Brian Hooks, Chairman and CEO, Stand Together
Chase Koch, Executive Vice President, Koch; Founder, Koch Disruptive Technologies
In conversation with: Kristin Stoller, Fortune
Chase Koch, Executive Vice President, Koch; Founder, Koch Disruptive Technologies
In conversation with: Kristin Stoller, Fortune
Category
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TechTranscript
00:00All right. Hello, everyone. So, Chase, Brian, I think that if nothing else that this past week showed us,
00:06it's that clearly people on both sides of the aisle are dissatisfied with the way that the country is being run.
00:11So, Chase, my first question for you is,
00:14what do you think the role is of business here to step in and advance society, specifically for you at Koch, in a time where
00:21people are just so dissatisfied with the way politicians and the government has been being run?
00:27I think it's a great question, and it's a question that's not asked very often of, like, what is the role of business in
00:34society? And the way we think about it, at least, is it's pretty simple. Value creation.
00:39Create value and do things that improve people's lives.
00:44And so, part of Koch's vision, we bake this right into our
00:49vision statement, and it informs all of our decisions. It's, you know,
00:54raw materials are scarce.
00:56So, are you making products and resources and services that create more value than the raw materials that go into them,
01:04while always consuming fewer resources over time, and in a way that improves people's lives?
01:09So, as I said, whether it's a new product that's coming out of R&D, it's an acquisition we do, everything has to meet that test.
01:19I think the other thing in the role of business, a second role that's really important, is
01:25what leaders do for their employees, and we call it empowerment, right? So, empower your people. And
01:31this ties into the the philanthropic side as well, because if you're focused on
01:38trying to help everyone
01:40understand their gift, and then design a role around people's gifts, you're going to have the best chance of succeeding.
01:48And helping them unlock their potential in that gift as well.
01:52So, maybe just a couple of examples around that, on how we think, I think, differently about this,
01:59in trying to, like, our whole talent strategy
02:03around empowering people. The first thing is, we think about values first, skills second.
02:10So, and credentials last. You may look at, you know, a large
02:14employer like Coke over 100,000 employees. How do you do that, right? Don't you just sift through resumes?
02:19And, you know, it's got to be a 3.5 or higher.
02:22We do our best to really kind of disrupt that idea, and just go find people based on raw material, raw material, on
02:29values. I call it the, go hire the farm team. Because, you know, kids that have worked on the farm, and
02:36that have good values, and are contribution motivated,
02:39those are the people that we want at Coke. And the second thing I would say on that is,
02:45that's different, is
02:49basically how,
02:52how,
02:53not only
02:54looking at, you know,
02:57looking at, not only looking at resumes, but trying to find people that,
03:03that,
03:05that, that potentially have been through something in their life, right?
03:10That maybe have had a past
03:14something on their record. And our, our, our approach on that, years ago, we decided to actually ban the box.
03:22And to where we, because we don't believe anyone should be,
03:25for the, the worst thing that they, they've done in their life,
03:30actually be looked at that for the rest of their life, right? And so,
03:35so we have, we banned the box a few years ago to give more.
03:39So ban the box for people that have had a prior felony, or prior something on their record.
03:45And what we found in that is that,
03:48so since they don't have alternatives with a lot of other companies, that
03:52they're some of the most contribution motivated people, and want that second chance to actually add value and deliver.
03:59And so we've had great success with that as well.
04:01And Brian, for you, as a philanthropic organization,
04:04how do you feel that businesses should be engaging with their philanthropic arms to advance society, if at all?
04:09Yeah, you mentioned the, the dissatisfaction that people have, that we saw in the election last week. I think it's all about
04:17making the most out of the opportunities in the economy.
04:20And we heard a lot already today about the potential for technology to dramatically transform our society for the better.
04:28While making sure that the millions of Americans who are looking at that pace of change
04:32feel like they're not going to be left behind. And so to me, these categories of philanthropy and business
04:39turn out not to be all that useful, right? I mean, I think both of them have a
04:43really important role to play in making sure that everyone can see themselves in the positive transformation of our economy.
04:50But they've got to work together.
04:52And so you think about what Chase just talked about, and you kind of expand that to society scale.
04:58If
04:59employers are sort of sending the demand signal into the market for education,
05:06but they continually tell people that the best jobs are going to be reserved for those who have a four-year college degree, for instance.
05:12And yet the economy is moving so fast that it's pretty impractical for somebody in their late 20s,
05:19let alone, you know, mid-40s to go get re-skilled, you know, through a four-year college degree.
05:25And there's probably a bunch of teenagers also saying, geez, I wish I could contribute right now.
05:29And the four-year degree is probably not the right pathway for me.
05:33As long as employers are sending the demand signal that that's what we value. You know, organizations like Stand Together that are supporting
05:40dozens of really incredible alternative pathways that help people to figure out
05:47what skills do they have?
05:48What do they need to do in pretty short order to build on those skills to be able to participate in the economy?
05:53You know, we could do that. We do dozens now.
05:55We could do ten times as much of what we do. But if employers aren't participating in this sort of transformation,
06:02they're never actually going to achieve it at scale, right? And so if employers say, look, we value those alternative credentials, those micro credentials, those
06:08demonstrations of other skills beyond sort of the traditional pathway, then they're going to help to transform the market.
06:14There's a huge demand. Philanthropy can help to fill that with supply. That makes a lot of sense.
06:19So I think one of the things that I find most interesting and that we all can identify with here is that
06:24humans come with a lot of bias. They come with a lot of personal bias, political bias. It happens to all of us.
06:29Chase, I know, for example, your family has historically aligned themselves with more conservative causes.
06:33So my question for you is how exactly do you choose which
06:38policies and causes to support and how do you balance that with personal beliefs you may have? Yeah, I mean, I think
06:44Stand Together is
06:47obviously where we do our philanthropy and I think
06:52where we focus from a policy standpoint, let me first say that I think we've been
06:59probably mischaracterized in terms of the focus on politics.
07:03It is a focus, but I think most people think that's the main focus and it's actually less than
07:0910% of what we do. When you look at Stand Together, as Brian described, and Brian leads the organization,
07:14but it's, you know, focused on
07:17addiction, mental health,
07:21disrupting violence,
07:24education, but there is a policy, obviously, element to that as well.
07:28I think the way we look at that is like where can we actually make a difference where there's the biggest problem and the biggest
07:34barrier that's holding people back?
07:37Brian can talk a lot about from education standpoint
07:41where we've focused on really a vision of how do you transform education from
07:47being a one-size-fits-all approach as I think many of us have, in K through 12, many of us have
07:53experienced and been through and so many kids are still kind of
07:58stuck in that system as opposed to a system that
08:03looks at individualized education.
08:06So a lot of our work and a lot of our policy work,
08:08we prioritize that over the last several years because we think we thought that's where we can make the most impact
08:14and that's where we have the most capability. I think that's right.
08:17I think, you know, these again, these ideas of left, right, conservative, liberal,
08:21they're just not all that useful anymore in approaching the problems that are really holding people back.
08:26So the current administration, you think you wouldn't change it one way or the other?
08:30I think if you look to politics to solve most of our problems,
08:33we are going to consistently be disappointed with the result, no matter who's in office.
08:37So there's a ton of work that needs to be done in society
08:42and when you tend to put those labels aside, and you just say let's be solutions focused.
08:47We don't want public education or private education.
08:50We want good education and good education can exist everywhere.
08:54People sort of perk up and they listen and so, you know, stand together as Chase said, we were founded by Charles Koch
09:0020 years ago, but we now have about a thousand business leaders and thousands of social entrepreneurs
09:06that have all sort of signed up to this organization.
09:10We help to identify potential solutions to big problems.
09:13We put together significant strategies and then invite philanthropists and business leaders to participate in those strategies.
09:19And the thing that makes it so easy for people, even those who have misconceptions about where we might be politically
09:25or where we've come from, to join and really get engaged is they see it works.
09:30And we're solving problems that they care about.
09:32And we do it by working together and frankly, applying a lot of the lessons,
09:37a lot of the insights that drive the businesses that have made them so successful
09:40and allowed them to participate in these solutions.
09:43Tell me about that, because I think it's interesting that you will say that you take a business approach to philanthropy.
09:47So what does that mean?
09:49What are the risks and the benefits associated with that?
09:52I'll start on that.
09:53I think the main thing is thinking about what we call a preferred partnership.
09:58And I think one of the biggest lessons learned that we had,
10:01my father's been working in philanthropy for close to 60 years.
10:06And it wasn't until 20 years ago, I think 2003, 2004, where we really learned that if you try to go do all this on your own,
10:15you're not going to make that much of an impact.
10:19And so where can we find aligned folks with values, with resources that want to pull that capital together?
10:28Like Brian said, close to a thousand business leaders over the last 20 years that have come together through this preferred partnership model.
10:36And what we mean by that is kind of three things that we look at in terms of who we partner with.
10:41You want to have an aligned vision in terms of where are you trying to go on an issue like education?
10:49Do we believe together that a one size fits all approach is not going to get us where we want to go with the next generation?
10:57And it's really about individualized education and new innovative models to help kids discover their gifts at earlier ages.
11:06So I think so aligned vision is one, aligned values in terms of how you get there, but then also complementary capabilities.
11:13So everyone brings something different to the table.
11:16And we're learning a lot on this in terms of really working on cultural campaigns around issues like addiction,
11:24where we haven't participated at all in sports and media and music up until the last four or five years.
11:34And what that's done is it's really back to the complementary capabilities, people that understand that and really access.
11:40And how do you message around education, around addiction, whatever the issue is?
11:46Into these highly influential parts of the economy that we didn't understand before.
11:53So preferred partnerships is a huge piece of really what we're trying to do with and stand together.
12:00That makes sense. And Brian, on partnerships for you, is there any perfect partner that you're looking for?
12:06Are there any qualifications that you will or you do want or you don't want that make it good for you?
12:10Again, I think when we talk about applying the lessons of business to philanthropy, these are pretty basic lessons.
12:16But as we said, we're a partnership organization, right?
12:21Some of the most successful business leaders in the world come in to stand together.
12:26And many of them come to us after they've already made a bunch of mistakes in their own philanthropy.
12:31Right. And these mistakes, we learn from them.
12:34We try to sort of share the knowledge as well as pool resources and bring other people in with the benefit of these lessons.
12:43But things like trying to go it alone, you would never try to be everything to everyone in your business.
12:49You would look to specialize where you can add value, find trading partners, and you know that together you can win bigger than if you just try to go out on your own.
12:57That's how we do philanthropy.
12:59That's how we try to solve problems in society.
13:02But to make those partnerships work, we use the kind of frameworks that Chase talked about that come from, in this case, the business that that he helps to lead.
13:11Shared vision. And when we say shared visions, we don't mean you got to we got to agree on everything.
13:16I mean, we don't agree with with our own team on everything.
13:19Can you agree on the issue that you're trying to work?
13:21Do you agree that education could be better?
13:23Yeah. OK, let's let's go to the next the next step.
13:26Shared values. Can we trust each other?
13:28Are we going to be there for each other?
13:29Because this is tough stuff, right?
13:30If it's easy, we're probably choosing the wrong problems.
13:33But the third one is really, really important.
13:35This is another mistake I think a lot of people make in their social change work, their philanthropy.
13:39Chase talked about complementary capabilities.
13:42We take a capability based approach.
13:45So much of philanthropy these days is aspirational, right?
13:49We care about these issues and that's great.
13:51But if all we do is care about them and we write a check, but we don't really vet the capabilities to understand whether or not they're sufficient to make the difference,
13:59whether or not we're approaching it in a way that's measurable and from an experimental mindset so we can learn from the experiment, apply those lessons and go forward as we scale.
14:07We're not going to win. And again, those are pretty basic lessons, but they tend to be pretty absent from the world of social change, trying to solve problems in society.
14:16The approach that we're taking invites people in to learn the lessons of the mistakes that we've made in the past so that they don't have to make them again in the future.
14:22Well, that's exactly where I want to go next, Brian.
14:24So thank you for bringing it up. Mistakes.
14:26So, Chase, you mentioned misconceptions that you face, but is there any one big mistake that the two of you have made that you look back on and wish I hadn't done that and learn something from it?
14:35And Chase, I'd like to start with you.
14:36Yeah. I mean, how long do we have?
14:39There's a lot of them.
14:40I mean, whether it's business or on the social change and the philanthropic side, I think what I said before, the biggest one is trying to do it alone and not really trying to find partnerships.
14:54I think that's one.
14:57Brian, I'll let you hit the second one.
14:59Yeah, I think, you know, if you're not making mistakes, you're probably not choosing the right issues.
15:02Because, again, when you're talking about an issue like education, for instance, 70 percent of parents today say that they want our education system, K through 12, to be radically different than it is right now.
15:13It's a huge market for something different.
15:16I think this comes largely out of the experience that many of us as parents had through COVID.
15:21We got a close look at what our kids were actually going through in schools, even some of the best private schools, some of the best public schools.
15:27And we said that they could do better.
15:28Yeah. And so what you've seen over the past three or four years is this dramatic movement towards better education.
15:35And that can take all sorts of different forms, whether it's public education or private education.
15:41I think that progress, you know, we've been involved, for instance, in policy reforms in 25 states.
15:48We've helped in partnership with places like the Walton Family Foundation to support over 3,000 education entrepreneurs.
15:55There's more than five million kids that are now benefiting from those programs.
15:58Compare that to the lack of progress in terms of educational improvement in the previous 30 or 40 years.
16:06I think we made a lot of mistakes in trying to move the ball forward during that period of time.
16:11Things like positioning the issue as us versus them.
16:14You had to choose public versus private.
16:16That was a big mistake.
16:17We went into the market three or four years ago.
16:20We saw this opportunity.
16:21And the slogan that we used, the sort of call to action to everyone was, don't force the divorce.
16:28Don't make parents choose between good education and their local school.
16:32Help to introduce reforms that can help improve all education.
16:36When you do that, you get this big tent coalition and you can create real change for families.
16:40So there's a lot of tactical mistakes that we've made in the past that helped to feed into the solutions.
16:44One other I think is important is we waited too long to really understand the power of bottom up principle.
16:52Bottom up as opposed to top down.
16:54I think this is a key distinction of how we approach things that stand together.
16:59I'll give you one example.
17:02Basically, it's almost like a venture capital model where we're betting on people.
17:07People that have been through a problem that really understand it and they find a better way as opposed to
17:14trying from the top down to say, oh, you guys have these problems and we're going to tell you how you need to fix your life.
17:20So an example of that would be Scott Strode from the Phoenix.
17:24We were big supporters of the Phoenix.
17:27We met Scott probably seven years ago.
17:29And what is the Phoenix?
17:30So the Phoenix is basically a program to overcome addiction.
17:37And so Scott Strode battled addiction most of his life.
17:40And then he had a mentor that helped him realize that exercise and getting on a bike and getting in the boxing ring was what helped him overcome his addiction.
17:51So when he basically overcame his issues there, he decided, I'm going to dedicate my life to this.
17:57I'm going to build a gym, call it the Phoenix, and take the power of exercise, combine it with the power of community and see if I can help others with the same thing that helped me.
18:08And so when we met him seven years ago, I think he had two or three gyms in Colorado.
18:15Now he's helped people in all 50 states.
18:19We stand together and all those business leaders that I've described came behind him with capital and capability and the principles on how to scale his organization.
18:28And we've got the musicians and the music industry behind it now.
18:34And I think we've gone from several hundred people seven years ago to about a half million people touched this year.
18:41And so next year, it's going to double.
18:42It's going to be a million.
18:44So that's the other thing about staying together is we want to focus on things where we can actually drive a movement.
18:50I think the word movement is really important.
18:52And we actually called the movement with the Phoenix One Million Strong because we wanted to make a meaningful impact in this country on addiction.
19:00So anyway, I think that bottom up principle is a very, very important one.
19:05We wish we would have had that insight earlier on.
19:08And you mentioned venture and VC.
19:10So, you know, Coke has a venture arm.
19:12I want to talk with our last few minutes a little bit about tech and innovation going forward.
19:16What is most exciting you coming up in the tech space and what are you using at Coke?
19:22Yeah, so there's so many things I could talk about.
19:25I'll just give you one example with how Coke is using artificial intelligence.
19:30I mean, we're experimenting with it clearly across all of our capabilities, whether it's operations, supply chain sales.
19:36And we have a lot of great examples there.
19:38But I think the most unique thing we're doing with AI is really trying to capture what we've been talking about a little bit here, our principle based approach.
19:48We have a philosophy that my father and other leaders have created called principle based management.
19:53And we're taking basically all the failures, all the lessons learned, all the readings that my father has, all of his books and all the data we can get our hands on both publicly and privately and trying to create a model similar to what Sal Khan did in education, where he partnered with OpenAI and Sal Khan to basically create a product called Conmigo, which is a Socratic method of learning for kids.
20:20It doesn't give them the answer.
20:21It gives them another question.
20:23So it teaches them critical thinking.
20:25We're trying to do the same within Coke and ultimately stand together around teaching this philosophy that has really been the key competitive advantage, we believe, for Coke and why it's grown the way it has.
20:37So we've got Cokemigo, I guess.
20:40You know, we're calling it Ask Fred, but it's the same principles with Conmigo, where instead of maybe a couple thousand employees really understanding these concepts.
20:51They're sitting there and they have basically a co-pilot in their pocket around these principles and how to solve daily problems with it.
21:00So we think that it's going to be one of our biggest innovations within the company.
21:04Amazing.
21:05Well, I very much look forward to seeing it.
21:06So thank you both so much for joining.
21:08I appreciate it.
21:09Thank you, Kristen.