Great American Private Companies

• Introduction

• Chapter 1 Koch Industries

• Chapter 2 Cargill

• Chapter 3 Mars, Incorporated

• Chapter 4 Publix Super Markets

• Chapter 5 H-E-B

• Chapter 6 Deloitte

• Chapter 7 Ernst & Young

• Chapter 8 PricewaterhouseCoopers

• Chapter 9 Fidelity Investments

• Chapter 10 Hearst Corporation

• Chapter 11 Bechtel

• Chapter 12 Enterprise Holdings

• Chapter 13 C&S Wholesale Grocers

• Chapter 14 Reyes Holdings

• Chapter 15 Cox Enterprises

• Chapter 16 S. C. Johnson & Son

• Chapter 17 Menards

• Chapter 18 Gordon Food Service

• Chapter 19 Amway

• Chapter 20 Capital Group Companies

• Chapter 21 Bloomberg L.P.

• Chapter 22 Meijer

• Chapter 23 Love's Travel Stops & Country Stores

• Chapter 24 Chick-fil-A

• Chapter 25 SAS Institute

• Afterword

When you picture a titan of American industry, what comes to mind? Perhaps it’s the frenetic energy of the New York Stock Exchange, with traders shouting and numbers flashing across a screen. Maybe it’s the ubiquitous logos of multinational corporations that adorn everything from your smartphone to your soda can. These are the public companies, the household names whose quarterly earnings reports are dissected on cable news and whose stock prices are a daily national obsession. But what if I told you that some of the most powerful and influential companies in the United States operate largely out of the public eye? These are the private companies, the hidden giants that form the backbone of the American economy.

A private company, in its simplest form, is a business entity that is not publicly traded on a stock exchange. Its shares are not available for purchase by the general public, but are instead held by a small number of individuals, families, or a group of investors. This fundamental difference in ownership structure creates a cascade of distinctions that set private companies apart from their public counterparts. For one, they are not beholden to the same stringent financial disclosure requirements mandated by the Securities and Exchange Commission (SEC). This means no quarterly earnings reports, no exhaustive annual filings, and a general veil of privacy around their financial performance.

This isn't to say that private companies are small potatoes. On the contrary, some of the largest and most profitable enterprises in the nation are privately held. In 2024, the top 258 private companies in the United States each reported revenues exceeding $2 billion. At the top of that list sits Cargill, an agribusiness behemoth with a staggering $177 billion in revenue in its most recent fiscal year. Following closely behind is Koch Industries, a diversified conglomerate with a revenue of $125 billion. These are not fledgling startups or quaint mom-and-pop shops; they are global powerhouses that rival and, in some cases, dwarf their publicly traded competitors.

So, why do these corporate titans choose to remain private? The reasons are as varied as the companies themselves, but a few key advantages consistently emerge. First and foremost is the freedom from the tyranny of the quarterly report. Public companies often find themselves making decisions with an eye toward boosting short-term stock performance to appease shareholders. Private companies, on the other hand, can afford to take a much longer-term view. They can invest in research and development, weather economic downturns, and pursue ambitious projects without the constant pressure of meeting Wall Street's expectations. This long-range perspective allows for more strategic and sustainable growth.

Another significant benefit is the ability to maintain control. In a public company, ownership is diffuse, and decisions are often subject to the approval of a board of directors and, ultimately, the shareholders. In a private company, particularly a family-owned one, the founders or their descendants can maintain a firm hand on the tiller, ensuring that the company's original vision and values are preserved. This centralized control allows for quicker and more agile decision-making, a crucial advantage in a rapidly changing business landscape.

Of course, the private route is not without its drawbacks. The most significant of these is limited access to capital. Public companies can raise vast sums of money by issuing new stock, a spigot that is largely turned off for their private counterparts. While private companies can still secure funding through private equity, venture capital, or bank loans, these avenues are often more limited and come with their own set of strings attached. This can make it more challenging for private companies to fund large-scale expansions or acquisitions.

Another potential hurdle is the lack of liquidity for shareholders. If you own stock in a public company and need to cash out, you can simply sell your shares on the open market. In a private company, finding a buyer for your shares can be a much more complicated and drawn-out process, often requiring the approval of other shareholders. This can make it difficult for investors and employees with stock options to realize the value of their holdings.

Despite these challenges, the private company model has not only survived but thrived in the American economic landscape. The collective impact of these private enterprises is immense. Large private companies, defined as those with at least 500 employees, support one in ten jobs in the United States, totaling over 17 million positions. They contribute an estimated $3.1 trillion to the economy and generate $1.7 trillion in personal income. On average, these companies contribute about 10% to their respective states' GDP, playing a vital role in boosting local economies.

The world of private equity-backed firms further underscores this economic significance. In 2024, these businesses directly employed 13.3 million workers and contributed $2 trillion to the U.S. GDP, representing approximately 7% of the total. The average worker in a private equity-backed business earned $85,000 in wages and benefits in 2024. It's also worth noting that the vast majority—around 85%—of private equity-backed businesses are small businesses with fewer than 500 employees. This highlights the crucial role of private investment in nurturing the growth of smaller enterprises.

The companies profiled in this book represent a diverse cross-section of American industry. From the agricultural and food production giants like Cargill and Mars to the professional services powerhouses of Deloitte, Ernst & Young, and PricewaterhouseCoopers. We will delve into the world of retail with employee-owned Publix Super Markets and the fiercely independent H-E-B. We'll explore the realms of finance with Fidelity Investments, media with Hearst Corporation, and construction with Bechtel. From the rental car empire of Enterprise Holdings to the wholesale grocery distribution of C&S Wholesale Grocers and Reyes Holdings, these companies touch our lives in ways we may not even realize.

This book will pull back the curtain on these often-secretive organizations. We will examine their histories, from humble beginnings to their current positions of dominance. We will explore their unique corporate cultures, many of which are deeply rooted in the values of their founders. We will also look at the controversies and challenges they have faced, from navigating the complexities of family succession to weathering the storms of economic and political change.

The stories of these companies are, in many ways, the story of American capitalism itself. They are tales of innovation, perseverance, and, at times, ruthless competition. They are a testament to the enduring power of the entrepreneurial spirit and the diverse paths to building a lasting business legacy. While they may not have their names splashed across the ticker tape, the great American private companies are, without a doubt, a driving force in the nation's economy and a fascinating subject of study. Prepare to be introduced to the quiet giants who shape our world.

To understand Koch Industries, one must first understand its founder, Fred C. Koch, a man whose engineering prowess was matched only by his staunch political convictions. Born in Quanah, Texas, in 1900 to a Dutch immigrant father who was a printer, Fred displayed an early aptitude for science and math. He pursued this interest at the Massachusetts Institute of Technology (MIT), graduating in 1922 with a degree in chemical engineering. His early career took him from Texaco in Port Arthur, Texas, to a stint as a chief engineer in England.

Upon returning to the United States, Koch and an MIT classmate, Lewis Winkler, formed the Winkler-Koch Engineering Company. In 1927, the firm developed a more efficient thermal cracking process for converting heavy crude oil into gasoline. This innovation was a game-changer, as it allowed smaller, independent refiners to compete with the industry's titans. The major oil companies did not take this challenge lightly and responded with a barrage of patent infringement lawsuits, effectively tying the young company up in litigation for years.

Frustrated but not defeated by the legal battles in his home country, Fred Koch took his expertise abroad. He found willing customers in the Soviet Union during Joseph Stalin's first Five-Year Plan, and between 1929 and 1932, his company built 15 cracking units there. His experiences in the USSR, however, left him with a profound and lifelong revulsion for communism. He witnessed the brutality and inefficiency of the Soviet state firsthand, which solidified the political ideology he would later champion.

His work in the years leading up to World War II also included a partnership to build a large refinery in Hamburg, Germany, in 1934. After these international ventures, Koch returned to the United States, his fortune secured. In 1940, he co-founded a new venture, the Wood River Oil and Refining Company, in Wichita, Kansas, the entity that would eventually grow into the colossal enterprise known today as Koch Industries. The early company expanded with key acquisitions, such as the Rock Island refinery in Oklahoma in 1946.

Fred Koch married Mary Robinson in 1932, and the couple had four sons: Frederick, Charles, and twins David and William (Bill). As his business grew, Fred became a vocal advocate for his political beliefs. He was a founding member of the John Birch Society, an anti-communist organization that advocated for limited government. This deep-seated political philosophy would become a defining characteristic of the family and the company he built.

As Fred Koch entered his later years, he became concerned about the future of his company and issued an ultimatum to his son Charles, who, like his father, had earned an engineering degree from MIT. Fred told Charles that if he didn't join the family business, he would sell it. The ultimatum worked. Charles Koch joined the company, then known as Rock Island Oil & Refining Company, in 1961, becoming its president in 1966.

Following Fred Koch's death in 1967, Charles became chairman and CEO of the company, which was renamed Koch Industries in honor of its founder. At the time, it was a medium-sized oil firm. What followed under the leadership of Charles, and for many years his brother David, who joined the company in 1970, was a period of extraordinary growth and diversification that would transform the company into the second-largest private corporation in America.

The transition to the second generation was not without its turmoil. The 1980s were marked by a bitter internal power struggle among the four brothers. Disagreements over the company's direction and dividend payouts escalated into a series of legal and boardroom battles. Ultimately, in 1983, Charles and David bought out the stakes of their brothers, Frederick and Bill, for a reported sum of nearly $800 million. This consolidation of ownership allowed Charles and David to steer the company with a unified vision.

At the heart of Koch Industries' immense success is a unique management philosophy developed by Charles Koch known as Market-Based Management (MBM). This framework, which Charles credits for the company's enormous growth, seeks to apply the principles of a free market within the organization itself. It is built upon five dimensions: Vision, Virtue and Talents, Knowledge Processes, Decision Rights, and Incentives.

The core idea of MBM is to foster a culture of principled entrepreneurship, where employees are encouraged to think like owners. The philosophy emphasizes understanding what creates value for customers and society and empowering employees to make decisions that align with that value. It rejects a traditional top-down hierarchical structure in favor of a system where decision-making authority is granted based on an individual's comparative advantage and demonstrated ability to achieve results.

Incentives under MBM are designed to reward employees for the long-term value they create, mirroring how entrepreneurs are compensated in a market economy. The philosophy also places a strong emphasis on virtues such as integrity, humility, and intellectual honesty, which are seen as essential for long-term success. This distinct corporate culture is a key factor in how Koch Industries integrates its numerous acquisitions and manages its diverse operations.

The expansion of Koch Industries from its oil and refining roots into a sprawling conglomerate is a story of strategic, and often massive, acquisitions. The company’s growth has been relentless, pushing it into nearly every corner of the modern economy. With operations in about 60 countries and employing over 120,000 people, its reach is truly global.

A pivotal moment in this expansion came in 2004 with the $4.2 billion acquisition of Invista, DuPont's textile and interiors unit. This purchase brought well-known brands like Lycra spandex and Stainmaster carpet into the Koch portfolio, marking a significant move into the world of polymers and fibers. Invista now operates as one of the world's largest integrated producers of chemical intermediates, polymers, and fibers.

Just a year later, in 2005, Koch executed its largest acquisition to date, purchasing the publicly traded Georgia-Pacific Corporation for $21 billion, including debt. This landmark deal took the maker of Brawny paper towels, Dixie cups, and Quilted Northern bath tissue private, transforming it into a wholly owned subsidiary. The acquisition gave Koch a massive foothold in the consumer products and building materials sectors.

The acquisition spree continued. In 2013, Koch acquired Molex, a manufacturer of electronic connectors, for $7.2 billion, adding a significant technology component to its industrial empire. Then, starting with a minority investment in 2012, Koch completed its full acquisition of Guardian Industries in 2017. Guardian is a global leader in float glass, fabricated glass products, and high-value coatings on plastics for the automotive industry.

Today, Koch Industries is a diversified behemoth with a vast and varied portfolio. Its subsidiaries are involved in refining, chemicals, biofuels, polymers, minerals, fertilizers, pulp and paper, ranching, commodity trading, and investments. Many of its company names are not widely known to the public, yet their products are ubiquitous.

Flint Hills Resources, for instance, operates oil refineries and chemical plants, producing everything from gasoline and jet fuel to the building blocks for plastics. Koch Pipeline Company operates thousands of miles of pipelines that transport crude oil and refined petroleum products across the United States. Its interest in the Colonial Pipeline gives it a stake in the country's largest refined products pipeline.

In the agricultural sector, Koch Ag & Energy Solutions is one of the world's largest producers of nitrogen fertilizers. The company also operates in methanol and energy services. Beyond industry, Koch even has a significant presence in the American West through the Matador Cattle Company, which runs three large ranches in Montana, Kansas, and Texas.

The company's presence extends into the technological and financial realms as well. Koch Disruptive Technologies is a venture capital arm that invests in innovative startups. Koch Investments Group handles a wide range of financial investments. This immense diversification, a hallmark of the company's strategy under Charles Koch, allows it to weather downturns in any single sector and seize opportunities across a broad economic landscape.

The influence of Koch Industries extends far beyond the marketplace and deep into the realms of American politics and public policy. Guided by the libertarian principles of Charles and the late David Koch, the company and the family have built one of the most significant and effective political networks in the country. This network advocates for free-market policies, limited government, and deregulation.

A key pillar of this network is Americans for Prosperity (AFP), a political advocacy group founded in 2004. AFP, heavily financed by the Kochs, operates as a grassroots organization with chapters across the country, mobilizing activists and running campaigns on issues ranging from tax cuts to energy policy. It has become one of the most influential conservative organizations in the United States, playing a significant role in the Tea Party movement and subsequent political debates.

Beyond direct advocacy, the Kochs have invested heavily in the intellectual infrastructure of the libertarian and conservative movements. In 1977, Charles Koch, along with Ed Crane and Murray Rothbard, founded the Cato Institute, a prominent libertarian think tank based in Washington, D.C. The Kochs provided initial funding, and while the relationship has had its complexities, the institute remains a powerful voice for policies like free trade, school choice, and a non-interventionist foreign policy.

The Koch network also includes support for numerous other organizations, such as the Federalist Society, The Heritage Foundation, and the Mercatus Center at George Mason University. Through their foundations, the Kochs have channeled hundreds of millions of dollars into these groups, funding research, public policy advocacy, and educational programs that align with their political and economic philosophy.

The family’s philanthropic endeavors also reflect these principles, but extend into other areas as well. The Koch foundations have donated significantly to higher education, medical research, and the arts. David Koch, who passed away in 2019, was a major patron of cultural institutions like New York's Lincoln Center and the Smithsonian's National Museum of Natural History. The family's charitable giving totals in the billions of dollars, supporting a wide range of causes.

This extensive political and philanthropic activity is often viewed through two very different lenses. Supporters see the Kochs as principled advocates for liberty and economic prosperity, using their resources to advance ideas they believe will benefit society as a whole. They are seen as champions of free enterprise who are putting their money behind their convictions to foster a more open and dynamic country.

Critics, however, argue that the Koch network's political activities are primarily self-serving, designed to advance the business interests of Koch Industries. They contend that the push for deregulation, particularly in the environmental sphere, benefits a company heavily involved in fossil fuels and chemicals. They see the network's vast spending as a way to exert undue influence on the political process, drowning out other voices and shaping policy to favor corporate interests.

The immense scale and secrecy of Koch Industries, combined with its controversial political advocacy and its operations in heavy industry, have made it a frequent target of criticism, particularly concerning its environmental record. As a major player in oil refining, pipelines, and chemical production, the company's operations have a significant environmental footprint, and it has faced numerous legal and regulatory challenges over the years.

One of the most significant environmental cases against the company culminated in 2000. The Environmental Protection Agency (EPA) and the Department of Justice announced that Koch Industries would pay a $30 million civil penalty—the largest ever under any federal environmental law at the time—to resolve claims related to more than 300 oil spills across six states. The spills resulted in the leakage of millions of gallons of crude oil into waterways.

In a separate case in 2001, a Koch subsidiary pled guilty to criminal charges of covering up environmental violations at its refinery in Corpus Christi, Texas. The company was accused of illegally releasing 91 metric tons of the carcinogen benzene and then falsifying documents to conceal its noncompliance. The case resulted in a $20 million payment, split between criminal fines and environmental projects.

Subsidiaries of the company have also faced scrutiny for their handling of petroleum coke, or "petcoke," a byproduct of refining tar sands. Large piles of petcoke stored by Koch-affiliated companies in cities like Chicago and Detroit have drawn complaints from residents about toxic dust blowing into their neighborhoods.

Environmental groups frequently rank Koch Industries among the nation's top polluters, citing data on its greenhouse gas emissions and toxic releases. These groups argue that the company's extensive lobbying efforts and funding of organizations that question the severity of climate change are aimed at weakening environmental regulations that could impact its bottom line. This has made the company a primary antagonist for many in the environmental movement.

In response to these criticisms, Koch Industries maintains that it is committed to environmental compliance and stewardship. The company states that it invests heavily in pollution control technologies and safety procedures. It points to its management philosophy, which includes a principle of Stewardship & Compliance, as a guide for its operations, requiring that the company act with proper regard for the rights of others and drive for environmental excellence.

The company also argues that a strong economy and a healthy environment are not mutually exclusive. Through its public policy advocacy, it promotes market-based solutions to environmental problems, such as eliminating energy subsidies, which it argues would foster innovation and efficiency. They contend that free enterprise, not government regulation, is the most effective driver of environmental progress.

Despite the controversies it courts, Koch Industries stands as a titan of American private enterprise. Its sheer size and diversity are staggering, with annual revenues that surpass those of many well-known public corporations. The company’s products are deeply embedded in the supply chains of countless industries, making its influence on the economy both profound and often invisible to the average consumer.

Remaining private has been a cornerstone of the company’s strategy, allowing it to pursue long-term growth without the quarterly pressures of Wall Street. This long-range perspective has enabled the multi-billion-dollar acquisitions and patient capital investments that have fueled its relentless expansion. It also allows the company to operate with a degree of privacy that is impossible for publicly traded firms.

The story of Koch Industries is a complex tapestry woven from threads of engineering innovation, aggressive business strategy, and deeply held political ideology. It began with Fred Koch's improved method for refining oil and was transformed by his sons into a global conglomerate managed by a unique, market-based philosophy. Its journey has been marked by both spectacular success and fierce controversy, making it one of the most powerful and debated entities in the American economic landscape.