What an honor to be here. Thank you for

hosting us, Forbes, and welcome. This

will be put out as the All-In interview,

so I'm really excited to share this

conversation with everyone on the world

on the internet, and to get some time

with Charles Koch, Chase Koch. Chase and

I have known each other

since 2013

>> Yep. when we overlapped in the

agriculture industry, got to know each

other, we've been business partners, and

Charles and I have gotten to know each

other a few times over the years, but

I'm really excited for this conversation

tonight. So, Charles, thank you for

being here. Thanks for having us. It's

an honor.

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In Silicon Valley, entrepreneurs, and

even mature company CEOs always like to

learn about the story of other

businesses and the success of those

businesses, and I've always felt like

Koch Industries was that untold story

of probably the most profitable private

family-owned business in the world.

Maybe I'm off on a couple points, but

certainly up there. And one of the most

impressive business stories because of

the evolution of the business, which I'm

hopeful we can hear a little bit about

how that evolution came to be

tonight. And just for some statistics,

if Koch were publicly traded, the

revenue would put it easily in the top

25 of the Fortune 500. It's a

family-owned business based out of

Wichita,

founded in 1940 by Fred Koch, with

businesses ranging from energy,

agriculture, chemicals, building

products, consumer products, even cloud

computing,

and a very active minority investment

portfolio with 120,000 plus employees.

That statistic might be off across 60

countries. Very unique operating model

which we'll get into today including

principles around disruptive innovation

of the business, reinvesting 90% of

profits in new businesses and growth,

meritocratic values,

and I'm hopeful that tonight we can take

an opportunity to hear about the

evolution of the business and talk about

some of those principles. And maybe we

can get started, Charles, if you could

give us a sense of the scale of the

business,

what are the business lines that you

operate today and and maybe, you know,

provide a little more color to those

high-level statistics I shared today. I

can go back through some of the history

and the failures and successes, but

uh

I'll go

through what we've grown since um the

early 1960s.

And then we had uh

30,000 three 300 employees. Now we have

more than 130,000.

And uh in in 60 countries.

And uh we have uh

increased in value 9,000 times over that

period.

When did you join the business?

>> 1961

full-time. I've been working

Well,

my father uh

we lived on a farm and and he told me at

age six he didn't want me to be a

country club bum.

So made me work in all of my spare time,

which I hated and and so I was always in

trouble.

And uh and so he was kind of tough on

me, rightfully so. And and thank God he

did.

Years later I I asked him, "Pop, why

were you

so much tougher on me than you were on

my younger brothers?" And he said, "Son,

you plum wore me out."

When you came into the business,

what was the scope of the business? What

was the business operating? We we had

two main businesses.

One was

to

design and make fractionating trays.

That is that they separate liquids by

differences in boiling points.

And then our largest business was a

crude oil gathering system in Oklahoma.

And

and so

so my father

and I I was

I had finished just

a few years earlier finished MIT.

And I was uh

I was working for Arthur D. Little, then

a leading consulting firm, and and I was

and and you'll think this is a joke at

age 25, I was doing managing consult

management consulting.

>> [laughter]

>> I have to laugh at the absurdity of

that, but I

>> [laughter]

>> but they were paying me for it, believe

it or not. So, my father called me and

he said, "Son,

uh

I want you to come back and join the

business." And as tough as he had been

on me, and as I say, rightly so,

uh

I declined.

So, he called me a few weeks later and

he said, "Son, either you come back to

run the company

or I'm going to have to sell it because

my health is bad and the companies

aren't doing well and uh and I don't

have long to live."

Uh

so, I agreed

because

uh

I

well, for for a number of reasons. One,

the first one is

uh I got three degrees at MIT in

engineering and I sucked as an engineer.

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

get through MIT? Because [clears throat]

I was real good at the math and the

science and the theory.

And I was no good at making or operating

things.

So, I figured out pretty quickly that I

wasn't going to make it as an engineer,

so I needed to be an entrepreneur.

And uh

and because I was good at principles,

and that's why we led So, I was always

looking for principles that would

help me

uh

contribute and and succeed.

And and and that's what uh

that's what transformed our our company.

So, you you come into the business

couple hundred employees, you said, at

the

>> 300 employees.

>> 300 employees.

And how did you think was the mandate to

grow the business? Was it just to keep

it stable?

>> it was it was Can I take a few minutes

to go through those first two

businesses?

>> I'm listening. Okay, that sounds great.

Okay, the first one was uh uh

uh making uh fractionating trays.

Designing those.

Uh we had a president then who

who was uh was one of our principles you

don't want to be. The negative is

top-down

and obsessed with controlling everybody.

So, he would send out uh memos every

week demanding they

on what they spent, what did you spend

it on, what did you do, what how did you

do this right?

So, they were first matter of fact, they

started uh ignoring him.

And then the whole culture was

protectionist.

That is when you sold when they sold uh

uh uh

uh the internals for fractionating tower

uh they wouldn't tell them the design.

And well, we need to know the design so

we can correct it.

No, they wouldn't give it to them.

And then and then what's even worse, uh

to to satisfy the European market, they

didn't even build a plant there.

They

they had a multiple sub contractors do

parts of a tray and then bring them all

together and assemble with another

contractor. Now you can imagine how that

was for speed and cost.

So we were losing our ass, if you'll

excuse the expression.

And so I changed the the management

and changed the philosophy. Okay, the

first thing we're going to focus on

is creating value for our customers.

And then then the second thing we're

going to empower our employees so they

want to to to do this. And the third

thing we're going to build do a plant.

We're going to build a plant in Italy to

satisfy the European market. We're going

to do it all ourselves.

And

and so we got became profitable.

And uh

and and then we started

adding

uh related products.

And and I'll get to that later, but

uh

and and and so we started growing. Can I

ask a question?

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

little bit, and you see the problems at

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

not being well managed. And you overturn

the management team.

How did you have the confidence at this

age, coming with the experience you had,

to take that level of action that

quickly?

Well, I it was life or death.

>> [snorts]

>> And my father said, you can run this

business any way you want. The only

thing you need me of my approval on is

to sell. That's the way he talked me

into coming back

after I said I didn't want to.

Uh

or I wasn't going to.

And then and then in 1970, what really

helped is my brother, younger brother

David,

uh

joined the business and then and then he

continued that growth.

>> And then

you're now

running a profitable operation, you've

got a European business, and at that

point did you start to think about

expanding into other products and other

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

I was learning all these different

principles.

And and what I saw we were doing, not

here, not just here, but in other

things, is we were

uh building capabilities. That is

I looked at it, we need to be capability

bounded, not industry bounded.

Like okay, you could say

uh to a certain extent, cuz we were in

crude oil gathering, we're in the oil

industry. Oh, that means everybody would

say you need to be an integrated oil

company. You need to be in everything.

And I was applying division of labor by

comparative advantage. No, you need to

be in the part of it

of the of the industry, in the part of

the value chain, where you can create

more value than others. Otherwise,

you're going to fail.

And that's what we're seeing happen now.

There's more specialization by

comparative advantage.

And so that's what so so I I I started

this the created this principle

called uh

uh

uh

creating virtuous cycles of mutual

benefit. And what that led us

to do is to to

to start this uh never-ending cycle

of uh uh

of growth,

uh

innovation, success, and failures.

And failures that

when we did it right that we learned

from and made us better and taught us

better how to apply principles to create

value. And we're still going through

that. We have a lot of failures.

And that's when you when you apply

creative destruction in your new things.

If you're not failing in everything,

you're not doing anything new.

>> Where did you learn that lesson? So,

what was the first major failure that

you know, they always say you got to

plan until you get punched in the face.

What was the first punch in the face?

>> had a bunch of them with with

with with that company where it was

called Coke Engineering then.

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

we got into refining, we created

petroleum coke. So,

I said, well, let's come up with a

a way to to use that as base to make

activated carbon.

And that was a fair we spent a fair

amount of money on that. And I did we

had a whole bunch of those.

And we've had we've had many more. How

did you make the decision to shut it

down or walk away? Some point a lot of

entrepreneurs have this problem. They

they build something, they're too in

love with it and they don't know when to

say enough is enough. Yeah, well, that's

when enough is enough when we lose our

ass enough. No, it's it's when we decide

we don't have the capability to create

superior value

for our customers and that we're going

to be rewarded for. And sometimes it can

be the structure

of a of a business.

Like like

company that Case founded Coke Disrupted

Technology Insight Tech, it's been

it it does tremendous things, but it it

is a structure that makes it hard to

make it profitable.

And so so that's the other thing is so

so that's another these are principles

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

apply that. What were the principles

that we didn't apply that caused us to

fail? That's what I mean we learn from

failure.

So, the businesses where you ask the

businesses we're in now and Chase and

there's Coke people here. You You all

can catch me up if I

the ones I missed, but uh we have uh

uh

engineered projects, engineering

construction.

We have uh

uh

we build uh solar plants.

We have commodity uh trading and and

distribution.

Uh we have uh fertilizers. We have

refined products. We have chemicals and

polymers. We have glass. We have uh

uh

uh forest and consumer products. We have

four different uh

investment firms with different

comparative advantages.

Uh

and we we have uh electrical products

and we

we have uh software uh

systems

uh

uh for management.

>> Dave, let me just hit one point.

Something

>> anything? No, you got it. You did a

great job. Oh. Um I mean, basically,

like um

eight eight wholly owned um business

unit platforms that he described and

then four investment um uh different

businesses. But, I just wanted to kind

of really drill a point home because

when I when I came out and when I

started um really hanging out with you

and the whole tech community and trying

to like build that network, a lot of

people have the same question that you

did about who is Koch? What are you guys

all about? You know, I know it's a large

private business, but being in Wichita,

you know, we don't know that much about

it.

I think this point that is so different

about Koch um versus almost any other

company out there is what my father said

on um being capability bounded, not

industry bounded.

And, you know, how do you get from a

small crude oil gathering company in

southern Oklahoma to all of those

businesses that he described? And

there's I mean, the principles obviously

throughout, which we'll be talking about

um in this discussion, but one of the

absolute core differences is that whole

approach to capabilities. And um I would

encourage anyone that's in a business

and trying to scale, think about it from

that lens. What capabilities have I

demonstrated that I can add value to

customers? And then um point it at new

industries where I can experiment. This

is one of our um

one of our principles as well,

experimental discovery. Not trying to do

everything at once and trying to conquer

the world, but experiment and test, does

the customer value my product or not?

Um and then along the way,

you know, those those core capabilities

for us started off as operations,

logistics, trading. In the very early

days of Koch, that's what we

demonstrated we were we were good at. We

were getting great customer feedback.

But then when we had the capability

approach to say, "Okay, we started in

energy, we started in crude oil

gathering and pipelines and refineries,

can we point those same capabilities

into natural gas? Can we point those

into chemicals? Let's experiment there.

Can we point those into fertilizers cuz

then we learned about natural gas?" And

then then the Georgia-Pacific

opportunity comes along and it's like,

"Hey, these are wood products. It

doesn't seem similar to these other um

businesses, but it's the same core

capabilities."

We buy Georgia-Pacific and along the way

it was somewhat of a happy accident that

we started learning learning about

consumer products and branding. So,

branding became a new capability for

Koch through acquisition, but it started

with where do we think we can add value

and do a good job on that and collect

new capabilities along the way. So, I

think that's like a really simple way to

think about Coke and it's

over the course of time like how we're

different. One other thing I'll mention

too

because I've been asked many times it's

like well, so is it sort of like you

know a Berkshire Hathaway where you have

all these different businesses a

conglomerate and I say no, I mean

obviously Warren Buffett and his team

have done an unbelievable job operating

the business the way they have but we

think about our business very

differently instead of operating them

all as independent businesses and almost

like in silos think about it as a

republic of science. We're not a

conglomerate. We're an integrated set of

capabilities. Would it fair to say that

you wouldn't consider an acquisition or

a new business line if there wasn't some

relatedness to an existing competency at

the company? It depends.

I mean as you see when you read the book

we went through uh

one chapter on

creative destruction.

And

and what Schumpeter called all the

different ways

to do that and one is to create a new

management approach. Okay, that's our

biggest one. So, the question is when we

bought Molex

makes electrical connectors

which has done fantastic and at first it

wasn't doing great. So, we said we think

if we can get them to apply these

principles it will turn them around and

and we didn't

we

the problem when we do that they they

they the tendency is to learn the lingo

and so you can call everything

by these by these names and you still do

what you always did and that's what was

going on there.

And so finally we got in no we we had

changed the management.

And and once we did that and and and and

and they started applying these

principles,

they took off and now they're knocking

it out of the park.

But let let me go back to failures. I

cuz I'm I mean we're understating our

our our great strength in failures.

And that is I'll I'll give you our worst

failures and what caused it. And it

caused us by by violating

the principle

of of of hiring people first on values

and second on talent.

And and what I've for years I told our

people, "Look,

if you want to hire

somebody

with bad values cuz you like them or

some, hire them slow and stupid and so

we can catch them real quick and get

them the hell out.

Maybe get them to go to work for our

competitors or something.

>> [laughter]

>> Maybe help them get a job. But anyway,

that was huge and then

we made that even worse

by uh

by taking people

who were

terrible values

and made them leaders.

And and so I what we call that is is

rather than we want everybody in the

company to be contribution motivated.

That I want to succeed by by

contributing. I want to be rewarded for

my contributions, not for anything else.

And the value I create for our customers

or for the future.

And and so they would some of these

people were destructively motivated.

What they wanted was power or control

and and they would hide their failures

and

and make up their successes.

And so I'll give you two examples. One

goes back to 1973. You remember the war

in the Middle East and everything.

And they had gotten us into all kinds of

wild reckless trade. So that could have

bankrupted the the company.

And then later

cuz I mean much later

shows you

that

that repetition penetrates even the

dullest of minds. So I needed this to

happen a bunch of times so it finally

>> [laughter]

>> Okay, I got it. I got it, God. Don't

punish me anymore, please.

For my stupid mistakes. So

So this was we we did it about the same

time our ag group.

We heard

we put leaders in who were destructively

motivated. And in refining we we we got

a leader and they were destroying those

businesses.

And uh

and and so it it didn't almost bankrupt

it but it almost wiped out all of Koch's

earnings in the in the the late 1990s.

You you'll appreciate

>> that give you a flavor?

>> Yeah.

So you'll appreciate this being an ag

guy to go a little deeper on what

happened in the late 90s in our ag

business.

We we called it a strategy the gas to

bread spread.

So we wanted to basically be in every

element of the value chain all the way

from pulling the natural gas out of the

ground, converting it into fertilizer,

making the nitrogen products to grow the

crops that would ultimately

then end up on the grocery store shelves

and being bread we got in pizza crust

all this crazy stuff. When you look back

on it you're what the hell were you

doing, right? But Um it was it was what

he was saying is like um like leadership

thinking about we can do we can do

anything. And if we get like basically

kind of control the the entire value

chain, like we can be make that

successful. Completely violates probably

all 41 principles in in the book, right?

Experimental discovery, knowing where

your capabilities are, right people, um

right roles. And so the We Yeah, we

called it the gas to Brad's bread. Some

people called it the ass to bread

spread, too. Um so

>> And there's another one in here,

integrity.

>> [clears throat]

>> Because when they knew there were losses

in some of these, and then they wouldn't

tell us. They wanted to go ahead anyway.

We had a we had a deal within that. You

know, like Purina dog food. So one of

the thing one of the things that was

acquired was the large animal um uh food

uh feed business feed.

>> Mainly hog. Yeah, so hog hog feed. And

um did no diligence, and this is one of

our principles to apply the scientific

method. So disprove your hypothesis as

much as you you try to prove it.

And um And so we we closed that

acquisition, and within days we found

out that we had hundreds of millions of

out of the money um hog contracts. Cuz

we didn't didn't even look at the

contracts. So I mean, that's when I

think this is a really important for

founders that want to grow, right? You

have this growth at all cost mindset,

and you start not like asking why not.

And this is the kind of trouble that you

get get yourself in. So let's go back to

the management piece. How do you

take these principles which you've

applied successfully to I would use the

term iterate cuz for me like failure is

all about iteration to success and

finding paths that work,

finding businesses that work, and

ultimately finding people that work. But

how do you drive that culture that

represents the principles? Because you

could create a book and give it to all

your employees and say guys here's 41

principles.

We've sat down, we've thought about it,

we've written them, they're going to

work. Yeah. But to actually live them,

to realize them, to hold people not just

responsible but accountable to them, how

do you how did you do that as you

develop these over the decades? Because

at first we tried to get them to do it

through sheep dipping.

That is you take everybody in, you give

them a big seminar, and now go do this.

And from Polanyi we if you want to

read a book that's hard to read, I mean

if you want really hard one you can read

human action. This is even harder, it's

called personal knowledge

by Michael Polanyi, who was a

a chemist and and then became a

philosopher.

And uh

and and he goes through what it takes to

to to develop personal knowledge.

It's it's you have to rewire your brain

to have it work differently. Right? You

have a habit,

so you don't need to think about it, and

then if you want to change like do I

brush my teeth first or I comb my hair

first? No, I want to start combing my

hair first, and all of a sudden you're

back brushing your teeth first, and you

cuz you're not thinking about it.

And so cuz your brain gets I mean you

know your body, let's say you're

you're a weightlifter and you want to be

a marathoner. Okay, it's going to take

work with intensity over time to change

your body. Well, your brain's part of

your body, so you've got to do the same

thing. So, we said okay, we've got to

start with okay, let's find a group

that's really interested in this.

They're struggling, they're having

problems,

and here are the principles, and we'll

coach them, we'll help them

start doing it, and if they work with

intensity on it, and then they succeed,

then we don't need ship to be because

then the other

uh

businesses and capabilities says, "Gosh,

I'd like to do that." So, you don't need

to call them in. Then then we have more

demand for people who can help them in

the hardest thing is have our people in

strategy or our our principle-based

management group who are really good at

helping them. And boy, they're in

they're in more demand than anybody. So,

the best thing is success will drive

social mimicry. You'll see others

>> That's it. Here's another um like take

on what he's saying um that I think like

really connects about culture to your

question. And that is like the essence

of like principle-based management and

all the principles in this book as well

is like what if you could um

have a business and a culture, small,

medium, or large, where everyone knew

what to do without being told?

And so, that's like hard to get your

head around, right? Because I think most

businesses come at it from top-down.

There's the iconic leader that's the

smartest guy in the room building the

strategy and then telling everyone what

to do.

And so, I think one of the most

important principles in this that we

tell a lot of stories around is to flip

that on its head and it's about

bottom-up empowerment with principles

and empowering your your talent, your

team, your leaders with these principles

so so that then you use the collective

knowledge of everyone, not a couple

smart guys at the top of the company.

Most people in most enterprises that

aren't owner-operators don't want to

fail. They want to keep their job. They

want to move up the ladder by being

repeatedly successful. And if you want

to create a culture of creative

destruction, if you want to create a

culture of failing and learning from

failure, it's very hard to get

individuals who live on an income, on a

salary, to do that because if they make

a mistake if they fail and then they

fail again and they fail again, I'm

worried about losing my job. So what you

typically see in most scaled

organizations is middle management and

even senior management when founders or

owners don't operate it anymore

saying, I'm going to take the less risky

path. I'm going to do the less

creatively destructive thing. I'm going

to do the thing that's least likely to

fail because I don't want to lose my

job. I want to keep my job, get my

bonus, move on to year two and go home

to my kids at and my wife and take care

of the family or whatever the the family

situation is and that's my that's my

objective.

>> that's and that's that that that

approach creates perverse incentives.

And so we we try to align our incentives

that we want to reward people

according to their overall contribution

to Coke's future.

So for example, if they have an

experiment and that doesn't mean doing

this thing in ag where you buy all these

hogs and you lose hundreds of millions

of dollars over what that's not an

experiment.

It's an experiment a good experiment is

where the value you you what you learn

from this

is higher value from this failure

than the cost of the experiment.

And and so when we do that and we're

we're evaluating what the person you are

building capability for the future.

That's why we're so

we we put so much emphasis on are you

building capability and capability part

of it is the culture and what Chase did

with with Coke Labs when he started Coke

Disruptive, he said Coke Labs, I want

every business to be a laboratory for

what we find both to help us source

these

these opportunities, these tech

opportunities

and

and then we'll let we'll we'll if

they're just trying something, we'll try

it out in that business. And being in

all these different businesses that that

touch almost every part of the economy,

it gives us a big advantage in that. So,

but that affected the whole culture. I

mean, in your business, don't you want

to be part of Coke Labs?

We're we're an experimental discovery

group. We're just not a bunch of grunts

here grinding stuff out. Yeah, I think

um the KDT examples are really good one

cuz you asked about motivating and like

what if you fail and then what if you

get fired and and all that. Um we we

tried to basically take a little bit of

the Silicon Valley approach and bring

the you know, of experimental discovery.

You learn more and you can pivot and

learn have a failure, but then now I

know what I don't want to do. I'm going

to pivot my strategy to what maybe we're

going to keep trying. As long as you

don't go sink the company with some

massive bet, right? And I think um KDT

was a

a great experience. Like I call um you

know, when when we did that um when when

we made the those first investments, you

know this adventure, um you're the the

losers fall out first and the winners

take a hell of a lot longer to to uh

materialize. So, if we would have just

judged it based on okay guys, you got

three or four years to figure this out,

we would have shut down KDT because we

you had the but but it was that

experimental discovery principle and

mindset that we applied to it. And oh,

by the way, we were learn we were

learning so much as Coke from seeing the

technologies that were coming around the

corner that might disrupt our core

business. And so, we value that learning

and we rewarded the people that were

bringing that knowledge in. If you just

look at it on the bottom line basis in

the first couple years, you'd say just

shut this down, right? But then over

time, like all these different things in

that and then the returns are starting

to come because we thought long-term

about it. But it all came from that

experimental discovery one principle and

then creative destruction. It's like if

we're not in the game on technology and

we don't see what's coming, something's

going to happen, especially with how

fast technology's moving today.

Some of our businesses are going to

become dinosaurs. How much of that risk

were you willing to take and did you

take on acquisitions? So, doing

homegrown experiments on new business

ideas and strategies and products

can be lower cost. But, if you're going

to do an acquisition, do you have less

room for failure?

>> this? We were a much smaller company and

we bought Georgia-Pacific for 20

billion.

Well, can you just tell us what

Georgia-Pacific is for those who don't

know? It's a wood products company and

it's got two big

pieces to it, building products and

consumer products. Well, it's got it's

got a third one, but

yeah. Okay, I'm I'm generalizing.

>> [laughter]

>> But, go ahead.

>> Sorry, no, no, no, no.

I'll shut up. I'll shut up.

Shut up, you old guy. No, no, no.

Um

but but anyway, but on on that one

>> when did you buy it and how big of a

betting the company move was it?

Uh 2005.

Well, that was we were much smaller in

2005.

I can't remember how much smaller, but

it was a lot smaller.

>> a massive bet.

>> it come up?

Okay, we were

like

applying this virtual cycles of mutual

benefit. We were saying,

"Okay, what's

one of these

uh

these cycles

are chemical process industries.

And and wood creating the pulp and stuff

was

Matter of fact, we found in my my my

father's thesis,

he he he did a

a study in Maine

on this very thing, on pulping.

>> [laughter]

>> I mean, I found it later, but that that

didn't Hit that MIT thesis? Yeah, yeah.

>> Wow.

So, we said, "Okay, let's look at the

Oh, and they were

they were saying they need to spin off

some of those parts of the pulping part.

And we said, "Okay,

let's buy that." And we bought that as

an experiment. And we did real well with

it.

And so, we said,

"Wow, they they have other

because that was a commodity business

and they were trying to get their price

earnings ratio it was like

six and if they became more of a

consumer products, they could get it up

to nine.

So, we proposed

we met with them and and proposed that

uh we

uh

uh

we buy the the uh the commodity part

and we'll pay them a a high enough price

that then they can

be all

uh consumer products and get their price

and we showed them all the economics and

they said, "That's fine, but we'll be

cons- sued for constructive fraud

because

we we all have this all these

lawsuits

against us and and uh and so, we can't

do it, but we like the value."

And so, we went home and says, "Well,

okay, what if we just offered the whole

thing?"

And the couple of them were getting

ready to retire and and the senior

officers, so they were really liking it.

>> Uh

And they were kicked out of all the

board meetings from then

>> [laughter]

>> on, but anyway,

so we we sold them and that was the time

when money was tight and stuff, so

nobody came in and and topped us. I'll

give you just one funny story.

We sent one of our people in to to be

the CEO, Joe Moller, who had been

president of the company.

And uh

and

and and he

They had

it was totally top-down bureaucratic.

They were

in Atlanta, they had this 51-story

building. Was it 51? You can correct me.

That's right. Yeah, you got it.

And and you they had a private elevator

to get up there.

And you didn't have to wear coat and

tie, but if if you came up to visit all

the management was on this 51st floor.

And you had to put on a coat and tie and

get permission to come up there.

And so Joe immediately

kicked them all out. Well, we fired a

bunch of them. And then sent the

remaining ones down to work with their

groups.

And

>> floor.

>> And and regular floor and then turned it

all into offices. I mean, into meeting

rooms open to anybody.

And so that I mean, you ask about how

you get culture change. A lot of it is a

signals like that. Particularly when a

bunch of them get fired for

being so bureaucratic and hierarchical.

>> say that that business unit operates

like the rest of Koch Industries today?

Oh, absolutely.

>> But how long did it take

I'll I'll just say like that is such a

rare and difficult thing to pull off. I

mean, there's just countless stories of

acquisitions where the acquirer thinks

that they have culture, thinks that they

know how to transfer culture.

And literally no one seems to be able to

do it. This was one of the insights from

Warren Buffett is you find great

managers, you let them continue to

operate as owners of that business and

they get some profit share or whatnot.

And they've got a durable moat, so he

can make a long-term investment and he

just leaves them in Yeah. Yeah, but

that's to say that wouldn't work for us.

The stuff we bought Let me let let me

give give another one if I could that's

was even more difficult. And that is

uh

uh sadly, my my father died not too long

after I came with the company in 1967

and we had owned an interest in a small

refinery in Minnesota.

And and so but 2 years later

we were able to buy it.

And uh

and it was not being operated very well

because the management had left the

union control how it was run and so it

was run very inefficiently.

And so the first thing we tried to do is

change the work rules.

So they went out on strike.

And by the way that was at the start of

my honeymoon.

Thanks a lot, guys.

And it was violent. I mean they they ran

a switch engine and tried to knock down

one of our units. They shot high-powered

rifles in there.

And they blocked the gates.

I mean it was impossible to get in

there. We had to take helicopter but we

we were successful in operating without

the union

workers

for 9 months bringing people in from

other plants

and it operated better than they did.

So finally we got the work rules

changed.

And then we

uh then we said, "Okay, we're going to

empower the employees. We're going to

change the culture." Now you think the

Georgia Pacific was tough

this was much tougher than that. And

and so we we we were worked and worked

on it to try to make their jobs better

get their opinions, get them to work as

teams, get them to come up with

innovations and when they did

we would reward them and we got the

unions to to agree with that. And and

like like one they said a group of them

said God, we're buying all these

spare parts we need.

Uh we can if you if you build a machine

shop, we can do it cheaper and faster.

And they did. And then other things they

saved ton of money for us, made things

more efficient. And now

the culture there is fantastic. You I

mean I mean we're talking about

we're not talking about Wichita, we're

talking about Minnesota.

So I mean we're so proud of what they've

done and it just uh

it still blows me away how how much

they've taken these principles to heart

and using them

to make that place so it's so we've

increased the capacity tenfold

and it's one of the best refineries in

the country.

>> Pop, wouldn't you say that um I mean the

common theme on all these cuz we have

the same story on Molex, you know,

similar similar but different than

Georgia Pacific. This was a

technology company a

connector and cabling and connector

company one of the largest in the world

um that makes products in your iPhone

and medtech products, your automobile.

And um when we bought that in 2013, it

was a

paradigm that needed to be changed. You

know, you described Georgia Pacific

top-down versus bottom-up. There was a

lot of that too, but it was top line

thinking versus bottom line thinking. It

was all about revenue growth, right?

This is a technology company and it was

also a public company for 30 plus years

as well. Cuz that was what the market

rewarded them for. And so like the whole

the stock price the public versus

private uh discussion is interesting

here and it just what we've learned is

it takes a hell of a lot longer than you

think to change the culture. And almost

in every case, probably Pop, tell me if

you agree with this, but in almost every

case it requires changing leadership

that has the paradigm of bottom-up

empowerment and that learns and applies

the principles. Almost every time when

we fail, it comes down to ignoring the

principles. You can that's what the the

book is about. You can kind of reverse

engineer these stories like well, we

missed that principle, we missed this

principle. Um but it comes down to

talent and the right people with the

right mindset. And I'll want to share

just one story with you that really um

shows like how we apply this at Coke. Um

he talked about our talent vision being

um you start with um basically culture

first, you know, skill second, values

first, skill second. I always add a

third dimension to that as well. Values

first, skill second, credentials last.

And that is a very different a mindset

than than most companies cuz most

companies I think look at it and say I

want I want the guys, you know, that

have the 4.0 from the Ivy League school

and all that. And there's some

incredibly smart, obviously, folks from

that, but by by our

um experience and also is one of the

reasons why we stayed in Wichita Kansas

is that we can basically hire the farm

team.

Right, kids that have grown up on the

farm that have that contribution

motivated mindset that work their tails

off and want to come in and make a

contribution as opposed to coming in

expecting all this stuff and coming in

with more of an entitlement mindset. So,

we um

case in point, our CIO today is named

Jared Benson. Um he start his first

interaction with Coke was base striping

lines in our parking lot.

So, no college degree whatsoever, but he

found his way into Coke cuz he

demonstrated that hey, he knows a little

bit about data science and he could help

us. This is about 20 years ago.

And then ultimately he came in, he

proved himself. He was running circles

around a lot of the team and like just

to

you know, contribution mindset,

adding value. He saw the cybersecurity

risk and that wave coming, built a whole

capability to protect us from cyber

attacks, and then now he's CIO of the

company. Guy with no college degree. So

I mean, that kind of mindset in terms of

our talent vision and like that values

first and someone that just wants to

come in and they they just love the job

and they want to make a difference.

>> Do you actually codify these principles

and everyone at the company has a

handbook that lists them out and then

they're part of the assessment process

for quarterly or annual reviews with

people?

>> Yeah, I mean, obviously there's the book

and he's this is his fifth book. It's my

first, but but so

good profit science of success. We have

our values

>> best book because of Jack.

>> [laughter]

>> Hey Brian, the one we did is pretty

good, too. Hugs will like that. Right.

Um

But yeah, no, there is a there's a

discipline, right? And and really it

comes down to the leaders taking it

seriously and their leaders first

responsibility is to help their people.

Okay, I'm going to put my analyst hat on

for a second. And I'm going to say

my observation would I would create a

theory. We could test the theory right

now that being in Wichita

being founder or owner operated

and

you know, having this ability to be

isolated from a monoculture. I just feel

like

Silicon Valley, a lot of companies

replicate each other. You have to kind

of

there's this term that's being used a

lot now, over socialization. You have to

operate like everyone around you or

you're not part of the you have to fund

raise in the right way and do these

deals. You have to

hire people this way. You have to do

this sort of vesting schedule, this sort

of equity structure. Everyone's the

same.

And if you don't, you're kind of a

weirdo, but by being in Wichita, you

don't really have that problem. You can

think your own way.

You can challenge yourselves. You can

debate. you can come up with your own

principles without feeling like everyone

else is conforming to the groups around

you. But they can because there are a

bunch in Silicon Valley that are.

They're challenged.

Yeah. So they're not all that way.

>> They're not all. Yeah, and this is what

>> it is it always been a competitive

advantage? I mean, did you ever think to

move the headquarters to New York City

or

>> No. No, but the main thing the

we've we've never thought of that.

But but what we've

Sorry about that.

I mean, there are advantages of being in

New York City. I mean, you have a great

mayor now, so

we're good to go.

But anyway,

so we we that's a competitive

competitive advantage of us.

That'll be a competitive

>> But but this is No, but the main the

main threat we've had is we we had So I

was wanting to go pop take us public.

And I said it'd be over my dead body,

and some of them thought well that would

be a good idea.

Just like they're thinking that about

Trump. Well, a lot of people thought

still think about I get a lot of nice uh

notices of my imminent death.

>> [laughter]

>> And and they say, "Okay, your brother

died. We hope it was

uh I know it's painful, but I hope it

was slow and painful, and I hope Charles

is even worse." That's the kind of crap

we get.

Uh but anyway, what the the biggest is

the

uh push has been for us to go public.

God, we'll be worth so much and stuff.

And but it it

And I I think our view

we never could have accomplished what

we've had. First of all, we never have

would have built a principle-based

framework. And then we we never would

have been able to pull off this

uh

capability-bounded

versus industry-bounded.

Because then I mean people don't

understand it. Now, if you're Buffett

and you sold that long, then people

okay, but but he wasn't trying to

integrate them the way we do. No one

would believe it.

And and so what the what and and and

that's because

uh

you've got to you've got to have a story

that people the analysts can understand.

Otherwise, we would like

Georgia-Pacific, we would have a low

price earnings ratio. And so being

private,

being in Wichita, competitive

advantages, what about being

owner-operated or founder-operated?

There's this

argument that the the the best Silicon

Valley companies are those who are

founder-led for as long as possible

because the founders are willing to

destroy the business creatively. They're

willing to think about what's over the

hill, make the tough decisions, reinvent

the company, hire and fire as needed, be

willing to take the short-term financial

loss for the long term. Have you been

able to get that to distill down into

the organization because that's the

thing that most public companies that

are not owner-operated deal with and

struggle with is managers that are

short-term incentivized and and aren't

and can't take the big risks and the the

risk of failure that that you're able to

embrace. No, but I

I think it depends on the values of the

owners.

If

like

one of our principles is that

any good partnership of any kind,

whether it's marriage, friend, employee,

partner requires three things. It

requires shared vision, shared values,

and having complementary capabilities

that you use to to make each other

better.

And if you would miss any one of those,

you're not going to have a lasting

good partnership. And so I I remember I

was I was to the YPO group in Wichita, I

was presenting this is like 20 years ago

presenting what we were doing and why,

and one of them said

"Well, how do you get that to work in a

private company?"

And

and I answered, "Well, no, it's easier

than in a public company, just like I

did."

And then I

I thought who it was and

he was talking about his father.

His father was a total dictator.

And there no way he could apply any of

these principles

in that. So, it all demand matters

who the owners are and what their values

are. Can a public CEO that doesn't have

a big ownership stake in the company

adopt these principles and transform the

culture of that company?

>> if you can get a

if you can sell it like Buffett has

but I mean he wasn't doing these

principles, but he had a different

principle and that is I'm going to buy

companies I'm not going to take

top price

but what meaning what's meaningful to

them is they run it, so I'm going to buy

it and let them run it.

And so that was his

his value that he sold that made him

tremendous. Well, that was the other one

was buying insurance company, so you'd

have a lot of liquidity to go do all

these things and those two things are

what made him successful. Right. Chase,

I want to just go back to you getting

involved in the business. We didn't get

into that, but how did you get started

at Coke? How did and were you always

a believer in the principles from a

young age? Were you around the

organization around your dad?

>> [laughter]

>> I'm a chip off the old block, so

it took me a while to come around.

>> No, this is the most remarkable

transformation. I've been talking about

him all evening.

This is the primo.

>> Here we go. Unbelievable.

>> Do I get to tell my story? The absolute

bottom to the absolute top. He'll

correct me.

>> No, he's blown me. He's doing things I

wouldn't even dream of or have the

capability to do. So he'll correct he'll

correct he'll correct me 10 times as I

tell the story, but [laughter]

Well, cuz you're too damn humble.

Um so I didn't start when I was six. I

started when I was 15. So you cut me

some slack, but it's because I was a

pretty competitive tennis player and

>> He was nationally ranked. See the

humility. He was nationally ranked.

First first time.

So um but at 15 I got burned out, you

know, tennis like typical story where I

wanted to hang out with my friends. I

wanted to have a good time. I was tired

of playing 6 hours a day. So I I started

throwing tennis matches intentionally to

get out of it out of these tournaments.

So I go home and party with my friends

and and he he said, "Look,

your attitude is terrible. You can

either

give 100% on the tennis court and apply

yourself or I'm going to get you a job."

I said, "I'm sick of tennis. I'm done

with it." And so I had his my the job

was figured out the next morning for me.

Yeah, but let me interrupt again cuz

this is important. He thought he would

get a nice cushy job in Wichita so he go

out and party with his friends at night.

Yeah. Well, you know, I'm

I may be old and slow, but I'm not that

slow.

Yeah, he was kicked out of a number of

schools which

>> at night, but not last night.

But yeah, so

>> a parallel story movie that could be

made.

>> Yeah, no, seriously. There there really

is. But basically all my was packed for

me. Yeah. And it was thrown in the back

of a truck and 6 hours later I showed up

at a at a feed yard and I lived in a

single wide trailer the whole summer

with with my boss. I slept on the floor,

worked 7 days a week and

just shoveled cow and dug post

holes. No, and the boils. Forgot about

that. You're popping boils.

>> manageable here. So um

So anyway,

but the the the interesting part of that

story, even though I went from literally

being like

you know, kind of country club rich kid

to

to doing that within 24 hours, it was an

absolute transformation for me. The the

fact that he kind of he made me do that.

And I chose, but I didn't know what I

was exactly, you know, choosing.

But by after, you know, I was like a

month or two

into this job, I started like actually

feeling like better my better about

myself. You know, I was like I hadn't

really made a contribution up till that

point in life. And then I'm actually I'm

working with a team, getting paid

minimum wage, I'm working my tail off,

I'm adding value, even though it may be

like you just menial work. Um

And this is I go back to a letter that

his father,

you know, wrote to him and the and his

other three brothers.

>> No, no, my my older brother. Yeah, your

older brother, sorry.

>> was 3 months old when he wrote it.

This letter about basically like when I

pass on,

um you're going to get what seems to be

a large sum of money.

I hope you don't squander it. I hope you

don't use it for but I hope you actually

apply yourself because I want you to

feel the glorious feeling of

accomplishment.

And it's a it's a really amazing letter

he has it hung in his um

But I you know, that was the first time

I felt that, even though I was working

at a feed yard. I was like, this feels

good, actually. You know, I could have

gone down the path of you know, just

kind of staying on the tennis circuit. I

have no idea where I'd end up in life

had I had I not gone down that path. And

so I basically worked every summer for

Coke from that summer on. I worked in

the gas liquids plant, I worked in our

refineries

all the way through junior year in

college, always had a Coke, you know,

kind of summer job. But,

another So, that was a an absolute like

transformation for me in my life. Let

let me let me give you one more credit

here. See, what he he has great humor,

which is great, but

and that is Chase has I I have this gift

for abstractions.

He's he's like his mother. He has a gift

for people.

He understands people and can rate

relate to them and he can go around

uh like like she [clears throat] can or

Sterling Varner, who was our president

early days, who by the way

uh

was born

his father had ran mules in an oil field

camp and he was born in a tent and they

damn near died.

Uh never went to college and

and

he could Whoever he met with wanted to

do business with us. And that's the way

Chase is. He goes around, meets these

people

and all of a sudden they're friends and

they want to do business, and that's

true for Stand Together, too. Go people

you think, "Oh, they don't they don't

want these

these capitalists or these free

enterprise people to do business with

them."

And and and he gets them

on our side and shows [clears throat]

them the value of these principles.

Well, let me let me make

>> Is that fair? Um what whatever you said.

>> [laughter]

>> No, I mean, that's my job. That's what I

do. Now, you know, origination of

partnerships. And about the time I met

you, that's when I started, you know,

getting into technology and trying to

build a new community so that we can get

access to the most disruptive founders.

But, one quick story I want to tell

because I think it'll be helpful for for

your audience as well that we haven't

touched on yet is the principle of

comparative advantage is another

meaningful like total shift in my job at

Koch and my role at Koch but also in my

my personal life.

Um was when I was running the AG

business. This was This was later on. We

talked about the late 90s the the gas to

bread spread and all that. This is a

separate business

uh with Koch Fertilizer.

I spent 10 years in that business really

understanding the operations of the

business. I worked in sales and and in

marketing and um the accounting the

finance like every piece of it the

trading and um I ran a lot of the

smaller business units but at one point

um my boss at the time wanted to add a

whole natural gas trading business to

it. So he's like, "Hey, I got to want to

put a parent company called AG and

Energy Solutions and I want you I'm

going to throw you the keys to the

fertilizer business. You're ready to run

it." And so I was promoted to president

of Koch Fertilizer at that time and

about 9 months in I realized that I was

not the guy for the job and I walked in

my boss my boss's office and fired

myself.

And the humiliating, right? It's like

especially being the boss's son and like

thinking about, "Oh my god, I'm a

failure, you know, I could I couldn't

make this work." The business was still

doing fine but I wasn't doing a good job

as a leader and I knew there was someone

else that had the comparative advantage

to be a great operator CEO, you know, a

president type role. And so I learned

through all that you call it a failure

in in that job that

um that I wasn't an operator and I

wasn't a good optimization type leader.

I was a builder. Like all I wanted to do

was go work on the innovation stuff.

That was about the time I met you and I

learned about Climate Corp and all that.

I just wanted to go focus on that and

and go build the stuff you know this

whole idea of creative destruction that

would disrupt the core business that I

was running. And so, that whole thing

around like understanding your

comparative advantage, what you're good

at, and what you're not relative to

others that could be doing that job, was

a huge deal. And like my hope was that

that was a little bit of an example for

other like Koch leaders as well. It's

like, if you're not in the right job,

like

you know, you don't have to like fire

yourself, but

but figure out where what your power

alley really is, and where you can

contribute, and and and add the most

value. So, that experience for me, what

was amazing, if you look at like what

happened after that, we we got a great

president to continue to transform the

fertilizer business. It's one of our

most exciting businesses today, and we

keep we keep growing

with it. So, that that did better than

it would have done had I stayed in the

role. But then all of this led to Koch

Disruptive Technologies, which we talked

about, which is a totally, you know, an

innovation platform for Koch to to see

around corners. So, like that one move

made one large business much better, and

and also created a whole new thing,

right? And so, like I always think about

it's like we have 130,000 employees.

What if that one principle, comparative

advantage, what if everyone like deeply

understood that, and and redesigned

their role to where they're truly like

in their power alley? And what what what

are the results of the business if we

could do that? You're never you're never

going to be perfect, but that's the

vision that we have and how we apply

>> For the organization.

>> For the organization.

>> So, think thinking about

individuals,

how do I

self-actualize? [clears throat]

How do I find my path of

purpose, happiness, success in life by

leveraging these sorts of principles in

a world that feels radically

transforming and continuously

constrained. I don't have infinite

flexibility. I'm not on the board of

Coke. I'm not on the board of my my

company that I'm employed by. How do I

find a path in this world because I do

think many people today are struggling

for that sense of purpose, for that

sense of identity, for that sense of

realizing their their their potential

and feeling fulfillment in work today.

>> Well, that's

I mean that's critical and that's

that's what every all the we we have

what

20-some thousand supervisors

in the company and so this is one of

their top jobs

is is making sure

that that each employee is in the right

role. For example, they're working hard

and trying and part of the work they're

doing well in and others not. Well,

rather than beating up you got to keep

doing better. Like like there's certain

things if you told me I had to do, I

mean I'm I'm

I'm good at at concepts and logic and

math and to go do something else

that's quite different, I mean I'd be a

total failure and you could you could

whip me till I was a grease spot on the

floor and I I couldn't do better.

And so that's the role of the

supervisors to not go tell them, "Okay,

your role is to go do this." and they're

just trying harder and harder

and so you're making them miserable and

so they hate you, they hate the company.

And so that's that's the way you empower

them. That's what what Maslow said if he

said that that if

everyone has capability

and and if if you don't develop it and

apply it in a way that creates value for

others

you will be you you be successful

monetarily or in some way, but you'll be

deeply unhappy your whole life because

you won't be fulfilling your nature.

Your nature, and I know what mine is. I

know what makes people say, "Well,

you're 90. Why don't you go out lie on

the beach?" I said, "What do you want me

to die?

I'd be dead in in

in a a week." It's not your nature. No,

it's not my nature. My nature is to

is to I have this gift. And a lot of our

people here may say, "Yeah, you damn

right. You use it too damn much." So,

What keeps most people from realizing

their gift? Well, I I think part of it

is the education system. So, the schools

need to be set up, "Okay, we're going to

help you find your gift and what you're

passionate about." And and and and what

is motivating to you. So, the whole

system demotivates you, and that's what

the way businesses are managed. You're

demotivated. Our whole deal, that's why

we we we have a five dimensions in the

in the way we apply this.

The first is vision. You got to get the

right vision. Like what capabilities of

creating value for others.

Uh then then it's virtue and talents.

We've we've talked about that. Then it's

knowledge. That's Republic of

of science.

Uh

creative destruction, all those things.

And then the the final one is

motivation.

And so, that's what we need to do. And

like Joe Lamond has created the schools.

He says it's 90% or 80% motivation.

And so, you have games. You have other

things that the kids can do that they

learn from and enjoy doing. They want to

do more. And that's I mean, I raised our

kids with these principles, and I made

them do it. So, I was piss-poor at

applying that my principles in in

teaching him this. And he's doing it. He

makes a game out of it. He has them

reading the book

and parts of it and then they have

competition on who can do it better and

who's

who's living up to this better? Who's

applying this principle better? And

they're loving it. Yeah, I'm not having

my kids listen to books on tape from

Milton Friedman when they're 10 years

old. No, Aristotle is the one that

>> there's there's plenty of them.

Um but

but let let me just make a comment. You

were told or suggested or encouraged to

listen to Aristotle on tape as Yeah.

>> Yeah.

>> [laughter]

>> No, he wasn't encouraged. No, we'd go

Sunday evenings.

>> I got to take a note from my

>> Elizabeth and and Chase and I would go

over to my library and I would play

these tapes. I'd only play it for 10

minutes cuz I knew Chase's attention

span.

Elizabeth was on it. Boy, she was on it.

She was getting straight A's in

everything and Chase would fall asleep

and then I then I'd after 10 minutes I'd

wake him up and okay, what what was his

[clears throat] point here? Is it test

every 15 minutes?

>> and then you may have seen on on

where was it where you talked about

uh about you we we worked together to do

your Aristotle term paper.

>> Yes. And why don't you tell that story?

>> Okay. Well, I mean we had a like a fifth

grade paper. Like choose your

philosopher, write about it. You know,

it's got to be 500 words or whatever. So

I came I was like, I don't know like

what philosopher am I going to write

about? And so he's like, you're going to

write about Aristotle and we're going to

work together on it. But I learned a

hell of a lot about Aristotle in in

fifth grade. And I turned in the paper

and the professor

had a lot of red ink all over it and

said, "F.

You did not write this."

And I was and so I'm like, "Oh god, you

know, this is so embarrassing." And so I

took it back to him and I told him I

said, "Pop, um we got an F on our

paper."

>> [laughter]

>> I know you said you got an F.

And um so and then I didn't think he was

going to pick up the phone and call the

the teacher.

So he said, um you know, "Dr. Cohen,

I'll never forget this." I was hiding

under the table during this phone call.

He said, "Dr. Cohen, um you know, I

helped my son write this paper and he

learned a lot from it. And yeah, you

know, do you not want me to help my son?

Do you not want any parents to help

their kids like learn?" And

and um

he said, "You know, I think you have a

point, uh Mr. Cohen."

And so the next day

the the next day I come back and it had

99 written on the top.

>> [laughter]

>> See? I I made a contribution.

>> Yeah. Let me Let Let me Let me go back.

It's a great story, I know. But um let

me go back to something I think you were

getting at um around how do you remove

more barriers for more people? Um and

this is really kind of the Stand

Together story. He mentioned education.

I just want to use one example of how

important we feel like transforming

education is. And we also feel like it's

a movement with tremendous opportunity

right now.

And so um

our vision for education

is to go from a teach-to-test model,

teacher at the front of the classroom,

teach you know, talking at kids to one

that's individualized education. Because

we all as we we talked about, we all

learn differently.

>> Everyone learns differently.

>> And our kid all all of our kids learn

learn differently as well.

So um we did the research at Stand

Together and prior to COVID At Stand

Together just Yeah, sorry. Stan So Stand

Together for those that don't know, this

is really um

you know, comes from my father's efforts

on social change which he's been working

on for for 60 years. And Stand Together

in 2003 was created that really I think

we had the insight of we can do a lot

more together versus do it alone. If we

operate in philanthropy and social

change in silos, we're just not going to

get the leverage to drive the change

that we want to.

Um and so Stand Together is made up of,

you know, close to a thousand business

leaders. It's It's just like the name

describes. It's a community of business

leaders that align on vision and values

on where you want to see the country.

It's really around this this this pretty

simple idea that every human has a gift,

but there's so many barriers across all

of our institutions,

education,

uh you know, broken education system, a

broken criminal justice system, um bad

policy holding people back so you can't

chase the American dream and build a

business. All of these things, right? So

we're very broad in terms of the issues

that we focus on, but education is

the one of the biggest ones. And so I

describe the vision of where where we're

trying to help take it and be a catalyst

for change. And one of the things that,

you know, we do a lot of research on

where public opinion is. And prior to

COVID, roughly 20% of families were open

to a new model of education. Very low,

right? And then everyone saw during

COVID how screwed up the system was. And

they saw their kids come home and they

learned a hell of a lot more on YouTube

learning than they actually did in the

classroom.

So, after

after COVID, three or four years later,

you look at that same data and it's 70

to 80% families are open to a

completely, you know, to transform the

education system cuz everyone now

understands that it's just broken.

So,

we're we're supporting, we have these

amazing preferred partnerships as my

father described, whether it's Joe Lee

Mott with what he's doing at the Alpha

School, like closing the motivation gap

and meeting kids where they are and

bringing like gamification and like the

principles of Fortnite into education in

a way that kids are like he's taking

kids that are failing students to top of

the class in 3 months because he's

meeting them where they're at. He's

meeting them where they are they're at

and solving the motivation gap and like

making learning fun and cool, right? Sal

Khan did the same he's a huge partner

with Khan Academy. And a really

interesting one uh that we we partnered

with the Walton family on is the Vela

Fund. Basically applying venture capital

to education entrepreneurs. So coming

out of COVID, there were

thousands of pissed off parents and

teachers that were just fed up with the

system. Like, I'm just going to create

my own school. You know, these small

micro schools. And so with a relatively

modest amount of money

over the last 5-6 years, we've helped

create and seed over 5,000 schools. So

what's happening is there's this huge

movement where people see it as like my

kids are learning the the the skills of

what the the future is going to be like.

Not this teach-the-test model where you

don't know how to interact with people.

The reality is it's project-based

learning. They need to have exposure to

these AI models. You don't ban them. You

empower them with these models, right?