Charles Koch relentless in pursuing his goals
10/14/2012 6:00 PM
08/06/2014 12:15 PM
Charles Koch’s wife says there is much endearingly quaint about the man so many now vilify.
He doesn’t know how to dress like a sophisticated grown-up, she said. She’s given him every haircut he’s had in their 44-year marriage.
Yet even Liz Koch’s stories about him show a drive and a relentlessness that sometimes scares her.
Until his knees gave out, Charles Koch took his wife skiing.
On the ski slopes, he made it clear that she should ski with him even though the slopes he took were two levels beyond her competence.
She spent 25 years flying down mountains, staring at the back of his head, feeling terrified.
“You want to be a part of something, be a part of it,” he told her. “If you don’t want to, that’s fine.”
“He pushes and he pushes and he pushes,” Liz Koch said. “But …with 20/20 hindsight, it was all good for me, I’m still alive, I never broke a limb.
“But man, I hated it.”
And she’s suffered for some of his decisions that have demonized Charles and David Koch in American popular culture.
Forbes reported in June that a proposed smartphone app would help people find Koch products, so they could boycott them.
David Letterman has lampooned them; so has Jon Stewart on Comedy Central. The Kochs are villains in HBO’s “The Newsroom” and in the movie, “The Campaign.” Cable news mentions the Kochs almost nightly, implying that they are greedy billionaires trying to buy an election.
“I’m so hopeful that there will be something, SOMETHING in the world out there besides ‘Evil Koch Brothers,’ ” Liz Koch said. “Jesus H., I’m sick of it.”
The family now lives night and day with bodyguards.
“We get a lot of death threats,” said Charles Koch, 76. “We get threats to fire-bomb our facilities. We get attacks by ‘Anonymous,’ trying to break in, destroy our communications, computer systems – cyberattacks.”
David Koch, 72, who lives in New York, told his three children, ages 6 to 14, that their bodyguards are like nannies, hired to help the family.
What drives Charles Koch most, Liz Koch said, is a conviction that free markets are the only way to create prosperity. Even those who live in poverty, he believes, have more money and more opportunities for jobs if they live in a free-market economy rather than one controlled by dictators or socialists intent on redistributing wealth.
“He is a family man, he’s a human being, he’s kind and he’s generous, and I just don’t know where this picture (comes from) of this person who’s greedy,” Liz Koch said. “Do you honestly believe that he works for money?”
What’s ironic about accusations, Liz said, is that both Koch brothers have given millions to charities. Charles and David Koch, their foundations and companies, have given about $1 billion in the past 12 years, more than $46 million to charities in Kansas.
One other significant irony about her husband, Liz Koch said, is that even his political allies don’t know or understand how wonderfully independent-minded he is. Many conservatives have adopted Charles Koch’s ideas, uttering his pet phrases about liberty and economic freedom and cronyism and advocating for low taxes, little regulation and a government kept as small as possible. But he also says things many conservatives would never dare say: Cut subsidies. Cut defense spending substantially. He also never says anything about religion, abortion, immigration or gun rights. And while political conservatives paint themselves as advocates for business, Charles Koch has accused corporate CEOs of cowardice for not speaking out for economic freedom.
Friends and family
Wichita Realtor Nestor Weigand said the fight has taken a toll on his friend. Charles Koch is accused of politicking to help Koch Industries make more money, but Weigand said he would make more money with silence. “He could just relax, and sit back and run his empire.”
When both Liz Koch and Weigand first met him in the early 1960s, Charles was a skinny young guy who read about economics night and day, and spoke about helping the world. Now he’s a skinny older guy running a company with more than $115 billion a year in revenue. And he is sure now, not only that he can help people, but that he’d better do it big, and do it soon.
“He really believes that if good business people do not get involved as he is, that they won’t have a business economy much longer,” Weigand said.
President Obama and Charles Koch’s other enemies have underestimated what Charles has accomplished politically, Weigand said. His success in winning allies, he said, comes not from his spending but from the frustration business people feel about government, not only from taxation but from irrelevant and deadening regulations.
And it’s not only federal regulations, Weigand said, but state, municipal and county regulations of all kinds. Every business person he’s ever known, Weigand said, can tell nightmare stories about paperwork, delays and unconcerned inspectors “who make you do unnecessary things, whether they are practical or irrelevant doesn’t seem to matter. If there were more business people among Democrats, perhaps they’d better understand why many people regard Charles as heroic.”
Going all out
Friends and family say he’s attentive and unfailingly nice. But something happens when Charles Koch gets into a competition. His friends say that when he plays, he plays hard.
In a game of squash years ago, Charles injured Weigand with a hard-hit ricochet shot to the head. “Charles wanted to take me to the hospital,” Weigand said. Weigand said it was his own fault for not playing alertly.
In the late 1970s, schoolteacher and later Eagle columnist Bonnie Bing played a game of doubles tennis with Liz, Charles and another friend. Charles Koch rushed the net and smashed an overhead shot, accidentally hitting Bing in the mouth. Her lip swelled so big, Bing said, that she could see it growing under her nose.
“What the f--- are you doing?” Liz screamed. “This is NOT f------ WIMBLEDON!”
Thirty years later, he still apologizes. But as he does with everything, he hit that shot to win.
Losing candidates say he plays politics like that.
Dan Glickman was a Democratic member of Congress from Wichita until 1994, when he says the Kochs opposed him for supporting a BTU tax on energy. He lost to Todd Tiahrt.
“I was on the receiving end of their campaign decisions,” Glickman said. “I viewed it as…I was on their target list.
“I had grown up in Wichita, and Charles and his brothers grew up there; I knew Charles, and knew David, and I had met Bill. We would go to Colorado, to Aspen, and I’d meet them. And we all got along fine. We have a lot of mutual friends, actually. So I knew it wasn’t personal. I never viewed it as personal. But I had voted for an energy tax, and they don’t like energy taxes. So they opposed me, which was their right. And I lost the election.”
Two years later, in 1996, when an ex-governor’s daughter-in-law named Jill Docking ran against Sam Brownback for the U.S. Senate, money got dumped into ads supporting Brownback.
Docking had known and liked Charles and Liz Koch most of her life; She had played tennis with Liz. But she and her family will never forget what happened in that campaign. An outside group, Triad Management Services, tried to influence the elections without disclosing its donors. She lost.
Her husband, Tom, remembers counting six or seven television ads in one evening attacking her, one of them with “dark, shadowy images, and dark voices” saying that Jill “is not who she says she is.” Her full name appeared on the TV screen, including her Jewish maiden name: Jill Sadowsky Docking from Springfield, Mass.
“The implication was that she was an East Coast Jew,” Tom Docking said.
People told him robo callers were telling voters that Jill and Tom Docking were raising their children not as Christians but as “heathens.”
“You kind of laugh at the time,” he said “But the ads were very effective.”
Mark Holden, Koch Industries’ senior vice president and general counsel, said the company donated $1,000 for one to two years to Triad to help elect candidates who supported free-market ideas.
“We were understanding that it would be used for legitimate purposes, proper purposes under the law,” he said.
But Democrats on the Senate Governmental Affairs committee found “circumstantial evidence” that a trust fund supported by the Kochs gave $1 million to Triad to run attack ads to influence the outcome of 29 congressional races, four of them in Kansas.
“While the Senate Democrats and others claimed in 1998 that there was ‘circumstantial evidence’ supporting their allegations, I’ve never seen any such evidence,” Holden said.
Triad spent $420,000 to elect Brownback and $131,000 to re-elect Todd Tiahrt. At the time, federal election law banned direct corporate contributions to candidates and held that voters had a right to know who was funding campaigns.
Sixteen years later, Docking says, she admires the Kochs, and says Kansans owe Charles and Liz a debt of gratitude for the millions they’ve given to charity. But that political campaign is hard to forget.
“It was hard for me personally, because I am a terrible politician in that way,” Jill Docking said. “It was such a huge force against me that I couldn’t help but take it personally….the same way that they take it personally, right? It’s painful, and we all live in a small town.”
Charles Koch says Americans are drifting dangerously away from traditions of honesty, independence and personal responsibility.
He learned after many years to hire for values rather than talent, he said.
“A lot of companies, and we’ve been guilty of this in the past, want to hire the smartest person, the most talented person. Well, the worst thing we can do, as we found, is hire a very talented person with poor values. If we’re going to hire somebody with poor values, we want somebody who’s not very smart. ’Cause he or she will do less damage.”
People sometimes ask why he stays in Kansas – there are no beaches or mountains, and the wind, insects and temperatures are ruthless. But he says it’s not just that he loves Wichita – it’s a business decision.
“We’ve done pretty well here,” he said. “And companies that have moved (away from Wichita) have missed this. You think, ‘Okay we few smart people at the top ... We have all this knowledge, and we’re going to move, and let’s say we lose half the people. No big deal. We’ll replace them.’ And then they find that their computer systems don’t work, their accounting system is a mess, the back office is screwed up. Why? Because people have tacit knowledge. They can’t even communicate all the things they know, how to make the system work. And they’ve learned to work together in a way that makes an organization highly effective, highly efficient, highly productive. And you lose that tacit knowledge, and lose that culture, and it isn’t going to work the same way.”
He said he has no plans to move the company out of Wichita, but can’t say what will happen after he is gone.
He also prefers hiring people from Kansas, Nebraska, Oklahoma and Texas, because he says they are honest and have a strong work ethic.
“A lot of them grow up in a rural area, where they’re out there having to work, and there are no fantasies about who is producing value and who isn’t,” Charles said. “If a cow dies because you didn’t feed her, you get a lesson. Somebody’s got to feed the cow.”
Charles Koch believes so devoutly in pursuing talents with passion and bearing the costs of our behavior that when his son, Chase, half-heartedly played a tennis match years ago, he sent the 13-year-old to work in a cattle feedlot in western Kansas. Liz said that the feedlot was so big that Chase could smell it from 20 miles away.
Charles Koch in person
Inside the massive black-glass building where Koch Industries manages 60,000 employees in 60 countries, Charles Koch steps to his office door and smiles in greeting.
He’s got a soft voice and a full head of white hair, and because he rubs his head excitedly when talking, he’s got a tuft sticking up from the back of his head. He is 6 feet 3, lean from disciplined diet and what Liz says is a ruthless, nearly daily 90-minute workout – 30 minutes of Pilates, 30 of aerobics, 30 of weight lifting.
Surgeons have replaced both knees and his right shoulder; his joints took a pounding from decades of athletics, including tennis, squash, golf and polo. He once told a meeting of employees that he used to take glucosamine with meals but “nowadays I just need a shot of WD-40 and I’m fine.”
He deliberates over every sentence, frequently stopping in the second clause to re-word the first.
Charles Koch tells the feedlot story. How he summoned his son to his office. “I think he thought he’d have a job here in Wichita and he could go out with his friends at night,” he said with a grin.
Instead, the manager of the Koch-owned feedlot picked up Chase Koch in Wichita and drove him to western Kansas. “And he lived with him on a couch, and worked 7 days a week, 12, 13 hours a day.”
In 44 years of marriage, Liz Koch says, she has given him every haircut because he doesn’t want to take time to go to a barber shop.
His ride to work takes only 10 minutes, but he pops an audio book into the player, using those minutes to learn something. “There is so much to learn, so much you need to know that there is not enough time,” he said.
His hatred of wasting time has sometimes led his wife to stare at him in wonder, on the golf course when he impatiently scoops up her ball when she plays slow, or when he gets in a hurry and runs his cart over her ball.
He is a perfectionist at everything. “Occasionally I’ll misuse a word about market-based management and he practically gets hysterical on me,” Liz Koch said.
After the kids came along, Charles coached son Chase and daughter Elizabeth on values and virtues daily at the dinner table, as his father had done.
“Sunday afternoons was economics,” Liz said. “That was at least an hour of sitting in the library, Chase with his baseball hat pulled down over his eyes with his eyes shut and sound asleep so his father wouldn’t see. And Elizabeth pretending to be the bright-eyed and bushy-tailed student.”
While Obama and his campaign directors portray Charles Koch as formidable, the man described by Liz seems clueless about some things. When they first met, he showed up dressed in madras shorts, with a pin-striped shirt. “God help you,” she said. “He looked like Willie-Off-The-Pickle-Boat.”
But to her, that showed he wasn’t vain, because no vain man would dress like that. After they married, she forbade him “to ever set foot in a retail clothing store again.”
They often finish each other’s sentences, but he can be remarkably obtuse, she said. After the death threats, he hired security guards for the family – and neglected to tell her. “Sometimes I get notified after the fact, if you get my drift.” She was furious.
Charles Koch sometimes tells stories on himself.
Several years ago, he said, the family owned Lucy, a small and mischievous shepherd dog, and Rufus, a huge Rhodesian ridgeback. Lucy, fearless, pounced on Rufus so much that Rufus cringed by the front door when Charles tried to take him outside.
“The big sissy,” Charles Koch said. Puzzled, he asked his son why Rufus acted like that.
“It’s obvious,” Chase Koch said. “He just sees the way you act around Mom.”
Now her husband stands accused: A rich guy who doesn’t care about the poor or the vulnerable.
“Prove it!” Liz said. “Prove that comment to me! Look at the money that goes into charities – and to innovation to make life better. Seriously, do they think all this stuff just comes out of thin air? People love their Internet, their cell phones…somebody came up with the ideas... Nobody thinks about where these things come from, they just think, ‘oh, greedy, greedy, greedy.’
“What is greed? Greed is a return on investment, the risk you took. And if you’re lucky, you get to employ more people. And more people.”
“In business, there’s risk and there’s reward,” she said. “The pride that I see, the upside, is that so many people have put their trust and their faith in him as being the beacon for saving the country.”
He believes sincerely that the country is going into debt so extreme “that we’ll never recover,” she said. He believes we’re losing a virtue that made us great. “When you see the courage and the tenacity of the people who settled this country, you just can’t believe that we want to give it away. I really think there’s something seriously wrong with education that people don’t understand what they’re giving away.”
Government giveaways like subsidies or other redistribution of wealth have created the idea “that there is something for nothing. The idea that you can take, and make everyone the same.” As a result, she said, “you have a country of non-risk takers. That just want to be coddled, and taken care of. It never entered their heads that they might be able to do it themselves and do it better.”
Charles Koch was so passionate about these ideas that in the first years of their marriage, besides insisting that she learn to cook, he insisted that she go to economics seminars.
“That was five years of training,” she said. “Intense training.”
Liz Koch said she and Charles hardly ever talk about the criticism from Obama or others.
“We’re at a point now where we both enjoy a good night’s sleep, and we know that if we have certain conversations too late in the day, it isn’t going to help us at all,” she said. “And...what are you going to say after somebody has tried to destroy your character, who you are, what you’ve built? What’s to talk about?”
Charles was the rebel son, born Nov. 1, 1935; David was born May 3, 1940, the same year their father, Fred Koch, founded the Wood River Oil & Refining Co., the precursor to Koch Industries.
From their yard in east Wichita, David said, they could all hear the voices of friends at the Wichita Country Club while they worked. Their father made them work, picking dandelions in the yard when little, shipping out to shovel manure on ranches when they got older.
“He kept saying, ‘I want all you boys to grow up to be great men,’ ” David said. There were four boys in all. The other two sons, Fred and Bill, are not involved in Koch Industries.
Fred rode Charles hard, and Charles was glad to get away to the Massachusetts Institute of Technology.
Charles Koch achieved: Bachelor’s degree, general engineering, 1957. Master’s degree, nuclear engineering, 1958. Master’s degree, chemical engineering, 1959.
For the next two years he worked for Arthur D. Little & Co. consulting, living in Cambridge, half a continent from the demanding father he adored.
His father pleaded with him to come back
No, Charles Koch said. “I thought, ‘my God, I go back, he won’t let me do anything and he’ll smother me.’ ”
Charles went to work for his father in 1961 only after Fred, weakened by illness, threatened to sell the company. Charles Koch took over the division called Koch Engineering. The first thing his father said when he showed up: “I hope your first deal is a loser, because otherwise you’ll think you’re a lot smarter than you are.”
“I didn’t disappoint him. I got us in a lot of losers.”
He challenged his father immediately after coming home.
One day, after hearing out Charles’ proposal to buy two trucking companies, his father went on safari in Africa. Fred, preoccupied with saving money to pay federal “death taxes,” told his son to buy only one. Charles bought both.
“He was FURIOUS,” Charles Koch said. “I met him at the airport when he got back, and he would just barely talk to me. The only thing he’d say was, ‘Son, I’ve been trying to save enough money to pay my death taxes, and you’re going out and just wasting it.’ ”
By then, Charles Koch’s mind was on fire. Inspired in part by stories his father told at dinner, about Stalinist Russia and how economics really worked, Charles was devouring books on history, philosophy, anthropology, psychology, science, economics. Charles said he read everybody, “all the way from anarchists to communists. And I read everybody.”
He read “like a demon,” David Koch said. Nestor Weigand, Charles Koch’s longtime friend in Wichita, would see Charles’ small apartment floor, the couch and tables covered wall to wall with books, many of them open, and Charles would talk excitedly about how he thought the world could be made vastly better if people grasped how free economies work.
After he married Liz, he stuffed their small apartment so full of books that there was no closet for her clothes.
He read until he reached his own conclusions, especially this one:
“There are certain laws that govern the natural world,” he said recently. He started to wonder “if the same isn’t true for societal world. Were there also laws that determine to what extent people can achieve their ends? That will determine the extent to which people are more prosperous? That they are better off. There’s more civility. That there’s peace. Progress. And so I became very passionate.”
He read Adam Smith, Ludwig von Mises, Friedrich Hayek, Milton Friedman – economists deeply committed to keeping government out of private enterprise. The key ingredient in a prosperous society is private enterprise, because private enterprise is all voluntary – people are doing things they want to do, rather than things they have to do to fulfill some government-imposed obligation.
In all those books, the guy with three degrees from MIT saw what happens, as he believed, when freedom is curtailed, whether by dictators using guns or liberals using laws to redistribute wealth.
He put these ideas into action, as he now says himself.
First, he built a company that had $70 million in annual revenue in 1960, the year before he came home, to one with more than $115 billion in annual revenue. Charles and David Koch are now worth $31 billion each, according to Forbes.
Second, he created think tanks like the Cato Institute to push his philosophy of a free-market society.
He said economists ponder why we have poverty. “We’re asking the wrong question. We ought to ask what do we need to change so we can become more prosperous? Not how we eliminate poverty. Poverty’s the natural condition. If we just sit around and guarantee each other, and no one produces, we have extreme poverty.”
Like Weigand, Liz Koch says the fight with Obama and the strain of work have taken a physical toll.
He’s lived a full life, she said. Their daughter, Elizabeth, now 36, lives out of town, and is not employed by Koch Industries. But their son, Chase, who slept through some of his dad’s economics lectures, is now, at 35, senior vice president at Koch Agronomics Services – and shows many of the relentless and workaholic traits of his father, Liz said.
But Charles’ full life has its limits, and she wonders whether at age 76 he pushes them too hard.
“I watch him like a hawk, because it’s a concern, to work as hard as he does, and push as hard as he does. Even the things he does for relaxation are ridiculous.”
Charles still acts like he’s pushing a time clock, she said.
“What are you doing?” she’s demanded.
But she knows what he’s doing. He worries about employees and business partners who depend on him to keep Koch Industries growing. And he’s convinced his economic ideas can help the country.
Slow down, she has told him.
“Please don’t nag me,” he’s replied. “If I didn’t want to do it, I wouldn’t do it. It’s why I get up in the morning. I love what I do. I love the people I work with.”
So he gets up every morning. He goes to work. He doesn’t plan to retire. “I like to say I’m going to ride my bicycle till I fall off,” he said. “I mean, I don’t want to go play golf every day, and I can’t read all the time.”
Charles Koch said his parents taught him to be humble and that he feels embarrassed every time he drives past the Wichita State University campus and sees “Charles Koch Arena” in big, dark letters on the wall of the basketball complex that he donated $6 million to renovate.
He felt the same way when Koch Industries built the black-glass block-shaped building that houses his headquarters. He came home from the Barcelona Olympics in 1992 to his new spacious office – and felt embarrassed. “I said, ‘My god, what’d I do? Why should I have an office that big?’ I mean it’s just, I don’t know, maybe it’s the way you’re brought up. It reminds me of the story of what the mama whale said to the baby whale: ‘Son, the time you get harpooned is when you come up to spout off.’ So it just makes me insecure.”
Yet with all his claims of humbleness there is soaring ambition: In recent months he has likened himself to the revolutionary who defied the Catholic Church and changed history to this day:
“The best way to describe it, which may be ridiculous, but is in a way similar to what Martin Luther must have thought when he said, ‘here I stand, I can do no other,’ ” Charles said. “I mean, if you believe these ideas are right, and they’re going to benefit the overwhelming majority of people, and you have some capability to advance them, how can you not?”
He’s that serious about politics. But he makes fun of himself, too. At a Koch Industries gathering after the White House criticism started in earnest, he told employees: “Liz reminded me the other day that when she married me, she knew it would be an exciting life.
“But she didn’t know it would be one of sheer terror.”
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