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#381: Charles Koch — CEO of Koch Industries

The Tim Ferriss Show podcast.

August 14

Charles Koch is a complex person that goes far beyond his political involvement. Even though he grew up among wealthy, Charles learned the value of hard work early in life while working on his dad's farm. There he learned to disregard instant gratification and to focus on the long-term. He also realized that unless he figured out how to be good at something unique, he'd be forever stuck digging dirt with his hands. If you want to hear some honestly brutal life and business advice from one of the world's riches men, this is a good podcast to start with.

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Hello, boys and Girls, Ladies and Germs. This is Tim Farris and welcome to another episode of The Tim Ferriss Show, where it is my job every episode to deconstruct world class performers of all different types to tease out the principles, habits, thinking, influences and so on that help them to do what they do. And my guest today does not grant many interviews, and he came to me through avenues that I would not have expected. His name is Charles Coke, and I had several of my close friends very, very accomplished in business, all very socially liberal who had become friends with Charles and suggested that I have him on the podcast and we'll talk more about that, I'm sure, But let's get into the bio,

and this episode no doubt will excite the Internet because there is a case of insanity going around, and I would encourage you to listen and to focus on what I hope to transmit, which is the importance of attacking. The problem's not the people we'll come back to that. Let's get to the bio. Charles Coke received a bachelor's degree in general engineering in two master's degrees in nuclear and chemical engineering from the Massachusetts Institute of Technology. M. I T. He is chairman of the board and see you of Coke Industries Inc. A position has held since 1967. He was renowned for growing Coke industries from a company worth 21 million in the early 19 sixties, toe one with revenues estimated as high as 110 billion. That's annually by Forbes. It's one of the largest privately held companies in the world, and by revenue it's larger than both Boeing and Disney let that sink in. He has transformed the business into a diverse group of companies that employ nearly 130,000 people,

making everything Dixie Cups two components in your cell phone. For 50 years, Charles has supported academic and public policy research with a special focus on developing voluntary market based solutions to social problems. This interest led him to found or help build a number of organizations, including the Institute for Human Studies, the Cato Institute, the Mercatus Center at George Mason University and the Bill of Rights Institute. Charles credits the success of Coke Industries to applying proven principles of social and scientific progress, which led to the development and implementation of his market based management MBM business philosophy. He describes MBM in its applications and two of his books, The Signs of Success and Good Profit. Charles is now using those principles in philanthropy as the founder of Stand Together to tackle our Country's biggest challenges. Stand Together is partnering with thousands of social entrepreneurs to help them improve their effectiveness and scale a tackling poverty, improving K through 12 education, bringing justice to our criminal justice system and Maur. I have more to say,

so don't fast forward. But you can find out more about both Cook Industries and stand together at coke end dot com k o c h i n g dot com Stand together dot org's, which I highly encourage. You check out if you are a social entrepreneur or no social entrepreneurs in need of support on Capitol, on Twitter at Cook Industries and at stand underscore together, it takes us a little while to get warmed up, as it often does in these podcast interviews. So give it, you know, 5 10 minutes to get into flow. But we talked about a lot. We talk about books that have had the greatest influence on his thinking. Inactions, thinkers We talk about, for instance, the differences in acquisition strategy between Coke Industries and Bircher Hathaway.

We really go all over the place, And I also asked him some of the questions that were submitted by people following me on social media. And there are some riel haymakers that I do read towards the latter portions of this conversation. So I do not simply serve up softballs. That's not the intention. And that's certainly not the way that I run this podcast in general. So this episode, why would I do this? Why would I deliberately polarize my audience because of identity, politics and people applying labels to themselves that caused so many problems? And I'm not referring to Charles. I'm referring to a lot of people among my listeners. No doubt it's because I believe, much like Paul Graham does one of the co founders of Why Combinator that the more labels you applied yourself this stupider you become and the more prone you are to group think, and it's very, very dangerous.

And in this episode, my role, I view, is not to get you to like or dislike Charles, but to pay attention to his thinking, which I do think is remarkable. And I will just mention a few things to calm down many of my friends out there who are predominantly liberal. I did live in the Bay Area for 20 years, after all, to try to encourage them further, to listen to this whole thing. Number one. I would say that Charles has been very active in collaborating with previous adversaries on criminal justice reform, including CNN commentator Van Jones. They shared or found they shared common principles when it came to reforming this country's criminal justice system. And that is the topic that actually was brought up by a lot of my friends who encouraged me to this podcast.

And in partnership with Van Charles, helped to build a nonpartisan policy coalition that passed his store Criminal justice reform last year on foreign policy, despite disagreements with George Soros on many other policy issues. As you can imagine, Charles discovered that he had common ground with him when it came to foreign policy. So they partnered with Georges Open Society Foundations tow Launch the Quincy Institute for Responsible Statecraft, which is a new think tank to promote ideas that move the U. S foreign policy away from Warren towards vigorous diplomacy in the pursuit of international peace. And it goes on and on in the sense that despite and I'm quoting the Guardian here, despite being a conservative powerhouse that has at times outspent the Republican National Committee, the coca network is increasingly showing willingness to work with Democrats and investing in nonprofit groups to promote quote free and open societies. End quote and then jumping forward In that piece, long seen as GOP kingmakers David and Charles Cook has made waves by lambasting Trump and his administration. They refused to back Trump 2016 vowed to hold him accountable to conservative priorities like free trade, free markets and small government, and have been outspoken against the White House on immigration and infrastructure spending.

What I found is that the people who love Charles Coke miss a lot the ones who have the most intensive use about Charles and Coke industries. Likewise, the people who hate Charles or cook industries miss a lot. And my hope is, ah that I'm able to add some nuance and texture to this person who is often evaluated based on headlines and also again to encourage everybody listening much like I feel Charles does very effectively to attack. The problem's not the people. I think that's the only path forward really is, too. Instead of asking how to most effectively fight against someone to first, ask yourself what you might have in common in terms of priorities so that you can line in some fashion without that we're all doomed, I think in short or long order. Either way, that's a long in true. But I'm happy to provide this, and I'm sure that the feedback will be strong in all sorts of directions. Without further ado, please enjoy my wide ranging conversation with Charles Coke. Charles. Welcome to the show.

13:4

Thanks, Tam. Thanks for having me.

13:6

Oh, I appreciate you taking the time, and I've had a number of my friends over the last. It's a year, year and 1/2 who have have wanted me to interview you and who are fans of a lot of what you've done. The main subject that has come up a lot is criminal justice reform, which I'm sure we will get to you. And there's a lot to cover. I thought we would start with dandy lions. Can you tell me about your history with digging daddy lines?

13:39

Well, I was, uh I really consider myself blessed because I had the best of all possible worlds. Looking back, it didn't seem that way at the time. But what? We were wealthy in my father. He called himself 1/2 baked chemist and he loved doing experiments. So we we lived on a new experimental farm. It wasn't a commercial farm, but it was, ah, farm where my father could experiment with various things. So we had We had cows, horses. Ah, dogs,

chickens. Ah, and raise crops. And Ah, and my father announced at an early age he said, I don't want any my sons to grow up to be country club bombs. And I was a middle job on my brother. It was two years older and two younger brothers who are twins. Ah, for four and 1/2 years younger than I waas. And, uh So my father started this on my older brother and he was more of an artistic band. So Ah, this manual labor that involved helping out on this experimental farm didn't work as well for him. And so I bore the brunt of it. And you may ask why?

Why did I better? Well, that was one reason, and as he put it, I asked him years later. I said, Pop, why were you so much tougher on me than my younger brothers? And he said, Son, you plumb wore me out. And so I I earned the right to be in more trouble, get knocked around more and do more work. So I started. He started me out in all my spare time working, and,

ah, the first was digging. Danielides. Reason I say digging. You can't just cut them off or Pullem, you've got to get all the routes out or they just come back. So that was my job. And then I graduated in tow into shoveling out stalls, feeding the animals. Ah, milking cows, digging post holes, fixing fence and all that stuff. And then as I got older, I got jobs in other places. So it was It was quite a non opportunity to learn the value of work and learn that I'd better develop some skills that other people will value are I could end up doing this the rest of my life,

which I didn't look forward to. He used to say that. He said I was a good kid in many ways, as long as the work didn't come too close. And so I had, Ah, I had. What's an economist call? High time preference, that is, I was into instant gratification. How could I minimize the work? How could I do something that's fine? So that was my whole orientation. And and then I was blessed that I thought the only thing I was good at was getting in trouble. And I was.

I was pretty expert at that, and I found in the third grade that I had a gift in in math, and I later learned when I studied study psychology, I read Howard Gardner and his multiple intelligence theories, and boy did that fit me because the only thing I was good at was what he called a logical mathematical intelligence. And so I had a gift for math and abstract concepts. So basically my whole life has been to find opportunities that that used that, that I could create value with that, and then to partner with people who were good at all. The other things that needed to be done. That I wasn't good at and dream possible is because I've done that. Whenever I've tried to do things by myself or without that kind of ah, of support, I've I've basically failed.

17:59

I want to ask a bit more about your dad specifically about a believe you still have it, I would imagine so. A framed letter that you found in your father's safe deposit box after his death. You talk about the letter that is on your wall and why it's important to you.

18:17

Yeah, he wrote that in Ah, and I think, January of Ah of 1936. And I was, But I was born in November, so I was, let's say, three months old. And so he wrote it to my older brother and me, and in there he talked about adversity, provides the greatest lessons, and it's certainly the greatest character builder, and then his hope for us and whatever he had given us that we used it. We didn't miss use that air wasted but used it and so we could experience the glorious feeling of accomplishment. And so that's everything he did. Whether I liked it at the time was toward that end.

And so he ah, and I think this is so important for anyone whose apparent and certainly we've tried to do that is you don't lecture your kids on anything that you don't live up to. And he exemplified, uh, integrity, humility, treating others with respect. And as he used to preach to me son, learn everything you can. You never know when it will come in handy. And so those who are all great lessons and and there was no hypocrisy in there. I mean, that's the way he lived

19:49

when you ended up, Ah, after your education. So after m i t. Ah, you. We're talked back to Wichita, and my understanding is that he had an equipment company that wasn't doing well and effectively said, You can run it any way you want. The one thing you would need approval for selling it was that the time that your dad fascinates me because I think you might have been correct me again if I'm wrong, but about 26. Ah, I have a piece of advice that they gave you, and it's I hope your first deal is a loser. Otherwise, you'll think you're a lot smarter than you are. So it really seems that your dad was focused on preserving your sort of initiative and drive so that the the wealth wouldn't become a curse. Are there other things that he did when you first joined the business to facilitate? That could be before or after, but I'm wondering what that initial experience was like,

20:57

Yeah, we had, uh, my father. The way he got me to come back, he had been after me. I was working for a consulting firm in in Boston and learning a lot, and I got to work in all different phase. Is this what wasn't? Just imagine mint consulting. I started in product development, and then I did process development. And then I worked in an innovation group, and I kept ah, maneuvering. So I got to try different things. I was looking for something that I could use what few gifts I had,

and in a way that would be productive and that and that I'd be passionate about. And by the way, I had the reason I was able to get in there. My tea and is I started my my time preference change. Rather than being instant gratification, I, uh, I started. Ah, I got a much lower time preference, and that is I I became focused on the long term on on studying and developing these aptitudes and looking for, ah, calling that I could use to create value for others. And that would make me successful and and that I would be fulfilled by, So I would be passionate about it and and work. So I threw all this that I worked in in multiple departments. That starts with the little and And I just, uh,

22:34

Charles, may I ask you for one second that I apologize? That could be talk about Just wanna pause on the switch that you made. So how did you because a lot of people never make the switch from instant gratification to this longer term focus. What catalyzed that for you? Well,

22:52

I think it's it's and I said, as my father always had me doing dirty jobs and I was minimizing the my work effort. I put into it, and at some point I fear this is a dead end. What am I doing? And and it been, Maybe his lessons in his example seeped in. And so I started, started reading, probably as a junior in high school, started reading, start with novels and then at M i t. I got three degrees in engineering there, but I was a lousy engineer, but I was good at the concepts behind engineering, but not on howto apply anything. So I maximized the taking the courses in theory.

And so I took ah ah, mathematics for nuclear engineers, all these abstractions because that's when I was good at. And so not that I've used a lot of that, but it really helped develop my aptitudes. And so then, as I got to work some in business and business consulting, I found, while this came naturally because when I was good at in business where things like vision, philosophy, strategy, logically analyzing problems and looking at the other side, what could go wrong rather than just go with whatever ideas we had, but to really experiment, test, um, applied the scientific method to him, Which I part of which I learned it in my tea, part of which I learned afterwards. Uh huh.

24:39

And, uh, I'd love to, and we can We can certainly bounce around. I mean, that's sort of the nature of a lot of these conversations, but if we could talk about books because it Ah, it certainly seems like books have had a the large influence in your life and in your book Good profit. You wrote. I am a bona fide book person. My home contains more books than I'll ever have. Time to count in the walls of my which to officer lined with them too. Uh, what what are some of the books that have had the largest impact on your thinking And two, I'd love for you. In addition. Anything else you might mention?

I'd love for you to describe. What impact Two books had that came up repeatedly in my reading FAA, Harper's. Why're wages rise? And I'm probably gonna pronounce this Nancy. Correct me. But, Ludwig, I want my XYZ or Ludvik one visas. I'm not sure.

25:32

Rick von Maces.

25:33

There we go. Yeah, Human action.

25:35

Oh, yeah. I can talk about those but the two. The two authors that have had the biggest influence on me are our Abraham Maslow and Frederick Kayak. And and ah, a lot of what we do is based on mass alos ideas of Of Positive was one of the early positive psychologists rather than most of them in history. Freud and others had worked on the psychiatry of of illness, and he took the other side. So what can enable somebody toe have a fulfilling, rewarding life? And what he said is, uh, what you can be you must be if you are determined to live your life without developing your potential. You may be successful in other ways, but you will be deeply unhappy for the rest of your life, he said. A bird has wings.

A bird has has to fly. What you can be, you must be. And so that's and then he called that that state of where you are fulfilling your nature. Ah, self actualization that what you can be, you've you're becoming not that any of us are every perfect in that causes continue learning experience and which requires ongoing effort. So that's what we've we tried to apply here co canisters. And that's what we're applying in our in our philanthropic efforts to enable everybody to have the opportunity to realize their potential. And then what I accepted of all the the insights that that he's provided one that's I quote in the in my book Good Profit, that what he called perhaps the greatest discovery in the history of mankind is that people can live and work together in in peace into their mutual advantage, under generalized rules of just conduct. That is, with generalized rules that enabled people to succeed by assisting others rather than detailed rules that cause conflicts. And people trying to undermine each other makes all the difference. And that was from his study of history.

Well, history, philosophy, economics. And so So you put those two together and it forms the core of my philosophy and what's enabled me to accomplish more than I ever was really capable of doing.

28:24

You, uh, you and even I, in been previous chats have had Karl Popper pop up in conversation a number of times. Do you find yourself applying scientific principles or engineering principles that you used in your education to business or how does. Carl? How does Karl Popper fit into your thinking about business or life?

28:53

No, no, that's the great question. The at M i. T. I became fascinated with science and the scientific method, and then after I moved back to Wichita, I started studying. One of the early thing I've studied was the the philosophy of science and the scientific method, and in particular, and as 11 particular essay of Carl Poppers called Sciences Falsification, in which he says that the true scientific method is develop a testable proposition now to prop proposition that that is untested ble, but one that's testable. And then your obligation is to not to go find evidence that will support it, but go out and seek criticisms of it. Find what's wrong with, and that's what we do on on everything.

Like we have a project or an acquisition. The first thing to do is find what could go wrong, and any idea I have I Let's say I have on idea for a new strategy or new business, and so the first thing I do is think through Okay, what what are the key drivers of success here? What needs to happen and let's say they're five different main drivers. Then I go find the people who can best show what's wrong or what could go wrong in each of those drivers and we get together and I go through my idea and and each one is expected to come up with ways that could go wrong. And every time we go through that, we come up with a better answer than I developed. And so that's critical. The other philosopher of sites that I've particularly drawn on this planet, who wrote Who's s a Well, a couple of things. His essay on Republic of Science where ah, the the reason the scientific community has been so productive and innovative is that no one's in charge. It's by consensus, debate and knowledge sharing and innovations come about by taking different ideas and combining them in new and novel ways. And so that's what that's another thing that we approach that we use in management. Every every one of our businesses we look at is the laboratory, for for innovation and finding new and better ways to do things and new and better opportunities.

31:41

Charles, could you could you speak to perhaps an example of how you have applied the Republic of Science with concepts they're in and for people who want to look him up. First name Michael, I believe. Plan. You will put this in the show notes as well for folks. But in terms of information exchange re combining in novel ways, could you give a an example concrete example of how that has been applied,

32:15

Right? Well, the first thing we do is ISS. We emphasize knowledge sharing. Many companies, particular large companies operate in silos. And and you have an incentive where Gosh, you know, you have an idea. Are you learned something and you don't want to share it because you may not get credit for it. We consider that the kiss of death. So So we expect everybody to share. And we build mechanisms and incentives in the company two to encourage this internal knowledge sharing. And then we expect every every discipline and every business to build knowledge networks around the world. And it may not be largely isn't something that's, ah, in in your field or just with competitors,

but something that's going on elsewhere. And so we do that, I mean, for example on On How do you keep compressors from breaking down and shutting down your whole operation? So we won group. Are we build a group to do data analytics, too, to take measurements and determine what it was near breaking down so we could repair it before it shut the whole plant down. And then everybody it insured this knowledge and learn from each other. And this this is our whole philosophy of mutual benefit. That is the way to get knowledge. Sharing is show when you help somebody else. If if the right person or group, then they will reciprocate. And so we have this culture now of knowledge sharing what we call a republic create the Republic of Science. And that's that's true for everything,

for not just, uh, compressors, but everything. And then we have innovation conferences that get draw from different disciplines and different over businesses. They get together and throw out ideas they have, and then they Then they get to know each other so they don't just share when we set up a structure to do it. But would they have what we call a spontaneous order where people just naturally no gosh I'm working on this problem who might help me in the company and then who can help me elsewhere in the world, who's working on something some. I mean, it's like what Newton said. If I see for others because I'm standing on the shoulders of giants and but they don't need to be giants. Anybody who who's working on a similar problem may have an idea that can help you. And collectively, we're all smarter than we are. Any of us are individually

35:15

and to that point. I say that it seems like you need to create systems and incentives to reward the right type of of sharing. And in I keep mentioning good profit. You've written other books, but a good profit I've found very interesting for a number of different reasons. I mean, you have. It's certainly completely politically agnostic. I mean, you have John Mackey, co founder of Whole Foods, who's praised it. You've got General Richard Myers, former chairman of the Joint Chiefs of Staff, and others who have talked about it, and it's it strikes me that clarity of thought and systems are recurring, Theme said.

I'd like to talk about a few things that makes what you guys do different, perhaps from from others and one that one that stuck out to me, and we don't have to spend a lot of time on this. But I was. This is on Coke after Fred in Chapter two, the It was on the difference between acquisition strategies of Coke in Berkshire Hathaway, and I believe I believe I'm getting this right. But it says Berkshire Hathaway buys companies when they're competitive. Position is attractive, and if their management is good, he assures them that he won't intervene except to decide how to invest the cash flow. Then he largely leaves them alone to operate as they had before the acquisition. Coke strategy has been to make acquisitions when we can create additional value by applying our capabilities. I was wondering if there any other differences or contrasts between Berkshire Hathaway or other companies that people might compare Coke to that that come to mind. Are there are there any any other differences that really stand out to you that we haven't talked about?

37:2

But I like our management approach, is based on on understanding the principles of scientific and social progress and and we've codified and systematized those in in the in the market based management in five dimensions and then which I I didn't describe in good profit, because I I hadn't clearly thought through how we applied that that enabled us to do all the things we did that ISS to in in 1961 when, ah, when I joined the company, we had two. Business is the largest one was a crude oil gathering system in southern Oklahoma, and the other was a smaller company that that I my father let me run initially Ah, that made, uh, internals for distillation columns. That was it was struggling at the time. And and since then, we've increased the value of the company 7000 fold and entered all these different businesses. We now have 12 business groups such as Georgia Pacific, DuPont told nylon business and and so forth. And and,

uh, well, I won't go through them all, But but okay, the way we've done that is is by creating what I now call virtuous cycles of mutual benefit, and that may be high fluting expression, but it's it accurately describes what we did. So the starting point is you understand what capabilities you have that others will value, that you can use to create value for others, and and and then to find the the opportunities for those capabilities that will create the most value for others and particularly others, who will reward you for that value. So so our idea that the ideal for business is to maximize value, create for others and your profit would come solely as compensation for that value you're creating for others and then to continually improve and ah, and add to those capabilities which and then looked for based on that, what what other opportunities are there? Ah,

for which you can create superior value. So so they're two components than one is to become preferred partner for all your key constituencies that starts with customers, but it's includes employees, suppliers, communities and society as a whole. And then the second piece is to continually transform yourself like our philosophy is, Ah, if we in the business or you as an individual working in there, if you're the best in the world, it's not good enough. And particularly today, with the rapid improvement and technologies within a year to you're gonna be obsolete if you just rest on your laurels. So you've got to be constantly thinking on how do I improve howto I do things differently? Uh, one of the new opportunities. I mean,

if we had just stayed with the crude oil gathering and and making those tower internals, I mean, we'd be out of business now, but it's by applying that applying these principles of human flourishing and, uh, to create thes beneficial cycles focusing on how do I create ve for all my constituencies, particularly those who will reward us for the value we create for Miss Watt has enabled us to do what we've done.

41:18

And, uh is that, in essence, the definition of a good profit for which the book is titled To be Prophet that is creating value for customer society partners. Ah, Drew. And by sort of voluntary, a voluntary, mutual beneficial relationship, it seems to map, I would love for you if you can maybe two confirm or clarify that. And then could you give you give some examples of what what bad profit is what are examples of bad profit

41:55
What are examples of bad profit?

Bad profit is finding ways to cheat your customers, misrepresent what you’re doing, and rig the system, and many other ways to hurt customers and your business altogether. Koch states that good profit is to produce products and services that customers will value more than their best alternatives.



and why our job is to produce products and service? Is that our customers will value more than their best alternatives. And in doing so, to constantly reduce and become more efficient in the resource is we consume in doing that, which Okay, how does that benefit society? It frees these resource is then to satisfy other needs. So that's what good profit is. Bad profit is, is all the ways they profit. That that is anesthetic A ll toe to that approach that is trying to cheat your customers, misrepresenting what you're doing and rigging the system, getting corporate welfare protectionism of all different kinds in including protection from foreign competition but also domestic competition. Ah, and a great example of this is is occupational license, sir, Uh,

in which, Ah, which they're like 1/3 of all. I think 1/3 of all occupations today required some kind of government approval. Whether that's it depends on the state or locale. But they're hundreds of these, which are are are mainly keep people who start with nothing from being able to do anything because some of them require Ah, a couple years of going to school Ah, and ah, and paying ah, substantial feed that they can't afford. So it just it keeps poor people poor, rather than enabling them to realize their potential by developing their skills that other people will value. And this is things like hair braiding, hair dressing, manicurist,

yoga instructors, funeral partners, interior decorators. You name not thinks that will blow people up or anything that you think as the government needs to approve that. So it's Ah, it's all just cronyism, protectionism and corporate welfare.

44:21

You've, uh you know, one thing that I've found engaging about good profit in a lot of your writing is that your very first specific and also very transparent in a lot of respects, the there a number of other things that fall in the book and please feel free to correct if I'm getting this run under the category of bad profit got mandates, subsidies, tax incentives, import terrorist restrictions on exports, anticompetitive regulations, bailouts. And I'm looking at a workbook. This is this is ah, this is a way to engage with the material a good profit workbook for people who want to really understand the material. And one of the questions that they pose is Duke Oh, companies participate in bad profit. If so, why? How would you answer that?

45:14
How do you handle comments that claim your company gives bad profit?

You can’t avoid it. Charles asks the question, what is a company doing if their goal is to provide bad profit? It does not benefit society or the company to have bad profit. Businesses are supposed to improve people’s lives, not make them worse.



Well, you can't avoid it. I mean, if if we free double, take, Ah, steel tariffs. We oppose those, even though we have, ah, 40% interest in the newest steel mill in the country. In Arkansas. Medic Forbes just wrote an article about it in the last issue. Big River steal. And, ah, so it makes us money,

but but we oppose it. I mean, we play by the rules, we're gonna play by the rules, were gonna bay other laws, and, uh, but we're gonna pose all the ones that ah, that undermined the the ideal role for business in society. And why? What are you just running a charity? No, but wait. We take the long term view until to rig the system to make a quick buck and makes people's lives worse. Then what are you doing? Why does society need business that's making people's lives worse?

Uh, if if if business and in individuals are getting wealthy, the only way society's gonna permit that long term is if they're contributing to helping people improve their lives, not making it worse. So this is a problem with business today we have business people have a bad wealthy people have a bad reputation because there's so much of this cronyism and protectionism going on, like we oppose the the border adjustment tax like 20% tax on all imports, even though we determined it in the most elected case, it would make us over $1,000,000,000 a year by increasing the cost of living to Wal Mart and Costco buyers. And and we helped get that defeated because, as a zay told the leaders and Republican, I said, How does this make sense? Are you gonna promote this? We're for this because it's gonna make Coke industries a lot of money and probably big exporters like Boeing and and General Electric. We'll probably never paid tax again, and it would increase the cost of living for the great majority of people in this country,

particularly those who are least well off. And of course, they had. They had their reasons, but it didn't make sense, and and so we and others got it defeated. But the sad thing is, you could to tell what the great majority of companies what whether they were for or against that, depending on whether they thought it would make them or cost them money short term. So that's all the short termism that's going on, we think is, is hurting people and undermining businesses? Role in society?

48:38

What's what. Types of market distortions Do you wish didn't exist? Or are you trying to prevent

48:48

all

48:49

of them? All of them. Could you give? Are there Are there any particular examples that stand out for you as sort of the the heavier domino of sorts or something that has particularly negative cascading effects?

49:6

Well, I mean, the biggest are all these forms of corporate welfare, which I mentioned occupational license, sir. Ah, the restrictions on innovation and competition and ah, opportunities for those who start with nothing as a ZAY said on occupational license, sir. So that's what goes with those and then and then all the protectionist provisions, these trade restrictions. This are crazy immigration system. All of these are things we're working hard on to change.

49:43

It strikes me, and I'm a simpleton and pretty uninformed when it comes to these things. But that being a privately held company allows you of flexibility that some people in leadership positions and publicly held companies publicly traded companies would feel they don't have, which is a benefit that that you have, For instance, if if you have, because I would imagine there are differing opinions at points. If you have an opportunity or a SE legislative a regulatory change that could be short term, beneficial, ah, profitable, that is, and that they conflict with with you, Charles, your direction that you would like to see things head on a broader scale for human flourishing. How do you have that conversation among top brass in the sense that revenue profit? These are things that are easily quantifiable, whereas something like human flourishing may be harder to quantify. How do you guys have a discussion when there's there's disagreement?

50:55

We had those those kind of disagreements decades ago, but I can't think of any of those now. We may have ah, debate on on whether it this will help or hurt long term, but it is always will. Will this enabled to fulfill our obligation as a business that is to profit by helping others improve their lives. I mean, what we do is we teach these principles. We have dozens of people who work full time on teaching these and consulting on on these principles of principles of human flourishing and and how to apply MME. That will make us successful long term. Uh, and that's how we'd we try to reward our people. Well, first of all, we hire first on on values on our guiding principles. We have now eight guiding principles, and,

uh and so we hire on those we we reward on those we promote on those. And if somebody isn't living by him, we encourage them to go somewhere else because it's not a fit for them here. And so So we have harmony. That doesn't mean we don't have challenges and disagreements. But it's on how to do how to realize this, this vision and these goals, rather than whether we want a sacrifice, our principles for, ah, for immediate game. So I would say what guides us first are are these basic principles of human progress, human flourishing. Second is building capabilities that will enable us to great value for others and then, due to continually transform ourselves too, do a better and better job of that and to and focus on using our capabilities to to contribute.

So that's what's made a successful. So I mean, I mean, you look at our track record. Not that we've been perfect and we haven't had problems and haven't violated these principles because we're all we're all flawed. We all make mistakes and get off track, which we've we've done many times and do it continually, potentially. When is we do have 130,000 employees,

53:27

that's incredible.

53:28

I mean, it blows me away constantly. The power of these ideas. I feel so well, You're so smart. I am not, believe me, everywhere I've ever worked or whatever, there are a lot of people who are smarter than I am. It's just I was dedicated to understanding and living by these principles, and that's what made the difference in my life that transformed my life.

53:51

Well, let's I'd like to talk about your the principles in your and your intellectual formation, and I said a book note to come back to this and maybe maybe thes air the wrong trees to be barking up. But could you speak to, uh, I have a couple of thinkers? I've written down authors and thinkers. We've already talked about a few of them. Michael Pollan, e we've talked. We've spoken about your father's. Certainly I have F A. Harper, author of Why Wages Rise. Ludwig von Mises, author of Human Action. Among other things,

of course. And, uh, W. Edwards, Deming, And wondering what what are the main principles or lessons that you've taken away from any any any of those people. We don't have to necessarily cover all of them. But if any come to mind that we haven't given any air time to if there any principles or learnings that you, uh you think our core to what you took away from any of the names that I mentioned,

54:53
What are principles or lessons that have inspired Koch?

Koch states that there is a big difference between personal knowledge and conceptual knowledge. Another principle is division of labor by comparative advantage. Creative destruction is when you don’t want to be a pretentious and protective in your own shop. Self-actualization is another concept, which is a state where the selfish and unselfish merge.



right? Well, we've talked about proper and planning, and there was So now they're besides Republic of Science that I got from Bologna. It's personal knowledge that that in in that he's written a book but name personal knowledge, which says there's a huge difference between conceptual knowledge and personal knowledge. Any uses example of a concert violinist will get first day a concert. Somebody wants to be a concert violinist first. How do I hold the the violin? Ah, how do I move my hands? How do I make notes? And and so they focus on the parts, and after these parts become natural like the violin and becomes an extension of your hands, you don't have to think about how to use your hands. That's what he calls personal knowledge, as opposed to conceptual knowledge.

And then after you do that, enough where the parts become second nature, then you can focus on the whole, the whole is making beautiful music. And so that's what I mean. Just that changed our whole approach to teaching our management philosophy because we were. And, uh, it's what I call I. I think of a flaw in our education system. It's not really education at schooling. Teach the test and what we found in our programs that works and helps helps people realize their potential ist elect a CZ to consider real education to be three dimensional rather than one dimensional. And those three dimensions are discover your gifts, your aptitudes and what will turn you on. And then the 2nd 1 is, do whatever you can don't fully developed,

though, So first you learned to be, then you learn to learn, and then you learn to apply it. Okay, How do I apply these? That will make a contribution in society that will be that will help me better myself and and and in the process, better. Others help others better their lives. And that's three dimensional education. And we find that in the inner programs we've started and support, that's what we're looking for because that's that's what moves his tort of society of mutual benefit, where people have the opportunity to realize their potential. Okay, that so that's personal knowledge is another one. Another one is the Division of Labor by Comparative Advantage,

which also fits Howard gardeners. Ah, thesis on multiple intelligence that is basically that people aren't smarter, are dumb. Overall, I'm except in the in real extremes. But most of us are gifted in some ways and and and not too swift and others, and that I'm exhibit A in that. And so I mean, that was that division of Labor. By comparing advantage, I was first developed by Ricardo on Nations Nations auto focus on what they're good at it and trade with others, and then I that optimizes everything learning Ah, best use of resource is, and so on. Another concept is is creative destruction Sham Painter's concept that is,

You don't want to be protectionist in your own shop. That is, you're doing something a certain way, like Kodak and in making film rather than do it digitally. They had the technology, but they tried to protect their existing product line and so end up going broke. So you've got to Do you want to drive creative destruction internally that is constantly replaced. What you're doing with a better way, a better product, a better technology. Another one is self actualization. When which I described, and then another one from also from Maslow and other positive psychologist is what he called synergy is a system and, ah, state of mind where what selfish and unselfish merge, I mean.

And that's what he meant by becoming contribution motivated. Ah, that that focusing on helping others in a way that's also rewarding to you than the whole a dichotomy between selfish and unselfish disappears. Now that's an idealized case that will never be perfectly true. But if we could have a society in an organization where that generally true, then you're gonna be much better off, and that's what we try to apply here that is tohave. What's in the long term interest of the company in the interests of the individual employees. Uh, and as I say, I learned that from from Maslow, uh, and then, uh, and then free speech and open inquiry is another one. The role of property rights and decision rights,

which is a key one of the five dimensions of market based management, then basic values such as integrity, humility, respect and desire to contribute. Then another from this is from von Mises human action model. People only act if the action will satisfy three requirements. The first is is you become dissatisfied with your current state. You have a vision of a better state, and you have a path to get there. So this is very important for how companies are society's organize themselves. If if people believe they're dissatisfied with current state, they see what's wrong with it. But they have no vision of of a better state. And because you don't have free speech, you don't have communication. They don't they haven't seen a better alternative or you're so bureaucratic and and protectionist.

You don't allow anybody to improve or like in a company. The approval process is so painful and difficult that you just give up somebody we work within one of the major or cos years ago was always complaining about the bureaucracy there, and he couldn't do anything wrong. And I find I said, Well, so what do you do about it? And he says, Well, after a while, you just paint your ass white and run with the antelope

62:11

And so

62:12

that's, uh, that's what what happened? So these these principles may seem obvious, but if they're so obvious, why are so many countries, organizations and people ignoring him anyway?

62:29

Why why do you? That's actually a fantastic question. Why do you think they are ignoring them? Because they're not obvious or because there are other other factors at play in. And then I want a Segway into you after after you have a chance to just comment on that ah, to stand together and we will provide some background to that and then get into it. But why do you Why do you think that these these principles aren't are neglected? Is is it because they're not obvious because they're difficult for for other reasons?

62:59

I think it doesn't fit their priorities, and I think a good part of it is their short term oriented rather than long term or in I think that's critical. And and, as I say, that's been the demise of so many companies. That's why you see, cos the top companies in the country 50 or 100 years ago are all gone. Not all but the great majority are gone or else very declined markedly in their position.

63:31

Yeah, it's Ah, it's incredible. How many blind spots and maybe not incredible is totally sensible how many blind spots are created by ignoring some of these factors? A friend of mine, one of the co founders of AH site and a service called Reddit has been on the podcast, described a meeting with an executive it at Yahoo At one point who, dismissing Lee, looked at their numbers and said, You're a rounding error and of course, that didn't uh, didn't work out so well. For Yahoo's with creative destruction is really important. Let

64:9

me mention one other principle that's been critical in my life that I touched on it and that ISS that as I said, I I have I just have a narrow range of abilities developing those and focusing on that and then partnering with with people who could complement that and and and what I've learned is toe have a good partnership that would do that requires three thanks. It requires shared vision, shared values and having complementary capabilities. And where I've had that partners who fit those three or we fit those three together. Uh, then I've been very successful where I haven't. I've generally failed, and my best partnership has been with my wife, who we've been together 51 years and and we share vision and values, and I'm good at the few things she is, and and she's good at about everything I'm not good at. So we make each other better. And so that's been one of another one of my great blessings, an advantage in in my life.

65:32

Yeah, I wanted Thio toe ask you. Perhaps later we'll come back to this, but what is factors that have made it work? The the the relationship with your wife because we've spoken about that before and I do want to come back to that if we have the time to do so, but I also want to make sure that we have a chance to cover Ah and give you time to To stand together is a way of getting there because I think there are a lot of there, a lot of passionate supporters, and there are a lot of passionate detractors and at least in my own very small microcosm of this. My experience is that the most intense supporters and detractors tend to miss things. So I want you to correct me if I get anything wrong that I'm going to say is as means of context, but just leading up to stand together, I want to paraphrase of former Congressman Joe Scarborough. This is from that source. Basically, the gist of it is, although your critics are usually unaware. The Coke brothers have supported more than just what are generally considered conservative causes.

They pose George W. Bush on many issues, are pro choice, support same sex marriage and worked closely with the Obama White House for the Obama administration's criminal justice reform initiatives that aligned with their own. Um, I've to two things that I wanted to mention on criminal justice, reform and foreign policy and then feel free to, and I would love you to correct anything that I get wrong, obviously. But what's what's impressed me about a number of the things that you've done and probably many, many things that you've done is that you've allied with former combatants is maybe too strong a word, but people with whom you've had tension or people with whom you still have many disagreements over different things at the first criminal justice reform. Despite what I believe was pretty adversarial relationship with activists and CNN commentator Van Jones, you ended up collaborating to work together on Colonel Justice from similarly on foreign policy, despite disagreements with George Soros on many policy issues. Beauty.

You found the head common ground when it came to foreign policy, so you were able to partner with Georges Open Society Foundation. The question I want to ask you before we get to stand together, which we're going to just a few minutes is how is your approach to policy? A. Did I get anything wrong? I'm cheating. It's a two part question. And then be how's your approach to policy coalitions changed over time?

68:12

No, that that's a great question. Well, I've I've been at this social change and and philanthropic approach for 55 years now. And it was basically I'd learned these principles that transformed my life and enabled me to Ah, really realized my potential and accomplished more than I ever dreamed possible. And so I I had the desire to help his many others. Ah, have the same kind of benefits in their own way to fit their own situation and gifts. And, uh so I started a CZ, I say, And I started in on this in in 1963. And, uh, and for the first, uh,

let's say, uh, 40 years of that I wasn't involved in politics at all. I wanted to stay away from that and and work with helping people realize their potential and supporting mainly students And then as the as the students talk to their professors about what they were learning working with with our organization, that the professor's would come and they want us to help them set up a program to do that so it just spread. And then to get things done, we, uh, we decided we needed to to build ah or organizations that would Well, first of all, that would take these ideas and develop. What are the policy implications of these? Until I I have found the Cato Institute and a number of other institutes to do that. And then we decided we needed to help mobilize people more, More people were interested in these ideas. How do we How do we get policy changes while we need to mobilize people who were interested in him and help them have a voice?

And so we started doing that, and then ah decided we needed to get politicians, more politicians who would be interested in ideas that would really help the country long term rather than just help them get a re elected. And, ah, so we started doing that. And the Republicans seem, although far from ideal, seem more sympathetic to these. So we started supporting Republicans, and, ah, and then then we learned that didn't get us anywhere. So we have changed nowhere. Just we will go back and support anybody who will advance cease policies that will help bring about the society of mutual benefit where people have the opportunity to realize their potential. And so if you put it in terms of my philosophy on partnerships to share vision and values and have complementary capabilities.

What I was doing, I was applying to broad a requirement for shared vision. That is okay, Well, it's on Lee. Support those and work with those who we share broadly a vision of what kind of society we want. And so that was really limiting the number of people we could work with. And so, in the last few years, we've changed that. All we need is share vision on a specific issue, and you we may disagree on everything else. But if if you can really help us advance this policy that will help people improve their lives, we will. We'll work together. And so that towel Ben Jones has gone from being somebody who was trying to shut us down to working with us and bragging on us and and enabled us to work with Soros and everybody on specific issues.

Other, even though we have major disagreements with him and that C and then that fits where we're finding is doing that it reduces the the hostility and the conflicts. If rather than you meet somebody, rather than try to find some you disagree well on and fight him and attack him search for something you can work together on that will contribute that will help people improve their lives and doing that. Now we have allies.

73:3

I never will believe

73:4

we can. And now, as this has changed, changing our brand and our help people look at us now. Many, many more people are open to working with us.

73:17

And, uh, it seems like a lot of what you've done. Ah, not just in the last years, but certainly even before that has led up to ah this initiative stand together. Could you tell? That's a little bit about that focus and why it's a focus. What it

73:37

is, right? We've we started the organization that was originally stand together now stand together foundation to build on the work we were doing in troubled communities and and our approach there is what we call bottom up as opposed to top down. And it starts with the the recognition, as I've been saying that everybody has a capability to realise their potential if they have the right mindset and support. So how do we How do we help people get the right mindset and support so they can have a better make a better life for themselves. And it's as I say it's with a bottom up approach rather than a top down approach. And what I mean by that is, rather than have somebody come in and say, Well, on average or we can improve the statistics on this, here's what we're gonna do and we want everybody toe to do this. Same thing we find that hasn't were. But what works is what defined what we call social entrepreneurs who are closest to the problem. And this would be largely people who who've had a a problem, have gotten in trouble, have been held back and have learned to overcome it.

And now we're dedicating their lives to helping others do the same. So they have different capabilities than we do. We advertise if you're interested in our help, so you can improve your efficiency. Bye bye. Better management practices and ah want to scale and celebrate it so it can spread so more more people can benefit from your proven approach. Then we'd love to do that, and so we've had several 1000 applications. We now have 150. These partnerships in these troubled communities on on everything from addiction to, uh to criminal justice to homelessness, from lack of economic opportunity from two young people who, ah, who have only seen negative contribution, negative motivation, uh, rather than contribution motivation and to help them change their mind set that they can succeed in contribute

76:21

and it strikes me. And I'd love for you to correct me if this this isn't accurate, but it seems like you're taking a lot of your experiences from, say, criminal justice reform were you've focused, among other places on really analyzing recidivism and reducing recidivism. Looking at how to change things to the employment opportunities for released convicts aren't as constrained as they are Currently. We're expanding those options, and I've actually spent time in some max security prisons teaching entrepreneurship with the number of organizations that you're taking some of those learnings and then applying it more broadly to enable a community of social entrepreneurs. The said that some of the numbers that I have in front of me are, ah, in terms of the odd printers and groups who are focused on. And it looks like there are 554 key institutions education, business, communities, government policies more than 1000 professors at more than 350 universities, tens of thousands of 12 teachers.

And this will lead up to a question more than 700 of the top business and philanthropic leaders that combined employed more than more than two million people. Ah, 140 plus community groups tackling poverty and addiction. Uh, I'm very interested in addiction. Uh, that's That's a longer story for another time. But, ah, millions of grassroots activists in all 50 states said This is is clearly bottom up like you mentioned. I think a lot of people, when they when they hear Charles Coke, think market based solutions. Our market based solutions part of this. We're looking for market based solutions, or is it broader than that?

78:14

Well, it's It's market based in that in that it's, uh, it's, uh, looking at what really works and looking at individuals rather than I mean market is a little bit of, ah, of a misnomer, but it's applying the same philosophy that that made Coke industries successful and enables us to to help our our employees become contribution and motivated. And by the way you suggested this early in our employees who, after years of learning they could succeed by constantly improving their ability to create value for others. They tell me, and and after they retire or leave right me and say they, uh they're so appreciative that they learn this because it improved their family life there communities their friendships, everything to look at it that way rather than the way they were looking at it before. But so it's It draws yeah, on our experience in criminal justice reform.

But but more broadly, our experience in In in what made Coke industries successful, what have made societies throughout history success which ones have people have flourished in which ones of people have been in misery, hated and what we learned in in developing youth entrepreneurs. And that's an organization my my wife and I started 28 years ago here in Wichita is we saw met so many kids that obviously had ability that they did played sports with, but we're just getting terrible advice. They were came from broken homes and tough neighborhoods where people were trying to hurt each other. So wow, this is what a waste. So we need to start something particularly in this in these inner city high schools that would teach them what we call principal launch partnership. That is, this Thio have create this three dimensional education where they learn they could change their mind set. Look, in spite of you thinking things, they're hopeless from where you came from. They're not.

While you gotta do is change your mind set and then we'll provide the support to help you become successful. So in youth entrepreneurs, they theory that one of the skills and values they need to be successful discovered their own and then bear a business plan. And the best business plans would get some venture capital to help you start your own business. And then, well, if you're successful, you can Will will find a local entrepreneur to help mentor you maybe provide internships for you in a few. Continue to do well. You want to go to trade, school or college. Whatever fits you, we'll help you do that. And it is amazing. The how many of these young people's lives have been transformed by this and in a running successful businesses Out of this, everything from car dealerships to ah,

the one developed a protein bar that sold on Amazon clothing lines, chartering buses, Ah, fitness clubs, hair braiding, making jewelry, tutoring, others. I mean, it is incredible. It just it blows you away when used in these here, these kids describe how they've how this has transformed their lives. So that's what motivates me not just the theory, but seeing what it really does to change people's lives.

82:18

And with with something. Charles, when you're when you're operating at such a high level in many respects Ah, and you have so many different places, you could allocate capital and effort. Ah, what what does success look like for standing of their foundations? Say, a year from now, three years from now, whenever you would assess it to determine whether to put Maur into that arm or into something else, which could also be philanthropic, maybe just a new adoration or a new foundation. How do you How do you think about what the success metrics are, or if not metrics? What? How you determine if it is working or not?

83:9

Well, I mean, what what we're looking for, where the social entrepreneurs is, which one can really we help scale and then celebrate so it could capture the national imagination and change the way people think about thes like criminal justice reform. I mean, there it was, what was current and choice was. Okay, somebody did some illegal block him up, throw the key away and and prisoners for punishment, Uh, rather than, uh, to help them rebuild and get a second chance. Now, Now it's changing because we,

we and others were. Van Jones and others have built these broad based coalitions that this first step act passed by 87 votes in the Senate. I mean, that's incredible in this day and age to have this kind of bipartisan support, and there's impetus to to take it to the next level. But it's it's changing life as people realize that 90 some percent of people go to prison, get out. And do you want prisons to be incubators for more hardened criminals than they were when they went in? Or you want them to have a second chance and come out with a skill and values that will enable them to contribute and become contributors rather than detriments to well being and safety. And I mean, for example, one of the groups we support. Hudson Link, uh, puts on college accredited courses in prison that that are three dimensional as I mentioned, and and if the graduates of their program has a recidivism rate purse percent that go back to president three years after they get out is 2% from graduates of their program is supposed to nearly 70% nationally and 40 some percent in in New York, where they they have mainly operated. And we've helped him where they're up to five prisons now and we think it could be greatly expanded.

85:37

You've also done you've supported some, uh, some really good work being done in addiction treatment with the Phoenix, and I'll link to all of this in the show. Notes to people can. I can take a look at it, but it's it's it's really important work, these air important topics and part of the reason Charles that I wanted to have you on, uh, after you know, months of just organizing t make it happen is that in a very polarized times, where you have could be any number of people, the president or someone else is the second coming on one channel, you flip to the next channel, and he or she is the anti Christ that it is possible to attack the issues or attack the problems and not the people. And while I'm sure that and I would hope that if we were to spend more time together, you and I disagree on a lot of things that there are things we could absolutely agree upon and that provides this space,

too. Have a conversation and discuss the possibility of collaboration. Four things that anyone can agree upon. Ah, and this is I'm really pleased to give some of the specific examples because it's it's paralyzing when everything becomes ad hominem and so so that that's really more of a comment. That a question. But I just wanted to thank you for making this space for us, too, to talk about that. Ah, and I do have some more questions. But the the question about about the standing of the foundation are Are you still accepting applications by social entrepreneurs? Uh, or has that window already closed?

87:44

Oh, no. We haven't actually helped change the director of the country more toward this ideal. So we're just getting started. We were a world upto over 150 now of the social entrepreneurs were partnering with and we think we're as we're developing capability, we can add, Ah is many a 70 year. So we're just ah, we like just scratching the service and and then developing the capability to help them scale and then two more fully celebrate it. To get this out in the mainstream self people see what's working and how how this approach can transform lives. What, what these individuals I have learned from their own experiences and her dedicated to ply. And those are my heroes in society of people who have suffered, ah, injustice, tremendous injustice and rather than come out better or giving up to dedicate their lives so that others don't have to suffer similar injustices, I mean those air. That's if we can encourage Maur Maureen. More people toe have that frame of mind and that kind of dedication. That's the only thing I think that will get us on a better trajectory. In this country,

89:18

people can learn more. Of course, I'll mention this at the end of the show as well. But stand together dot or GE is a great girl and a simple girl for people to remember. For those who want to learn more, I would like to, ah, shift gears in a way, but it's it's it's connecting a handful of things and also ah, giving us a non opportunity to talk about that sort of ad hominem versus issue based debates and also accurate perceptions versus misperceptions. So I have I have some questions for my audience, and there were a lot of questions, and I've deliberately chosen Ah phew that I think, Ah, tackle, head on or literally tackle. But give sort of an emotional voice to ah ah,

a number of things that people, some people, rightly or wrongly, I want to ask. So the 1st 1 I'd like to throw out and this is from Matthew B. And you could tackle this anyway it like. But the gist of it is, does he ever have pangs of guilt about the millions of Americans made poorer, sicker or dead by unfettered capitalism? Does he actually prefer a world where the majority struggle in misery? So if you can hoard billions, wire higher profit margins worth polluting the environment, and how does he square that with the animals and people sickened and killed by deregulated industrial pollution. So that's it up very strongly worded, of course, but I want to sort of give air timeto Ah ah,

a few These questions And there are a number of questions about, ah, environmental issues and climate change. So I love you, too. To answer that in any way that you'd that you'd like. I mean, I think we've talked about you don't need to answer. Do you prefer a world where the majority struggling misery? So if you can hold billions, I think that's pretty self evident that your answer is you do not prefer that. But, uh, how would you like to comment or respond to that? Uh, no, we we would

91:33

agree. I mean, I'm not I don't like the term capitalism that that assumes that what we're after is a system or certain people have a lot of capital, and that's not what we're about. What we're after is a system where everybody has the opportunity to realize their potential, including those who start with nothing, and and business should only profit to the extent there helping other people improve their lives, and that so Ah, and and polluting and making people sick. Killing people is they shouldn't profit. They should bear a cost for that. And those air my worst. You talk to you, ask about failures. Our biggest failures in my mind and what we worked the hardest on are our safety problems. When there's an accident and people die, I mean,

that's monsters. So that's that's job job. One is keeping people safe. And job, too, is protecting the environment. And, ah, I I think the last five years the E. P. A. Has ranked us either number one or number two of US companies in pollution reduction initiatives. That is, that is our second top priority after keeping people safe. So, I mean,

we agree to the extent. But what you find is that the the the countries that do the worst and those are those that are top down. If your bottom up and you're liking it, individuals and how to improve their lives. It changes your approach rather than some top down statistical approach, our control. And so that's meant to me. The basic difference is, do we want a system that empowers people or one that controls them? and you look it systems through history that have tried to to advance humanity by controlling everybody and making them follow some theory of of the people in charge, as opposed to having incentives and rules that will cause people to want to believe that the way to succeed is by helping others improve their lives. I mean the results. Throughout history, there is no comparison between the two and in their benefit to human flourishing them. If you want to look at the biggest polluters, look at East Germany.

When when that became combined with West Germany, they had all these inefficient factories that were massive polluters and then and then like it. I don't know if you've seen the documentary Tre Noble on the that shows. When things become politicized, they become corrupted. And that's that's why all those years I got had nothing to do with politics, and now we're, Ah, we have something to do with it. But but based on on not partisan, but who's going to help improve the policy so so we can move toward this system of mutual

95:9

benefits? So I'm gonna ask just a few more of these. I'm gonna alternate between the the highly politically charged and not so I'll go to one that I think is not. But I'd be curious to hear your answer. It was uploaded quite a bit. This is from John Jay, asked Charles. While we can't return to the tax structure of last century, higher taxes equals higher GDP. We average twice the GDP of today. Trickle down never works. Government has created or supported most businesses in this country. Computers, GPS, Internet roads, electricity, et cetera. What are your

95:40

thoughts, Charles? I mean, I my reading of history is is somewhat different. My,

95:46
What is Charles and his company working on to eliminate?

They are working on eliminating the aspects of all these injustices that are haunting the country. Charles says that people who are liberated and empowered succeed. He states that the world used to be utilitarian and people weren’t allowed to think differently, which stifled the progress. America was once the most successful country in the world, but some people had limited or partial rights.



I don't I don't have a dog in the fight because I'm not. I don't know what Let's

95:50
What is Charles and his company working on to eliminate?

They are working on eliminating the aspects of all these injustices that are haunting the country. Charles says that people who are liberated and empowered succeed. He states that the world used to be utilitarian and people weren’t allowed to think differently, which stifled the progress. America was once the most successful country in the world, but some people had limited or partial rights.



get it on this. People are liberated and empowered. Ah, they succeed. If you look at the history of humanity for all the millennia, up until starting in the 18th century, there was barely ever any improvement. And because these were top down societies where those in charge well, they were, they were beyond authoritarian. They were totalitarian, and people weren't allowed to think differently. If you if you violated the religious dogma tortured until you either died or or changed your opinion or were threatened with that. And so that stifled progress. And then ah, starting, really.

And with Holland, when they got out from under Spanish rule, they started liberating. So religious and other dissidents start coming to Holland and they had free trade open. I mean, they had plenty of problems. They still had slavery, which was Ah ah, endemic everywhere. But they had much more than others. So they became the most prosperous country in the world. And then it it, uh, it followed in in England and then spread to the United States. These ideas and was to me best embodied in the Declaration of Independence. That is a system of equal rights,

uh, and and everybody having the right to the pursuit of happiness, which to me is a different way of saying the opportunity to realize their potential and to toe learn, contribute and succeed. And to the extent that was followed in this country made us the U. S. Most successful country in the history of the world. Unfortunately, it was not applied across the board. For example, African Americans and Native Americans had no right. Uh, obviously, with slavery for African Americans and practicing genocide against Native Americans. Women only had partial rights, not just and I'm not talking about just the right to vote.

But they weren't allowed to go to college in the early days. They weren't when they got married, whatever property they had their husbands controlled. So the relationship between husband and wife was almost like a master servant relationship. And it took 80 years to remove the great majority of that. Then I am very various immigrants, such particularly Chinese on the and the and the Irish had only partial rights, and certain religious groups didn't. So all these all those were violations of the principals in the Declaration of Independence and Mai. What we're working on, what stand together is working on is to eliminate the the aspects of all those injustices that continue to haunt us. Haunt the country today.

99:19

Thank you. Ah, ah! Lot of I'm gonna jump back to the more charged. A lot of these questions were about climate change, and I don't I don't know the answer. This I'm just gonna ask. Since this sort of thematically has come up a couple times from Imani, Uh, I'm not gonna get last name this one is from Iman. Do you really fund propaganda to confuse people about global warming?

99:46

Well, I certainly hope not. Believe me, I am totally dedicated to the scientific method and in good science. And what we're doing is is trying to get various groups, not people on the extremes who say they're there is no man made contribution to to warming or others who say, within a few years, the world's going to and so leaving those people out, people who are somewhat open minded and willing to listen to the other side to get him together. And we've had several of those sessions so we can find something. I mean, there's there's enough concern about a man made contribution to warming that various policies are have been developed and are being developed. And so what we want him to do is is to find policies that will actually work, actually do something about reducing CEO too Emissions Man made co two emissions and at the same time not make people's lives worse of many of these policies. I haven't done anything reduced CEO, too, but they make people's lives worse,

particularly the poorest and, uh, and the biggest contribution or the biggest reduction has been in the U. S. In recent years because of fracking of natural gas substituting for Cole. And so the U. S is now figures I have seen is now responsible for 15% of seal, too. Ah, man made sail to generation and a countries in Asia bitterly, China and India share is growing. And the problem with many of our policies is they they aren't doing much for it and they make us less competitive. Vs China in China has double the co two emissions per unit of GDP that the U. S does. And so, as we push more over there,

push more production over there were just increasing and uncertain of the, uh of the production there, for example, in fertilizers and chemicals that are based on coal gas rather than natural gas. It's 4 to 5 times admission for unit of production. So these air all dilemma it's that we try to do something here, but many of them make it worse. So how do we what we think we need your innovations that are good cause China to adopt him and have them reduce emissions rather than us try to do it in ways that causes them to increase emissions. So that's that's what we're working on. And because it's not, it's just not once again, it's just not a simple top down matter. You've got to provide incentives for people to to do it, and people have to believe it will make their lives better rather than worse and and accomplish nothing, which is what a lot of the policies have done.

103:15

It's a great point about China and offshoring. That's I certainly hadn't thought through Ah as, uh, as granule early is that I mean, it's after, if you're pushing off production into, ah, jurisdiction or just a could be jurisdiction, could be regulatory could be cultural. I have no idea where the the emissions air pollution per unit of production is 45 times higher. You haven't solved the problem by changing the location, uh,

103:50

and you and you see that in the world all these policies and all this and these initiatives and so two emissions air still going up around the world. So we need a different approach. I mean, to keep doing the same thing over and over. It is a form of insanity. So that's what we're trying to do is get people focused on something that will make a difference and not make people's lives worse.

104:20

It's Charles. This is a question for me just building on that, uh, are related to it. What? What do you think are the most legitimate existential threats to mankind? If you go to Silicon Valley, Artificial intelligence is a very popular vote. Ah, you certainly have sort of climate change or global warming, depending on if you're using, uh, who's wording you're using? Ah, which is the vote for a lot of folks in your mind. What are, uh, if any the the theme or legitimate existential threats to human kind?

104:55

I think the biggest threats, as they were for millennia, up until the 18th century, our top down, the tyranny of experts, the fatal conceit that a few smart people can go tell everybody how to live their lives and what we're finding. We're working with these social lunch preneurs, the ones who have good solutions, micro solutions, not macro solutions, because they've lived through problems and they worked their way out of it and they know what works and approving it every day that that's what we need, a society as as high as found in history that enables people to pursue their own interests in a way that is mutually beneficial and leads to peace and harmony and these top down solutions. All they do is create partisanship and and, ah, and conflict. And that's what we see today in this country because it's politics is when lose game. Working together to your mutual benefit is when win, as opposed to win lose. So we need to maximize the amount that we allow people to do to advance their interests in a way that benefits others.

106:32

Are there any particular problems that worry you or things on the horizon that were you, that you think everyone should be paying more attention to any specifics that come

106:47
What are some worries that we need to pay attention to?

Charles thinks that trade, immigration, and foreign policies should be paid closer attention to. He states that if goods don’t cross the borders, soldiers will.



to mind? Yeah, I think I think, uh, policies on trade and and immigration is it's what has attributed to Basquiat. If goods don't cross border soldiers well and have and then our foreign policy of forever wars, that's why we with with, uh with so Rose's foundation, we create this. The Quincy Institute, named after John Quincy Adams, who said following the founders we got. We go not abroad in search of monsters to destroy where the friends of all nations and allies of not And so we're in dozens of wars. We have a over 800 bases around the world were involved in everything tryingto control the world and it doesn't work. This is totally this is the most top down of all.

107:48

Yeah, didn't didn't work very well for the room and empire, Not to say their equivalent, but quick review of history. It seems to indicate that that that doesn't tend to pan out

107:59

so well. And and then you add nuclear weapons to the mix. And the more we we bully or like like we did in Libya. Ah, Gaddafi promised and got rid of his nuclear ambitions. And so we destroyed him. And so that creates a little bit of perverse incentive for Iran and North Korea and CEFTA to believe our promises that will leave him alone if if they'll drop their nuclear weapons. So, I mean, it's stuff is so backwards.

108:36

What would thesis This is a question from I think it's joke amore hokum Donna to pronounce it. Uh and I I know we, uh we probably have a handful of minutes left if you're open to just going for another, maybe 5 to 10 minutes. Sure. And his question is, what would you be willing to risk your whole fortune for? And and I'll just add my own parameter to that, which is it's not necessarily betting the farm with the company, but your personal fortune. Is there anything that you would risk Ah, lot of or your entire

109:5
Is there anything you would risk your personal fortune on?

Charles says that he’s investing in all of the liquidity he has in Stand Together.



fortune for? Well, I'm investing all the liquidity I have in and stand together, so I mean, I the economists, have a concept called demonstrated preference that pay attention not to what people say, but what they do. So that's what I'm doing. And then I dedicate a lot of my time to that as well. My time and right and treasure. And, uh and so that's That's what I'm I'm risking everything to, and that's that's the progress we're making. There is one of the reasons I get up in the morning charged up every day.

109:43

Yeah, it's important to have a reason to get up, which I think you're not. Toe not Thio harken all the way back to this. But your chapter on incentives in could profit actually touches on quite a lot. Ah, what would you put on a billboard? Metaphorically speaking, if you could get a quote or a message question a word, anything non commercial out to billions of people. Is there anything that you might put on that

110:15

billboard? Yeah, I put languages are our slogan that stand together greater. You're good. And that's because that's a little bizarre. So what? What are they talking about? So you would hope that then they'd follow up. What do they mean by that? And

110:33

what do you

110:34

mean? Yeah, I mean just exactly what I'm thinking. Blimey, What? We've been talking about that ISS discover your your gifts develop, um, and apply them in a way that helps others that also beneficial to you. So you'll be motivated to continue to do it.

110:54

Well, Charles II don't want Thio take up too much your time. But I do have, uh maybe a few more questions and I want to We started close to the beginning, age six. I want to say something along those lines. Digging dandelions. Let's go back even further. Who were Who were you named after. Where do you get your first name?

111:19

Well, my first and middle name was Charles Diagonal, and I was named after announced dinner. My father worked for named Charles Diagonal, and he he My father at age, I don't know, 25 or so, Or maybe it was 27. Designed a refinery for him on the island green in the UK and worked for him for a couple of years. And they became lifelong friends. And he greatly admired Charles Diagonals, entrepreneurship, his integrity in his treatment of others. So that's who I was named after.

112:3

Did Ah Charles give your father opportunities that were important early on, or was there? Ah, did that factor into the French of the developed or was it, uh, in a broader sense, what you just mentioned?

112:22

Yeah, he his son Carl Diagonal, was a classmate of my my father. My father started at rice and studying chemistry because there wasn't a field called chemical engineering. And then after during his sophomore year, they're m I t started the first chemical engineering department. And so, uh, my junior my father transferred m i t. And got his degree there in chemical engineering practice. And then he went toe work for was Texaco then and then the gasoline products company, which was a process design company. And in all this, he he developed his own ideas on on refining and, ah, in upgrading, uh,

heavy oil. And so, ah, Charles diagonal one to build this plant in the island grain. And And believe me, plants back then in the twenties were nothing like today. A whole refinery would cost maybe a couple of 1,000,000 it was primitive by today's standard. But Carl recommended his father that he hired my my father from from a cz, an employee at Gasoline Products company. And so my father quit guessing but went to work for Charles Diagonal. So he gave him that opportunity and ah, and then my father wanted to go in business for himself. Finney He came back. He came to Wichita where another classmate had an engineering company and he joined There is a partner, invested $300 became a partner. And another funny story is people wonder.

Well, how'd you get the name coke? How do you pronounce that? Well, my my my grandfather, my father's father emigrated from the Netherlands in 18 88 and, ah, and he didn't speak any English. So he came over. He was the printer's apprentice, and he went to work for various Dutch newspapers and then that learned to speak English. And then he heard about this print shop and and weekly newspaper in Quantity Texas, that he and a partner could buy for, I don't know, 2 $300. And so they bought that and ah,

and was very poor place. They mainly got paid with, uh, farmer would have chickens or eggs and deliver eggs or chicken or or weed or whatever is largely a martyr system because nobody had any money. And so that's where my father grew up. And he had this technical ability. So he said he'd he wanted to go somewhere where there was more opportunity so that he went to Rice and then m i t. And then ended up with his own business.

115:30
Is “Koch” a Dutch pronunciation?

Yes. It was later pronounced like “caw,” like a crow. Charles’ father hated that pronunciation. He was traveling for business and his last name was paged as “coke,” and he liked that better. So, that’s how it’s pronounced now.



And is is cook the Dutch pronunciation?

115:34

Oh, yeah, thanks. I got off the subject. Yes. Oh, so my grandfather pronounced

115:40

that call hard for English speakers.

115:44

Well, particularly West, Texan said, don't exactly fit their pronunciation. So so they pronounced it car like a crow. Call Fred Call. That's the way it's pronounced there. My father hated that pronunciation, and one time he was traveling on business and he was paged as Fred Coke. And he said, I like that. So that's how we got our name. So you see, it has this elegant

116:10

history that's amazing from royalties from from the bartering with chickens and having people address him as cost staining and so much that he took the last name from an announcement. That's incredible. Ah, well, Charles, I suppose, much like, uh, the Charles that we mentioned who gave your father those opportunities early on? Ah, I'm really excited to see what stand together does and what opportunities they provide. Two people who could benefit from them and, uh, hopefully, like you said, to scale solutions that can capture the imagination of the nation. That that's that's a That's a worthwhile project,

and people can learn more about that stand together dot or GE. They can learn about all of the company's side of things. At Coke i n d dot com on Twitter, people confined stand together that at stand underscore together and Coke Industries is simply at Coke Industries. Is there anything else that you would like to say or discuss?

117:30

Yeah, I think they're a number of videos that I've done and others have done on YouTube. I think you can just go on YouTube and look up Charles coke and you see mine. And so you can. But I mean, I mean particularly what I've said, and then you can You can judge me by that. I've done Ah, a number of of op EDS and Ah, and I've done one with, uh, with Bloomberg on free speech and open inquiry College campus. Michael Bloomberg done one with Tim Cook on Apple on the Dreamers on making them permanent. And and we've we've brought dreamers back to Washington and to the NASDAQ toe to show how many of them are productive bunch of work for us, as in other companies, Microsoft has joined us, and then and then I've done one.

Ah, with Michael Lomax, the president of United Negro College Fund, on ah, the work we've done ah, with that organization to help students at the's historically black colleges. Ah, to learn principal Dodge manure ship. So that's that's been another amazing story of helping these students transform their lives just like youth entrepreneurs

119:8

has been great. I will I will get a number of videos from your team. And then we will also linked to the op. EDS And, uh, for everybody listening, you'll be able to find links to everything that we spoke about. Certainly in the show notes at tim dot log forward slash podcast as always. And you gonna search by the episode or search Coke Koc ation. It'll pop right up. Uh, Charles, thank you so much for taking the time. I know you're very, very busy. Man. You seem to be as as busy as ever at 83 which I admire.

And, ah, I hope that this episode will certainly bring attention to stand together. But even more than that, some of the the principles behind it and the underlying ability if we choose to exercise it too, attacked the problems and not the people, even with the people you most disagree with on saved 90 95% 99% of all issues, you can still find common ground. Eso. So my hope is that this episode and the stories that you shared. Ah, and certainly the current initiatives also will show people that that is a path you can choose. So thank you for making the time, Charles. I really appreciated. Well,

120:32

thanks for having me, Tim. And and asking some of the tough questions. That's what that's what we need. That's the scientific method that challenge. So I enjoy it and appreciate it.

120:45

My pleasure. Thanks, Charles. Hey, guys, this is Tim again. Just a few more things before you take off Number one, This is Fi Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email for me every Friday? So that provides a little morsel of fun before the weekend and fiber Fridays. Every short email or I share the coolest things I've found or that I've been pondering over the week That could include favorite new albums that have discovered it could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric as I do. It could include favorite articles that I have read and that I've shared with my close friends, for instance, and it's very short. It's just a little tiny bite of goodness before you head off for the weekend. So if you want to receive that,

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