0:15

Pushkin. Tim

0:19

Harford here with a bonus episode of

0:22

Cautionary Tales. I have got an incredible

0:24

story for you today about a pioneering

0:26

businesswoman who disrupted the champagne

0:29

industry and in so

0:31

doing, changed it forever.

0:34

This episode is sponsored by Chase

0:36

for Business, and I'm joined by Ben

0:38

Walter, who is the CEO of Chase for Business

0:41

and those of his own rather brilliant podcast, The

0:43

Unshakeables. Ben. Welcome to

0:45

Cautionary Tales. Tim, thank you

0:47

for having me. It's great to be here. Well, it's

0:49

great to have you, so, Ben, what

0:52

comes to your mind when I say the word

0:54

champagne?

0:56

You know, obviously celebrations. I suppose

0:58

the other thing that comes to mind from me is quality,

1:00

don't cheap out, because for any of us who've

1:03

ever been drunk on cheap champagne, you know that that's

1:05

a one time affair and you never do that again.

1:07

I wouldn't know anything about that, I'm sure.

1:10

So these associations of luxury

1:13

and possibly of excess come

1:15

to mind. What if I told you that all of this

1:18

comes down to a single rather

1:20

remarkable nineteenth century businesswoman.

1:22

I didn't know that. On our podcast, we've had a number

1:24

of incredible female entrepreneurs whove achieved

1:26

quite a lot, but hearing that it happened in the nineteenth

1:29

century is a whole different follow Axe.

1:31

She is quite a character. Barb Nicole,

1:34

Clico Pon Sardin. She

1:37

essentially created champagne

1:40

as a category as we know it today.

1:43

And she also took a struggling family run

1:45

champagne house and she turned into a global

1:47

empire. And I should

1:50

say it was partly about the way

1:52

she marketed things. She drove behavioral

1:54

change around sparkling wine.

1:57

I'm trying to picture what you have in your

1:59

head. This is the nineteenth century. Women

2:01

I don't think in France could have bank accounts

2:03

at that time, and this woman revolutionized

2:05

an entire industry.

2:06

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

2:08

tell you all about it, and I hope you

2:11

will give me some of your reactions

2:13

to the story, because I know you're a business

2:15

expert. You've spoken to so many entrepreneurs

2:18

on your podcast, The Unshakeables.

2:20

But before we get to that, I need to say

2:22

I'm Tim Harford and you're listening to

2:25

cautionary tales.

2:50

Madame Klico was born Barbnicole

2:53

Ponsardan in seventeen seventy

2:56

seven, so we're going back a quarter of

2:58

a millennium. She was the daughter of

3:00

a wealthy textiles industrialist,

3:03

and she came of age during the

3:05

French Revolution, all of that turbulence

3:08

and social change, the Nsent

3:10

regime disintegrating the middle

3:12

class on the rise, and

3:14

when she was twenty one, she

3:16

married Francois Clico. He

3:18

was the only son of her father's competitor,

3:21

Philippe Clico, and he was another

3:23

textiles businessman. So the marriage

3:25

was effectively a business deal between

3:28

the Clico and Ponsadin families.

3:31

And at this point, normally

3:33

we'd tell a story about Barbneicole becoming

3:36

a wife and a mother. She

3:39

would be expected, like all married women,

3:41

to live in the shadow of their husbands. However,

3:45

she and Francois ended up forming a

3:47

business partnership. She was fascinated

3:50

by wine making, so was her husband

3:52

Francois. He was keen to grow

3:54

his family's small wine business, and so the

3:57

young couple together set

3:59

about acquiring vineyards and learning

4:01

all about the industry.

4:03

These were two textile families right in New York.

4:05

We'd call it the rag business. So were they supportive

4:08

of them going into the wine business.

4:10

Not really, no, they weren't. I meanp Clico wasn't

4:13

keen on his son's idea. He thought the

4:15

textile business was going perfectly

4:17

well. The wine business was something of a distraction.

4:20

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

4:23

are on the horizon, and

4:26

with Europe ripped apart first by revolution

4:29

then by war, wine

4:31

is not looking like a profitable business because

4:33

it's going to disrupt all of the trade and all

4:35

of the commerce. And of course he was completely right.

4:38

So Francois and Barbnicole's

4:40

business started to struggle,

4:44

and in eighteen oh five things

4:46

got worse. Tragedy struck

4:49

the family. Barbnicole's husband, Francois died.

4:52

Now rumors at the time were

4:54

that his business was going so incredibly

4:57

badly that he had killed himself. That's actually

4:59

unlikely, much more likely he died due

5:01

to typhoid fever. But whatever

5:04

the reason, he's dead. She is a

5:06

widow. Her daughter, le

5:09

Montine is six years old,

5:11

Barbnicole herself twenty seven,

5:14

and she is facing life as

5:16

the widow clco or as they say in France,

5:19

la veuve clico.

5:21

Aha. Now this is starting to sound more familiar.

5:24

So Philip took pity on her, I suppose, and

5:26

decided to back the business in the wake of the tragedy.

5:29

Ben, I didn't bring you here to tell you a story about

5:31

people who felt sorry for this woman.

5:33

No.

5:33

No, he didn't take pity on her. He clearly

5:36

saw something in

5:38

her, but he was at first

5:40

just keen to close the wine business

5:43

entirely. I mean, the money is in textiles, the

5:45

wine business has been going badly, why go

5:47

ahead with this?

5:48

But obviously that didn't happen in the end, right,

5:50

I mean there's a bottle of this stuff in my fridge right now.

5:53

Yeah, I'm very envious. Yes, I mean

5:55

the the product's world famous. She

5:57

basically somehow managed

5:59

to persuade him that her idea

6:02

was worth backing, or perhaps more likely,

6:05

that she was worth backing. He

6:08

must have seen she was in incredibly smart, incredibly

6:10

driven, and she had some

6:12

collateral. She was owed inheritance,

6:15

and she said, look, instead of the

6:17

inheritance, why don't

6:19

you back my

6:22

wine business? And he put in

6:24

the equivalent of maybe a million dollars today,

6:27

which says a lot about her. I think also

6:29

says a lot about Philippe, because, as you pointed

6:31

out, earlier women in France at the time couldn't

6:34

even have a bank account, and

6:36

she is proposing that she is going to lead this

6:38

huge and untried business.

6:41

And it's also a male dominated business.

6:43

So who are the players? I mean, will we have heard of any of

6:45

them? Chanle, Angrie Hide, sec Jean

6:48

Remy Moe.

6:49

Have you heard of them? Those are certainly names

6:51

that sound familiar. Were they well known at the time. They

6:53

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

6:56

he had this celebrity romance with Napoleon

6:59

and he used to advertise his wine

7:01

by distributing these postcards showing

7:03

Mowe and Napoleon exploring wine

7:05

cellars together. Well, it's good to know the romance.

7:08

There's not a new funman.

7:10

Absolutely absolutely. So this

7:13

is the situation in which

7:15

Barbnicole approaches her father

7:18

in law, Philippe. He said, okay,

7:20

I will back the business, but you've got

7:22

to learn something about wine. You've got to go and do an

7:24

apprenticeship and learn

7:26

the trade four years figuring

7:28

out how the wine business works.

7:31

She agreed. She went off. She did her four year apprenticeship.

7:34

At the end of the four years, the business is still really

7:37

struggling, and so she goes back to Philippe,

7:39

her father in law, and she asks him for help

7:42

yet again, and he agrees. Wow,

7:44

and so he must have really believed in her at some level.

7:47

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

7:49

but in any case, whatever it was that

7:52

passed between them, he backed her

7:54

a second time. This is the point

7:56

at which Barbnicole decides she's going

7:58

to have to take a gamble. Possibly she realizes it if

8:00

she doesn't make it this time, it's really a case

8:03

of now or never.

8:04

Yeah, We've had a number of entrepreneurs

8:06

on the show who've told similar stories about

8:09

being up against the wall and then

8:11

betting it all in black, so to speak, because they have

8:13

no choice. For example, we had a woman who

8:16

owns a company called Desi I Were her name

8:18

is Desi Perkins, and she went into a number

8:20

of places to pitch and couldn't get an answer and

8:23

was running out of cash and really went for it

8:25

and it came through. But you know, to go for

8:27

broke, it takes courage to do that.

8:29

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

8:31

of survivor bias that we see the ones who

8:33

took the gamble and then the gamble

8:35

paid off. But certainly my own

8:38

research suggests there is something about

8:40

that crisis that forces people

8:42

to think differently and to explore new

8:45

ways of doing things. So that is something of a catalyst

8:48

for business transformation, I think.

8:50

So what happened next?

8:52

Barbnicole foresaw

8:54

that the Napoleonic Wars were likely to come

8:56

to an end, and that when they

8:58

did, that was going to

9:00

free up trade between

9:03

France and its faux

9:05

Russia, and that meant potentially

9:08

a huge champagne market in

9:10

Russia. And Barb Nicole was making

9:12

a particular kind of champagne that she was confident

9:15

would sell very well in Russia. It was incredibly

9:17

sweet. Do you know so turn the dessert

9:19

wine?

9:19

Ben? I don't.

9:21

Is that similar to what they were drinking? Well,

9:23

so turn is very sweet. This champagne

9:27

was sparkling like modern champagne,

9:29

but it was very sweet. It was actually

9:31

twice as much sugar even as

9:33

a modern so turn. So

9:36

this is like drinking baileis

9:38

or hot chocolate or something. I mean, it's a very

9:40

very sweet sparkling drink and

9:44

the widow Clico. She decides

9:46

when the war ends, Russian's going to go for

9:49

this. She smuggles bottles of

9:51

her best vintage, the eighteen eleven vintage,

9:54

to Amsterdam, knowing

9:56

that if the war does finish, they

9:58

will be very well placed to be shipped to Russia

10:01

at that moment. So she's taking this

10:03

risk because if the war doesn't end, then

10:06

she's not going to get any return from

10:08

this wine. But if it does, she is

10:10

perfectly timed to profit.

10:13

There's sort of three brilliant

10:15

moves she makes at the same time. One is really knowing

10:18

her product market fit right. She knows that this

10:20

incredibly sweet drink fits the Russian palette.

10:23

Two is being aware of the macro effects

10:25

of what's going on around her, knowing the war is going to end

10:27

and that will open up trade. And then three is having the guts

10:30

to smuggle this stuff into Amsterdam so

10:32

she can get a jump on the competition. That's quite

10:34

a combination. Yes, the risk

10:36

comes good. Madame Cleiko's champagne

10:39

makes it to Russia, beating her competitors,

10:41

including Monsieur Moey by several

10:44

weeks. She gets influencer support

10:46

nineteenth century style two. The Cizar

10:49

says that verve Click is the

10:51

only champagne he will drink, and

10:53

of course, once he says that the entire

10:55

Russian court has to follow suit.

10:58

It's the perfect product. It is there at

11:00

the perfect moment. That, though, poses

11:03

its own problems, because she suddenly

11:05

got this massive demand to

11:07

make this kind of champagne, and at

11:09

the time, making champagne is extraordinarily

11:12

difficult and the whole production

11:16

process is very inefficient.

11:18

Yet tim when people are successful, that can suddenly

11:20

bring up a new range of challenges. We spoke

11:23

to Melissa Gaiardo who started a candle

11:25

company called Benita Fierce Candles, and

11:27

when her sales took off, she didn't

11:30

know how to keep up with production. I mean, she had people in

11:32

her home just making candles as fast as they

11:34

could possibly make them because she had a moment and she had

11:36

to capture it. Yeah.

11:37

I mean, this is exactly the problem that Barbney

11:39

Cole faced, and she realizes

11:43

she has to do something to change that.

11:45

But in this case, it sounds like she had to become

11:48

a bit of an engineer.

11:50

Yeah, So all champagne has a

11:52

sediment. It makes the drink cloudy. That's

11:55

not what people want. They want to clear champagne.

11:58

That's true now, it was certainly true at the time.

12:01

But to filter out the sediment is

12:03

this very time consuming business. What

12:06

Madame Clico invented was called a

12:08

riddling table. So riddling is the

12:10

process of getting the sediment out. And

12:13

this is a kind of wooden frame with

12:16

holes bored into it, allowing

12:18

the bottles to be suspended at different angles,

12:21

so they're basically upside down on

12:23

a diagonal. And you put

12:25

the bottles in this frame and then these expert

12:28

wine riddlers come up and they

12:30

give it a sharp quarter turn every

12:32

now and then. And every time you have this quarter

12:34

turn, you're changing the angle of the bottle

12:37

and you're very gently disturbing

12:39

the sediment. You're not mixing it

12:41

back into the wine. You're letting it slip

12:44

to the bottom of the bottle.

12:46

And of course, because the bottle is upside down, the bottom

12:48

of the bottle is the neck, so

12:51

you've got this sediment gathering in the

12:53

neck and you can take it out of the bottle

12:55

easily. So this riddling

12:59

contraption, this riddling table, is

13:01

the killer app that makes it much

13:03

much easier to get

13:06

the sediment out of the champagne, and

13:08

her competitors absolutely cannot

13:10

work out how she is doing this, How

13:12

is she making so much champaign so

13:15

quickly? Moway figured it out eventually,

13:17

but it took him fifteen years to catch.

13:19

Up, you know, Tim, She was innovating

13:21

in a physical product that had been around

13:23

a long time, and it's interesting because

13:25

that never stops. We interviewed someone on

13:27

the podcast as a company, Sabanto,

13:30

that is changing the way that you plant

13:32

and harvest corn. We've

13:34

been consuming corn for thousands of years.

13:37

He's developing automated tractors that

13:39

can plant and reap the crops. I think people

13:41

fall into a trap where innovation

13:43

only happens in sort of the advanced sectors

13:46

of tech, and actually there isn't

13:48

an industry around that's not waiting around

13:50

to be disrupted.

13:51

Yeah. I think that's absolutely right, and the

13:53

wine industry, as Barbneicole showed,

13:55

is clearly one of them. And one

13:57

of the things that Madame Clico did here

14:00

was not just invent the process,

14:02

but keep the process a secret, so she

14:04

had real loyalty from

14:06

her employees who presume

14:09

could have gone to one of her competitors and collected

14:11

some kind of reward, but none of them did,

14:14

and that may have been because she had this profit

14:17

sharing system. So they were all making

14:19

money, they felt looked after, and

14:21

they did not betray her secrets. Well,

14:23

she was shrewd in a number of ways. Is this approach

14:26

of treating your work as well sharing

14:28

the gains something that you've encountered

14:31

yourself.

14:31

Ben, loyal employees are critical.

14:34

I would just say that loyalty

14:37

and employment is only partially about

14:39

paying ownership. It's you know, particularly

14:41

in today's world, it's about that plus creating

14:44

the right environment, making people feel valued

14:46

and like they belong and like they have purpose. So

14:49

I think the right compensation structure is

14:51

important, but it's not the whole ball game.

14:53

Yeah, Listeners to our episode

14:55

on the building of the Empire State Building might

14:58

recognize this. Paul Starrett, who was

15:00

in charge of that project, was in

15:02

some ways an incredibly generous employer.

15:05

He paid the workers very well. The

15:07

conditions were great, it was great food safety

15:10

standards were very high. But at the same time he

15:12

watched them absolutely like

15:15

a hawk. He had really really

15:17

tough minded site managers,

15:19

cracking down on fraud

15:21

and theft and so on. So there was this sort of sense

15:24

of like, I'm going to absolutely insist on the

15:26

best possible behavior, but at

15:28

the same time, I'm going to reward that.

15:30

You know, success is the best

15:32

retention tool there is, and success

15:35

gives you the right to be tougher because

15:37

people want to be in an environment of success and they

15:39

want a rise to the occasion. You

15:41

talked earlier about the fact that she basically

15:44

established the category. I mean she drove large

15:46

scale behavioral and

15:49

intentive change across

15:51

an entire continent. It sounds like, how

15:53

did she do that? Tell me more about that.

15:55

I think it's a fascinating case study.

15:58

So at the time, Champagne itself

16:00

was not the drink it is today,

16:02

and the Champagne region was not famous

16:05

for sparkling wine. It was famous for

16:07

still white wines. So

16:10

by reaching these influencers,

16:12

reaching the czar, by producing

16:15

this drink that perfectly matched

16:17

people's taste, and by creating

16:19

something that seemed luxurious but at the same time

16:22

was cheap enough to be affordable because she had made the

16:24

production process more efficient and to make it

16:26

available at scale, she creates

16:29

this whole category. Suddenly, this drink is something

16:31

that the czar demands,

16:34

and yet the ordinary middle classes

16:36

can afford it, and it basically

16:39

becomes the drink of celebrations

16:41

everywhere. She established all of this. By

16:43

the time she died in eighteen sixty six, the

16:45

Widow Clico had a global empire.

16:48

She was exporting her wine as far afield

16:50

as the United States. Sales had

16:52

reached seven hundred and fifty thousand

16:55

bottles a year. That is up from seventeen

16:58

thousand bottles back in eighteen

17:00

eleven before her big breakthrough,

17:03

and the brand is now so well recognized. I

17:05

think it's these second most

17:07

popular brand of champagne in the world.

17:09

And if you go into a bar

17:12

in France, I understand that you

17:14

can simply ask for a glass of the Widow

17:17

and people will know that you want

17:19

verve Clico Champagne.

17:21

Tim What's interesting about that is we

17:24

think that hyperscaling is a

17:26

modern phenomenon. You look

17:28

at the likes of Apple or Amazon or

17:30

Google or some of the other more recent startups

17:32

that have gone global with their impact. And while

17:34

the time scales might have been longer, this

17:36

was maybe fifty or sixty years as opposed

17:39

to five or ten. The impact

17:41

even back then could be global in scale,

17:44

in terms of how far reaching some of these

17:46

insights and innovations can be.

17:48

Yeah. Absolutely, it's partly about

17:50

developing the product that people want

17:53

to drink. It's partly about the marketing, but it

17:55

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

17:57

make this stuff. You have to get all of these

17:59

things right. And that's what she did.

18:01

Yes, and aspiration and luxury

18:03

is a timeless phenomenon.

18:05

Something else timeless is

18:07

the motivational business quote. And

18:09

I actually have a motivational business quote

18:12

from wido'click. I rather like this

18:14

one. This was a letter she

18:16

wrote to one of her grandchildren, and she

18:18

commented, the world is in

18:21

perpetual motion and we must

18:23

invent the things of tomorrow. One

18:25

must go before others, be determined

18:28

and exacting, and let your intelligence

18:31

direct your life. Act with

18:34

audacity.

18:36

What an incredible woman. I hope that aspiring

18:38

female and frankly male entrepreneurs can hear

18:40

this story because the woman was groundbreaking

18:43

in so many ways. I don't speak French. I didn't

18:45

know what the word for meant, so

18:47

I kept waiting for tim to tell me that she

18:49

married mister viv and it turns

18:51

out she did it all on her own. And I think that's fantastic

18:54

what she was able to accomplish as a woman

18:56

in early nineteenth century France. I mean,

18:58

I'm just bowled over by that. I think about

19:01

innovation, resilience, scale,

19:03

grit vision. You know, these

19:05

are things we talk about all the time in business

19:08

circles, and she had them and spades and pioneered

19:10

them to something that has stood

19:12

the test of time and more ways than one.

19:14

No, Ben, I will drink to

19:16

that. Ben Walter, thank you very

19:19

much for joining me on Cautionary Tales.

19:21

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

19:25

This episode was sponsored by Chase for Business

19:28

and I was talking to Ben Walter,

19:30

who is the CEO of Chase

19:33

for Business. You can of course find the

19:35

Unshakeables wherever you get your podcasts,

19:38

and there will be a new episode of Cautionary

19:40

Tales in this feed very shortly.

19:43

For a full list of our sources, see

19:45

the show notes at Timharford

19:48

dot com.

19:54

Cautionary Tales is written by me Tim

19:56

Harford, with Andrew Wright, Alice Fines,

19:59

and Ryan Dilly. It's produced by Alice

20:01

Fines and Marilyn Rust. The

20:03

sound design and original music are

20:05

the work of Pascal Wise. Additional

20:08

sound design is by Carlos San Juan

20:10

at Brain Audio. Bend

20:12

A Dafhaffrey edited the scripts. The

20:15

show features the voice talents of Melanie

20:18

Guttridge, Stella Harford, Oliver

20:20

Hembrough, Sarah Jupp, messaam

20:22

Monroe, Jamal Westman, and Rufus

20:24

Wright. The show also wouldn't

20:26

have been possible without the work of Jacob Weisberg,

20:29

Greta Cohne, Sarah Nix, Eric

20:31

Sandler, Carrie Brody, Christina

20:33

Sullivan, Kira Posey, and Powen

20:36

Miller. Cautionary

20:38

Tales is a production of Pushkin Industries.

20:41

It's recorded at Wardore Studios

20:43

in London by Tom Berry.

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