How Charles Koch grew the family company
Charles Koch did not start Koch Industries, but he is responsible for almost all of its growth. His father, Fred C. Koch, was a chemical engineer who developed an improved method for refining heavy oil into gasoline and founded a company that later became Rock Island Oil and Refining, based in Wichita, Kansas. Charles joined the business in 1961 and became chairman and chief executive after his father's death in 1967. The following year he renamed it Koch Industries.
At that point the company was mainly in oil gathering, refining and some cattle ranching. In 1969 it gained control of a refinery at Pine Bend in Minnesota, which became an important source of cash. Over the following decades Koch Industries expanded into pipelines, chemicals, fertilizers, commodities trading and ranching, usually by buying businesses and running them according to Koch's management philosophy.
The company has stayed private, and profits have mostly been reinvested rather than paid out. Koch's fortune comes from his large stake in the company, which he co owned for decades with his brother David until David's death in 2019. Because the business was inherited and then enlarged, his wealth is classified as inherited rather than self made.
Koch Industries businesses
Koch Industries operates through a group of subsidiaries, including:
- Flint Hills Resources: refining and chemicals
- Georgia Pacific: paper, tissue, packaging and building products, acquired in 2005
- Invista: fibers and polymers, including the Lycra brand for a time, acquired from DuPont in 2004
- Molex: electronic connectors and components, acquired in 2013
- Guardian Industries: glass and building products, fully acquired in 2017
- Koch Engineered Solutions, Koch Ag and Energy Solutions and Koch Minerals and Trading: engineering equipment, fertilizers and commodities
The family owns most of the company. In 1983, after a long dispute, Charles and David Koch bought out their brothers Frederick and Bill, and litigation between the brothers continued for years afterward before a settlement. Charles Koch remained chairman and chief executive, and his son Chase Koch took a senior role in the company, leading its venture investing arm, Koch Disruptive Technologies.
Koch is known for a management system he calls Market Based Management, which tries to apply economic principles such as property rights, incentives and price signals within the company.
Education and early career
Charles de Ganahl Koch was born in November 1935 in Wichita, Kansas, the second of four sons of Fred and Mary Koch. His father insisted the boys work on the family ranch and in other manual jobs during their childhood.
He studied at the Massachusetts Institute of Technology, earning a bachelor's degree in general engineering and two master's degrees, in nuclear engineering and in chemical engineering. After graduating he worked at the consulting firm Arthur D. Little in Boston before returning to Wichita to join his father's business.
In his early years at the company he read widely in economics and became attached to the ideas of the Austrian school, including Ludwig von Mises and Friedrich Hayek. Those ideas shaped both his political views and his approach to management. He has written several books setting out his philosophy, including The Science of Success, published in 2007, Good Profit, published in 2015, and Believe in People, published in 2020. He has led Koch Industries for well over half a century, making him one of the longest serving chief executives of any large American company.
Political influence and philanthropy
Koch has been one of the most influential funders of libertarian and free market causes in the United States. He co founded the Cato Institute, a libertarian think tank in Washington, in 1977. He has supported the Mercatus Center at George Mason University and a network of groups advocating lower taxes, less regulation and limited government, including Americans for Prosperity.
In recent years his giving has been organized under Stand Together, a philanthropic community he founded that funds programs in education, criminal justice reform, poverty reduction and free speech. Koch has said he wants his giving to empower people rather than direct them, and he has funded initiatives that support entrepreneurs and nonprofit groups working in local communities.
The Charles Koch Foundation provides grants to universities for research and teaching in economics and other fields, and these grants have drawn criticism from some academics who see them as attempts to shape curricula. Koch's political spending has made him a frequent target of criticism from opponents of his views, while his supporters credit him with backing causes such as reducing incarceration that have attracted support across party lines.