and
01:13:49
then they started fighting over who has
01:13:51
bigger greater more purity in these
01:13:54
principles to get in exactly like and
01:13:57
one brilliant guy but but totally this
01:14:00
way he says I I he said my libertarian
01:14:04
is this plum line anybody disagrees I he
01:14:06
purged so it's almost like the communist
01:14:08
party doing the same thing that Lynn did
01:14:11
and they and They admired Lyn. Yeah, he
01:14:13
had the right strategy. Well, no, you
01:14:15
can't go murder anybody that does like
01:14:17
so it doesn't work for liberty. It works
01:14:19
for totalitarianism.
01:14:22
And so when and then and then I started
01:14:25
reading uh Maslo uh uh usakian
01:14:29
management and his strategy and then
01:14:32
Victor Frankle is the one that really
01:14:35
got me going. And Victor Frankl
01:14:39
uh this tremendous insight. He says the
01:14:43
the problem today is ever more people
01:14:47
have the means to live and no meaning to
01:14:50
live for.
01:14:53
So if you can't find a path to a life of
01:14:57
meaning
01:14:59
which comes from as I said from
01:15:04
uh finding your gift
01:15:07
and using it to succeed by helping
01:15:10
others succeed in a way that gives your
01:15:13
life meaning
01:15:16
then you you have two choices. You can
01:15:20
either choose
01:15:22
to go for power or you can go for
01:15:25
pleasure. And and you see this today and
01:15:28
you see this through the the history of
01:15:30
the world. So if you if you choose
01:15:34
power, then you're always going to want
01:15:37
you become addicted to power. I want
01:15:40
more power. I need more power. And we've
01:15:42
seen that in, as I said, in our
01:15:44
businesses, but you damn sure see that
01:15:46
in politicians and you see that in all
01:15:48
the dictators in the world.
01:15:51
Then if you say if you if you've given
01:15:54
up and you say, well,
01:15:58
uh, I've given up. I'm going to to go
01:16:01
for p for pleasure. and you and you d
01:16:04
you you you dedicate yourself to to
01:16:07
pleasure
01:16:09
uh without considering the long-term qu
01:16:12
consequences
01:16:13
then
01:16:15
you have uh you're going to experience
01:16:18
failure.
01:16:20
You're also have a tendency to become
01:16:23
addicted to an addict to become suicidal
01:16:28
and to even engage in crime. And we see
01:16:33
both of these today. So the problem
01:16:36
today is when you have a world
01:16:40
that is based on power and pleasure,
01:16:44
it's a slippery slope slope to
01:16:47
totalitarianism,
01:16:50
authoritarianism, and socialism.
01:16:53
And that's that's what we're saying
01:16:55
today.
01:16:58
So, so that's the solution
01:17:02
is to help people
01:17:05
find their gift and a way to apply it
01:17:08
that enables them to succeed by helping
01:17:10
others succeed. And so what does that
01:17:12
mean? That means we need to
01:17:16
all of us more fully live up to the
01:17:20
promise in the Declaration of
01:17:22
Independence
01:17:23
to better apply these principles of
01:17:26
human progress.
01:17:29
And then the other thing that I screwed
01:17:32
up on is is
01:17:36
uh for the first I've been at this more
01:17:40
than 60 years and for the first 50 I
01:17:44
avoided pol politics or major party
01:17:46
politics. I mean being in the
01:17:48
Libertarian party there was no thought
01:17:50
of winning. The the only reason I got
01:17:52
into that is well this is a time people
01:17:56
are listening they're interested in
01:17:58
politics so we'll engage in that because
01:18:00
people are talking so we'll throw that
01:18:02
in the hopper in hopes it takes on. Well
01:18:05
the way we did it it didn't take on at
01:18:07
all. It blew up in our face. So then but
01:18:10
we decided we needed to get in because
01:18:12
we desperately needed some
01:18:14
principalbased policies. Look at all the
01:18:17
policies that we have today. They're
01:18:19
destructive. They're leading to more and
01:18:21
more power and pleasure, socialism and
01:18:23
authoritarianism.
01:18:26
And and the mistake we made or I made is
01:18:31
trying to do it through one party.
01:18:34
You can't do that. So now we we follow
01:18:38
Frederick Douglas's advice
01:18:40
to work with anyone to do right and no
01:18:43
one to do wrong.
01:18:45
>> Where are we in the cycle? So there's a
01:18:48
rising
01:18:49
number of political leaders around the
01:18:52
country. Initially it was in local
01:18:54
elections and now it's on kind of the
01:18:56
national stage declaring themselves
01:18:58
socialist or some form of socialism. Are
01:19:01
we kind of on an upswing and
01:19:04
>> upswing? What we is there a social
01:19:06
>> I thought hell was down not up
01:19:13
>> so where are we? I think we continue
01:19:16
this about we're going to hell in a
01:19:17
basket. It's what it's what Thomas
01:19:20
Jefferson he had slaves but what he said
01:19:23
about
01:19:25
slavery. He says
01:19:28
if if if God is just, I despair for the
01:19:31
future of our country. That's kind of
01:19:34
where I am. If God is just, I despair
01:19:36
for the future of the country. the
01:19:39
people we're electing both Republicans
01:19:41
and Democrats.
01:19:43
I mean, and the the mistreatment you I
01:19:46
mean, you look at at at at
01:19:49
what's being done. I mean, occupational
01:19:52
lensure,
01:19:54
the way they're the the the the way
01:19:56
they're treating illegal immigrants, you
01:20:00
name it, across the board. and the
01:20:02
socialists, the way they're they're
01:20:04
treating all the the crime, all of that
01:20:09
is uh
01:20:12
it's what we we've got to elect people
01:20:16
who have some
01:20:19
principles beyond power and pleasure.
01:20:22
>> What are your principles for changing
01:20:23
people's minds?
01:20:25
>> My it's it's what Chase says. We find
01:20:27
them where we are just like we have in
01:20:30
the company and we show them this
01:20:32
doesn't get results. Now if you're if
01:20:36
you're a dedicated communist
01:20:39
if you're like like Trosky is if we can
01:20:43
get rid of private property we'll get a
01:20:46
we'll get rid of greed and then every ma
01:20:49
every man will be a gerta and a
01:20:51
beethoven and we will uh or we will be
01:20:57
able to create ever ready warehouses of
01:21:01
all the goods and everybody can go in
01:21:03
because out of their goodwill. They'll
01:21:05
be making all this stuff. If people
01:21:07
still have those fantasies, it's never
01:21:09
worked in history.
01:21:12
And so,
01:21:13
>> but it's different this time.
01:21:14
>> Yeah.
01:21:14
>> Yeah. That's Well, that's right. And so,
01:21:18
that's what we're trying to do at Stand
01:21:20
Together. And
01:21:21
>> Dave, what what we've learned on this is
01:21:23
that you to change minds and change
01:21:26
paradigms, you show versus tell. And um
01:21:29
go back to what we were talking about
01:21:31
before bottom up empowerment as opposed
01:21:33
to top down control. I mean I think
01:21:35
that's like a overarching umbrella
01:21:37
principle on all of these. So our whole
01:21:40
thing with stand together and that's I
01:21:41
think why it's growing exponentially is
01:21:44
we have stories of PE we believe in
01:21:46
people. We don't need top down to come
01:21:49
in and tell people how to to solve
01:21:51
problems. That's the That's the book
01:21:52
that Brian Hooks and I wrote which we
01:21:54
just uh we we have a new edition based
01:21:58
on the 250 and we got Martin Luther King
01:22:02
III wrote a forward to it and
01:22:06
>> and that's that's another book besides
01:22:08
this one. If you're interested in these
01:22:10
the very these ideas we're talking about
01:22:12
on social change there's much more in
01:22:15
that on than than this book on that.
01:22:17
Although we have quite a bit on this
01:22:19
book, we have
01:22:20
>> one one of the key concepts in that is
01:22:22
um if you believe that people aren't the
01:22:24
problems to be solved, the people that
01:22:26
are in the problem, they're the ones
01:22:28
with the best ideas and they're the
01:22:30
source of the solution. That's a totally
01:22:33
different mindset, right? And I mean
01:22:34
that's what Stand Together does. We talk
01:22:36
about venture capital a lot. We bet on
01:22:38
people that have found something that
01:22:40
works. Um just give a quick example,
01:22:43
Scott Strode from the Phoenix. We found
01:22:46
Scott. Um, his story is amazing. About
01:22:49
eight years ago where he battled
01:22:51
addiction most of his life. He had a
01:22:53
mentor that put him in in the gym and
01:22:55
got him in boxing gloves and like
01:22:58
exercise was the thing that helped him
01:23:00
kick addiction. And what he did, he's
01:23:02
like, "Well, if this helps me, I think I
01:23:04
can help other people with this this
01:23:06
same concept." He built a gym called the
01:23:08
Phoenix. Combined the power of community
01:23:11
with others that are struggling with the
01:23:13
same thing.
01:23:14
um you know multiplied by the power of
01:23:17
um of exercise and he was getting insane
01:23:20
results like relapse rates that were
01:23:22
below 10%. So what we do is like instead
01:23:25
of like some top- down program to handle
01:23:28
addiction, go bet on Scott. And that's
01:23:31
what we've done the last seven or eight
01:23:33
years is we've gone from he had a couple
01:23:34
gyms in Colorado when we met him, you
01:23:37
know, impacting a couple thousand
01:23:38
people. He just hit a million people
01:23:42
basically overcoming addiction in this
01:23:44
last year. That's a movement, right? And
01:23:46
I mean that's a key difference I think
01:23:48
of Stand Together is like how do you do
01:23:49
what you're talking about at scale and
01:23:52
help people change paradigms? You show
01:23:54
them with stories like Scott that let's
01:23:56
be let's believe in the people and let's
01:23:58
bet on them to transform society
01:23:59
>> for addiction and crime that resonates
01:24:02
wholeheartedly. Let me ask about the
01:24:04
economic condition of America. Kids are
01:24:07
graduating college. They got hundreds of
01:24:08
thousands of dollars in student loan
01:24:10
debt. No one can afford to go to the
01:24:12
doctor. Grocery bills are too high.
01:24:14
People are worried about paying for
01:24:16
their next grocery bill. You look at the
01:24:17
polling data, the survey data, the
01:24:19
average American is really struggling. I
01:24:21
think more than half of Americans, 60
01:24:23
plus% maybe 63% have negative equity.
01:24:26
They have more debt than they have
01:24:27
assets and everything's getting more
01:24:29
expensive and no one's moving up the e
01:24:30
economic ladder. There's no mobility
01:24:32
anymore. People are really struggling.
01:24:34
And then they're looking on TV and
01:24:35
they're seeing spaceships launching up
01:24:37
to space, holding flowers out the
01:24:39
window, smiling and laughing. And it's a
01:24:42
really dark time. And it really leads
01:24:44
people down this path of I need the
01:24:46
government to help me. I need support. I
01:24:47
need help. I need to elect the people
01:24:49
that will fix this for me. How do we
01:24:50
address the economic crisis that's
01:24:54
facing the average person in America?
01:24:56
The lack of economic mobility, the
01:24:58
principles around these distraught
01:25:00
situations, fantastic. But this
01:25:02
fundamental economic crisis that we're
01:25:04
facing,
01:25:04
>> that's a damn good question. It's it's
01:25:07
like here's the question. Okay, the eggs
01:25:10
have have been scrambled. It's your job
01:25:12
to unscramble them,
01:25:13
>> right?
01:25:14
>> So, that's the problem. Once you create
01:25:17
these uh entitlements,
01:25:20
I mean, you almost can never get rid of
01:25:23
them. I you you almost need well may
01:25:27
maybe uh maybe Argentina if he can pull
01:25:30
off what he's doing because they were in
01:25:32
worse shape.
01:25:34
>> But they went through it.
01:25:35
>> Yeah,
01:25:35
>> we haven't got through it.
01:25:37
>> Well, maybe we will getting there.
01:25:39
>> Well, let me ask a question. Does
01:25:40
capitalism work long term? And let me
01:25:42
give you a an argument why it might not.
01:25:44
The success at Koch Industries is built
01:25:46
on an algorithm, your principles, and
01:25:48
you've been able to adapt that
01:25:50
algorithm, and as a result, scale your
01:25:51
business, generate cash, reinvest that
01:25:53
cash, generate more cash, reinvest that
01:25:55
cash, and so on, and you've scaled
01:25:57
9,000x. You've built a compounding
01:25:59
advantage in your business.
01:26:01
>> As is the case with all successful
01:26:03
capitalists, you build a compounding
01:26:04
advantage. The problem with compounding
01:26:06
in any system is it eventually eats all
01:26:08
of the whatever is in the system or it
01:26:11
makes it hard for others to compete in
01:26:14
that system or participate effectively
01:26:15
in that system. And that's the argument
01:26:17
that's being made today against
01:26:18
capitalism. How do we counter that idea
01:26:20
and share that capitalism should be more
01:26:23
accessible to all that everyone can
01:26:24
participate and everyone can benefit
01:26:26
that it doesn't end up in this
01:26:27
monopolistic end state where no one
01:26:30
>> Well, it starts from removing the
01:26:31
barriers.
01:26:33
That's what I said. You you've we've got
01:26:35
to work for a system
01:26:38
where we remove the barriers that are
01:26:41
holding people back from realizing their
01:26:44
potential, finding their gifts,
01:26:46
realizing their potential and succeeding
01:26:49
by contributing.
01:26:52
Okay. So I mean I mean so we we should
01:26:56
start like occupational licensing all of
01:26:59
this. There are hundreds of hundreds as
01:27:01
you know of occupations where they make
01:27:04
it so tough all the local people who are
01:27:06
in that business make it impossible for
01:27:09
anybody who starts with nothing to to do
01:27:12
it. And then and then the way we're
01:27:15
treating illegal immigrants, the one
01:27:17
here working and contributing, we harass
01:27:19
them and are going to kick them out. No,
01:27:21
we ought to welcome them and kick some
01:27:23
of the others, the bad ones out. But uh
01:27:27
I mean so some of this is is basic and
01:27:31
then we we we've got to reward people
01:27:35
who want to contribute. That's why we
01:27:37
keep you've got to get people to be
01:27:40
contribution motivated. Then you're
01:27:43
going to have a life of meaning and and
01:27:45
that's what Vic Victor Frankle was
01:27:47
trying to tell us. And if we don't we're
01:27:51
we're going to fail. And we're failing
01:27:53
because we're taking away the chance for
01:27:56
most people to have a life of meaning
01:27:59
because we're setting up all these
01:28:00
obstacles
01:28:02
and and I'm not picking on one party or
01:28:05
the other. They're both doing it and
01:28:06
then set up all these tariffs which
01:28:08
undermine the divisional labor by
01:28:11
comparative advantage which makes
01:28:12
everything more expensive. So it's just
01:28:16
I mean everywhere you look it's a it's a
01:28:18
tragedy. There's a debate happening at
01:28:20
this moment on AI regulating AI. How
01:28:23
does AI become an enabler of
01:28:25
self-actualization, giving every
01:28:27
individual the capacity to develop
01:28:29
themselves, accelerate and succeed
01:28:31
versus making a fewer number of people
01:28:34
even more wealthy and taking jobs away
01:28:35
from the masses? What's your view on
01:28:37
where AI is taking us?
01:28:38
>> Well, it's it depends on how it's done.
01:28:40
I mean that's why we back Cosmos who is
01:28:44
who is doing backing people who do AI
01:28:48
based on these principles of
01:28:49
market-based management based on these
01:28:52
these principles of human progress and
01:28:55
uh and and why don't you tell everybody
01:28:58
what you've done in the in the book with
01:29:00
AI
01:29:01
>> there I mean just one principle on like
01:29:03
our approach to AI is just simple
01:29:06
concept of permissionless innovation
01:29:08
open I mean the cost of AI to get it in
01:29:10
people's hands is dropping it just to an
01:29:14
incredibly cheap level that hopefully
01:29:16
everyone can have access to that and
01:29:18
then combine that with their gifts to
01:29:21
unlock their potential and learn 1000x
01:29:24
faster. That's I mean from an AI
01:29:26
standpoint that's that's that's our
01:29:27
mindset on it. But and that's what we're
01:29:30
doing internally at KO as well. Like I
01:29:32
think one of the most exciting
01:29:34
innovations that we have is all around
01:29:36
human empowerment back to bottomup
01:29:38
empowerment with principles. So, not
01:29:40
only are we, you know, trying to make
01:29:43
sure that we have the right supervisors
01:29:44
that are helping people, you know,
01:29:46
understand their principles so they can
01:29:47
apply them. Um, you know, with the book,
01:29:50
we've created an app. Um, I sent it to
01:29:52
you, Dave. I don't know if you you
01:29:53
played with it or not, but it's called,
01:29:55
uh, Principal Companion. You can
01:29:57
download it in the app store. And, um,
01:30:00
it's really taking off within Coke
01:30:02
because it's just another way to engage
01:30:04
with principles in a very simple way and
01:30:07
meeting people where they are. um
01:30:09
whether it's chat GPT or Claude and
01:30:11
solving a problem in 5 to 10 minutes
01:30:13
that otherwise would have taken a long
01:30:14
time. We're basically powering it with
01:30:16
the principles that are in the book to
01:30:18
like any problem. So it's one field, you
01:30:21
know, whatever your problem is in
01:30:23
business and philanthropy and if you run
01:30:25
a sports team or you're having problems
01:30:28
with your kids,
01:30:29
>> it helps you with that, right? And so
01:30:31
that I think that's just one example of
01:30:33
how we're trying to like really drive
01:30:34
human
01:30:35
>> and it doesn't give you an you can't say
01:30:37
well I got this problem what's the
01:30:39
answer no it asks you questions okay
01:30:43
okay given that have you thought about
01:30:45
this have you thought about that so it's
01:30:48
a Socratic method and we know what
01:30:50
happened to Socrates so
01:30:51
>> yeah okay
01:30:53
>> so listen we're going to need to wrap in
01:30:55
a minute but before we do Chase you know
01:30:57
what was the experience like writing the
01:30:59
book with your What's it like working
01:31:01
with your dad
01:31:02
>> and
01:31:04
biggest lesson lessons learned from your
01:31:06
dad? Yeah,
01:31:07
>> I want to give you a chance.
01:31:09
>> Absolutely incredible. I'd say it's
01:31:10
probably the most important project that
01:31:12
I've ever worked on. Um, getting invited
01:31:15
into writing this book and I've said to
01:31:17
many people, um, I've learned more in
01:31:19
the last 18 months than I probably have
01:31:21
the last 18 years, just because when you
01:31:23
write something, as you know, the the
01:31:25
the depth of learning and going back
01:31:27
into the details of the stories,
01:31:29
figuring out how to tell that story in a
01:31:31
book in a way that connects with as many
01:31:33
people as possible. Um, I always say
01:31:36
like you really don't know something
01:31:38
until you have to teach it. And writing
01:31:40
a book is a form of like trying to to
01:31:42
teach others with it. So my depth of
01:31:45
learning because I got to be right, you
01:31:48
know, be alongside this guy and and
01:31:50
there was many others across KO that
01:31:52
that contributed to this to this book as
01:31:54
well. But um learned a tremendous
01:31:57
amount. Um the other thing of just doing
01:32:00
this with him, um he applied the
01:32:04
principles to the bookw writing process,
01:32:07
right? So it's like everything and it's
01:32:10
he's so consistent it almost like drives
01:32:12
you nuts, right? In terms of of applying
01:32:15
principles to everything, but principles
01:32:17
like openness, creative, he's written,
01:32:19
this is his fifth book. This is my
01:32:21
first, but he wanted to drive creative
01:32:23
destruction of his first four, right?
01:32:25
And so I think bringing me in to it,
01:32:28
just bringing a fresh perspective,
01:32:30
bringing technology to it and uh telling
01:32:33
stories in a different way. Um that's an
01:32:36
open mindset. He could have eas the
01:32:38
boss. I've done this before. What the
01:32:39
hell do you know? You know, um but he he
01:32:42
had that mindset to it and you know
01:32:45
applied the principles to it. But I will
01:32:47
say he's such a stickler with words and
01:32:52
um you should talk to my mother about
01:32:53
this and how it drives her effing nuts.
01:32:56
Um but so I got I got kind of a an
01:33:00
18-month window on what it's like to be
01:33:02
mom maybe. Um but um but the you know we
01:33:07
had one chapter in there on on
01:33:09
stewardship and I think we were on we
01:33:12
were on version 27 of it or something
01:33:14
like that.
01:33:15
>> Yeah, I rewrote it of I like pop
01:33:17
>> 15 times myself.
01:33:18
>> You are not applying the principle of
01:33:20
marginal analysis.
01:33:22
>> Version 26 was pretty damn good
01:33:26
>> and so
01:33:27
>> so anyway we but we had a lot of fun
01:33:29
with it and yeah of course there was
01:33:31
tension in terms of how you you'd write
01:33:33
something or whatever but overall most
01:33:36
important project I've ever worked on.
01:33:37
>> Yeah. Now words have meaning. I mean
01:33:39
people say the proof is in the pudding.
01:33:42
No, the proof of the pudding is in the
01:33:45
eating.
01:33:47
>> For God's sake, that means nothing. The
01:33:49
proof is in the pudding.
01:33:51
>> Yeah.
01:33:51
>> What? You stuck your foot in it?
01:33:53
>> Yeah.
01:33:53
>> He corrects the coke leader on that in
01:33:55
about every meeting we're in. So,
01:33:57
>> Oh, and then and then I used to give
01:33:59
grammar lessons in our discovery board.
01:34:01
>> What's it like working with Chase?
01:34:03
What's it been like writing the book?
01:34:05
It's I mean he is I thought he'd help
01:34:08
some with the book and he would get us a
01:34:10
a a perspect different perspective on
01:34:13
how to reach young people and do some
01:34:15
things and and improve it from his p
01:34:18
perspective but he's taken it to a whole
01:34:20
level like bringing in AI and have AI as
01:34:26
the as a principal companion to the book
01:34:29
and all of these that are way beyond me.
01:34:32
So he's taken the as he has in
01:34:35
everything taken it to a whole level
01:34:37
beyond where I am.
01:34:39
>> You've uh written a lot of books. You've
01:34:40
built an unbelievable business, one of
01:34:42
the greatest on earth. You've engaged in
01:34:45
extraordinary social and civic
01:34:47
engagement. What do you want the legacy
01:34:51
to be?
01:34:52
>> I want us I want our country to more
01:34:55
fully live up to the promise in the
01:34:57
Declaration of Independence.
01:35:00
>> Charles Ko. Chase Coke. Thank you.
01:35:03
>> Stay safe.
01:35:22
>> I'm going all in.
