Chase Koch on Principles, Music, and Overcoming Entropy

22:44And so during COVID, I kind of had this idea that it's like, we've never tapped into music to drive social change. Now is the time. Why? Because artists aren't on tour. They want to help. everyone's going through this terrible pandemic and so how can we leverage the power of music to help people so I founded this concept stand together jam together where we got on zoom and we got the whole stand together community all like piling in everyone was in their homes with they couldn't do anything and I got some of my friends that were artists to come on it was like Matt Sorum from Guns N' Roses Michael Kang from String Cheese Incident we had some of the blues traveler guys.

23:25And then it just kept, we had a few experiments. And then the second, the third show, I had a friend, Pastor Omar Jawar, that was very close with Snoop. And Pastor Omar, we had worked with him on trying to disrupt gang violence through a group called Urban Specialists based in Dallas, Texas. And so he got Snoop on, and I knew Snoop was big on criminal justice reform. And this was right after all the George Floyd stuff happened. And so there was really a moment that people wanted to air things out and talk about on the injustices of our criminal justice system. And so I had my father on the show interview Snoop Dogg, basically the impact of the war on drugs and basically the criminal justice system and how our approach is lock them up and throw away the key.

24:15Don't give people second chances. And that was really how Stand Together Music was born, is through Stand Together Jam Together, an online Zoom platform. And all of a sudden we realize it's like, wow, we have something that artists want. They want the ability to drive social change and be able to push the easy button. For Snoop, it was criminal justice. For Matt Sorum, it was addiction, you know, with the Phoenix and what we're doing there. We've created a movement called One Million Strong where we've had more than a million people that have transformed their lives with the Phoenix. So anyway, I could go on.

24:49I'm very passionate about this, but it's very exciting what we started with, with folks like Snoop and where it's headed now. And we have meaningful movements, great partners like Live Nation, AEG. We're at all the festivals, Coachella, Stagecoach, the Breakaway festivals, where we're getting to more people at scale through music with these ideas on how we help people.

25:12Tyler Cowen:For your own group, Too Lot, if I look on Spotify, the song Come Together is much more popular than the next most popular song. Why is that? Is it your best song? If you asked the five bandmates, we'd all have a different answer to that. I love that one. I helped co-produce that one, which was very exciting. I think it just, you know, it's one of those, it's hard to articulate. We have no idea. We put a song out, what's going to hit and what's not. I just think it's in that electronic kind of jam hybrid vibe that gets people dancing, but also has instrumentation to it. And it's got a little funk to it as well.

25:47So it's a really kind of a cross genre one. The other one I would say that ties to the principles and ties to the book is the song Entropy. And really, it's the song, the album title song of our very first record that we put out two years ago. And 2LOT, you mentioned the band's name, 2LOT is short for the second law of thermodynamics, which is the law of entropy. And we put the band together because the band members were all going through something. We were all overcoming our own entropy. Our lead singer's father had just passed away a few months before. Our drummer's father, who I mentioned a minute ago, who's the founder of Urban Specialist, Omar II, we call him too, his father passed away from COVID.

26:33in his late 40s. He was a close friend of mine. And so Tu's father passed away and I had just gone through a divorce. And so we called it Tu Lot because we were overcoming entropy in our own lives. But we said, can we build a band that has excellent music and is hybrid soundscaping from EDM and jam band and all the influences from the band, but then help other people overcome entropy in their own lives through the stories of a song like Entropy that's on our first record. But also when we have the stage, we can showcase groups like the Phoenix with the platform that we have and help drive awareness to organizations like that.

27:15So it's been a really fun project with those guys.

27:18Tyler Cowen:And some of your song titles like Masquerade or I Hurt Myself Again, they seem to reflect some inner sense of vulnerability that to me comes through in the music as well. That's quite interesting. Yeah. Thank you, Tyler. Thank you. The music's only good if you're really speaking from the heart on it. I mean, the listeners get it. They know when you're faking it or you're just trying to copy something else. So we're just trying to make the most authentic stuff we can. Which musical genre do you feel, if you had to say, is the most either classical liberal or libertarian or in accord with your principles?

27:52Tyler Cowen:Some people say country and Western. I mean, do you have a view? Can you even generalize in that way? That's such an interesting question. I don't think it's one genre. Like Tulat and the guys that we've pulled together, we all have different backgrounds. Two is from funk, pop. He grew up playing drums in the church. He was Chance the Rapper's drummer for a bit when he was 18 years old. So he's got rap influence. Marbasis has influence from funk and R &B, our lead singer, the same. He can play any genre. And our pianist synthesizer player, Sage, has jazz background. and I come from the jam band community.

28:30So literally almost every genre is represented. I think the magic is where it all meets.

28:36Tyler Cowen:What is Mr. Beast like and what are his principles? That's a great question. Well, just to give your audience context, back to the approach with staying together and really trying to help people drive change by really tapping into culture. there's no bigger culture carrier or influencer than Mr. Beast's number one YouTuber in the world, right? I think he just hit half a billion subscribers. And if you look at all of his platforms, that was on YouTube. But if you look at it across everything, he's more than a billion now. So it's like, it's hard to even wrap your head around. But the reason that I developed a relationship with Jimmy is because of our values alignment.

29:18One of the principles that we talk about in the book, Tyler, is preferred partnerships. And so we believe that a preferred partnership, three things have to be present for a long-term mutually beneficial partnership. This applies to everything in life, whether it's your spouse, whether it's a supplier, a customer, a social change partner, supplies to everyone and everything. You have to have an aligned vision where you're going with that partnership, a clear North Star. Number two, you got to have aligned values. So how you capture opportunities, how you solve problems. Can you work together? Can you engage in a challenge process to get to a better answer?

29:57Humility, respect, integrity, all these principles. That's number two. And number three is complementary capabilities. Both parties bring something very unique to the table and different to the table because when that happens, you have real synergy and that's what makes it a sticky partnership in long term. So with that context, that is what our partnership with Jimmy Donaldson and his team has been. We started by experimenting on some videos because his whole thing is making kindness go viral. And that's where he started with basically helping other people and demonstrating to his followers that it's cool to help people, to go out and help people that are in need.

30:41And you can do that in a million different ways. And that's the spirit of Stand Together as well, is that all we're trying to do is help people remove barriers in their lives. And there's so many different barriers across all of our institutions. So a partnership with Jimmy, he sees what we have with the Stand Together platform. We see what he has. We're aligned on vision, aligned on values. And when you combine those two platforms with messaging and helping kids understand these principles, we think we can really drive some meaningful change. but he's a great human. I was with him two weekends ago.

31:16He was filming the third Beast Games for Amazon. And just to see what he does and how he does it is really remarkable.

31:24Tyler Cowen:Some basic questions about Coke Industries and also Coke Disruptive Technologies. At this point, like roughly what percentage of the business is still energy related? I'm glad you asked that question because it's a misperception. I think part of that is because Coke is private and we've always been private and we plan to stay private. But Coke is not an old kind of industrial company anymore. We're a tech company. We've invested over the last, I would say close to 10 years, 50 billion in tech. And that's through companies like Infor, which is ERP software that we acquired over time that brought on, you know, more than 30 ,000 software engineers to help the rest of Coke really think about technology through a different lens.

32:10Molex was also a game changer for us. Molex makes connectors in all products, whether it's your iPhone, medical devices, what lights up this room, data centers. And I think that was 2013 that we acquired Molex. That was basically getting us into this IoT world where everything was starting to be connected and you could create so much more value if you could get data off machines and products and plants and processes. So when we acquired that, it transformed our knowledge around what you could do with data, but you need the hardware to make that work too. So the first thing I would say is it coaxed a tech company now.

32:52And for those even old industrial companies that aren't transforming themselves with technology, they're going to be dinosaurs really quick. And so, you know, the principle of creative destruction from Joseph Schumpeter. We believe it. We live it. It's not perfect, but we try to inspire that principle in all 130 ,000 employees in 60 countries. Creatively destroy what has made us successful in the past and make it better every day, whether it's your individual job and what you focus on or experimenting with new technologies. So back to your question on energy, 4 % of the overall capital consumed at Coke is in refining, which is basically where my grandfather started the company.

33:35So I think that surprises a lot of people because I think a lot of people are still stuck in this, well, you're this energy company. No, we're not. We touch the majority of the economy now and we're in everything from forest products, consumer products, software, as I described, glass manufacturing to energy and fertilizers as well.

33:52Tyler Cowen:What have you learned from Mark Andreessen, speaking of partnerships? Mark is amazing. You know, I remember when I started Koch Disruptive Technologies, that was in 2017. And Mark was one of my first mentors. I had actually fired myself from being CEO of Koch Fertilizer because I'd spent 10 years in that business. And I had so much, so many great opportunities in different roles. I got to the point where my boss at the time had said, you're ready. You need to be CEO. I'm moving on to a different role. And I realized that being a CEO operating in 30 countries and 5 ,000, 6 ,000 employees, it wasn't my comparative advantage back to that key principle that we described earlier.

34:37and where my heart was, was in technology and innovation. And I wanted to work on the next thing, not, you know, kind of optimizing and operating the existing business. So that's when I had the idea of bringing this, building Koch disruptive technologies from scratch and getting us in the tech game like we'd never been in before and invest in technologies that were very early. So Koch could look around corners and do a more effective job of driving creative destruction. And Mark, back to your point, was one of those key mentors. He was one of the first people I sat down with in Silicon Valley.

35:13We had had a prior relationship with him, but I hadn't really spent a lot of time with him. And I spent an hour with him just walking through all his learnings and how he built Mandreason Horowitz. So, I mean, one of the smartest guys in the game, results speak for themselves, but just how he looks at technology and how he thinks about betting on founders and the values alignment and what he sees in the pattern analysis, given all of his history to make the right decision based on the quality of the founder. Learned a lot and I modeled a lot, you know, with KDT after what I learned from Mark and I would say from Ben as well and become friends with them both.

35:54Tyler Cowen:Do you think the principles of market-based management work especially well in the Midwest and Canada, or is it completely culturally neutral? Well, there's a reason we stayed in Wichita, Kansas, in the Midwest. How would you articulate that reason? I would say talent and values. And I call it access to the farm team. And this is our whole talent vision for Coke. Now, case in point, we operate, as I mentioned, in 60 countries, and I believe we're in all 50 states. But I would say like how we deliberately think about talent, it's we want to hire kids that are contribution motivated. I think too often you see in our culture that you have people or, you know, in kids that are more deficiency motivated, if not destructively motivated.

36:49So there's a continuum there, contribution motivated all the way to destructively motivated. and on the contribution motivated side, take the positive. The reason why I say we want to hire the farm team is kids that have, whether they grew up on a farm or not, that doesn't matter, but it's the mindset, the mindset of grit and work ethic and wanting to come in and make a contribution as opposed to deficiency motivated, where you come in with a victim mindset or you come in with a mindset of, well, I went to this fancy school, look at my resume. I had a 4.0 and I'm entitled to some high, some role, some title, and some salary when you haven't earned it yet.

37:32We want the contribution motivated kids. Let me give you one example, Tyler. Our CIO today at Coke over all of Coke Inc. has no college degree. And he started, his first access to Coke was striping lines in the parking lot. So he just wanted to get in the building. This was back when we were way more stringent and way more kind of process driven on talent, which was the wrong way to approach it just based on resumes and GPA, you know, 20 plus years ago. But somehow he found a way in Coke. He proved himself that he knew a lot about technology and he was helping us a lot with data science in the early days.

38:14and then he saw the cyber wave coming and all the cyber risk that coke had and all the attacks we were getting and he built a capability around that he became cso head of our cyber security capability built that and then a number of different roles but is now cio of coke no college degree his name is jared benson jared is i'd say that like that's what we want we we want someone that's come in and wants their role so badly and they come in with fire in their belly, just wanting to make a contribution. Look where he is today.

38:47Tyler Cowen:How is Wichita most changed since you grew up there? That's interesting. It keeps growing. I think the change, you know, there's more and more businesses here. There's something in the water here, Tyler. I think it ties back to kind of access to the farm team and values. And there's so many principled entrepreneurs here and so many great businesses have been built in Wichita. But what I would say how it's changed is that the people have stayed the same and the value system has stayed the same. I have so many friends that left, they went to college or they wanted to go to the big city. Almost all of them have come back.

39:23And it's for the same reason that I described. How it's going to change, you know, I have a specific project I'm working on downtown. We talked about my passion for music and the ability to unify people. I'm building around this idea of bringing people together through music. You know, I've helped build festivals here the last couple summers. We have another one coming up in September called Somewhere Fest, where we basically mix great music with social change and bring all that together into one concept. But I'm building long-term assets here because I think we've had a gap in Wichita around music.

39:58And so I'm building an indoor venue that I think fits that gap with a number of other assets around that for housing, working with Wichita State on a number of things downtown. So I think you'll see Wichita continue to evolve and hopefully attract more and more of those people that I described.

40:16Tyler Cowen:And you founded a school that is located on the grounds of Wichita State. Do I understand that properly? Yes, I would say my ex-wife founded that. I can't remember exactly what year it was, but it's a school called Wonder. My kids still go there today. And it's really this principle of we really support across Stand Together. That's this idea of where education is going and what's helping kids the most is not a one-size-fits-all approach. The teach-to-test model that, Tyler, you and I probably grew up in with the teacher at the front of the classroom talking at kids. This is more of a model, and I think where most of education is going.

40:58Project-based learning, the kids have agency, the kids are the customer, not the teacher, and it's more of a guided system where each kid has a different gift. So you help guide them and find their gift earlier in life than they otherwise would. They're leveraging things like Claude Code. My son can run circles around me with Claude Code and what he's building, but it's because he has the freedom at school to try these different things on his own. No one's telling him what to do. He and his friends are getting together and say, hey, we can go build stuff. We can build video games. We can build apps.

41:33And that's like what I'm most excited about what we're working on with Stand Together is around education. And we are in the middle of one of the biggest movements as a country, I think, that we've ever seen. If you look pre-COVID at the research, and Stand Together has done all this research, only 20 % of families were open to their kids going to a non-traditional school. If you look at the over the last year, we've measured that same question and it's north of 70%, I think closer to 80%. So in terms of the biggest opportunity for what we can do to transform education, it's shifting from that one size fits all approach to one where it's individualized education.

42:16And as you know, better than anyone, we now have the technology to do it. Alpha school is a great example that Khan Academy is a great example of that. We have a Vela Fund concept with the Walton family where we're writing very fast checks to any parent, any teacher, any entrepreneur that wants to transform education so they can go build it. And with that model, we've built over 5 ,000 schools over the last five years.

42:44Tyler Cowen:If you had to explain to an outsider, in terms of fundamentals, how is Kansas different from Nebraska? How would you put it? Oh my gosh. Well, I haven't spent, you know, in my tennis days, I toured Nebraska quite a bit, but it's been a while since I've been back there. So I wouldn't be the best person to give you. But that's endogenous, right? You don't feel you need to go back. Yeah. Okay. That's fair. That's fair. Yeah. I mean, for the Midwest, Kansas is home and I shout from the rooftops at how great this state is. I spend a lot of time on the road with my role. I'm all about finding the new technologies, building new origination and partnerships.

43:21So I'm on the East coast, West coast, but you see the trend, right? I mean, you see people leaving the coast wanting, wanting something different, whether it's because they're taxed too much or The regulations are too high. The cost of living is too. And they're finding markets like Kansas. Wall Street Journal did a write-up on Wichita three weeks ago about how attractive it is from a cost of living standpoint and how more and more people are encouraging people to look at markets, mid-sized cities and markets like Wichita, Kansas.

43:53Tyler Cowen:What's physically the most beautiful thing about Wichita weather? For this summer, it's been one of the mildest summers so far. And we've had, it was in the 60s the other day. But I would say we have an amazing pocket in the fall, which is like, there's no other place you'd want to be in Wichita. And then we have another kind of a month and a half in spring. That's remarkable. The thing that people knock on Kansas is the wind. It's flat. You can stand on a can and see a long way when you're in Kansas. But yeah, no, I'm obviously very proud to be from Kansas and still live here. I think your lightning storms are quite beautiful.

44:28Tyler Cowen:And because it's flat, you can see them very clearly. So it's the hot summer months that for me are the most attractive about Wichita. Yeah, you got it. Agree. Agree. You mentioned AI. How is it in either your personal life or work life? How do you use AI? Well, as I told you, he just turned 14 last week. My oldest son is teaching me how to code. And never would I have imagined that I could code. And he got me on Claude. I was using Claude the last year or so. But when he introduced me to Claude Code, the ability to become a super coder in about 30 or 45 minutes of someone showing you how to use it.

45:10What's amazing now, I mean, the first little project I worked on was my son saw I had a bunch of Excel spreadsheets for my exercises and my stretches that I do. And he's like, what is this? He's like, why don't you have this, you know, to where you have checklists and an app. You can have analysis and charts. And like, this is my son telling me this. I was like, well, then build it for me. And he whipped it together in about an hour or two. And now I have an app on my phone. It's one of the top apps I use to hold myself accountable to my. So something as simple as that. But then when I saw the power of it, I'm working on my own operating system.

45:46So, for example, and I can talk about what the company is doing with it as well. But you asked me personally, what am I doing? I'm building my own operating system. I said, here's my roles and my responsibilities for Koch as a board leader, as an investment decision maker, and being on the investment committee, but also with my role as origination and partnerships and finding the next great opportunity. And then staying together, all the things I'm doing there. I fed that document in and I said, how can Claude help me become 100x more effective and efficient? And what engines do I need to build to make me a better decision maker across all these disparate roles?

46:27And then instead of me saying, well, I do a lot of origination, who are the people that I need to have access to where I can create mutually beneficial opportunities with? I just said, instead of me coming up with the engine, Claude came up with all of it. And it gave me five engines. I have it actually right here. Five engines that I use to just operate my day. And it's everything from origination. It analyzes the quarterly business reviews for all the business, helps me ask better questions. It recommends strategies to me. So it literally is 100 to 1 ,000x in terms of what it can do for, and that's anyone.

47:05It doesn't matter what role you have. If you're head of sales, if you're a salesperson, if you're an admin, whatever role it is, can supercharge whatever gift you have. And that's what we're trying to do across the company is help people understand that and encourage people to use things like Claude and ChatGPT.

47:23Tyler Cowen:And across the company and your affiliates, what do you do to incentivize your workers, managers to do something with this? It starts with leadership. And this is, you know, one of the key principles that we have in the book, Tyler, is bottom up versus top down. And so one of the ways I describe principle-based management and what is different about Coke is asking yourself the question, if you run an organization, what if you had a culture where everyone knew what to do without being told? I mean, it's a really, it's a big question, right? And I'm not saying we have that at Coke, but it is a vision for us.

48:00And what that principle is, is bottom-up empowerment, as opposed to top-down control and dependency on the one, the smartest guy in the room. So it's really all about empowering people with principles, but to your point, also empowering people with technology and empowering people with tools. The incentive is it just makes them more effective. So I think there's a natural motivation there for any employee to say, do I want to do my job more effectively? Yeah. Well, are there tools out there that can help me with that? Of course. And so as roles of supervisor is to encourage and empower these people with principles.

48:38Are you driving creative destruction of your own role? Are you driving creative destruction of your own business? Are you practicing experimental discovery with technology? That's another one of our principles. And so they're questions. They're not go do this, right? And I think that's what's very different about a bottom-up approach as opposed to running an organization from the top down.

49:01Tyler Cowen:Now, we live in a great country. As you know, Kansas is a great state. We have other great states. What's the most fundamental reason for trying to understand why so many of our political candidates are so terribly bad? That is a great question. I wish I knew the answer to that question. I think we need more people that have been successful in business and that really kind of understand the real world to engage in politics. I would say, Tyler, for me personally, I have never been one to get really excited about politics and engage in politics. And my focus is really more on all the community things that we're talking about, transforming education, culture, and politics is critical.

49:47But our focus around politics is around encouraging principle-driven policies. It's policy versus politics. And if we can get away from, you know, Republican versus Democrat and apply the principle of openness and work together more and have politicians that have that mindset. You know, my father taught me about Frederick Douglass, and that's one of his, and frankly mine, most inspirational leaders, because he taught everyone to work with anyone to do right. We don't see much of that today in politics. It's Republican versus Democrat mudslinging. If we could work together, like what we're doing, what we did on criminal justice reform, we worked with Van Jones as an example.

50:32Van disagrees with us on probably seven or eight out of 10 things. But we saw the one thing we could agree on, and we saw a problem around criminal justice system and we came together and we helped drive change. And that we're also doing the same in transforming education, working with anyone to do right. And we've helped pass school reform in like 33 states now, which going back to this whole, what I think is the biggest opportunity to transform education and one of the biggest movements. That's one of the reasons it's happening because people are working together because they see how broken the education system is.

51:06So I can't speak to a specific politician of this and that. It's not really my focus, but I can speak to what I feel like we need to do at the principal level.

51:15Tyler Cowen:Last question. Obviously, you're very busy, including being a father. Is there a place you've never been and you think of going, traveling to, and what would that place be, and why does it so intrigue you? That is a good question. With my roles across Koch, I've been to a lot of places around the world. I've seen most of the world. As I mentioned, I spent a lot of time in Brazil. I've been all over Europe and built businesses there, spent time in Asia. God, where do I want to go? I would say, well, I'll tell you where I'm going this summer that I've never been in Croatia, just because I've heard it is so spectacularly beautiful.

51:50After this book tour, the last like four to five weeks, I'm going to need an opportunity to recharge the batteries. So that's where we're going this summer. So I'll tell you how it is, but I've heard amazing things about it. The culture, the people, and the beauty of it. So we're going to spend a week there and I'll let you know how it goes.

52:07Tyler Cowen:I've loved my trips there and it has arguably the most beautiful people in the world. Oh, wonderful. Chase Koch, thank you very much. Tyler, thanks for the opportunity. It's great to see you and great to be on. Thanks a lot. Again, everyone, to repeat, Charles and Chase Koch have a new book out, Becoming a Principle Driven Leader. Hey, Tyler, if I could say one more thing. We didn't think about this just as a book. We think about it as a platform for principles. And one of the things that we built is an app that your audience can download on any of the app stores, whether it's an Apple app store or Google play, and it's called principle companion.

52:46And what it is, is one field, just like ChatGPT, solve your problem with principles now. And with engaging with this in five minutes on a specific problem that you have today, whether it's in business, whether it's family problems, whether it's sports team problems, it'll coach you through with the principles that many of them I described on this podcast. And I think it's another way for people to engage with something that they're dealing with right now. So I'd encourage downloading Principal Companion as well. So thanks for the opportunity.

53:20Tyler Cowen:I'll add there's a QR code in the book. I also received my copy of 41 cards for the 41 principles. And here are principled leadership questions in a little red box. Jason, thanks again. Thanks again, Tyler. I really appreciate you. Thanks for listening to Conversations with Tyler. You can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. If you like this podcast, please consider giving us a rating and leaving a review. This helps other listeners find the show. On Twitter, I'm at Tyler Cowen, and the show is at Cowen Convos. Until next time, please keep listening and learning.