#381: Charles Koch — CEO of Koch Industries

“When goods don't cross borders, soldiers will.” — Charles Koch, quoting Frédéric Bastiat This episode will no doubt surprise people, and my guest came to me through channels I wouldn't have expected. --- Charles Koch received a bachelor’s degree in general engineering and two master’s degrees, in nuclear and chemical engineering, from the Massachusetts Institute of Technology. He is chairman of the board and CEO of Koch Industries Inc. https://www.kochind.com/, a position he has held since 1967. He is renowned for growing Koch Industries from a company worth $21 million in the early 1960s to one with revenues estimated as high as $110 billion by Forbes. It’s one of the largest privately held companies in the world, and by revenue, it’s larger than both Boeing and Disney. He has transformed the business into a diverse group of companies that employ nearly 130,000 people—making everything from Dixie cups to components in your cell phone. Charles credits the success of Koch Industries to applying proven principles of social and scientific progress, which led to the development and implementation of his Market-Based Management® https://www.charleskochinstitute.org/about-us/market-based-management/ (MBM®) business philosophy. He describes MBM and its applications in two of his books, The Science of Success https://www.amazon.com/Science-Success-Market-Based-Management-Largest/dp/0470139889?tag=offsitoftimfe-20 and Good Profit https://www.amazon.com/Good-Profit-Creating-Successful-Companies/dp/1101904135/?tag=offsitoftimfe-20. Charles is now using those principles in philanthropy, as the founder of Stand Together https://standtogether.org/, to tackle some of the biggest challenges in the U. S. Stand Together https://standtogether.org/ is partnering with thousands of social entrepreneurs to help them improve their effectiveness and scale at tackling poverty, improving K-12 education, bringing justice to our criminal justice system, and more. This episode is brought to you by ExpressVPN http://www.expressvpn.com/tim. ExpressVPN http://www.expressvpn.com/tim is an app you run on your computer or mobile device that easily secures your Internet connection, hides your public IP address, and lets you bypass regional restrictions on content. ExpressVPN http://www.expressvpn.com/tim is consistently rated the fastest VPN service on the market, and it's incredibly simple to use. Just download the app, tap one button, and you're connected to a secure VPN server. Visit my special link ExpressVPN.com/TIM http://www.expressvpn.com/tim, and you'll get an extra three months of ExpressVPN protection for free! This episode is also brought to you by ShipStation https://www.shipstation.com/. 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• 0:01Tim Ferriss?

  At this altitude, I can run flat out for a half mile before my hands start shaking.

• 0:06Speaker 01

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• 0:24Tim Ferriss?

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• 2:03Tim Ferriss?

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• 2:47Tim Ferriss?

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• 3:30Tim Ferriss?

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• 4:13Tim Ferriss?

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• 4:51Tim Ferriss?

  Hello, boys and girls, ladies and germs. This is Tim Ferriss and welcome to another episode of the Tim Ferriss Show where it is my job every episode to deconstruct world-class performers of all different types, to tease out the principles, habits, thinking, influences and so on that help them to do what they do. And my guest today does not grant many interviews and he came to me through avenues that I would not have expected. His name is Charles Koch and I had several of my close friends, very, very accomplished in business, all very socially liberal, who had become friends with Charles and suggested that I have him on the podcast and we'll talk more about that, I'm sure, but let's

• 5:35Tim Ferriss?

  get into the bio. And this episode, no doubt, will excite the internet because there is a case of insanity going around and I would encourage you to listen and to focus on what I hope to transmit, which is the importance of attacking the problems, not the people. We'll come back to that, but let's get to the bio. Charles Koch received a bachelor's degree in general engineering and two master's degrees in nuclear and chemical engineering from the Massachusetts Institute of Technology, MIT. He is chairman of the board and CEO of Koch Industries, Inc., a position he has held since 1967. He is renowned for growing Koch Industries from a company worth 21 million in the early

• 6:20Tim Ferriss?

  1960s to one with revenues estimated as high 110 billion, that's annually, by Forbes. It's one of the largest privately held companies in the world and by revenue it's larger than both Boeing and Disney. Let that sink in. He has transformed the business into a diverse group of companies that employ nearly 130,000 people, making everything from Dixie cups to components in your cellphone. For 50 years, Charles has supported academic and public policy research with a special focus on developing voluntary market-based solutions to social problems. This interest led him to found or helped build a number of organizations, including the Institute for Humane Studies, the Cato Institute, the Mercatus Center at George Mason University, and the Bill of Rights Institute. Charles credits the success of Koch Industries to applying proven principles of social and

• 7:04Tim Ferriss?

  scientific progress, which led to the development and implementation of his market-based management, MBM, business philosophy. He describes MBM and its applications in two of his books, The Science of Success and Good Profit. Charles is now using those principles in philanthropy, as the founder of Stand Together, to tackle our country's biggest challenges. Stand Together is partnering with thousands of social entrepreneurs to help them improve their effectiveness and scale at tackling poverty, improving K through 12 education, bringing justice to our criminal justice system, and more. I have more to say, so don't fast forward. But you can find out more about both Koch Industries and Stand Together at Kochind.com,

• 7:46Tim Ferriss?

  K-O-C-H-I-N-D dot com, StandTogether.org, which I highly encourage you to check out if you are a social entrepreneur or know social entrepreneurs in need of support and capital. On Twitter, @KochIndustries and @Stand underscore Together. It takes us a little while to get warmed up, as it often does in these podcast interviews, so give it five, 10 minutes to get into flow. But we talk about a lot. We talk about books that have had... The greatest influence on his thinking and actions. Thinkers, we talk about, for instance, the differences in acquisition strategy between Coke Industries and Berkshire Hathaway.

• 8:27Tim Ferriss?

  We really go all over the place and I also ask him some of the questions that were submitted by people following me on social media. And there are some real haymakers that I do read towards the latter portions of this conversation. So I do not simply serve up softballs. That's not the intention and that's certainly not the way that I run this podcast in general. So this episode, why would I do this? Why would I deliberately polarize my audience because of identity politics and people applying labels to themselves that cause so many problems? And I'm not referring to Charles, I'm referring to a lot of people among my listeners, no doubt.

• 9:11Tim Ferriss?

  It's because I believe, much like Paul Graham does, one of the co-founders of Y Combinator, that the more labels you apply to yourself, the stupider you become and the more prone you are to group think. And it's very, very dangerous. And in this episode, my role I view is not to get you to like or dislike Charles, but to pay attention to his thinking, which I do think is remarkable. And I will just mention a few things to calm down many of my friends out there who are predominantly liberal, I did live in the Bay Area for 20 years after all, to try to

• 9:56Tim Ferriss?

  encourage them further to listen to this whole thing. Number one, I would say that Charles has been very active in collaborating with previous adversaries on criminal justice reform, including CNN commentator Van Jones. They shared, or found they shared, common principles when it came to reforming this country's criminal justice system. And that is the topic that actually was brought up by a lot of my friends who encouraged me to do this podcast. And in partnership with Van, Charles helped to build a nonpartisan policy coalition that passed historic criminal justice reform last year. On foreign policy, despite disagreements with George Soros on many other policy issues,

• 10:39Tim Ferriss?

  as you can imagine, Charles discovered that he had common ground with him when it came to foreign policy. So they partnered with George's Open Society Foundations to launch the Quincy Institute for Responsible Statecraft, which is a new think tank to promote ideas that move the US foreign policy away from war and towards vigorous diplomacy in the pursuit of international peace. And it goes on and on in the sense that despite, and I'm quoting The Guardian here, "Despite being a conservative powerhouse that has at times outspent the Republican National Committee, the Koch network is increasingly showing willingness to work with Democrats and investing in nonprofit groups to promote, quote, 'free and open societies,' end quote."

• 11:20Tim Ferriss?

  And then, jumping forward in that piece, "Long seen as GOP kingmakers, David and Charles Koch have made waves by lambasting Trump and his administration. They refused to back Trump in 2016, vowed to hold him accountable to conservative priorities like free trade, free markets, and small government, and have been outspoken against the White House on immigration and infrastructure spending." What I've found is that the people who love Charles Koch miss a lot, the ones who have the most intense views about Charles and Koch Industries. Likewise, the people who hate Charles or Koch Industries miss a lot.

• 12:01Tim Ferriss?

  And my hope is that I'm able to add some nuance and texture to this person who is often evaluated based on headlines, and also, again, to encourage everybody listening, much like I feel Charles does very effectively, to attack the problems, not the people. I think that's the only path forward, really, is to, instead of asking how to most effectively fight against someone, to first ask yourself what you might have in common in terms of priorities, so that you can align in some fashion. Without that, we're all doomed, I think.

• 12:40Tim Ferriss?

  In short or long order either way. That's a long intro, but I'm happy to provide this and I'm sure that the feedback will be strong in all sorts of directions. Without further ado, please enjoy my wide-ranging conversation with Charles Koch. Charles, welcome to the show.

• 13:04Speaker 02

  Thanks, Tim. Thanks for having me.

• 13:06Tim Ferriss?

  Oh, I appreciate you taking the time and I've had a number of my friends over the last, let's say, year, year and a half, who have wanted me to interview you and who are fans of a lot of what you've done. The main subject that has come up a lot is criminal justice reform, which I'm sure we will get to, and there's a lot to cover. I thought we would start with dandelions. Can you tell me about your history with digging dandelions?

• 13:38Speaker 02

  Well, I was, I really consider myself blessed because I had the best of all possible worlds, looking back. It didn't seem that way at the time, but we were wealthy and my father, he called himself a half-baked chemist, and he loved doing experiments. So, we lived on an experimental farm. It wasn't a commercial farm, but it was a farm where my father could experiment with various things. So, we had cows, horses, dogs, chickens, and raised crops.

• 14:21Speaker 02

  And my father announced at an early age, he said, "I don't want any of my sons to grow up to be country club bums." And I was a middle child, I had a brother who was two years older and two younger brothers who are twins, who are four and a half years younger than I was. And...

• 14:44Speaker 02

  So my father started this on my older brother and he was more of an artistic bent. So this manual labor that involved helping out on this experimental farm didn't work as well for him. And so I bore the brunt of it. And you may ask why, why did I bear it? Well, that was one reason. And as he put it, I asked him years later, I said, "Pop, why were you so much tougher on me than my younger brothers?" And he said, "Son, you plum wore me out." And so I earned the right to be in more trouble, get knocked around more and do more work.

• 15:28Speaker 02

  So I started, he started me out in all my spare time working. And the first was digging dandelions. Reason I say digging, you can't just cut them off or pull them. You've got to get all the roots out or they just come back. So that was my job. And then I graduated into shoveling out stalls, feeding the animals, milking cows, digging post holes, fixing fence and all that stuff. And then as I got older, I got jobs in other places. So it was, it was quite an opportunity to learn the value of work and learn that I better

• 16:12Speaker 02

  develop some skills that other people will value or I could end up doing this the rest of my life, which I didn't look forward to. He used to say that, he said, "I was a good kid in many ways, as long as the work didn't come too close." And so I had, I had what's an economist call high time preference. That is, I was into instant gratification. How could I minimize the work? How could I do something that's fun? So that was my whole orientation. And, and then I was blessed that, I thought the only thing I was good at was getting in trouble and I was, I was pretty expert at that.

• 16:56Speaker 02

  And I found in the third grade that I had a gift in math. And I later learned when I studied psychology, I read Howard Gardner and his multiple intelligence theories. And boy, did that fit me because the only thing I was good at was what he called logical mathematical intelligence. And so I had a gift for math and abstract concepts. So basically, my whole life has been to find opportunities that use that, that I could

• 17:37Speaker 02

  create value with that, and then to partner with people who were good at all the other things that needed to be done that I wasn't good at. And a dream possible is because I've done that. Whenever I've tried to do things by myself or without that kind of support, I've basically failed.

• 17:59Tim Ferriss?

  I want to ask a bit more about your dad, specifically about a, I believe you still have it, I would imagine so, a framed letter that you found in your father's safe deposit box after his death. Can you talk about the letter that is on your wall and why it's important to you?

• 18:16Speaker 02

  Yeah, he wrote that in, I think, January of 1936. And I was, let's say, I was born in November, so I was, let's say, three months old. And so he wrote it to my older brother and me. And in there, he talked about adversity provides the greatest lessons and is certainly the greatest character builder. And then his hope for us and whatever he had given us, that we used it, we didn't misuse it or waste it, but used it so we could experience the glorious feeling of accomplishment.

• 19:03Speaker 02

  And so that's everything he did, whether I liked it at the time, was toward that end. And so he, and I think this is so important for anyone who's a parent, and certainly we've tried to do that, is you don't lecture your kids on anything that you don't live up to. And he exemplified integrity, humility, treating others with respect. And as he used to preach to me, "Son, learn everything you can. You never know when it will come in handy." And so those were all great lessons, and there was no hypocrisy in there. I mean, that's the way he lived.

• 19:49Tim Ferriss?

  When you ended up, after your education, so after MIT, you were talked back to Wichita. And my understanding is that he had an equipment company that wasn't doing well, and effectively said, "You can run it any way you want. The one thing you would need approval for is selling it." Was that the time that, your dad fascinates me, because I think you might have been, correct me again if I'm wrong, but around 26. I have a piece of advice that he gave you, and it's, "I hope your first deal is a loser. Otherwise, you'll think

• 20:30Tim Ferriss?

  you're a lot smarter than you are." So it really seems that your dad was focused on preserving your sort of initiative and drive so that the wealth wouldn't become a curse. Are there other things that he did when you first joined the business to facilitate that? Could be before or after, but I'm wondering what that initial experience was like.

• 20:57Speaker 02

  Yeah, we had, my father, the way he got me to come back, he had been after me. I was working for a consulting firm in Boston and learning a lot and I got to work in all different phases. This wasn't just a management consulting. I started in product development and then I did process development and then I worked in an innovation group and I kept maneuvering so I got to try different things. I was looking for something that I could use what few gifts I had and in a way that would be productive and that I'd be passionate about.

• 21:39Speaker 02

  And by the way, I had, the reason I was able to get into MIT is I started, my time preference changed. Rather than being instant gratification, I started, I got a much lower time preference and that is I became focused on the long term, on studying and developing these aptitudes and looking for a calling that I could use to create value for others and that would

• 22:15Speaker 02

  make me successful and that I would be fulfilled by, so I would be passionate about it and work. So through all this, I worked in multiple departments at Northrop D. Little and I just...

• 22:33Tim Ferriss?

  Charles, may I interrupt you for just one second? I apologize. That, could we talk about, I just want to pause on the switch that you made. So how did you, because a lot of people never make the switch from instant gratification to this longer term focus. What catalyzed that for you?

• 22:51Speaker 02

  Well, I think it's, it's that I said is my father always had me doing dirty jobs. And I was minimizing the, my work effort I put into it. And at some point I figured out, this is a dead end. What am I doing? And, and it been, maybe his lessons and his example seeped in. And so I started, started reading probably as a junior in high school, started reading, started with novels. And then at MIT, I, I got three degrees in engineering there, but I was a lousy engineer. But I was, I was good at the concepts behind engineering, but not on how to apply anything.

• 23:36Speaker 02

  So I maximized the, uh, taking the courses in theory. And so I took, uh, uh, mathematics for nuclear engineers, all these abstractions, because that's what I was good at. And so, not that I've used a lot of that, but it really helped develop my aptitudes. And so then, as I got to work some in business and business consulting, I found, wow, this came naturally because what I was good at in business were things like vision, philosophy, strategy, uh, logically analyzing problems and looking at the other side, what could

• 24:21Speaker 02

  go wrong, rather than just go with whatever ideas we had, but to really experiment, test them, apply the scientific method to them, which I, part of which I learned at MIT, part of which I learned afterwards.

• 24:37Tim Ferriss?

  And, uh, I'd love to, and we can, we can certainly bounce around. I mean, that's sort of the nature of a lot of these conversations, but if, if we could talk about books, because it, uh, it certainly seems like books have had a, the large influence in your life. And in, in your book, Good Prophet, you wrote, "I am a bona fide book person. My home contains more books than I'll ever have time to count and the walls of my Which to offer are lined with them too. What are, what are some of the books that have had the largest impact on your thinking? And two, I'd love for you to, in addition to anything else you might mention, I'd love for you to describe what impact two books had that came up repeatedly in my reading.

• 25:22Tim Ferriss?

  F A Harper's Why Wages Rise, and I'm probably going to pronounce this name, so you can correct me, but Ludwig von Mises or Ludwig von Wies, I'm not sure.

• 25:32Speaker 02

  Ludwig von Mises.

• 25:33Tim Ferriss?

  There we go. The Human Action.

• 25:35Speaker 02

  Well, I, yeah, I can talk about those, but the two, the two authors that have had the biggest influence on me are Abraham Maslow and Friedrich Hayek. And, and a lot of what we do is based on Maslow's ideas of, of posi, he was one of the early positive psychologists, rather than most of them in history, Freud and others had worked on the psychiatry of, of illness. And he took the other side, he said, what can enable somebody to have a fulfilling, rewarding life?

• 26:20Speaker 02

  And what he said is, what you can be, you must be. If you are determined to live your life without developing your potential, you may be successful in other ways, but you will be deeply unhappy for the rest of your life. He said, a bird has wings, a bird has, has to fly. What you can be, you must be. And so that's, and then he called that, that state of where you are fulfilling your nature, self-actualization, that what you can be, you've, you're becoming, not that any of us are every perfect in that, because it's continual learning, experience, and which requires

• 27:05Speaker 02

  ongoing effort. So that's what we've, we try to apply here at Coke Industries, and that's what we're applying in our. In our philanthropic efforts to enable everybody to have the opportunity to realize their potential. And then what Iax said of all the insights that he's provided, one that's I quote in my book Good Prophet, that what he called perhaps the greatest discovery in the history of mankind is that people can live and work together in peace and to their mutual advantage under generalized rules of just conduct.

• 27:47Speaker 02

  That is with generalized rules that enable people to succeed by assisting others rather than detailed rules that cause conflicts and people trying to undermine each other makes all the difference. And that was from his study of history, well, history, philosophy, economics, and so on. So you put those two together and it forms the core of my philosophy and what's enabled me to accomplish more than I ever was really capable of doing.

• 28:24Tim Ferriss?

  You and I in previous chats have had Karl Popper pop up in conversation a number of times. Do you find yourself applying scientific principles or engineering principles that you used in your education to business? Or how does Karl Popper fit into your thinking about business? Or life?

• 28:53Speaker 02

  No, no, that's a great question. At MIT, I became fascinated with science and the scientific method. And then after I moved back to Wichita, I started studying, one of the early things I studied was the philosophy of science and the scientific method. And particularly, and one particular essay of Karl Popper's called "Science is Falsification", in which he says that the true scientific method is develop a testable proposition, not a proposition that... That is untestable, but one that's testable.

• 29:32Speaker 02

  And then your obligation is to not to go find evidence that will support it, but go out and seek criticisms of it. Find what's wrong with it. And that's what we do on everything. Like, we have a project or an acquisition. The first thing to do is find what could go wrong. And any idea I have, I, let's say I have an idea for a new strategy or a new business. And so the first thing I do is think through, okay, what are the key drivers of success here? What needs to happen?

• 30:15Speaker 02

  And let's say there are five different main drivers. Then I go find the people who can best show what's wrong, or what could go wrong in each of those drivers. And we get together, and I go through my idea, and each one is expected to come up with ways that could go wrong. And every time we go through that, we come up with a better answer than I developed. And so that's critical. The other philosopher of science that I've particularly drawn on is Polanyi, who wrote, whose essay, well, a couple of things.

• 30:55Speaker 02

  His essay on Republic of Science, where the reason a scientific community has been so productive and innovative is that no one's in charge. It's by consensus, debate, and knowledge sharing. And innovations come about by taking different ideas and combining them in new and novel ways. And so that's what, that's another thing that we, or approach that we use in management. Every one of our businesses, we look at as a laboratory for innovation and finding new

• 31:36Speaker 02

  and better ways to do things, and new and better opportunities.

• 31:41Tim Ferriss?

  Charles, could you speak to perhaps an example of how you have applied...

• 31:50Tim Ferriss?

  The Republic of Science or the concepts therein and for people who want to look them up, first name Michael, I believe, Planyi, we'll put this in the show notes as well for folks, but in terms of information exchange, recombining in novel ways, could you give a concrete example of how that has been applied?

• 32:14Speaker 02

  Right, well, the first thing we do is, is we emphasize knowledge sharing. Many companies, particularly large companies, operate in silos and, and you have an incentive where, gosh, you know, you have an idea or you learned something and you don't want to share it because you may not get credit for it. We consider that the kiss of death. So, so we expect everybody to share and we build mechanisms and incentives in the company to, to encourage this internal knowledge sharing.

• 32:52Speaker 02

  And then we expect every, every discipline and every business to build knowledge networks around the world and it may not be, largely isn't, something that's in, in your field or just with the competitors, but something that's going on elsewhere. And so, we do that. I mean, for example, on, on how to keep compressors from breaking down and shutting down your whole operation. So, we, one group, we build a group to do data analytics, to, to take measurements and

• 33:35Speaker 02

  determine whether it was near breaking down so we could repair it before it shut the whole plant down. And then, everybody, and shared this knowledge and learned from each other. And this, this is our whole philosophy of mutual benefit. That is, the way to get knowledge sharing is show when you help somebody else, if it's the right person or group, then they will reciprocate. And so, we have this culture now of knowledge sharing, what we call a republic, create the republic of science. And that's, that's true for everything, for not just compressors, but everything.

• 34:20Speaker 02

  And then, we have innovation conferences that get, draw from different disciplines and different other businesses, they get together and throw out ideas they have, and then they, then they get to know each other, so they don't just share when we set up a structure to do it, but would they have what we call a spontaneous order, where people just naturally know, "Gosh, I'm working on this problem, who might help me in the company? And then, who can help me elsewhere in the world? Who's working on something similar?" I mean, it's like what Newton said, "If I see further, it's because I'm standing on the shoulders of giants."

• 35:01Speaker 02

  And, but they don't need to be giants, anybody who, who's working on a similar problem may have an idea that can help you. And collectively, we're all smarter than we are, any of us are individually.

• 35:15Tim Ferriss?

  And, you know, to that point, I'd say that it seems like you need to create systems and incentives to reward the right type of, of sharing. And in, I keep mentioning Good Profit, you've written other books, but you know, Good Profit, I've, I've found very interesting for a number of different reasons. I mean, you have, it's certainly completely politically agnostic, I mean, you have John Mackey, co-founder of Whole Foods, who's praised it, you've got General Richard B. Myers, former Chairman of the Joint Chiefs of Staff, and others who've, who've talked about it, and it's, it strikes me that sort of clarity of thought and systems are a recurring theme.

• 35:59Tim Ferriss?

  So, I'd like to talk about a few things that makes what you guys do different, perhaps, from, from others. And one, one that stuck out to me, and we don't have to spend a lot of time on this, but was, this is on Coke After Fred, in Chapter 2.

• 36:20Tim Ferriss?

  It was on the difference between acquisition strategies of Coke and Berkshire Hathaway. And I believe I'm getting this right, but it says Berkshire Hathaway buys companies when their competitive position is attractive, and if their management is good, he assures them that he won't intervene, except to decide how to invest the cash flow, then he largely leaves them alone to operate as they had before the acquisition. Coke's strategy has been to make acquisitions when we can create additional value by applying our capabilities. I was wondering if there are any other differences or contrasts between Berkshire Hathaway or other companies that people might compare Coke to that come to mind? Are there any other differences that really stand out to you that we haven't talked about?

• 37:02Speaker 02

  What I like, our management approach is based on understanding the principles of scientific and social progress. And we've codified and systematized those in the market-based management in five dimensions. And then, which I didn't describe in Good Profit, because I hadn't clearly thought through how we applied that that enabled us to do all the things we did. That is, in 1961, when I joined the company, we had two businesses.

• 37:43Speaker 02

  The largest one was a crude oil gathering system in southern Oklahoma, and the other was a smaller company that my father let me run initially, that made internals for distillation columns. It was struggling at the time. And since then, we've increased the value of the company seven thousandfold and entered all these different businesses. We now have 12 business groups, such as Georgia Pacific, DuPont's old nylon business, and so forth. And, well, I won't go through.

• 38:30Speaker 02

  Them all, but, but, okay, the way we've done that is, is by creating what I, I now call virtuous cycles of mutual benefit. And that may be highfalutin expression, but it's, it accurately describes what we did. So the, the starting point is to understand what capabilities you have that others will value, that you can use to create value for others. And, and, and then to find the, the opportunities for those capabilities that will create the most value for others, and particularly others who will reward you for that value.

• 39:13Speaker 02

  So, so our idea, that the ideal for business is to maximize the value you create for others, and your profit would come solely as compensation for that value you're creating for others. And then to continually improve and, and add to those capabilities which, and then look for, based on that, what, what other opportunities are there for which you can create superior value. So, so there are two components then. One is to become preferred partner for all your key constituencies.

• 39:55Speaker 02

  That starts with customers, but it's, includes employees, suppliers, communities, and society as a whole. And then the second piece is to continually transform yourself. Like our philosophy is, if we in a business, or you as an individual, working in an area, if you're the best in the world, it's not good enough. And particularly today with the rapid improvements in technologies, within a year or two, you're going to be obsolete if you just rest on your laurels. So you've got to be constantly thinking on, how do I improve? How do I do things differently?

• 40:40Speaker 02

  What are the new opportunities? I mean, if we had just stayed with the crude all gathering and making those tower internals, I mean, we'd be out of business now. But it's by applying that, applying these principles of human flourishing and to create these beneficial cycles, focusing on how do I create value for all my constituencies, particularly those who will reward us for the value we create for them, is what has enabled us to do what we've done.

• 41:18Tim Ferriss?

  And is that, in essence, the definition of good profit for which the book is titled? I mean, profit that is creating value for customers, society, partners, driven by sort of voluntary, a voluntary mutual beneficial relationship? It seems to map. I'd love for you, if you can, maybe to confirm or clarify that. And then could you give, could you give some examples of what, what bad profit is? What are examples of bad profit and why?

• 41:56Speaker 02

  Our job is to produce products and services that our customers will value more than their best alternatives. And in doing so, to constantly reduce and become more efficient in the resources we consume in doing that, which, okay, how does that benefit society? It frees these resources then to satisfy other needs. So that's what good profit is. Bad profit is, is all the ways they profit that is antithetical to, to that approach.

• 42:37Speaker 02

  That is, trying to cheat your customers, misrepresenting what you're doing, and rigging the system, getting corporate welfare, protectionism of all different kinds, including protection from foreign competition, but also domestic competition.

• 43:00Speaker 02

  And a great example of this is occupational licensure, in which there are, like, a third of all, I think, a third of all occupations today required some kind of government approval, whether that's, and it depends on the state or locale, but there are hundreds of these, which are mainly keep people who start with nothing from being able to do anything, because some of them require a couple of years of going to school and paying a substantial fee that they can't afford.

• 43:43Speaker 02

  So it just, it keeps poor people poor, rather than enabling them to realize their potential by developing their skills that other people will value. And this, these things like hair braiding, hairdressing, manicurists, yoga instructors, funeral parers, interior decorators, you name it, not things that will blow people up or anything that you think, gosh, the government needs to approve that. So it's, it's all just cronyism, protectionism, and corporate welfare.

• 44:20Tim Ferriss?

  You've, you know, one thing that I've found engaging about Good Profit and a lot of your writing is that you're very, you're very specific and also very transparent in a lot of respects. The, there are a number of other things that fall in the book, and please feel free to correct if I'm getting this wrong, under the category of bad profit, you've got mandates, subsidies, tax incentives, import tariffs, restrictions on exports, anti-competitive regulations, bailouts. And I'm looking at a workbook, this is, this is a way to engage with the material, a Good Profit workbook, for people who want to really understand the material.

• 45:04Tim Ferriss?

  And one of the questions that they pose is, do coke companies participate in bad profit? If so, why? How would you answer that?

• 45:14Speaker 02

  Well, you can't avoid it. I mean, if we, for example, take steel tariffs. We oppose those even though we have 40% interest in the newest steel mill in the country in Arkansas. And I think Forbes just wrote an article about it in the last issue. Big River Steel. And so it makes us money, but we oppose it. I mean, we play by the rules. We're gonna play by the rules, we're gonna obey other laws, and, but we're gonna oppose

• 45:55Speaker 02

  all the ones that undermine the ideal role for business in society. And why? What are you, just running a charity? No. But we take the long-term view. And to rig the system to make a quick buck and makes people's lives worse, then what are you doing? Why does society need business that's making people's lives worse? If business and individuals are getting wealthy, the only way society's gonna permit

• 46:38Speaker 02

  that long-term is if they're contributing to helping people improve their lives, not making it worse. So this is a problem with business today. We have, business people have a bad, wealthy people have a bad reputation because there's so much of this cronyism and protectionism going on. Like, we oppose the... The border adjustment tax, like a 20% tax on all imports, even though we determined in the most likely case it would make us over a billion dollars a year by increasing the cost of living to Walmart and Costco buyers.

• 47:23Speaker 02

  And we helped get that defeated because as I told the leaders in Republican, I said, "How does this make sense? Are you going to promote this? We're for this because it's going to make Koch Industries a lot of money and probably big exporters like Boeing and General Electric will probably never pay tax again. And it will increase the cost of living for the great majority of people in this country, particularly those who are least well off." And of course, they had their reasons, but it didn't make sense and so we and others got it defeated.

• 48:08Speaker 02

  But the sad thing is you could tell what the great majority of companies, whether they were for or against that, depending on whether they thought it would make them or cost them money short term. So that's it. All this short-termism that's going on, we think is hurting people and undermining businesses' role in society.

• 48:38Tim Ferriss?

  What types of market distortions do you wish didn't exist? Or are you trying to prevent?

• 48:48Speaker 02

  All of them.

• 48:49Tim Ferriss?

  All of them. Could you give, are there any particular examples that stand out for you as sort of the heavier domino of sorts or something that has particularly negative cascading effects?

• 49:06Speaker 02

  Well, I mean, the biggest are all these forms of corporate welfare, which I mentioned, occupational licensure, the restrictions on innovation and competition, and opportunities for those who start with nothing, as I said, on occupational licensure. So that's what goes with those, and then all the protectionist provisions, these trade restrictions, this crazy immigration system, all of these are things we're working hard on to change.

• 49:43Tim Ferriss?

  It strikes me, and I'm sort of a simpleton and pretty uninformed when it comes to these things, but that being a privately held company allows you a flexibility that some people in leadership positions in publicly held companies, publicly traded companies, would feel they don't have, which is a benefit that you have. For instance, if you have, because I would imagine there are differing opinions at points, so if you have an opportunity or a, say, legislative or regulatory change that could

• 50:19Tim Ferriss?

  be short-term beneficial, profitable that is, and that conflicts with you, Charles, your direction that you would like to see things head on a broader scale for human flourishing, how do you have that conversation among top brass in the sense that revenue, profit, these are things that are easily quantifiable, whereas something like human flourishing may be harder to quantify? How do you guys have a discussion when there's disagreement?

• 50:54Speaker 02

  We had those kind of disagreements decades ago, but I can't think of any of those. Now, we may have a debate on whether this will help or hurt long-term, but it is always, will this enable to fulfill our obligation as a business? That is, to profit by helping others improve their lives.

• 51:22Speaker 02

  I mean, what we do is we teach these principles. We have dozens of people who work full-time on teaching these and consulting on on these principles and principles of of human flourishing and and how to apply them that'll make us successful long-term. And that's how we we try to reward our people. Well, first of all, we hire first on on values, on our guiding principles. We have now eight guiding principles. And and so we hire on those, we we reward on those, we promote on those. And if somebody isn't living by them, we encourage them to go somewhere else.

• 52:07Speaker 02

  Because it's not a fit for them here. And so, so we have harmony. That doesn't mean we don't have challenges and disagreements, but it's on how to do, how to realize this this vision and these goals, rather than whether we want to sacrifice our principles for for immediate gain. So I would say what guides us first are are these basic principles of human progress, human flourishing. Second is building capabilities that will enable us to create value for others. And then to continually transform ourselves to

• 52:53Speaker 02

  do a better and better job of that. And to and focus on using our capabilities to to contribute. So that's what's made us successful. So I mean, I mean, you look at our track record. Not that we've been perfect and we haven't had problems and haven't violated these principles because we're all we're all flawed, we all make mistakes and and get off track, which we've we've done many times and do it continually, particularly. Well, and as we do have 130,000 employees.

• 53:27Tim Ferriss?

  That's incredible.

• 53:28Speaker 02

  I mean, it blows me away constantly, the power of these ideas. People say, "Oh, well, you're so smart." I am not. Believe me, everywhere I've ever worked, or whatever, there are a lot of people who are smarter than I am. It's just, I was dedicated to understanding and living by these principles. And that's what's made the difference in my life. That transformed my life.

• 53:51Tim Ferriss?

  Well, let's, I'd like to talk about your, the principles in your, in your intellectual formation. And I set a book note to come back to this. And maybe, maybe these are the wrong trees to be barking up. But could you speak to, I have a couple of thinkers I've written down, authors and thinkers. We've already talked about a few of them. Michael Pollan, we've talked, we've spoken about your father certainly. I have F.A. Harper, author of Why Wages Rise. Ludwig von Mises, author of Human Action, among other things, of course. And W. Edwards Deming.

• 54:28Tim Ferriss?

  I'm wondering what, what are the main principles or lessons that you've taken away from any, any, any of those people? We don't have to necessarily cover all of them. But if any come to mind that we haven't given any airtime to? If there are any principles or learnings that you, you think are core to what you took away from any of the names that I mentioned?

• 54:53Speaker 02

  Right. Well, we, we've talked about Popper and Pollan. And there was another, besides Republic of Science, that I got from Pollan. It's personal knowledge that, that, and that's, he's written a book by name, Personal Knowledge, which says there's a huge difference between conceptual knowledge and personal knowledge. And he uses the example of a concert violinist. Okay, first thing at concert, somebody wants to be a concert violinist. First, how do I hold the violin? How do I move my hands? How do I make notes? And so they focus on the parts.

• 55:36Speaker 02

  And after these parts become natural, like the violin, then becomes an extension of your hands. You don't have to think about how to use your hands. That's what he calls personal knowledge as opposed to conceptual knowledge. And then after you do that enough, where the parts become second nature, then you can focus on the whole. The whole is making beautiful music. And so that's what, I mean, just that changed our whole approach to teaching our management philosophy. Because we were in, it's what I call, I think, a flaw in our education system. It's not really education, it's schooling.

• 56:21Speaker 02

  Teach to test. And what we found in our programs that works and helps people realize their potential is to look, is to consider real education to be three-dimensional rather than one-dimensional. And those three dimensions are, discover your gifts, your aptitudes, and what will turn you on. Then the second one is, do whatever you can to fully develop those. So first you learn to be, then you learn to learn, and then you learn to apply it. Okay, how do I apply these that will make a contribution in society that will be, that

• 57:05Speaker 02

  will help me better myself and, and in the process, better others. Help others better their lives. And that's three-dimensional education. And we find that in our programs we've started and support, that's what we're looking for. Because that's, that's what moves us toward a society of mutual benefit, where people have the opportunity to realize their potential. Okay, so that's personal knowledge is another one. Another one is division of labor by comparative advantage, which also fits Howard Gardner's

• 57:50Speaker 02

  thesis on multiple intelligence. That is, basically, that people aren't smart or dumb overall, I mean, except in real extremes, but most of us are gifted in some ways and not too swift in others, in that I'm Exhibit A in that. And so, I mean, that was, that division of labor by comparative advantage, that was first developed by Ricardo on nations. Nations ought to focus on what they're good at and then trade with others. And then that optimizes everything: learning, best use of resources, and so on.

• 58:35Speaker 02

  Another concept is creative destruction, Schumpeter's concept. That is, you don't want to be protectionist in your own shop. That is, you're doing something a certain way, like Kodak in making film rather than do it digitally. They had the technology, but they tried to protect their existing product line, and so ended up going broke. So you've got to, you want to drive creative destruction internally, that is constantly replace what you're doing with a better way, a better product, a better technology.

• 59:15Speaker 02

  Another one is self-actualization, which I described, and then another one, also from Maslow and other positive psychologists, is what he called synergy. Is a system and a state of mind where what selfish and unselfish merge. I mean, and that's what he meant by becoming contribution motivated. That focusing on helping others in a way that's also rewarding to you, then the whole dichotomy between selfish and unselfish disappears. Now, that's in an idealized case, that'll never be perfectly true.

• 59:57Speaker 02

  But if we could have a society and an organization where that's generally true, then you're going to be much better off. And that's what we try to apply here. That is to have what's in the long-term interest of the company in the interests of the individual employees.

• 1:00:19Speaker 02

  And as I say, I learned that from Maslow.

• 1:00:25Speaker 02

  And then, and then free speech and open inquiry is another one. The role of property rights and decision rights, which is a key, one of the five dimensions of market-based management. Then, basic values such as integrity, humility, respect, and desire to contribute. Then another from, this is from von Mises, Human Action Model. People only act if the action will satisfy three requirements. The first is, is you become dissatisfied with your current state. You have a vision of a better state, and you have a path to get there.

• 1:01:09Speaker 02

  So this is very important for how companies or societies organize themselves. If, if people believe they're dissatisfied with the current state, they see what's wrong with it, but they have no vision of, of a better state.

• 1:01:31Speaker 02

  And because you don't have free speech, you don't have communication, they don't, they haven't seen a better alternative. Or you're so bureaucratic and, and protectionist, you don't allow anybody to improve, or like in a company, the approval process is so painful and difficult that you just give up. Somebody we worked with in one of the major oil companies years ago was always complaining about the bureaucracy there and he couldn't do anything wrong, and I finally I said, "Well, so what do you do about it?" And he says, "Well, after a while, you just paint your ass white and run with the antelope." And so that's, that's what, what happened.

• 1:02:15Speaker 02

  So these, these principles may seem obvious, but if they're so obvious, why are so many countries, organizations, and people ignoring them? Anyway.

• 1:02:29Tim Ferriss?

  Why, why do you, that's actually a fantastic question. Why do you think they are ignoring them? Because they're not obvious, or because there are other, other factors at play? And then I want to segue into, after, after you have a chance to just comment on that, to stand together and we'll, we'll provide some background to that and then get into it. But why do, why do you think that these, these principles are neglected? Is it because they're not obvious, because they're difficult, for, for other reasons?

• 1:02:59Speaker 02

  I, I think it doesn't fit their priorities. And I think a good part of it is they're short-term oriented rather than long-term oriented. I, I think that's critical. And, and as I say, that's been the demise of, of so many companies. That's why you see companies, the top companies in the country 50 or 100 years ago are all gone. Not all, but the great majority are gone or else, uh, very, uh, declined markedly in their position.

• 1:03:31Tim Ferriss?

  Yeah, yeah, it's, uh, it's incredible how many blind spots, and maybe not incredible, it's totally sensible how many blind spots are created by...

• 1:03:41Tim Ferriss?

  Ignoring some of these factors, a friend of mine, one of the co-founders of a site and a service called Reddit, who's been on the podcast, described a meeting with an executive at Yahoo at one point, who dismissingly looked at their numbers and said, "You're a rounding error." And of course, that didn't, didn't work out so well for Yahoo. So the creative destruction is really important.

• 1:04:07Speaker 02

  Let me, let me mention one other principle that's been critical in my life. I touched on it. And that is that, as I said, I, I have, I just have a narrow range of abilities, developing those and focusing on that, and then partnering with, with people who could complement that. And, and, and what I've learned is to have a good partnership that would do that, requires three things. It requires shared vision, shared values, and having complementary capabilities.

• 1:04:47Speaker 02

  And where I've had that, partners who fit those three, or we fit those three together, then I've been very successful. Where I haven't, I've generally failed. And my best partnership has been with my wife. We've been together 51 years. And we share vision and values, and I'm, I'm good at the few things she isn't, and she's good at about everything I'm not good at. So we make each other better. And so that's been one of, another one of my great blessings and advantage in, in my life.

• 1:05:32Tim Ferriss?

  Yeah, I wanted to, to ask you, perhaps later we'll, we'll come back to this, but what is, factors that have made it work? The, the... The relationship with your wife, because we've spoken about that before. And I do want to come back to that if we have the time to do so. But I also want to make sure that we have a chance to cover and give due time to stand together as a way of getting there. Because I think there are a lot of passionate supporters and there are a lot of passionate detractors. And at least in my own very small microcosm of this, my experience is that the most intense

• 1:06:15Tim Ferriss?

  supporters and detractors tend to miss things. So I want you to correct me if I get anything wrong that I'm going to say as a means of context. But just leading up to Stand Together, I want to paraphrase a former congressman, Joe Scarborough. This is from that source. Basically, the gist of it is, although your critics are usually unaware, the Koch brothers have supported more than just what are generally considered conservative causes. They oppose George W. Bush on many issues, are pro-choice, support same-sex marriage, and worked closely with the Obama White House for the Obama administration's criminal justice reform initiatives that align with their own. I have two things that I wanted to mention on criminal justice reform and foreign policy,

• 1:06:58Tim Ferriss?

  and then feel free to, and I would love you to correct anything that I get wrong, obviously. But what's impressed me about a number of the things that you've done, and probably many, many things that you've done, is that you've allied with former, combatants is maybe too strong a word, but people with whom you've had tension, or people with whom you still have many disagreements over different things. The first criminal justice reform, despite what I believe was a pretty adversarial relationship with activists and CNN commentator Van Jones, you ended up collaborating to work together on criminal justice reform. Similarly, on foreign policy, despite disagreements with George Soros.

• 1:07:43Tim Ferriss?

  On many policy issues, you found that you had common ground when it came to foreign policy, so you were able to partner with Georgia's Open Society Foundation. The question I want to ask you before we get to stand together, which we're going to in just a few minutes, is how is your approach to policy? A, did I get anything wrong? I'm cheating, it's a two-part question. And then B, how's your approach to policy coalitions changed over time?

• 1:08:11Speaker 02

  No, that's a, that's a great question. Well, I've, I've been at this social change and philanthropic approach for 55 years now. And it was basically, I'd learned these principles that had transformed my life and enabled me to really realize my potential and accomplish more than I ever dreamed possible. And so I, I had the desire to help as many others have the same kind of benefits in their own way, to fit their own situation and gifts.

• 1:08:55Speaker 02

  And so I started, as I say, and I started in, on this in, in 1963. And, and for the first, let's say, 40 years of that, I wasn't involved in politics at all. I wanted to stay away from that and, and work with helping people realize their potential and supporting mainly students. And then as, as the students talked to their professors about what they were learning working with, with our organization, that the professors would come and they'd want

• 1:09:38Speaker 02

  us to help them set up a program to do that. So it just spread.

• 1:09:45Speaker 02

  And then, to get things done, we decided we needed to build organizations that would, well, first of all, that would take these ideas and develop what are the policy implications of these. And so I found the Cato Institute and a number of other institutes to do that. And then we decided we needed to help mobilize people. If more and more people were interested in these ideas, how do we get policy changes? Well, we need to mobilize people who are interested

• 1:10:25Speaker 02

  in them and help them have a voice. And so we started doing that, and then decided we needed to get politicians, more politicians, who would be interested in ideas that would really help the country long-term, rather than just help them get re-elected. And so we started doing that, and the Republicans seemed, although far from ideal, seemed more sympathetic to these. So we started supporting Republicans. And then we learned that didn't get us anywhere, so we have changed. No, we will go back and support anybody who will

• 1:11:09Speaker 02

  advance these policies that will help bring about the society of mutual benefit, where people have the opportunity to realize their potential. And so, if you put it in terms of my philosophy on partnerships, you share vision and values and have complementary capabilities. What I was doing was applying too broad a requirement for shared vision.

• 1:11:36Speaker 02

  That is, okay, we'll only support those and work with those who we share broadly a vision of what kind of society we want. And so that was really limiting the number of people we could work with. And so in the last few years, we've changed that. All we need is share vision on a specific issue. And we may disagree on everything else, but if you can really help us advance this policy that will help people improve their lives, we will, we'll work together. And so that's how Van Jones has gone from being somebody who was trying to shut us down

• 1:12:21Speaker 02

  to working with us and bragging on us and, and enabled us to work with Soros and everybody on specific issues. Other, even though we have major disagreements with him and that's, see, and then that fits. What we're finding is doing that, it reduces the hostility and the conflicts. If rather than you meet somebody, rather than try to find something you disagree with on and fight them and attack them, search for something you can work together on that will contribute, that will help people improve their lives. And doing that, now we have allies I never would have believed we can.

• 1:13:05Speaker 02

  And now as this is change, changing our brand and how people look at us, now many, many more people are open to working with us.

• 1:13:17Tim Ferriss?

  And it seems like a lot of what you've done, not just in the last years, but certainly even before that, has led up to this initiative, Stand Together. Could you tell us a little bit about that focus and why it's a focus, what it is?

• 1:13:38Speaker 02

  Right, we've, we started the organization that was originally Stand Together, now Stand Together Foundation.

• 1:13:48Speaker 02

  To build on the work we were doing in troubled communities. And our approach there is what we call bottom up as opposed to top down. And it starts with the recognition, as I've been saying, that everybody has a capability to realize their potential if they have the right mindset and support. So how do we help people get the right mindset and support so they can make a better life for themselves? And as I say, it's with a bottom up approach rather than a top down approach.

• 1:14:30Speaker 02

  And what I mean by that is rather than have somebody come in and say, "Well, on average, or we can improve the statistics on this. Here's what we're gonna do, and we want everybody to do this same thing." We find that hasn't worked. But what works is to find what we call social entrepreneurs who are closest to the problem. And this would be largely people who've had a problem, have gotten in trouble, have been held back, and have learned to overcome it, and now are dedicating their lives to helping others do the same.

• 1:15:14Speaker 02

  So they have different capabilities than we do. We advertise, "If you're interested in our help so you can improve your efficiency by better management practices, and want to scale and celebrate it so it can spread so more and more people can benefit from your proven approach, then we'd love to do that." And so we've had several thousand applications. We now have 150 of these partnerships in these troubled communities on everything from

• 1:15:51Speaker 02

  addiction, to criminal justice, to homelessness, from lack of economic opportunity, to young people who...

• 1:16:06Speaker 02

  Who have only seen negative contribution, negative motivation, rather than contribution motivation, and to help them change their mindset that they can succeed and contribute.

• 1:16:21Tim Ferriss?

  And it strikes me, and I'd love for you to correct me if this isn't accurate, but it seems like you're taking a lot of your experiences from, say, criminal justice reform, where you've focused, among other places, on really analyzing recidivism and reducing recidivism, looking at how to change things so that employment opportunities for released convicts aren't as constrained as they are currently, or expanding those options. And I've actually spent time in some max security prisons, teaching entrepreneurship with a number of organizations, that you're taking some of those learnings and then applying

• 1:17:04Tim Ferriss?

  it more broadly to enable a community of social entrepreneurs. Some of the numbers that I have in front of me are, in terms of the entrepreneurs and groups who are focused on, and it looks like there are five, four key institutions, education, business, communities, government policy, so you have more than 1,000 professors at more than 350 universities, tens of thousands of K-12 teachers, and this will lead up to a question, more than 700 of the top business and philanthropic leaders that combined employ more than 2 million people, 140-plus community groups tackling poverty and addiction.

• 1:17:48Tim Ferriss?

  I'm very interested in addiction, that's a longer story for another time, but millions of grassroots activists in all 50 states. So this is clearly bottom up, like you mentioned. I think a lot of people, when they hear Charles Koch, think market-based solutions. Are market-based solutions part of this, or looking for market-based solutions, or is it broader than that?

• 1:18:14Speaker 02

  Well, it's, uh, it's market-based in that, in that it's, uh, it's, uh, looking at what really works and looking at individuals rather than, I mean, market is, is a little bit of a, of a misnomer, but it's applying the same philosophy that, that made Coke Industries successful and enables us to, to help our, our employees become contribution and motivated. And by the way, I, you suggested this early, and our employees who after years of learning they can succeed by constantly improving their ability to create value

• 1:18:58Speaker 02

  for others, they tell me and, and after they retire or leave, write me and say they, uh, they're so appreciative that they learned this because it improved their family life, their communities, their friendships, everything, to look at it that way rather than the way they were looking at it before. Uh, but, so it's, it draws, yeah, on our experience in criminal justice reform, but, but more broadly, our experience in, in, in what made Coke Industries successful, what have made societies throughout history successful, which ones

• 1:19:39Speaker 02

  have, people have flourished and which ones have people that have been immiserated, uh, and what we learned in, in developing youth entrepreneurs. And that's an organization my, my wife and I started 28 years ago here in Wichita, is we saw, met so many kids that obviously had ability that they did, played sports with, but were just getting terrible advice. They were, came from broken homes and tough neighborhoods where people were trying to hurt each other. So, wow, this is, what a waste. So, we need to start something, particularly in this, in these inner-city high schools.

• 1:20:24Speaker 02

  That would teach them what we call principal entrepreneurship. That is, to have, create this three dimensional education where they learn, they could change their mindset. Look, in spite of you think things are hopeless from where you came from, they're not. All you've got to do is change your mindset and then we'll provide the support to help you become successful. So in youth entrepreneurs, they, a theory, one of the skills and values they need to be successful and discover their own. And then for a business plan, and the best business plans will get some venture capital to help you start your own business.

• 1:21:07Speaker 02

  And then we'll, if you're successful, you can, we'll, we'll find a local entrepreneur to help mentor you, maybe provide internships for you. And if you continue to do well, you want to go to trade school or college, whatever fits you, we'll help you do that. And it is amazing that, how many of these young people's lives have been transformed by this and, and are running successful businesses out of this. Everything from car dealerships to, one developed a protein bar that sold on Amazon,

• 1:21:48Speaker 02

  clothing lines, chartering buses, fitness clubs, hair braiding, making jewelry, tutoring others. I mean, it, it is incredible. It just, it blows you away when you, and these, you hear these kids describe how they've, how this has transformed their lives. So that's what motivates me, not just the theory, but seeing what it really does to change people's lives.

• 1:22:18Tim Ferriss?

  And with something, Charles, when you're operating at such a high level in many respects, and you have so many different places you could allocate capital and effort, what does success look like for Standing Other Foundation, say, a year from now, three years from now, whenever you would assess it to determine whether to put more into that or more into something else, which could also be philanthropic, maybe just a new iteration

• 1:22:57Tim Ferriss?

  or a new foundation, how do you think about what the success metrics are, or if not metrics, how you determine if it is working or not?

• 1:23:09Speaker 02

  Well, I mean, what we're looking for with these social entrepreneurs is which ones can really, we help scale and then celebrate so it can capture the national imagination and change the way people think about these, like criminal justice reform. I mean, there it was, what was current in choice was, okay, somebody did something illegal, block them up and throw the key away. And prison is for punishment, rather than to help them rebuild and get a second chance.

• 1:23:50Speaker 02

  Now, it's changing because we and others, Van Jones and others, have built these broad-based coalitions that this First Step Act passed by 87 votes in the Senate. I mean, that's incredible in this day and age to have this kind of bipartisan support. And there's impetus to...

• 1:24:17Speaker 02

  To take it to the next level. But it's changing life as people realize that ninety some percent of people who go to prison get out. And do you want prisons to be incubators for more hardened criminals than they were when they went in? Or do you want them to have a second chance and come out with a skill and values that will enable them to contribute and become contributors rather than detriments to well-being and safety? And, I mean, for example, one of the groups we support, Hudson Link, puts on college-accredited

• 1:25:00Speaker 02

  courses in prison that are three-dimensional, as I mentioned, and of the graduates of their program has a recidivism rate, percent that go back to prison in three years after they get out, is two percent from graduates of their program as opposed to nearly seventy percent nationally and forty some percent in New York where they have mainly operated. And we've helped them. They're up to five prisons now, and we think it can be greatly expanded.

• 1:25:36Tim Ferriss?

  You've also done, you've supported some really good work being done in addiction treatment with the Phoenix, and I'll link to all of this in the show notes so people can take a look at it. But it's really important work. These are important topics. And part of the reason, Charles, that I wanted to have you on after months of just organizing to make it happen is that in very polarized times where you have...

• 1:26:17Tim Ferriss?

  It could be any number of people. The president or someone else is the second coming on one channel. You flip to the next channel and he or she is the antichrist. That it is possible to attack the issues or attack the problems and not the people. And while I'm sure that, and I would hope that if we were to spend more time together, you and I would disagree on a lot of things, that there are things we could absolutely agree upon. And that provides the space to have a conversation and discuss the possibility of collaboration for things that anyone can agree upon.

• 1:27:01Tim Ferriss?

  And I'm really pleased to give some of those specific examples because it's paralyzing when everything becomes ad hominem. And so that's really more of a comment than a question, but I just wanted to, thank you for making the space for us to talk about that. And I do have some more questions, but the question about the Standing Other Foundation, are you still accepting applications by social entrepreneurs or has that window already closed?

• 1:27:44Speaker 02

  Oh, no. We haven't actually helped change the trajectory of the country more towards this ideal. So we're just getting started. We're up to over 150 now of these social entrepreneurs we're partnering with. And we think as we're developing capability, we can add as many as 70 a year. So we're just, we like just scratching the surface and then developing the capability to help them scale and then to more fully celebrate it, to get this out.

• 1:28:22Speaker 02

  In the mainstream, so people see what's working and how this approach can transform lives, what these individuals have learned from their own experiences and are dedicated to apply. And those are my heroes in society, people who have suffered injustice, tremendous injustice, and rather than come out better or giving up, to dedicate their lives so that others don't have to suffer similar injustices. I mean, if we can encourage more

• 1:29:05Speaker 02

  and more people to have that frame of mind and that kind of dedication, that's the only thing I think that will get us on a better trajectory in this country.

• 1:29:17Tim Ferriss?

  People can learn more, of course, I'll mention this at the end of the show as well, but StandTogether.org is a great URL and a simple URL for people to remember for those who want to learn more. I'd like to shift gears in a way, but it's connecting a handful of things and also giving us an opportunity to talk about sort of ad hominem versus issue-based debates and also accurate perceptions versus misperceptions. So I have some questions

• 1:29:56Tim Ferriss?

  from my audience, and there were a lot of questions, and I've deliberately chosen a few that I think tackle head-on, or they don't really tackle, but give sort of an emotional voice to a number of things that people, some people rightly or wrongly, want to ask. So the first one I'd like to throw out, and this is from Matthew B., and you can tackle this any way you'd like, but the gist of it is...

• 1:30:32Tim Ferriss?

  Does he ever have pangs of guilt about the millions of Americans made poorer, sicker, or dead by unfettered capitalism? Does he actually prefer a world where the majority struggle in misery so few can hoard billions? Why are higher profit margins worth polluting the environment? And how does he square that with the animals and people sickened and killed by deregulated industrial pollution? So, that's very strongly worded, of course, but I want to sort of give airtime to a few of these questions. And there are a number of questions about environmental issues and climate change. So, I'd love for you to answer that in any way that you'd like. I mean, I think we've talked about, you don't need to answer, "Do you prefer a world where

• 1:31:16Tim Ferriss?

  the majority struggle in misery so a few can hoard billions?" I think that's pretty self-evident that your answer is, you do not prefer that. But how would you like to comment or respond to that?

• 1:31:28Speaker 02

  No, we would agree. I mean, I'm not, I don't like the term capitalism. That assumes that what we're after is a system where certain people have a lot of capital. And that's not what we're about. What we're after is a system where everybody has the opportunity to realize their potential, including those who start with nothing. And business should only profit to the extent they're helping other people improve their lives.

• 1:32:07Speaker 02

  And that, so, and polluting, and making people sick, killing people, is, they shouldn't profit. They should bear a cost for that. And those are my worst, you're talking, you ask about failures. Our biggest failures, in my mind, and what we work the hardest on, are our safety problems. When there's an accident and people die, I mean, that's monstrous. So, that's, that's job, job one is keeping people safe, and job two is protecting the environment. And I think the last five years, the EPA...

• 1:32:49Speaker 02

  has ranked us either number one or number two of US companies in pollution reduction initiatives. That is, that is our second top priority after keeping people safe. So, I mean, we agree to the extent, but what you find is that the, the countries that do the worst in those are those that are top-down. If you're bottom up and you're looking at individuals and how to improve their lives, it changes your approach rather than some top-down statistical approach or, or control.

• 1:33:33Speaker 02

  And so that's, but to me, the basic difference is, do we want a system that empowers people or one that controls them? And you look at systems through history that have tried to, to advance humanity by controlling everybody and making them follow some theory of, of the people in charge as opposed to having incentives and rules that will cause people to want, to believe that the way to succeed is by helping others improve their lives.

• 1:34:12Speaker 02

  I mean, the results throughout history, there is no comparison between the two in, in the benefit to human flourishing. I mean, if you want to look at the biggest polluters, look at East Germany when, when that became combined with West Germany. They had all these inefficient factories that were massive polluters. And then, and then look at, I don't know if you've seen the documentary Chernobyl. On the, that shows when things become politicized, they become corrupted. And that's, that's why all those years I got, had nothing to do with politics. And now we're, we have something to do with it, but, but based on, on not partisan, but...

• 1:35:01Speaker 02

  Who's going to help improve the policy so we can move toward this system of mutual benefit?

• 1:35:09Tim Ferriss?

  So I'm gonna ask just a few more of these and I'm gonna alternate between the the highly politically charged and not, so I'll go to one that I think is not, but I'd be curious to hear your answer. It was upvoted quite a bit. This is from John J. "Ask Charles why we can't return to the tax structure of last century. Higher taxes equals higher GDP. We averaged twice the GDP of today. Trickle down never works. Government has created or supported most businesses in this country: computers, GPS, internet, roads, electricity, etc. What are your thoughts, Charles?"

• 1:35:40Speaker 02

  I mean, my reading of history is somewhat different.

• 1:35:45Tim Ferriss?

  I don't have a dog in the fight because I'm not well-educated on this.

• 1:35:50Speaker 02

  People are liberated and empowered. They succeed. If you look at the history of humanity, for all the millennia up until, starting in the 18th century, there was barely any improvement. And it was because these were top-down societies where those in charge, well, they were beyond authoritarian, they were totalitarian, and people weren't allowed to think differently. If you violated the religious dogma, tortured until you either

• 1:36:27Speaker 02

  died or changed your opinion or were threatened with that. And so that stifled progress. And then, starting really with Holland, when they got it out from under Spanish rule, they started liberating. So religious and other dissidents started coming to Holland and they had free trade, open. I mean, they had plenty of problems. They still had slavery, which was endemic everywhere.

• 1:37:02Speaker 02

  But they had much more than others, so they became the most prosperous country in the world, and then it followed in England and then spread to the United States these ideas and was, to me, best embodied in the Declaration of Independence, that is, a system of equal rights and everybody having the right to the pursuit of happiness, which to me is a different way of saying the opportunity to realize their potential and to learn, contribute, and succeed.

• 1:37:42Speaker 02

  And to the extent that was followed in this country made us, the US, the most successful country in the history of the world. Unfortunately, it was not applied across the board. For example, African-Americans and Native-Americans had no rights, obviously with slavery for African-Americans and practicing genocide against Native-Americans. Women only had partial rights, not just, and I'm not talking about just the right to

• 1:38:19Speaker 02

  vote, but they weren't allowed to go to college in the early days, they weren't, when they got married, whatever property they had, their husbands controlled, so the relationship between husband and wife was almost like a master-servant relationship. And it took eighty years to remove the great majority of that. Then various immigrants, such particularly the Chinese and the Irish, had only partial rights and certain religious groups didn't. So all those were violations of the principles in the Declaration of Independence.

• 1:39:04Speaker 02

  And to me, what we're working on, what Stand Together's working on, is to eliminate the aspects of all those injustices that continue to haunt the country today.

• 1:39:19Tim Ferriss?

  Thank you. A lot of, I'm going to jump back to the more charged, a lot of these questions are about... Climate change and I don't, I don't know the answer to this, so I'm just gonna ask since this sort of thematically has come up a couple of times from Iman, I'm not gonna give the last name, this one is from Iman, "Do you really fund propaganda to confuse people about global warming?"

• 1:39:45Speaker 02

  Well, I certainly hope not, believe me, I am totally dedicated to the scientific method and, and good science and what we're doing is, is trying to get various groups, not people on the extremes who say there, there is no man-made contribution to, to warming, or others who say, "Within a few years, the, the world's going to end." So, leaving those people out, people who are somewhat open-minded and willing to listen to the other side to get them together, and we've had several of those sessions, so we

• 1:40:27Speaker 02

  can find something, I mean, there, there's enough concern about a man-made contribution to, to warming, that various policies are, have been developed and are being developed, and so what we want them to do is, is to find policies that will actually work, actually do something about reducing CO2 emissions, man-made CO2 emissions, and at the same time not make people's lives worse. So, many of these policies haven't done anything, reduce CO2, but they make people's lives

• 1:41:07Speaker 02

  worse, particularly the poorest, and, and the biggest contribution, or the biggest reduction has been in the US in recent years because of, of fracking of natural gas substituting for coal. And so the US is now, the figures I have seen, is now responsible for 15% of CO2, man-made CO2 generation. And countries in Asia, particularly China and India, share is growing. And the problem with many of our policies is they aren't doing much for it, and they

• 1:41:52Speaker 02

  make us less competitive versus China. And China has doubled the CO2 emissions per unit of GDP that the US does. And so as we push more over there, push more production over there, we're just increasing and uncertain of the production there. For example, in fertilizers and chemicals that are based on coal gas rather than natural gas, it's four to five times the emissions per unit of production. So these are all dilemmas, that we try to do something here, but it, many of them make it worse.

• 1:42:36Speaker 02

  So how do we, what we think we need are innovations that are going to cause China to adopt them and have them reduce emissions rather than us try to do it in ways that causes them to increase emissions. So that's what we're working on, and because it's not, it's just not, once again, it's just not a simple top-down matter. You've got to provide incentives to people to do it, and people have to believe it will make their lives better rather than worse, and accomplish nothing, which is what a lot of the policies have done.

• 1:43:15Tim Ferriss?

  Yeah, it's a great point about China and offshoring that I certainly hadn't thought through as granularly as that. I mean, it's, yeah, if you're pushing off production into jurisdiction, or just a, it could be jurisdiction, it could be regulatory, it could be cultural, I have no idea where the... The emissions or pollution per unit of production is four or five times higher. You haven't solved the problem by changing the location.

• 1:43:50Speaker 02

  And you see that in the world, all these policies and all these initiatives. And CO2 emissions are still going up around the world. So we need a different approach. I mean, to keep doing the same thing over and over is a form of insanity. So that's what we're trying to do, is get people focused on something that will make a difference and not make people's lives worse.

• 1:44:20Tim Ferriss?

  Charles, this is a question for me, just building on that or related to it. What do you think are the most legitimate existential threats to mankind? If you go to Silicon Valley, artificial intelligence is a very popular vote. You certainly have climate change or global warming, depending on if you're using, whose wording you're using, which is the vote for a lot of folks. In your mind, what are, if any, the more legitimate existential threats to humankind?

• 1:44:55Speaker 02

  I think the biggest threats, as they were for millennia, up until the 18th century, are top-down. The tyranny of experts, the fatal conceit that a few smart people can go tell everybody how to live their lives. And what we're finding, we're working with these social entrepreneurs, the ones who have good solutions, micro-solutions, not macro-solutions, because they've lived through problems and they've worked their way out of it and they know what works and are proving it every day.

• 1:45:36Speaker 02

  That that's what we need as society as as Hayek found in history. That enables people to pursue their own interests in a way that is mutually beneficial and leads to peace and harmony. And these top-down solutions, all they do is create partisanship and and and conflict. And that's what we see today in this country because it's politics is win-lose game. Working together to your mutual benefit is win-win as opposed to win-lose.

• 1:46:21Speaker 02

  So we need to maximize the amount that we allow people to do to advance their interests in a way that benefits others.

• 1:46:32Tim Ferriss?

  Are there any particular problems that worry you or things on the horizon that worry you that you think everyone should be paying more attention to? Any specifics that come to mind?

• 1:46:47Speaker 02

  Yeah, I think I think policies on trade and and immigration, it's what is attributed to Bastiat. If goods don't cross borders, soldiers will. And to have and then our foreign policy of forever wars. That's why we with with Soros's foundation, we created this the Quincy Institute, named after John Quincy Adams, who said, following the founders, we go we go not abroad in search of monsters to destroy. We're the friends of all nations and allies of none.

• 1:47:32Speaker 02

  And so we're in dozens of wars. We have over 800 bases around the world. We're involved in everything, trying to control the world, and it doesn't work. This is totally, this is the most top-down of all.

• 1:47:47Tim Ferriss?

  Yeah, it didn't didn't work very well for the Roman Empire. Not to say they're equivalent, but quick review of history. It seems to indicate that that that doesn't tend to pan out so well.

• 1:47:59Speaker 02

  And and then you add nuclear weapons to the mix.

• 1:48:05Speaker 02

  And the more we bully, or like we did in Libya, Gaddafi promised and got rid of his nuclear ambitions. And so we destroyed him. And so that creates a little bit of perverse incentive for Iran and North Korea and stuff to believe our promises that we'll leave them alone if they'll drop their nuclear weapons. So I mean, this stuff is so backwards.

• 1:48:35Tim Ferriss?

  What would, this is a question from, I think it's Jokum or Hokum, I don't know how to pronounce it. And I know we probably have a handful of minutes left. If you're open to just going for another, maybe five to 10 minutes. And his question is, what would you be willing to risk your whole fortune for? And I'll just add my own parameter to that, which is it's not necessarily betting the farm with the company, but your personal fortune. Is there anything that you would risk a lot of, or your entire fortune for?

• 1:49:05Speaker 02

  Well, I'm investing all the liquidity I have in Stand Together. So, I mean, the economists have a concept called demonstrated preference, that pay attention not to what people say, but what they do. So that's what I'm doing. And then I dedicate a lot of my time to that as well, my time and treasure. And so that's what I'm risking everything to. And that's the progress we're making there is one of the reasons I get up in the morning charged up every day.

• 1:49:43Tim Ferriss?

  Yeah, well, it's important to have a reason to get up, which I think you're, not to hearken all the way back to this, but your chapter on incentives in Good Profit actually touches on quite a lot. What would you put on a billboard, metaphorically speaking, if you could get a quote, or a message, question, a word, anything non-commercial out to billions of people? Is there anything that you might put on that billboard?

• 1:50:15Speaker 02

  Yeah, I put, which is our...

• 1:50:19Speaker 02

  Our slogan that stand together, greater you're good. And that's because that's a little bizarre. So what are they talking about? So you would hope that then they'd follow up. What do they mean by that?

• 1:50:32Tim Ferriss?

  Yeah, what do you mean?

• 1:50:34Speaker 02

  Yeah, I mean, just exactly what I'm thinking. I mean, what we've been talking about, that is, discover your gifts, develop them, and apply them in a way that helps others, that's also beneficial to you. So you'll be motivated to continue to do it.

• 1:50:55Tim Ferriss?

  Well, Charles, I don't want to take up too much of your time, but I do have maybe a few more questions. And I want to, we started close to the beginning, age six, I want to say, something along those lines, digging, dandelions. Let's go back even further. Who were you named after? Where do you get your first name?

• 1:51:19Speaker 02

  Well, my first and middle name was Charles Daganal. And I was named after an entrepreneur my father worked for named Charles Daganal. And he, my father at age, I don't know, 25 or so, or maybe it was 27, designed a refinery for him on the Isle of Green in the UK and worked for him for a couple of years. And they became lifelong friends. And he greatly admired Charles Daganal's entrepreneurship, his integrity, and his treatment of others. So that's who I was named after.

• 1:52:03Tim Ferriss?

  Did Charles give your father?

• 1:52:09Tim Ferriss?

  Sort of opportunities that were important early on, or was there, did that factor into the friendship that they developed, or was it, in a broader sense, what you just mentioned?

• 1:52:21Speaker 02

  Yeah, he, his son, Carl Degenall, was a classmate of my father. My father started at Rice and studying chemistry because there wasn't a field called chemical engineering. And then after, during his sophomore year there, MIT started the first chemical engineering department. And so, the junior year, my father transferred to MIT and got his degree there in chemical engineering practice. And then he went to work for, it was Texaco then, and

• 1:53:01Speaker 02

  then the Gasoline Products Company, which was a process design company. And in all this, he developed his own ideas on refining and upgrading heavy oil. And so, Charles Degenall wanted to build this plant in the Isle of Grain. And, believe me, plants back then, in the twenties, were nothing like today. A whole refinery would cost maybe a couple million, and it was primitive by today's standard. But Carl recommended to his father

• 1:53:40Speaker 02

  that he hire my father from, as an employee at Gasoline Products Company. And so, my father quit Gasoline, went to work for Charles Degenall. So, he gave him that opportunity. And then, my father wanted to go in business for himself, and he came to Wichita, where another classmate had an engineering company, and he joined there as a partner. He invested three hundred dollars and became a partner. And another funny story is, people wonder, "Well, how'd you get the name Coke? How do you pronounce that?"

• 1:54:22Speaker 02

  Well, my grandfather, my father's father immigrated from the Netherlands in 1888. And he didn't speak any English, so he came over, he was a printer's apprentice, and he went to work for various Dutch newspapers. And in that, learned to speak English, and then he heard about this print shop and weekly newspaper in Quanah, Texas, that he and a partner could buy for, I don't know, $200, $300. And so, they bought that, and it was a very poor place. They mainly got paid with, the farmer would have chickens or eggs, and deliver eggs

• 1:55:07Speaker 02

  or chicken, or wheat, or whatever. It was largely a barter system, because nobody had any money. And so, that's where my father grew up, and he had this technical ability, so he said he wanted to go somewhere where there was more opportunity. So, that's, he went to Rice, and then MIT, and then ended up with his own business.

• 1:55:30Tim Ferriss?

  And is Coke the Dutch pronunciation?

• 1:55:33Speaker 02

  Oh, yeah, thanks, I got off the subject. Yeah, so, so my grandfather pronounced it "coo."

• 1:55:41Tim Ferriss?

  Hard for English speakers.

• 1:55:43Speaker 02

  Well, particularly West Texans, that doesn't exactly fit their pronunciation. So, so they pronounced it "coo," like a crow. "Coo," Fred "Coo," that's the way it's pronounced there. My father hated that pronunciation, and one time, he was traveling on business, and he was paged as Fred Coke. And he said, "I like that." So, that's how we got our name. So, you can see, it has this elegant history.

• 1:56:11Tim Ferriss?

  That's amazing.

• 1:56:13Speaker 02

  From royalties.

• 1:56:15Tim Ferriss?

  From the bartering with chickens, and having people address him as "coo," hating it so much, that he took the last name from an announcement. That's incredible. Well, Charles, I suppose, much like the Charles that we've mentioned, who gave your father those opportunities early on.

• 1:56:37Tim Ferriss?

  I'm really excited to see what Stand Together does and what opportunities they provide to people who could benefit from them. And hopefully, like you said, to scale solutions that can capture the imagination of the nation. That's a worthwhile project. And people can learn more about that at StandTogether.org. They can learn about all of the company side of things at CokeIND.com. On Twitter, people can find Stand Together at @Stand_Together.

• 1:57:19Tim Ferriss?

  And Coke Industries is simply @CokeIndustries. Is there anything else that you would like to say or discuss?

• 1:57:29Speaker 02

  Yeah, I think there are a number of videos that I've done and others have done on YouTube. I think you can just go on YouTube and look up Charles Koch and you see mine and so you can... You'll get all sorts of different results. Yeah, but I mean, particularly what I've said and then you can judge me by that. I've done a number of op-eds and I've done one with Bloomberg on free speech and open inquiry at college campus, Michael Bloomberg.

• 1:58:10Speaker 02

  I've done one with Tim Cook on Apple, on the Dreamers, on making them permanent. And we've brought Dreamers back to Washington and to the NASDAQ to show how many of them are productive. A bunch of them work for us and other companies. Microsoft has joined us and that. And then I've done one with Michael Lomax, the president of United Negro College Fund, on the work we've done with that organization to help...

• 1:58:49Speaker 02

  Students at these historically black colleges to learn principled entrepreneurship. So that's been another amazing story of helping these students transform their lives just like youth entrepreneurs has been.

• 1:59:08Tim Ferriss?

  Great. I will get a number of videos from your team and then we will also link to the op-eds. And for everybody listening, you'll be able to find links to everything that we spoke about, certainly in the show notes at tim.blog/podcast as always. And you can just search by the episode or search Koch, K-O-C-H, and it'll pop right up. Charles, thank you so much for taking the time. I know you're a very, very busy man. You seem to be as busy as ever at 83, which I admire. And I hope that this episode will certainly

• 1:59:50Tim Ferriss?

  bring attention to Stand Together, but even more than that, some of the principles behind it and the underlying ability, if we choose to exercise it, to attack the problems and not the people, even with the people you most disagree with on, say, 90, 95%, 99% of all issues, you can still find common ground. So my hope is that this episode and the stories that you've shared, and certainly the current initiatives also, will show people that that is a path you can choose. So thank you for making the time, Charles. I really appreciate it.

• 2:00:31Speaker 02

  Well, thanks for having me, Tim, and asking some of the tough questions. That's what we need. That's the scientific method, the challenge, so. I enjoy it and appreciate it.

• 2:00:45Tim Ferriss?

  My pleasure. Thanks, Charles. Hey, guys. This is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday? That provides a little morsel of fun before the weekend. And Five Bullet Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric, as I do. It could include favorite articles that I've read and that I've shared with my close friends, for instance.

• 2:01:29Tim Ferriss?

  And it's very short. It's just a little tiny bite of goodness before you head off for the weekend. So if you want to receive that, check it out. Just go to fourhourworkweek.com. That's fourhourworkweek.com all spelled out. And just drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it. This episode is brought to you by ShipStation. If you've ever sold anything online, or if you sell anything online, then you know what a pain in the ass the shipping process is. It's time consuming, it's expensive. You're always copying and pasting orders from different sites, trying to figure out the best carrier, so on and so forth. It's such a hassle. And in a previous life, I shipped tens of thousands of units overseas,

• 2:02:13Tim Ferriss?

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• 2:02:56Tim Ferriss?

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• 2:03:41Tim Ferriss?

  That's shipstation.com, enter promo code TIM. Check it out, shipstation.com, promo code TIM. This episode is brought to you by ExpressVPN. What is VPN? Virtual Private Network. It's an app that you run on your computer or your mobile device. It secures your internet connection, hides your public IP address, and lets you bypass regional restrictions on content. And I actually asked my followers on Twitter, 1.5 or 1.6 million of you, for VPN recommendations, your favorites. Many wrote back that ExpressVPN was their favorite, including a number of people who've been on this podcast. So I gave it a shot. I've been using it for a few weeks now, and it is ridiculously fast, to the extent that

• 2:04:26Tim Ferriss?

  I thought I didn't have it on, to give you an idea. ExpressVPN is consistently rated the fastest VPN service on the market. It's incredibly easy to use, and it's 1-2-3. Just download the app, tap one button, and you're connected to a secure VPN server. And I recommend checking out the website just to see the signup flow. They make it really smooth, very easy to sign up. And if you're an entrepreneur or do any web-based front-end development, or design, rather, it's worth checking out for that alone. So ExpressVPN, what are we talking about here? ExpressVPN is great for when you need to Get work done while you're on some sketchy Wi-Fi network, for instance. And I've had a number of hacker friends of mine show me how easy it is to snoop on

• 2:05:09Tim Ferriss?

  public Wi-Fi just by downloading simple apps. You do not need a computer science background to do that, which scares the hell out of me. So, if you don't want to be a victim of that, you can use ExpressVPN. Or, if you're traveling and need to access something that's only available in another country. So, let's say you're in a hotel in a foreign land, you light some candles, and you want to throw on some Pandora for ambiance. Well, lickety-split, ExpressVPN has you covered. ExpressVPN is useful not only for entrepreneurs and remote workers and travelers like yours truly, but really for anyone who wants protection from being snooped on or having their personal data stolen. So, I use it constantly when I'm in airports, coffee shops, and so on. Any public Wi-Fi, really.

• 2:05:53Tim Ferriss?

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