for Charles Koch to work on Sundays and call in other employees to join him. But Bill Koch wasn’t at the office when Hall arrived and Bill Koch didn’t show up while Hall worked through the day, punching cards and running simulations.
Early in the afternoon, Bill Koch called the office to check in on Hall’s progress. Hall began explaining to him how the simulations were going, but Bill kept interrupting him, shouting, “Ah! . . . Ah!” Hall couldn’t figure out what was going on, and he asked Bill if something was wrong.
Bill replied, “I’m watching this Patriots football game,” Hall recalled. After they hung up, Hall returned to the basement to keep running simulations while Bill Koch enjoyed the game.
* * *
Hall finished the Monte Carlo simulations and prepared a presentation on the findings for Charles Koch and Sterling Varner. Bill Koch made it clear that he wanted to impress Sterling and Charles, so Hall rushed to a special store in downtown Wichita that rendered his findings onto color slides that could be shown from an overhead projector during the presentation. In the 1970s, this was high technology.
Hall meticulously arranged the presentation and the overhead projector in the boardroom at Koch headquarters. He was still a new hire, and it was thrilling for him to be in the same room as Charles Koch. He was proud of the work he’d done. The computer simulations were extremely complex, and he’d spent hours memorizing his findings so he’d be ready for any questions.
When the meeting started, Sterling Varner and Charles Koch sat down and Bill Koch began the presentation with a brief overview. Then Brad Hall went through the slides, laying out the extensive analysis he’d done on Koch’s mainframe computers.
Hall was only a few minutes into the presentation when Sterling Varner interrupted him.
Varner said, “Billy, I know that you and Brad understand all this fancy stuff and everything. I know Brad’s done all these calculations. And that’s great. But I just want to know: Is this a good deal?” Hall recalled.
Hall was frozen in place.
Is this a good deal? That statement would reverberate in his head many decades later. “It’s like somebody hit me with a sledgehammer,” he said. He called the statement “classic Sterling.” It cut to the quick and exposed how flawed Hall’s presentation really was. Brad Hall realized in an instant that he’d gotten lost in the minutiae of his analysis without thinking about the broader strategy that should have been behind it. He had a thousand computer runs to tell him what the internal rate of return might be under various conditions. But he couldn’t present any critical analysis about why the deal might be a good idea over the next decade, or why Koch Industries more than any other company was the right company to do the deal.
“I had no idea what I was doing. I was all tied up in these details and everything. And there’s this whole other spectrum of strategy” that Varner employed when considering a deal, Hall said.
Almost right away, Charles Koch began asking questions about other competitors in the business and the marginal suppliers in the industry. They were strategic questions, and they cut to the bone.
For Brad Hall, these questions cemented one realization. Hall knew whom he wanted to work for, and that person was not Bill Koch.
The message could not have been lost on Bill Koch himself.
* * *
Like all vice presidents at Koch Industries, Bill Koch had to periodically answer a battery of probing questions from Charles that evaluated how well he was doing. But Bill was different from other executives in one vital way: he owned a big chunk of stock in the company.
Charles, Bill, and David had very large numbers of shares, each son with roughly a 20 percent share of the company that had been left to them by their father. Their older brother, Frederick, also had shares, even though he wasn’t involved in operations. J. Howard Marshall II, the former co-owner of the Pine Bend refinery, owned another large piece of the company. Marshall gave some of these shares to his son, J. Howard Marshall III. There was a smattering of other small shareholders, including cousins from Fred Koch’s side of the family who were simply referred to as the “other Kochs.”
Being a major stockowner complicated Bill Koch’s standing with Charles.
As a vice president, Bill reported to Charles. But as a major shareholder, he was, in many ways, Charles’s equal. As Bill Koch