In many ways, however, politics were a sideshow for Charles Koch. There was another, more important campaign underway for leadership within Koch Industries. After Charles’s son, Chase Koch, took himself out of the fast-track lane to become CEO, something like a three-way race emerged to select Charles Koch’s immediate successor. There were three executives who seemed primed to take the job, and Charles Koch could evaluate each one as the business grew.
The contours of this race were defined in 2017, when Koch Industries was overhauled in the most significant restructuring since 2000. This time, the company was redrawn into two divisions: Koch Enterprises and Koch Resources. The Enterprise division included Georgia-Pacific, Molex, and Invista—basically any part of Koch Industries that produced a consumer product or piece of a consumer product. The resources division contained Koch’s legacy operations in fossil fuels and other extractive businesses, including Flint Hills, Koch Minerals, Koch Ag & Energy Solutions (which included the fertilizer division), and the commodities trading arm, Koch Supply & Trading.
Jim Hannan was promoted from CEO of Georgia-Pacific to CEO of Koch Enterprises. Brad Razook was promoted from CEO of Flint Hills to CEO of Koch Resources. In these roles, the two executives were engaged in an unspoken competition. Each division reported its results to Charles Koch. He could measure their progress and determine who might be best suited to take over the firm. Then there was David Robertson, the president of Koch Industries, which acted like a holding company over both Enterprises and Resources. Robertson had quietly made his way to the most senior spot beneath Charles Koch over many decades of work. Robertson was soft-spoken, direct, and a consummate MBM man. He knew how to achieve great things and appear to not take any credit for it. If Charles Koch made a bet that his corporate culture could replace him as the charismatic CEO, then David Robertson was a fitting vehicle to carry that bet forward.
If any of these men became CEO, however, they might be taking the job in a caretaker’s role, because Chase Koch was still the heir apparent. After working for a while in the specialty fertilizer division, Chase Koch invented a new role for himself. He was spending a lot of time with venture capitalists who wanted Koch to fund their projects, and he became intrigued with many of their ideas. He talked it over with his father when the two of them had dinner at Chase’s childhood home. Chase told his dad that Koch Industries was missing out on the future by not getting more involved with venture capital firms making risky bets on new technologies. They mulled over this idea, and came up with a new division of Koch called Koch Disruptive Technologies. Chase was named head of the new division. He would help Koch identify the next wave of big businesses to invest in. One of the group’s first investments was in an Israeli medical devices company. Chase’s division moved to a newly constructed wing of the Koch headquarters campus. In early 2018, the KDT offices were still a blank slate, a set of cubicles and small offices under construction. In a small meeting room near the space, Chase sat at the head of the table, leading his group through a meeting. His bearing was somewhat stiff, but authoritative. After many years, he seemed comfortable in his own skin. When asked if he would be CEO some day, Chase said it was certainly a possibility. He said he would only fill the right job at the right time.
One day, Charles Koch sent his son a small folder of old papers, with a handwritten note attached. The note was written on a small piece of yellow paper with a simple letterhead: “Charles Koch.” Charles Koch’s neat, cursive script read:
Chase,
I’m going through my old files for the book project. I found these notes on your Aristotle paper.
Pop
The papers attached were notes that Charles and Chase had written while working on Chase’s elementary school assignment about Aristotle. Aristotle believed that people strived to accomplish things, and that is what gives their life meaning. From that meaning flows happiness. This was the message he passed on to his son.
If Charles Koch found meaning during his working days in 2018, that meaning seemed to derive largely from the “book project” he mentioned in his short note to Chase. People close to Charles Koch said he was drawing away from the business, at least somewhat, to work on this book project, which was his private passion. Charles Koch’s close friend Leslie Rudd said Charles was finally exhibiting something that was very rare in his life: a sense of contentment. “I think Charles, now, is doing just exactly what he wants to do, which is trying to do good,” Rudd said.
Charles Koch had already published two books about Market-Based Management, which he argued was the ultimate solution for running a prosperous business. But even within those books, he had hinted that Market-Based Management was more than a business philosophy. In this new book, Charles Koch planned to show the final dimension of Market-Based Management. He would show that it was a guidebook not just for operating companies, but for operating entire societies. The proper shape of American society was the shape of Kochland.
Charles Koch had no illusions that America would instantly adopt his creed when his new book was eventually published. The path would be long and contentious. He had been cutting the path for fifty years already. But he had always worked on a very long timeline, measuring his success on a scale of years, even decades.
His plan, so long in the making, was still just in its early stages.
ACKNOWLEDGMENTS
So many people helped produce Kochland over so many years that it is impossible for me to properly thank them all.
I am deeply grateful to all the current and former employees of Koch Industries who spoke with me for this book. It would have been simply impossible to understand the institution without them. The hardest part of being a reporter is trying to weigh both the good and the bad, and to produce a narrative that is as fair and close to the truth as humanly possible. It’s impossible to even try to do it without good sources, and I am deeply indebted to everyone who helped me along the way. Thank you.
This book was only possible because of the guidance, leadership, and tireless support of my editor, Priscilla Painton. She has been unwavering even as the years stretched on and one deadline after another passed by. At every step, I relied on Priscilla’s judgment, her ethics, her patience, and her amazing eye for the right word. I am so grateful that we have editors like Priscilla to keep this important work alive. I am also grateful to the entire team at Simon & Schuster for their support. Jonathan Karp gave me great insight and pushed me to ask the right questions early on. Sophia Jimenez and Megan Hogan were vital teammates. Dana Trocker and Larry Hughes have been invaluable, over many years, in helping me communicate these ideas to a broader audience. Samantha Hoback and her team did a miraculous job of improving and polishing up this manuscript under deadline. Edward Klaris and Alexia Bedat at Klaris Law are the best kind of allies a reporter can have: smart, hardworking attorneys who are committed to upholding press freedom. Their rigorous review and feedback made this book much stronger.
My agents, Lauren Sharp and David Kuhn, are the best I could hope for. They are diligent, honest in their critiques, and always willing to put in the extra hours to improve the work. They instantly supported the idea for Kochland, even in the face of long odds in the market. I couldn’t navigate this business without them.
When I conceived the idea of writing Kochland in late 2011, two people came along at just the right moment and helped transform my life as a writer: Steve Coll and Andrés Martinez. They gave me a fellowship at the New America Foundation, and I am grateful every day for the opportunity they provided. I can never repay the gift, but I will keep trying. Thank you. This book wouldn’t have happened if you didn’t give me that break.