A tour of duty in the military might have been one of the best things for Paul and Roger Koch. The experience upon their return guided their thinking about how to manage their family-owned business in the latter stages of their career.
“One of our saving graces was going into the service after graduating from WashU,” said Paul Koch, BSBA ’61, JD ’64, MBA ’68. “It got us away from the family, it got us away from St. Louis. And when we came back, our father said, ‘This is my company. You’ll have to start your own.'”
Their father didn’t want his sons, Paul and Roger, BSBA ’64, MBA ’66, to follow him into his real estate company. So they did exactly as he said and started their own. It became Koch Development Co., a St. Louis-based developer and manager of commercial real estate and owner/operator of select entertainment attractions—a business that has endured for three generations, so far.
“We say we are the third generation because we’re in that line of entrepreneurs in the same kind of business,” Roger Koch said. “Our kids had different interests. They had an interest in real estate, but they wanted to move in different directions.”
Paul and Roger Koch’s experiences separating from their father’s business, growing their own, and arranging for a generational transition informed their interest in deepening Olin Business School’s focus on the family business arena. The two brothers—and their spouses, Elke and Fran Koch—established a family business initiative in 2016, with a $1.09 million gift.
A key component of the family business initiative is an annual symposium focused on the topic of closely held and family-owned businesses. The fourth annual Olin Family Business Symposium will be held October 12 in Emerson Auditorium, focused on “Staying Private Forever–Often a Better Alternative.”
The Kochs’ commitment expanded in February when they contributed an additional $9 million toward a full-fledged Koch Center for Family Business, a research center that will be run by a faculty member holding a newly endowed Koch Distinguished Professorship in Family Business.
Roger Koch said Washington University has the potential to be a hub of knowledge, learning, and research on family businesses, which contribute more than $68 trillion to global GDP and drive 64 percent of the US economy.
“Students get totally focused on big, publicly traded companies,” he said. “They get no exposure to what family businesses are like. Family businesses by far create more jobs than any other sector of the economy. There are great careers to be had in family businesses. They’re very long-term oriented. They don’t only think about the next quarter. They’re here to move the entire organization along.”
He and his brother Paul know first-hand the importance of planning for generational transitions, a key stumbling block for many family businesses.
“We’re not unique, but too often family businesses fail to create that high-level management by using non-family managers,” Roger Koch said. “The seniors don’t want to give up control. That almost dooms the business. Even if you have a family member in that management team, you still need non-family managers to provide back-up support and continuity.”
Paul Koch added: “What is atypical of our business is that we were willing to go from family business managers to stakeholders.”
The next Olin Family Business Symposium includes keynote speaker Dave Whorton, founder and CEO of The Tugboat Group, as well as three panels, all discussing different aspects of “evergreen businesses”—businesses “led by purpose-driven leaders with the grit and resourcefulness to build and scale private, profitable, enduring, and market-leading businesses that make a dent in the universe.”
Pictured above: Fran and Elke Koch, first row. Paul Koch, Dean Mark Taylor, Roger Koch, and Chancellor Mark Wrighton on February 20, 2018, when the Kochs’ gift was announced.
7:30 a.m. Breakfast and Networking
8:30 a.m. “Introduction to Evergreen Principles,” Dave Whorton
9:00 a.m.: “The Concept of Strategic Ownership in Evergreen Companies”
Panel discussion with Dave Whorton, The Tugboat Group; Penny Pennington, Edward Jones; Alaina Macia, Medical Transportation Management, Inc. (MTM)
10:00 a.m.: “Importance of Evergreen Values in Businesses and Families”
Panel discussion with John Stupp Jr., Stupp Bros., Inc.; Michael Dierberg, First Bank Inc.; Greg Twardowski, Whelan Security Company; Jessica Rovello, Arkadium
11:00 a.m.: “Importance of Evergreen Values to Our Community”
Panel discussion with Spencer Burke, Olin Business School; David Kemper, Commerce Bancshares; Ricardo Cervantes, La Monarca Bakery; Michael Van Houweling, Van Wall Equipment