1.) Chris, I was amazed at the scale of the Koch family’s business empire, which I suppose doesn’t get much attention because folks here in Washington are more obsessed with their political activities.  But you talk of Charles Koch taking the Wichita-based private company from a $200 million to a $115 billion enterprise in his half-century (and counting…) as CEO, based on patient, analytical long-term investment in a broad range of industries – paper, electronics, fertilizers, natural gas, steel, water-purifying, you name it.  You don’t use the analogy, but I found myself thinking of another sage investor based in another improbable trading mecca: Omaha.  Why isn’t Charles Koch mentioned in the same breath as Warren Buffett?

I think one key reason Charles Koch doesn’t get the attention he deserves is because the company is not publicly traded. Because Berkshire Hathaway has public shareholders (at least the handful who can afford the stock!), it generates a lot of coverage by media outlets. Koch Industries, on the other hand, isn’t traded on any stock exchange, so there isn’t the same kind of story to follow. Koch doesn’t hold the kind of splashy annual meetings that Warren Buffett presides over, for example. On the contrary, Koch is a very private person. Again and again, I heard from current and former employees that Charles Koch, and by extension Koch Industries, prefers to avoid the limelight when possible. The culture is more about getting the job done rather than trying to get attention

 2.) Tell me about Charles’ dad, Fred.   Your story intriguingly mentions that he worked in the USSR “for Stalin.” I want to read that article! What’s the story there?

Yes — it’s really fascinating. Fred Koch was running an oil-refining company back in the late 1920s, but his business was getting squeezed out by the big oil producers that controlled the U.S. market at the time. When Fred Koch got an order to build 15 oil refineries in Russia, under Stalin, he took the deal so he could escape the grip of the big U.S. oil majors.  Fred clearly hated what he saw in the U.S.S.R. as he travelled the country in 1930, describing it later as a “land of hunger, misery and terror.” He travelled with a government-appointed minder named Jerome Livshitz, a “hard-core Communist” who schooled Fred on theories of Communism as they worked together. Fred noted that Livshitz was later executed as a traitor, which highlighted for him the inhumanity of Stalin’s regime. Fred came home convinced that Communism was profoundly destructive, and that Communists were committed to overthrowing the United States and its free market system. He wrote about all this in a booklet called “A Business Man Looks at Communism,” which sold for 25 cents a copy, and he worked with groups like the John Birch Society to fight Communism’s spread. Fred saw the struggle between free markets and communism as a profound moral issue, and that view can be directly traced to his time under Stalin.

 3.) Well, I can see how traveling across the USSR in the days of the Great Terror would be a cautionary tale about the future of socialism. Now, as you‎ travel across the parts of our country where Koch Industries and other conglomerates are enlarging their footprints, do you discern a cautionary tale (even if a less dire one than the one Fred Koch witnessed!) about the future of capitalism?

I feel like there are cautionary tales about our economy everywhere! It seems like the economy is just sliding sideways these days, and it has been for years. Maybe things will pop in 2014, and everyone will be surprised, but right now it just feels like we are still in the middle of a long, stagnant period. I was disheartened when I asked Kochs’ CFO Steve Feilmeier what he thinks about the future prospects of the U.S. economy. He’s a guy who is looking at this stuff all time with an eye toward making good investments, and he told me he sees future growth as being “slow and tepid.” And this is more than five years after the financial crisis!

4.) If the Koch brothers weren’t so active supporting conservative political causes, do you think we’d hear more or less about their businesses?

Truthfully, I don’t think anyone would be talking about Koch Industries if David and Charles Koch weren’t politically active. I know I heard a lot about the company as a business reporter in the Midwest, but Koch didn’t really gain much national attention until The New Yorker writer Jane Mayer detailed the political activities of David and Charles Koch in 2010. The whole narrative of the Koch Brothers as these right-wing political bogeymen seems to have been what really catapulted the name “Koch” into the national mainstream. In a way this is a shame because I think the political attention has really obscured a pretty important and fascinating business story. The company itself is worth looking at because it touches so many consumers. Or at least consumers who use gasoline, paper towels, Lycra clothing, lumber, or who eat food raised with nitrogen fertilizer. I think that accounts for a lot of us.


Excerpt, “The New Koch,” Fortune Magazine

The headquarters of Koch Industries isn’t exactly the first place you’d expect to find an information technology evangelist. It’s about 1,600 miles away from Silicon Valley and even more distant culturally and politically. Located on the northeast fringe of Wichita, where the city streets give way to open expanses of prairie grass, the campus of one of America’s largest private companies has grown over the years to support an expanding oil and gas empire.

But when Koch CFO Steve Feilmeier was asked recently about the future of the U.S. economy, he launched into a spirited monologue about the bright prospects for the nation’s high-tech industry. “It’s the little things, like these BlackBerrys that didn’t exist eight or 10 years ago,” said Feilmeier, holding up his distinctly last-century smartphone and growing animated in his modest office along executive row. “These technologies have improved the quality of our lives tremendously. That’s going to continue, very rapidly.”

In early December, Koch Industries put some serious money behind that belief when it closed on its $7.2 billion acquisition of Molex, a global electronic components manufacturer headquartered in Lisle, Ill. Molex makes parts for a wide variety of gadgets, including iPhones, and was traded on Nasdaq before the buyout. Koch sees huge potential for Molex to benefit from the so-called Internet of Things revolution that’s on the horizon. ”Think about sensors and connectors and how [they're] proliferating right now,” says Feilmeier, a stout 52-year-old who has the rah-rah intensity of a high school football coach. “As technology becomes more user-friendly and machines become wired to be more proactive — whether that be industrial robotics and automation, or you have automobiles doing more for you and telling you more and keeping you out of accidents — we think Molex is really well positioned to capture that growth.”

…While it began as an oil company, Koch today operates more like a giant private equity fund. It is essentially a massive pool of cash that is looking to invest wherever it sees the potential for long-term profits. When the company moves into a new industry, it does so strategically and patiently. Just 10 years ago, for example, Koch was a minor player in the fertilizer business. Then it made a series of quiet investments that turned it into the third-largest maker and distributor of fertilizer products in the U.S. Now Koch occupies a crucial role in the world’s food system — a position that the company is using as a beachhead for further investments in agribusiness.

Read the full piece (subscription only) here.

About the Author

Andrés Martinez
Andrés Martinez is New America's editorial director for Future Tense. He is also the editorial director of Zócalo Public Square, and professor of practice at the Cronkite School of Journalism at Arizona State University.