Kochland

Koch Industries publishes no annual report and answers to no outside shareholders, which is a large part of why it stayed so little understood. Leonard shows how a regional oil gatherer and refiner turned itself into a commodities and trading powerhouse built to make money whether prices rose or fell, guided by Market-Based Management, Charles Koch's philosophy of treating every manager as the owner of a profit center.

Leonard, a veteran business reporter and the author of The Meat Racket, won the J. Anthony Lukas Work-in-Progress Award for the project before publication. The book was a finalist for the Financial Times and McKinsey Business Book of the Year.

Critics were close to unanimous. Bryan Burrough in the New York Times Book Review praised its balance and evenhandedness, saying Leonard explains the Kochs rather than judging them. Jane Mayer in the New Yorker called it deeply and authoritatively reported, and Kirkus called it a landmark, comparing it with Steve Coll's Private Empire and Ida Tarbell's history of Standard Oil. The main caveat is size: at 704 pages, with a large cast of executives, traders and litigants, it asks for patience.

It rewards anyone interested in private capital, commodities trading, industrial strategy or how corporate money shapes regulation.

1. Volatility can be the business model. Koch built its trading operations to profit from price swings in either direction, drawing on information from the physical assets it owned.
2. Private ownership buys time. Without public shareholders or quarterly reports, Koch could make long-horizon bets and keep its strategy out of competitors' view.
3. Incentives cut both ways. Market-Based Management pushed decision rights and profit responsibility down to managers, which drove performance, while the company's pollution cases show it treating compliance as a cost until penalties grew large enough to change the math.
4. Not every acquisition fits. The Purina Mills purchase shows that a culture built for commodities and process industries can stumble in a business it does not understand.
5. Regulation is a line item. Koch treated regulatory and political outcomes as something to invest in, and its spending on lobbying, think tanks and campaigns shaped energy and climate policy for decades.

The book is organized in three broad movements that run roughly in chronological order.

1. Building the machine. After Fred Koch dies in 1967, Charles takes control and sets out to grow the company. Leonard covers the bitter 1970s fight with the union at the Pine Bend refinery in Minnesota, federal investigations into oil taken from wells on Native American land in Oklahoma, the feud between Charles and his brothers for control, and the costly 1998 purchase of the animal-feed maker Purina Mills, which went into bankruptcy the next year and cost Koch its equity.
2. Profiting from volatility. In the 1990s and 2000s, Koch uses its pipelines, refineries and commodity flows as an information edge for trading and moves deeper into financial markets. This section covers its role in the 2000 California electricity crisis, its trading profits and the purchase of Georgia-Pacific, which took the company into paper and building products.
3. Law, politics and climate. The final part turns to Koch's battles with regulators over pollution, including wastewater discharges in Minnesota that led to a guilty plea, and to how those fights and Charles Koch's libertarian convictions grew into a vast political and lobbying network. Leonard traces its decades-long effort to block action on climate change and its approach to the Trump administration.

NEW YORK TIMES BESTSELLER * NEW YORK TIMES NOTABLE BOOK OF 2019 * WINNER OF THE J ANTHONY LUKAS WORK-IN-PROGRESS AWARD * FINANCIAL TIMES’ BEST BOOKS OF 2019 * NPR FAVORITE BOOKS OF 2019 * FINALIST FOR THE FINACIAL TIMES/MCKINSEY BUSINESS BOOK OF 2019 * KIRKUS REVIEWS BEST BOOKS OF 2019 * SCHOOL LIBRARY JOURNAL BEST BOOKS OF 2019 Superb…Among the best books ever written about an American corporation.” —Bryan Burrough, The New York Times Book Review Just as Steve Coll told the story of globalization through ExxonMobil and Andrew Ross Sorkin told the story of Wall Street excess through Too Big to Fail, Christopher Leonard’s Kochland uses the extraordinary account of how one of the biggest private companies in the world grew to be that big to tell the story of modern corporate America. The annual revenue of Koch Industries is bigger than that of Goldman Sachs, Facebook, and US Steel combined. Koch is everywhere: from the fertilizers that make our food to the chemicals that make our pipes to the synthetics that make our carpets and diapers to the Wall Street trading in all these commodities. But few people know much about Koch Industries and that’s because the billionaire Koch brothers have wanted it that way. For five decades, CEO Charles Koch has kept Koch Industries quietly operating in deepest secrecy, with a view toward very, very long-term profits. He’s a genius businessman: patient with earnings, able to learn from his mistakes, determined that his employees develop a reverence for free-market ruthlessness, and a master disrupter. These strategies made him and his brother David together richer than Bill Gates. But there’s another side to this story. If you want to understand how we killed the unions in this country, how we widened the income divide, stalled progress on climate change, and how our corporations bought the influence industry, all you have to do is read this book. Seven years in the making, Kochland is a dazzling feat of investigative reporting and epic narrative writing, a tour de force that takes the reader deep inside the rise of a vastly powerful family corporation that has come to influence American workers, markets, elections, and the very ideas debated in our public square. Leonard’s work is fair and meticulous, even as it reveals the Kochs as industrial Citizens Kane of our time” (Steve Coll, Pulitzer Prize–winning author of Private Empire).