C.S. Hayden. who is serving an internship at Koch Industries, Inc., the world’s largest privately-held company, provides this entertaining interview of Charles G. Koch, the company’s CEO. Koch is the author of The Science of Success: How Market-Based Management Built the World’s Largest Private Company (Wiley 2007), which he expands upon in the interview. Of particular interest is Koch’s view toward Koch’s advantages in the marketplace:

Q: What separates this company from those in the Fortune 500?
Mr. Koch: The MBM culture and management philosophy are key. We are privately held, which gives us tremendous advantages in this business environment of regulation and litigation. Also, we have continuity of leadership. As Deming said, constancy of purpose is a key. A 20% yearly return will make your money double every 3.5 years, which adds up over time. Others try to change their purpose all the time, they have some successes, but they end up bankrupt and have to start all over again.
Q: What are the advantages and disadvantages of the private vs. public ownership structure?
Mr. Koch: In today’s regulatory and litigious society, about every company is better off private. The only reason to go public would be if the shareholders want liquidity or if the business can finance takeovers through public offerings. [I think this is what he said, but I’m not certain about the second point, financing takeovers; the key is that he emphasized the vast benefits of the private structure.]
The equity markets are not free markets, but highly regulated and distorted.

Also impressive is Koch’s analysis of his decision-making:

Q: What have been your best and worst decisions?
Mr. Koch: The best decision was a deal with J. Howard Marshall to gain control of the Great Northern Oil Company, which established the refining business and eventually propelled us into many other industry areas. The worst decisions are way too numerous to recount. Making so many mistakes is definitely a humbling process. The very worst decisions occur when we don’t take advantage of good deals, when we have massive opportunity costs. We get scared and don’t take risks. Fred Koch said, “Don’t take counsel of your fears.”

Koch’s final piece of advice is also insightful:

Finally, if you lose your humility, you’re on your way out.

Read the entire interview.