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How We Grew Koch Industries to $150 Billion Without Going Public: Charles & Chase Koch

May 12, 2026 / 01:35:27

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What an honor to be here. Thank you for

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hosting us, Forbes. And welcome. This

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will be put out as the all-in interview.

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So, I'm really excited to share this

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conversation with everyone on the world

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on the internet and to get some time

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with Charles Ko, Chase Ko. Chase and I

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have known each other since 2013.

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>> Yep.

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>> When we overlapped in the agriculture

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industry, got to know each other. We've

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been business partners. And Charles and

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I have gotten to know each other a few

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times over the years. But I'm really

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excited for this conversation tonight.

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So, Charles, thank you for being here.

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>> Thanks for having us.

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>> It's an honor.

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In Silicon Valley, entrepreneurs and

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even mature company CEOs always like to

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learn about the story of other

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businesses and the success of those

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businesses. And I've always felt like

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Coke Industries was that untold story.

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Uh probably the most profitable private

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family-owned business in the world.

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Maybe I'm off on a couple points, but

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certainly up there. and one of the most

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impressive business stories because of

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the evolution of the business, which I'm

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hopeful we can hear a little bit about

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how that evolution came to be tonight.

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And just for some statistics, if CO were

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publicly traded, the revenue would put

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it easily in the top 25 of the Fortune

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500. It's a family-owned business based

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out of Witchah. Founded in 1940 by Fred

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Ko with businesses ranging from energy,

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agriculture, chemicals, building

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products, consumer products, even cloud

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computing and a very active minority

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investment portfolio with 120,000 plus

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employees. That statistic might be off

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across 60 countries. very unique

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operating model which we'll get into

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today including principles around

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disruptive innovation of the business

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reinvesting 90% of profits in new

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businesses and growth meritocratic

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values and I'm hopeful that tonight we

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can take an opportunity to hear about

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the evolution of the business and talk

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about some of those principles and maybe

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we can get started Charles if you could

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give us a sense of the scale of the

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business what are the business lines

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that you operate today and and maybe you

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know provide a little more color to

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those highle statistics I shared today.

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>> I can go back through some of the

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history and the failures and successes,

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but uh I I'll go through what we've

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grown since the early 1960s.

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And then we had uh 30 thou three 300

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employees. Now we have more than

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130,000.

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and uh in in 60 countries and uh we have

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uh increased in value 9,000 times over

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that period.

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>> When did you join the business? In

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>> 1961 full-time I'd been working Well, my

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father uh we lived on a farm and and he

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told me at age six he didn't want me to

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be a country club bum. So made me work

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in all my spare time which I hated and

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and so I was always in trouble and uh

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and so he was kind of tough on me

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rightfully so. And and thank God he did.

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Years later I I asked him, "Pop, why

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were you so much tougher on me than you

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were on my younger brothers?" And he

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said, "Son, you plumb me out

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>> when you came into the business.

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What was the scope of the business? What

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was the business operating?

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>> We we had two main businesses.

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One was uh to uh uh design and make uh

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fractionating trays. That is that they

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separate liquids by differences in

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boiling points. And then the our largest

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business was a crude oil gathering

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system in in Oklahoma.

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And and so so my father uh and I I was

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uh I had finished just a few years

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earlier finished MIT and I was uh

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working for Arthur D. Little then a

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leading consulting firm and and I was

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and and you'll think this is a joke at

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age 25 I was doing managing cons

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management consulting. mean that I have

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to laugh at absurdity of that but I

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but they were paying me for it believe

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it or not. So my father called me and he

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said son

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uh I want you to come back and join the

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business and as tough as he had been on

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me and as I say rightly so

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uh I declined. So he called me a few

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weeks later and he said, "Son, either

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you come back to run the company or I'm

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going to have to sell it because my

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health is bad and the companies aren't

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doing well and uh and I don't have long

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to live."

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Uh so I agreed

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because

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uh I well for for a number of reasons.

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one. The first one is uh I got three

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degrees at MIT and engineering and I

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sucked as an engineer.

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I mean, get that. And what? So, how'd

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you get through MIT? Because I was real

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good at the math and the science and the

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theory. And I was no good at making or

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operating things.

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So, I figured out pretty quickly that I

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wasn't going to make it as an engineer.

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So I need to be an entrepreneur

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and uh and because I was good at

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principles and that's why we led. So I

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was always looking for principles that

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would help me

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uh contribute and and succeed

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and and and that's what uh that's what

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transformed our our company. So you you

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come into the business couple hundred

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employees you said at the time 300

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employees

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>> and how did you think was the mandate to

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grow the business? Was it just to keep

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it stable?

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>> No, it was it was Could I take a few

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minutes and go through those first two

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business?

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Okay, sounds great. Yeah.

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>> Okay. The first one was uh uh making

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fractionating trays, designing those.

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Uh we had a president then who

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who was uh was one of our principles.

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You don't want to be a negative is top

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down and obsessed with controlling

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everybody. So he would send out a memos

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every week demanding they on what they

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spent, how did you spend it on, what did

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you do, what did you do this right? So

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they were frust matter of fact they

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started ignoring him and then the whole

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culture was protectionist

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that is when you s when they sold

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the internals for fractionating tower uh

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they wouldn't tell them the design

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and well we need to know the design so

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we can correct it. No, they wouldn't

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give it to them. And then and then

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what's even worse to to satisfy the

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European market, they didn't even build

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a plant there. They uh they had multiple

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subcontractors

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do parts of a tray and then bring them

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all together and assemble with another

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contractor. Now, you can imagine how

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that was for speed and cost. So we were

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losing our ass if you excuse the

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expression.

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And so I changed the the management

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and changed the philosophy. Okay, the

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first thing we're going to focus on is

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creating value for our customers.

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And then then the second thing we're

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going to empower our employees so they

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want to to to do this. And the third

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thing we're going to be do a plant we're

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going to build a plant in Italy to

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satisfy the European market. we're going

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to do it all ourselves

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and uh and so we got became profitable

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and uh

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and and then we started adding

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uh related products

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and and I I'll get to that later but uh

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and and and so we started growing.

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>> Can I ask a question?

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>> Yeah. You come in at 25 plus or minus a

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little bit and you see the problems at

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the business. It's not profitable. It's

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not being well managed and you overturn

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the management team. How did you have

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the confidence at this age coming with

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the experience you had to take that

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level of action that quickly? Well, I it

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was life or death. And my father said,

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"You can run this business any way you

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want. The only thing you need me of my

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approval on is to sell." That's the way

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he talked me into coming back after I

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said I didn't want to

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uh or I wasn't going to.

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And then and then in 1970, what really

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helped is my brother, younger brother

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David

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uh uh joined the business and then and

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then he continued that growth.

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>> And then you're now running a profitable

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operation. You've got a European

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business. And at that point did you

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start to think about expanding into

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other products and other

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>> Well, that's it. And this is so

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>> I was learning all these different

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principles

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and I and what I saw we were doing not

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here not just here but in other things

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is we were

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building capabilities that is I looked

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at it we need to be capability bounded

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not industrybounded

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like okay you could say uh to a certain

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extent because we were in crew oil

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gathering we're in the oil industry oh

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that means Everybody was saying you need

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to be an integrated oil company. You

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need to be in everything. And I was

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applying divisional labor by comparative

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advantage. No, you need to be in the

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part of it of the of the industry in the

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part of the value chain where you can

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create more value than others.

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Otherwise, you're going to fail. And

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that's what we're seeing happening now.

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There's more specialization by

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comparative advantage. And so that's

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what so so I I I started this created

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this principle called uh uh uh creating

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virtuous cycles of mutual benefit. And

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what that led us to do is to to to start

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this uh neverending cycle

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of of uh of growth

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uh innovation, success and failures.

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and failures that

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when we did it right that we learned

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from and made us better and taught us

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better how to apply principles to create

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value and we're still going through

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that. We have a lot of failures and

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that's when you when you apply creative

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destruction in your new things. If

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you're not failing at everything, you're

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not doing anything new.

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>> Where did you learn that lesson? So,

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what was the first major failure that

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you know they always say you got to plan

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until you get punched in the face. What

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was the first punch in the face?

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>> Well, I had a bunch of them with uh with

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uh w with with that company. It was

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called Coke Engineering then. And like

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like I said, okay, we're when we got

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into refining, we created petroleum

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coke. So I said, well, let's come up

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with a a way to to use that as base to

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make activated carbon.

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And that was a fair we spent a fair

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amount of money on that. And I just we

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had a whole bunch of those and we've had

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we've had many more.

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>> How did you make the decision to shut it

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down or walk away some point? A lot of

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entrepreneurs have this problem. They

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they build something, they're too in

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love with it and they don't know when to

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say enough is enough.

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>> Yeah. Well, that's when enough is

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enough. When we lose our ass enough. No,

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it's it's when we decide we don't have

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the capability to create superior value

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for our customers and that we're going

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to be rewarded for. And sometimes it can

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be the structure of a of a business like

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uh like

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the company that Case founded Coke

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disruptive technology insight tech. It's

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been it it does tremendous things but it

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it is a structure that makes it hard to

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make it profitable.

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>> And so so that's the other thing is so

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so that's another these are principles

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that we've learned. Okay, we didn't

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apply that. What were the principles

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that we didn't apply that caused us to

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fail? That's what I mean we learned from

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failure. So the businesses we're you ask

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the businesses we're in now and Jason

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there's coke people here. You you all

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can catch me up if I the ones I miss.

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But uh we have uh uh engineered

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projects, engineering construction.

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We have uh uh we build uh solar plants.

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We have commodity uh trading and and

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distribution.

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Uh we have uh fertilizers. We have

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refined products. We have chemicals and

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polymers. We have glass. We have uh uh

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uh forest and consumer products. We have

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four different uh investment firms with

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different comparative advantages.

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Uh and we we have electrical products

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and we we have uh software uh systems

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uh uh for management.

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>> Dave, let me just hit one point

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something. No, you got it. You did a

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great job.

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Um I mean basically like um eight eight

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wholly owned um business unit platforms

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that he described and then four

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investment um uh different businesses.

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But I just wanted to kind of really

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drill a point home because when I when I

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came out and when I started um really

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hanging out with you and the whole tech

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community and trying to like build that

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network, a lot of people had the same

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question that you did about who is Coke?

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What are you guys all about? you know, I

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know it's a large private business, but

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being in Witchto, Kansas, we don't know

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that much about it. I think this point

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that is so different about Coke um

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versus almost any other company out

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there is what my father said on um being

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capability bounded, not industry

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bounded. And you know, how do you get

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from a small crude oil gathering company

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in southern Oklahoma to all of those

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businesses that he described? And

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there's I mean the principles obviously

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throughout which we'll be talking about

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um in this discussion but one of the

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absolute core differences is that whole

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approach to capabilities and um I would

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encourage anyone that's in a business

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and trying to scale think about it from

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that lens. What capabilities have I

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demonstrated that I can add value to

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customers and then um point it at new

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industries where I can experiment. This

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is one of our um one of our principles

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as well. experimental discovery, not

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trying to do everything at once and

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trying to conquer the world, but

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experiment and test. Does the customer

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value my product or not? Um, and then

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along the way, you know, those those

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core capabilities for us started off as

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operations, logistics, trading in the

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very early days of KO, that's what we

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demonstrated we we were good at. We were

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getting great customer feedback. But

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then when we had the capability approach

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to say okay we started in energy we

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started in crude oil gathering pipelines

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and refineries can we point those same

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capabilities into natural gas can we

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point those into chemicals let's

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experiment there can we point those into

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fertilizers because then we learned

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about natural gas and then then the

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Georgia Pacific uh opportunity comes

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along and it's like hey these are wood

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products it doesn't seem similar to

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these other um businesses, but it's the

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same core capabilities.

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We buy Georgia Pacific and along the way

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it was somewhat of a happy accident that

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we started learning learning about

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consumer products and branding. So

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branding became a new capability for KO

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through acquisition, but it started with

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where do we think we can add value and

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do a good job on that and collect new

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capabilities along the way. So, I think

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that's like a really simple way to think

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about Coke and it's o over the course of

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time like how we're different. One other

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thing I'll mention too um because I I've

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been asked many times it's like well so

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is it sort of like um you know a

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Birkshshire Haway where you have all

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these different businesses and

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conglomerate and um I would say no. I

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mean obviously Warren Buffett and his

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team have done an unbelievable job

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operating the business the way they have

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but we think about our business very

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differently instead of operating them

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all as independent businesses and almost

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like in silos um think about it as a

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republic of science. We're not a

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conglomerate. We're an integrated set of

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capabilities. Is it fair to say that you

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wouldn't consider an acquisition or a

00:18:05

new business line if there wasn't some

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relatedness to an existing competency at

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the company?

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>> It depends. I mean, as you see when you

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read the book, we went through uh one

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chapter on creative destruction

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and uh and what Champer called all the

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different ways to do that and one is to

00:18:28

create a new management approach. Okay,

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that's our biggest one. So the question

00:18:34

is when we bought Molex makes electrical

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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

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problem when we do that they they they

00:18:58

tendency is to learn the lingo and so

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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

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and and once we did that and and and uh

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and and and they started applying these

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principles, they took off and now

00:19:24

they're knocking it out of the park. But

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let let me go back to failures. I

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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

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failures and what caused it. And it

00:19:41

caused us by by violating

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the principle

00:19:47

of of of hiring people first on values

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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.

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