The new Koch

  @FortuneMagazine December 20, 2013: 5:43 PM ET
KOC13 koch brothers

Charles (left) and David Koch have greatly expanded the company founded by their father.


The headquarters of Koch Industries isn't exactly the first place you'd expect to find an information technology evangelist. It's about 1,600 miles away from Silicon Valley and even more distant culturally and politically. Located on the northeast fringe of Wichita, where the city streets give way to open expanses of prairie grass, the campus of one of America's largest private companies has grown over the years to support an expanding oil and gas empire.

But when Koch CFO Steve Feilmeier was asked recently about the future of the U.S. economy, he launched into a spirited monologue about the bright prospects for the nation's high-tech industry. "It's the little things, like these BlackBerrys that didn't exist eight or 10 years ago," said Feilmeier, holding up his distinctly last-century smartphone and growing animated in his modest office along executive row. "These technologies have improved the quality of our lives tremendously. That's going to continue, very rapidly."

In early December, Koch Industries put some serious money behind that belief when it closed on its $7.2 billion acquisition of Molex, a global electronic components manufacturer headquartered in Lisle, Ill. Molex makes parts for a wide variety of gadgets, including iPhones, and was traded on Nasdaq before the buyout. Koch sees huge potential for Molex to benefit from the so-called Internet of Things revolution that's on the horizon. (See "Everything Is Connected.") "Think about sensors and connectors and how [they're] proliferating right now," says Feilmeier, a stout 52-year-old who has the rah-rah intensity of a high school football coach. "As technology becomes more user-friendly and machines become wired to be more proactive -- whether that be industrial robotics and automation, or you have automobiles doing more for you and telling you more and keeping you out of accidents -- we think Molex is really well positioned to capture that growth."

Feilmeier envisions Molex growing from today's $3.6 billion in revenue to $10 billion within a decade and says there are hundreds of smaller tech companies that could be acquisition targets. "They just weren't out acquiring those companies or those technologies to enter new markets, and we'll really be able to help them with that," he says.

To the degree that most people have heard of Koch (pronounced "coke"), it is likely because of the political activities of the company's primary shareholders -- the brothers Charles and David Koch. Thanks to the tremendous growth of the family company founded by their father, Fred, more than 70 years ago, the Kochs are among the very wealthiest people in the world today. Each brother has a net worth estimated at $36 billion or more, and as their fortunes have grown, they have been aggressive about using their money to influence the political conversation in the U.S. The Kochs are staunch libertarians -- David ran for Vice President on the Libertarian Party ticket back in 1980 -- with a distaste for big government and, some would argue, regulation that might infringe on the profitability of their businesses. Money from the Koch brothers helped fund groups that spawned the Tea Party movement. One of the prime vehicles for their efforts is the Koch-sponsored political advocacy group Americans for Prosperity, which has taken on an array of political fights -- from repealing Obamacare to fighting the power of public sector unions in Wisconsin. According to a recent study by the Center for Public Integrity, AFP spent $122 million in 2012 alone. But that is hardly the extent of the Kochs' political spending. They have given tens of millions to help support a network of other conservative organizations. As a result, the brothers have become outsize figures in America's partisan political narrative -- all-purpose bogeymen to those on the left.

All the attention on the Koch brothers' politics, however, obscures the story of how their sprawling conglomerate has become one of the most important companies in America. If Koch Industries were eligible, its $115 billion in revenues would be enough for it to rank No. 17 on the Fortune 500, with sales larger than those of Google, Goldman Sachs, and Kraft Foods combined. It has doubled in size in the past decade. But Koch isn't important just because it's big. As Koch grows, it is reaching into new areas of business and becoming more closely entwined with more consumers. Koch owns well-known brands such as Stainmaster carpet and, thanks to its $22 billion purchase of Georgia-Pacific in 2005, Quilted Northern toilet paper, Brawny paper towels, and Dixie cups.

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