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Speaker 1: Pushkin. Tim Harford here with a bonus episode of Cautionary Tales.

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Speaker 1: I have got an incredible story for you today about

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Speaker 1: a pioneering businesswoman who disrupted the champagne industry and in

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Speaker 1: so doing, changed it forever. This episode is sponsored by

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Speaker 1: Chase for Business, and I'm joined by Ben Walter, who

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Speaker 1: is the CEO of Chase for Business and those of

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Speaker 1: his own rather brilliant podcast, The Unshakeables. Ben. Welcome to

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Speaker 1: Cautionary Tales. Tim, thank you for having me. It's great

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Speaker 1: to be here. Well, it's great to have you, so, Ben,

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Speaker 1: what comes to your mind when I say the word champagne?

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Speaker 2: You know, obviously celebrations. I suppose the other thing that

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Speaker 2: comes to mind from me is quality, don't cheap out,

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Speaker 2: because for any of us who've ever been drunk on

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Speaker 2: cheap champagne, you know that that's a one time affair

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Speaker 2: and you never do that again.

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Speaker 1: I wouldn't know anything about that, I'm sure. So these

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Speaker 1: associations of luxury and possibly of excess come to mind.

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Speaker 1: What if I told you that all of this comes

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Speaker 1: down to a single rather remarkable nineteenth century businesswoman.

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Speaker 2: I didn't know that. On our podcast, we've had a

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Speaker 2: number of incredible female entrepreneurs whove achieved quite a lot,

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Speaker 2: but hearing that it happened in the nineteenth century is

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Speaker 2: a whole different follow Axe.

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Speaker 1: She is quite a character. Barb Nicole, Clico Pon Sardin.

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Speaker 1: She essentially created champagne as a category as we know

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Speaker 1: it today. And she also took a struggling family run

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Speaker 1: champagne house and she turned into a global empire. And

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Speaker 1: I should say it was partly about the way she

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Speaker 1: marketed things. She drove behavioral change around sparkling wine.

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Speaker 2: I'm trying to picture what you have in your head.

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Speaker 2: This is the nineteenth century. Women I don't think in

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Speaker 2: France could have bank accounts at that time, and this

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Speaker 2: woman revolutionized an entire industry.

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Speaker 1: It is an astonishing story, and Ben, I'm going to

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Speaker 1: tell you all about it, and I hope you will

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Speaker 1: give me some of your reactions to the story, because

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Speaker 1: I know you're a business expert. You've spoken to so

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Speaker 1: many entrepreneurs on your podcast, The Unshakeables. But before we

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Speaker 1: get to that, I need to say I'm Tim Harford

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Speaker 1: and you're listening to cautionary tales. Madame Klico was born

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Speaker 1: Barbnicole Ponsardan in seventeen seventy seven, so we're going back

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Speaker 1: a quarter of a millennium. She was the daughter of

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Speaker 1: a wealthy textiles industrialist, and she came of age during

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Speaker 1: the French Revolution, all of that turbulence and social change,

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Speaker 1: the Nsent regime disintegrating the middle class on the rise,

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Speaker 1: and when she was twenty one, she married Francois Clico.

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Speaker 1: He was the only son of her father's competitor, Philippe Clico,

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Speaker 1: and he was another textiles businessman. So the marriage was

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Speaker 1: effectively a business deal between the Clico and Ponsadin families.

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Speaker 1: And at this point, normally we'd tell a story about

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Speaker 1: Barbneicole becoming a wife and a mother. She would be expected,

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Speaker 1: like all married women, to live in the shadow of

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Speaker 1: their husbands. However, she and Francois ended up forming a

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Speaker 1: business partnership. She was fascinated by wine making, so was

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Speaker 1: her husband Francois. He was keen to grow his family's

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Speaker 1: small wine business, and so the young couple together set

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Speaker 1: about acquiring vineyards and learning all about the industry.

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Speaker 2: These were two textile families right in New York. We'd

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Speaker 2: call it the rag business. So were they supportive of

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Speaker 2: them going into the wine business.

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Speaker 1: Not really, no, they weren't. I meanp Clico wasn't keen

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Speaker 1: on his son's idea. He thought the textile business was

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Speaker 1: going perfectly well. The wine business was something of a distraction.

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Speaker 1: And you've got a bear in mind that Napoleonic Wars

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Speaker 1: are on the horizon, and with Europe ripped apart first

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Speaker 1: by revolution then by war, wine is not looking like

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Speaker 1: a profitable business because it's going to disrupt all of

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Speaker 1: the trade and all of the commerce. And of course

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Speaker 1: he was completely right. So Francois and Barbnicole's business started

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Speaker 1: to struggle, and in eighteen oh five things got worse.

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Speaker 1: Tragedy struck the family. Barbnicole's husband, Francois died. Now rumors

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Speaker 1: at the time were that his business was going so

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Speaker 1: incredibly badly that he had killed himself. That's actually unlikely,

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Speaker 1: much more likely he died due to typhoid fever. But

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Speaker 1: whatever the reason, he's dead. She is a widow. Her daughter,

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Speaker 1: le Montine is six years old, Barbnicole herself twenty seven,

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Speaker 1: and she is facing life as the widow clco or

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Speaker 1: as they say in France, la veuve clico.

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Speaker 2: Aha. Now this is starting to sound more familiar. So

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Speaker 2: Philip took pity on her, I suppose, and decided to

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Speaker 2: back the business in the wake of the tragedy.

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Speaker 1: Ben, I didn't bring you here to tell you a

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Speaker 1: story about people who felt sorry for this woman.

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Speaker 2: No.

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Speaker 1: No, he didn't take pity on her. He clearly saw

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Speaker 1: something in her, but he was at first just keen

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Speaker 1: to close the wine business entirely. I mean, the money

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Speaker 1: is in textiles, the wine business has been going badly,

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Speaker 1: why go ahead with this?

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Speaker 2: But obviously that didn't happen in the end, right, I

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Speaker 2: mean there's a bottle of this stuff in my fridge

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Speaker 2: right now.

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Speaker 1: Yeah, I'm very envious. Yes, I mean the the product's

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Speaker 1: world famous. She basically somehow managed to persuade him that

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Speaker 1: her idea was worth backing, or perhaps more likely, that

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Speaker 1: she was worth backing. He must have seen she was

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Speaker 1: in incredibly smart, incredibly driven, and she had some collateral.

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Speaker 1: She was owed inheritance, and she said, look, instead of

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Speaker 1: the inheritance, why don't you back my wine business? And

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Speaker 1: he put in the equivalent of maybe a million dollars today,

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Speaker 1: which says a lot about her. I think also says

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Speaker 1: a lot about Philippe, because, as you pointed out, earlier

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Speaker 1: women in France at the time couldn't even have a

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Speaker 1: bank account, and she is proposing that she is going

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Speaker 1: to lead this huge and untried business. And it's also

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Speaker 1: a male dominated business. So who are the players? I mean,

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Speaker 1: will we have heard of any of them? Chanle, Angrie Hide,

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Speaker 1: sec Jean Remy Moe.

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Speaker 2: Have you heard of them? Those are certainly names that

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Speaker 2: sound familiar. Were they well known at the time. They

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Speaker 2: were very well known at the time. Moe in particular,

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Speaker 2: he had this celebrity romance with Napoleon and he used

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Speaker 2: to advertise his wine by distributing these postcards showing Mowe

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Speaker 2: and Napoleon exploring wine cellars together. Well, it's good to

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Speaker 2: know the romance. There's not a new funman.

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Speaker 1: Absolutely absolutely. So this is the situation in which Barbnicole

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Speaker 1: approaches her father in law, Philippe. He said, okay, I

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Speaker 1: will back the business, but you've got to learn something

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Speaker 1: about wine. You've got to go and do an apprenticeship

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Speaker 1: and learn the trade four years figuring out how the

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Speaker 1: wine business works. She agreed. She went off. She did

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Speaker 1: her four year apprenticeship. At the end of the four years,

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Speaker 1: the business is still really struggling, and so she goes

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Speaker 1: back to Philippe, her father in law, and she asks

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Speaker 1: him for help yet again, and he agrees. Wow, and

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Speaker 1: so he must have really believed in her at some level.

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Speaker 1: He must have done. I mean, we don't know why,

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Speaker 1: but in any case, whatever it was that passed between them,

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Speaker 1: he backed her a second time. This is the point

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Speaker 1: at which Barbnicole decides she's going to have to take

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Speaker 1: a gamble. Possibly she realizes it if she doesn't make

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Speaker 1: it this time, it's really a case of now or never.

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Speaker 2: Yeah, We've had a number of entrepreneurs on the show

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Speaker 2: who've told similar stories about being up against the wall

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Speaker 2: and then betting it all in black, so to speak,

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Speaker 2: because they have no choice. For example, we had a

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Speaker 2: woman who owns a company called Desi I Were her

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Speaker 2: name is Desi Perkins, and she went into a number

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Speaker 2: of places to pitch and couldn't get an answer and

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Speaker 2: was running out of cash and really went for it

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Speaker 2: and it came through. But you know, to go for broke,

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Speaker 2: it takes courage to do that.

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Speaker 1: Yeah, I mean, suppose to some extent there's a degree

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Speaker 1: of survivor bias that we see the ones who took

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Speaker 1: the gamble and then the gamble paid off. But certainly

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Speaker 1: my own research suggests there is something about that crisis

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Speaker 1: that forces people to think differently and to explore new

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Speaker 1: ways of doing things. So that is something of a

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Speaker 1: catalyst for business transformation, I think.

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Speaker 2: So what happened next?

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Speaker 1: Barbnicole foresaw that the Napoleonic Wars were likely to come

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Speaker 1: to an end, and that when they did, that was

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Speaker 1: going to free up trade between France and its faux Russia,

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Speaker 1: and that meant potentially a huge champagne market in Russia.

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Speaker 1: And Barb Nicole was making a particular kind of champagne

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Speaker 1: that she was confident would sell very well in Russia.

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Speaker 1: It was incredibly sweet. Do you know so turn the

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Speaker 1: dessert wine?

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Speaker 2: Ben? I don't.

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Speaker 1: Is that similar to what they were drinking? Well, so

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Speaker 1: turn is very sweet. This champagne was sparkling like modern champagne,

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Speaker 1: but it was very sweet. It was actually twice as

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Speaker 1: much sugar even as a modern so turn. So this

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Speaker 1: is like drinking baileis or hot chocolate or something. I mean,

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Speaker 1: it's a very very sweet sparkling drink and the widow Clico.

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Speaker 1: She decides when the war ends, Russian's going to go

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Speaker 1: for this. She smuggles bottles of her best vintage, the

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Speaker 1: eighteen eleven vintage, to Amsterdam, knowing that if the war

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Speaker 1: does finish, they will be very well placed to be

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Speaker 1: shipped to Russia at that moment. So she's taking this

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Speaker 1: risk because if the war doesn't end, then she's not

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Speaker 1: going to get any return from this wine. But if

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Speaker 1: it does, she is perfectly timed to profit. There's sort

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Speaker 1: of three brilliant moves she makes at the same time.

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Speaker 1: One is really knowing her product market fit right. She

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Speaker 1: knows that this incredibly sweet drink fits the Russian palette.

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Speaker 1: Two is being aware of the macro effects of what's

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Speaker 1: going on around her, knowing the war is going to

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Speaker 1: end and that will open up trade. And then three

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Speaker 1: is having the guts to smuggle this stuff into Amsterdam

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Speaker 1: so she can get a jump on the competition. That's

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Speaker 1: quite a combination. Yes, the risk comes good. Madame Cleiko's

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Speaker 1: champagne makes it to Russia, beating her competitors, including Monsieur

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Speaker 1: Moey by several weeks. She gets influencer support nineteenth century

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Speaker 1: style two. The Cizar says that verve Click is the

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Speaker 1: only champagne he will drink, and of course, once he

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Speaker 1: says that the entire Russian court has to follow suit.

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Speaker 1: It's the perfect product. It is there at the perfect moment. That, though,

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Speaker 1: poses its own problems, because she suddenly got this massive

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Speaker 1: demand to make this kind of champagne, and at the time,

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Speaker 1: making champagne is extraordinarily difficult and the whole production process

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Speaker 1: is very inefficient.

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Speaker 2: Yet tim when people are successful, that can suddenly bring

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Speaker 2: up a new range of challenges. We spoke to Melissa

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Speaker 2: Gaiardo who started a candle company called Benita Fierce Candles,

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Speaker 2: and when her sales took off, she didn't know how

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Speaker 2: to keep up with production. I mean, she had people

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Speaker 2: in her home just making candles as fast as they

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Speaker 2: could possibly make them because she had a moment and

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Speaker 2: she had to capture it. Yeah.

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Speaker 1: I mean, this is exactly the problem that Barbney Cole faced,

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Speaker 1: and she realizes she has to do something to change that.

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Speaker 2: But in this case, it sounds like she had to

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Speaker 2: become a bit of an engineer.

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Speaker 1: Yeah, So all champagne has a sediment. It makes the

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Speaker 1: drink cloudy. That's not what people want. They want to

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Speaker 1: clear champagne. That's true now, it was certainly true at

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Speaker 1: the time. But to filter out the sediment is this

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Speaker 1: very time consuming business. What Madame Clico invented was called

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Speaker 1: a riddling table. So riddling is the process of getting

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Speaker 1: the sediment out. And this is a kind of wooden

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Speaker 1: frame with holes bored into it, allowing the bottles to

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Speaker 1: be suspended at different angles, so they're basically upside down

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Speaker 1: on a diagonal. And you put the bottles in this

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Speaker 1: frame and then these expert wine riddlers come up and

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Speaker 1: they give it a sharp quarter turn every now and then.

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Speaker 1: And every time you have this quarter turn, you're changing

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Speaker 1: the angle of the bottle and you're very gently disturbing

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Speaker 1: the sediment. You're not mixing it back into the wine.

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Speaker 1: You're letting it slip to the bottom of the bottle.

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Speaker 1: And of course, because the bottle is upside down, the

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Speaker 1: bottom of the bottle is the neck, so you've got

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Speaker 1: this sediment gathering in the neck and you can take

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Speaker 1: it out of the bottle easily. So this riddling contraption,

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Speaker 1: this riddling table, is the killer app that makes it

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Speaker 1: much much easier to get the sediment out of the champagne,

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Speaker 1: and her competitors absolutely cannot work out how she is

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Speaker 1: doing this, How is she making so much champaign so quickly?

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Speaker 1: Moway figured it out eventually, but it took him fifteen

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Speaker 1: years to catch.

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Speaker 2: Up, you know, Tim, She was innovating in a physical

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Speaker 2: product that had been around a long time, and it's

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Speaker 2: interesting because that never stops. We interviewed someone on the

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Speaker 2: podcast as a company, Sabanto, that is changing the way

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Speaker 2: that you plant and harvest corn. We've been consuming corn

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Speaker 2: for thousands of years. He's developing automated tractors that can

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Speaker 2: plant and reap the crops. I think people fall into

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Speaker 2: a trap where innovation only happens in sort of the

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Speaker 2: advanced sectors of tech, and actually there isn't an industry

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Speaker 2: around that's not waiting around to be disrupted.

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Speaker 1: Yeah. I think that's absolutely right, and the wine industry,

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Speaker 1: as Barbneicole showed, is clearly one of them. And one

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Speaker 1: of the things that Madame Clico did here was not

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Speaker 1: just invent the process, but keep the process a secret,

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Speaker 1: so she had real loyalty from her employees who presume

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Speaker 1: could have gone to one of her competitors and collected

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Speaker 1: some kind of reward, but none of them did, and

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Speaker 1: that may have been because she had this profit sharing system.

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Speaker 1: So they were all making money, they felt looked after,

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Speaker 1: and they did not betray her secrets. Well, she was

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Speaker 1: shrewd in a number of ways. Is this approach of

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Speaker 1: treating your work as well sharing the gains something that

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Speaker 1: you've encountered yourself.

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Speaker 2: Ben, loyal employees are critical. I would just say that

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Speaker 2: loyalty and employment is only partially about paying ownership. It's

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Speaker 2: you know, particularly in today's world, it's about that plus

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Speaker 2: creating the right environment, making people feel valued and like

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Speaker 2: they belong and like they have purpose. So I think

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Speaker 2: the right compensation structure is important, but it's not the

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Speaker 2: whole ball game.

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Speaker 1: Yeah, Listeners to our episode on the building of the

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Speaker 1: Empire State Building might recognize this. Paul Starrett, who was

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Speaker 1: in charge of that project, was in some ways an

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Speaker 1: incredibly generous employer. He paid the workers very well. The

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Speaker 1: conditions were great, it was great food safety standards were

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Speaker 1: very high. But at the same time he watched them

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Speaker 1: absolutely like a hawk. He had really really tough minded

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Speaker 1: site managers, cracking down on fraud and theft and so on.

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Speaker 1: So there was this sort of sense of like, I'm

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Speaker 1: going to absolutely insist on the best possible behavior, but

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Speaker 1: at the same time, I'm going to reward that.

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Speaker 2: You know, success is the best retention tool there is,

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Speaker 2: and success gives you the right to be tougher because

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Speaker 2: people want to be in an environment of success and

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Speaker 2: they want a rise to the occasion. You talked earlier

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Speaker 2: about the fact that she basically established the category. I

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Speaker 2: mean she drove large scale behavioral and intentive change across

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Speaker 2: an entire continent. It sounds like, how did she do that?

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Speaker 2: Tell me more about that.

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Speaker 1: I think it's a fascinating case study. So at the time,

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Speaker 1: Champagne itself was not the drink it is today, and

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Speaker 1: the Champagne region was not famous for sparkling wine. It

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Speaker 1: was famous for still white wines. So by reaching these influencers,

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Speaker 1: reaching the czar, by producing this drink that perfectly matched

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Speaker 1: people's taste, and by creating something that seemed luxurious but

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Speaker 1: at the same time was cheap enough to be affordable

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Speaker 1: because she had made the production process more efficient and

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Speaker 1: to make it available at scale, she creates this whole category. Suddenly,

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Speaker 1: this drink is something that the czar demands, and yet

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Speaker 1: the ordinary middle classes can afford it, and it basically

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Speaker 1: becomes the drink of celebrations everywhere. She established all of this.

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Speaker 1: By the time she died in eighteen sixty six, the

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Speaker 1: Widow Clico had a global empire. She was exporting her

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Speaker 1: wine as far afield as the United States. Sales had

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Speaker 1: reached seven hundred and fifty thousand bottles a year. That

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Speaker 1: is up from seventeen thousand bottles back in eighteen eleven

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Speaker 1: before her big breakthrough, and the brand is now so

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Speaker 1: well recognized. I think it's these second most popular brand

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Speaker 1: of champagne in the world. And if you go into

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Speaker 1: a bar in France, I understand that you can simply

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Speaker 1: ask for a glass of the Widow and people will

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Speaker 1: know that you want verve Clico Champagne.

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Speaker 2: Tim What's interesting about that is we think that hyperscaling

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Speaker 2: is a modern phenomenon. You look at the likes of

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Speaker 2: Apple or Amazon or Google or some of the other

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Speaker 2: more recent startups that have gone global with their impact.

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Speaker 2: And while the time scales might have been longer, this

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Speaker 2: was maybe fifty or sixty years as opposed to five

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Speaker 2: or ten. The impact even back then could be global

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Speaker 2: in scale, in terms of how far reaching some of

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Speaker 2: these insights and innovations can be.

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Speaker 1: Yeah. Absolutely, it's partly about developing the product that people

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Speaker 1: want to drink. It's partly about the marketing, but it

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Speaker 1: is also about the production. You've got to be able

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Speaker 1: to make this stuff. You have to get all of

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Speaker 1: these things right. And that's what she did.

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Speaker 2: Yes, and aspiration and luxury is a timeless phenomenon.

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Speaker 1: Something else timeless is the motivational business quote. And I

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Speaker 1: actually have a motivational business quote from wido'click. I rather

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Speaker 1: like this one. This was a letter she wrote to

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Speaker 1: one of her grandchildren, and she commented, the world is

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Speaker 1: in perpetual motion and we must invent the things of tomorrow.

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Speaker 1: One must go before others, be determined and exacting, and

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Speaker 1: let your intelligence direct your life. Act with audacity.

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Speaker 2: What an incredible woman. I hope that aspiring female and

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Speaker 2: frankly male entrepreneurs can hear this story because the woman

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Speaker 2: was groundbreaking in so many ways. I don't speak French.

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Speaker 2: I didn't know what the word for meant, so I

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Speaker 2: kept waiting for tim to tell me that she married

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Speaker 2: mister viv and it turns out she did it all

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Speaker 2: on her own. And I think that's fantastic what she

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Speaker 2: was able to accomplish as a woman in early nineteenth

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Speaker 2: century France. I mean, I'm just bowled over by that.

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Speaker 2: I think about innovation, resilience, scale, grit vision. You know,

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Speaker 2: these are things we talk about all the time in

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Speaker 2: business circles, and she had them and spades and pioneered

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Speaker 2: them to something that has stood the test of time

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Speaker 2: and more ways than one.

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Speaker 1: No, Ben, I will drink to that. Ben Walter, thank

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Speaker 1: you very much for joining me on Cautionary Tales.

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Speaker 2: Thanks so much for having me, Tim, What a great story.

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Speaker 1: This episode was sponsored by Chase for Business and I

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Speaker 1: was talking to Ben Walter, who is the CEO of

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Speaker 1: Chase for Business. You can of course find the Unshakeables

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Speaker 1: wherever you get your podcasts, and there will be a

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Speaker 1: new episode of Cautionary Tales in this feed very shortly.

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Speaker 1: For a full list of our sources, see the show

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Speaker 1: notes at Timharford dot com. Cautionary Tales is written by

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Speaker 1: me Tim Harford, with Andrew Wright, Alice Fines, and Ryan Dilly.

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Speaker 1: It's produced by Alice Fines and Marilyn Rust. The sound

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Speaker 1: design and original music are the work of Pascal Wise.

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Speaker 1: Additional sound design is by Carlos San Juan at Brain Audio.

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Speaker 1: Bend A Dafhaffrey edited the scripts. The show features the

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Speaker 1: voice talents of Melanie Guttridge, Stella Harford, Oliver Hembrough, Sarah Jupp,

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Speaker 1: messaam Monroe, Jamal Westman, and Rufus Wright. The show also

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Speaker 1: wouldn't have been possible without the work of Jacob Weisberg,

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Speaker 1: Greta Cohne, Sarah Nix, Eric Sandler, Carrie Brody, Christina Sullivan,

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Speaker 1: Kira Posey, and Powen Miller. Cautionary Tales is a production

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Speaker 1: of Pushkin Industries. It's recorded at Wardore Studios in London

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Speaker 1: by Tom Berry. If you like the show, please remember

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