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the name of Nobel usually calls to mind Alfred Nobel the inventor of dynamite and the Nobel prizes which he endowed but other members of the Nobel family were no less creative and Innovative in fact the range of their achievements in
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building an industrial Empire truly qualifies them to be known as the Russian Rockefellers the founder of this Russian industrial dynasty was an immigrant from Sweden Emanuel Nobel Was An Architect a Pioneer producer of steam
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engines and a weapons maker decades before his son Alfred's Dynamite began to alter the character of Modern Warfare Emanual design invented and produced underwater mines emanuel's other Sons included Robert who directed the
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family's activities in the Caspian oil fields and as you and I will talk about a spur of the moment decision by Robert actually changes the entire trajectory of the Nobel family from weapon makers into developing uh the entire Russian
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oil industry and lwig who is going to be the majority of what I want to talk to about today this this is my favorite Nobel and lwig an engineering genius and Manufacturing magnet whose Boundless Energy and fierce determination created
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the Russian petroleum industry Ludwig's son Emanuel was not only one of the wealthiest men in Europe but the peer and occasional adversary of some of the most powerful figures in international business circles he shrewdly bargained
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with the Rothchilds for control of the Russian markets and did not shrink from head-on competition with standard oil and and Royal Dutch Shell for lucrative World Markets Emanuel not only helped modernize the Russian Navy he also
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expanded the Russian oil industry was a Pioneer user of the diesel engine official of the State Bank and a commander of a fleet of 300 ships perhaps no family in history has played so decisive a role in building an industrial Empire in an undeveloped but
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resourcer Nation yet the achievements of the Nobel family are almost entirely unknown why the answer can be found in the official Soviet myth that when the bulovic seized power in November 1917 they inherited an empty cupboard which
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they transformed into a cornicopia the truth was the exact opposite when the bolix came to power Emmanuel had to flee the country disguise as a peasant a reminder of how fast things can change he was one of the richest people in the
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country has to flee the country disguised as a peasant and two of his brothers were thrown in jail the family's Holdings were confiscated the Nobel Empire with its 50,000 workers lay in Ruins its Fleet of oil tankers were idled the fires in its foundaries were
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banked the oil refineries ceased operations their oil wells were flooded and Russia's largest engine Factory shut down an Empire which had taken the family 80 years to design and build was destroyed bringing to a sudden and
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Bitter End and one of the most remarkable industrial Odyssey in world history that is an excerpt from the inside flap of this remarkable book that I'm going to talk to you about today first published all the way back in 1976 it is called the Russian
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Rockefellers The Saga of the Nobel family and the Russian oil industry and is written by Robert tlf so I found this book through my friend Cameron priest who continues to be one of the most prolific readers of entrepreneurial
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history that I've ever come across he's recommended I don't know 40 50 60 of these books to me and I spent the last few days rereading my highlights and going through all my notes on the book to try to figure out what I want to
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focus on so I want to focus on lwig Nobel but to tell the story of lwig Nobel I have to tell you the story of his father a few of his brothers and then his son and so I want to start in the introduction of the book to give you
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an overview of what has to be one of the most remarkable families in human history so we start with Alfred Nobel everybody knows him because he's the one he dies and his in his will he endows the Nobel Prize and then other people
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knew him as the inventor of dynamite so it says Alfred Nobel was only one member of history's most inventive family and the story has never been told of his father Emanuel and his brothers lwig and Robert and his nephew Emanuel and their
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own individual entrepreneurial technological and financial achievements in the weapons petroleum chemical and transportation industry so lwig Nobel the reason the book is called the Russian Rockefellers is because L lwig noell Alfred's brother literally created
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the Russian oil industry this is nuts so I've been going around talking about this book uh to all my friends and really anybody who will listen this week as I've been reading it because at the time to give you an overview at the time
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that that the book takes place okay Russia at this point in history is going to wind up producing over half of all the world world's oil the Nobel family produces 30% of that half one company and that company is founded and created
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by Ludwick and so here's just a brief overview of some of his achievements he designed the world's first oil tanker he installed Europe's first pipelines he built the world's first fullscale continuous distillation Refinery he forged gigantic
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infrastructure on water and land he built a network of storage Depots and tank Farms Harbors fright yard Freight yards and marketing Outlets from one end of the vast Russian Empire to the other and then across the European continent
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Ludwig's father before him pioneered development of underwater mines designed steam engines to power Russian ships and installed the first central heating systems to warm Russian homes lwig son after him launched the world's first
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diesel driven tugboats and tankers while bargaining with the Rothchilds and struggling against the Royal Dutch Shell company and bartering with Standard Oil okay so keep that in mind this entire conversation is going to center around
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lewick I got to tell you about his father and the fact that they grew up in poverty I read Alfred nobel's biography a long time ago was probably 3 4 years ago it's episode 163 there's a line in there because you're going to understand
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that Emmanuel Nobel the founder of this dynasty the patriarch of the family spent essentially decades in poverty in fact there's a lot the reason I bring this up is because in Alfred nobel's biography it says that he never forgot
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poverty and he never forgot poverty even after he was one of the wealthiest people on the planet keep in mind this guy lived in the 1800s and so there's a line in his biography that's that's where he asked somebody what they wish
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as a wedding present and the young woman replied I want uh as my wedding gift should be what you earn in one day and Nobel who's usually tight with money actually agreed and he wrote her a check his his daily earning for himself was
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$110,000 a day in the 1800s and so this poverty that his his dad's really an inventor we're going to talk a lot about this today it's like it's not enough to just be an inventor you also have to a skilled entrepreneur which his his dad wasn't but his sons
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definitely were and so this is we're going to go right into emanuel's life and says only his marriage brought him some measure of success and it talks about the role that his wife and then the mother of lwig and Alfred just how
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important she was to the family's success her patience endurance even her faith in her husband were sorely tested during those first years of marriage as one after another of emanuel's Dreams turned into nightmares they mooved from
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house to house on the outskirts of Stockholm needing but not being able to afford larger quarters for their growing family Alfred was born just 10 months after his father had declared bankruptcy nobel's wife was the strong support of
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pillar and upon which he's going to build his business this reminded me of when I read the the autobiography of the founder of Four Seasons Isidor sharp there is a bunch of times where his wife is kind of com adding commentary to the
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book about what it was like not Four Seasons now but when four seasons was just an idea in her husband's brain she talks about the fact that she saw him Str stressed she saw him lying awake in the middle of the night and she said she
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said that something that was very very I think profound she said my V my most valuable contribution to his success has been my silence what does that mean this is what she she says in his autobiography early on he made some
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audacious statements that sounded like pipe dreams he told me once that his aim was to make the name Four Seasons a worldwide brand synonymous with luxury like rollsroyce sure I thought with only about 10 hotels hardly likely but I
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didn't let on my most valuable contribution to his success has been my silence and I think she's picking up on a very important idea entrepreneur are going to get enough doubt from the external World they can't have it when
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they come home they can't have it with the most important relationship they have in their life and you see that just like Isidor Sharp's wife understood that Emanuel nobel's wife also understood that the previous year a fire had
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destroyed most of their home and possessions Emanuel still faced with deaths from his abandoned building projects saw no alternative to the humiliation of declaring himself bankrupt but he refused to be discouraged or defeated he was determined to find practical
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applications for some of those ideas that never stop swirling in his head and so not only is he inventive but he's also very persuasive so he's able to raise money multiple times even after multiple failures and so he starts
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setting up and he does these experiments experiments with subsurface charges of gunpowder to destroy an enemy under on land or on sea what he is thinking about becomes underwater and underground mines this is really important because it's
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going to lead directly to some experiments that his son does which builds the Empire and the Monopoly that he built around Dynamite says it was the beginning of the Nobel family's fascination with explosives so Emanuel is Swedish he's trying to sell his
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invention to the Swedish military a main theme of the book is the fact that for a very long time there's been a huge number of Swedish immigrants into Russia and it is during this next generation of the Nobel family that the Swedish
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actually build the Russian oil industry and so here's a little bit about the troubles that he's having in Sweden of the 1830s Emmanuel was alone in recognizing the value of this new weapon Financial Security continued to elude
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him creditors continued to Hound him now they're going to describe Sweden at this time in an agricultural country in which poverty was thought to be a national characteristic Emanuel was was beginning to believe that he would not have the
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chance to make the kinds of success he felt he could with the proper opportunities his frustration was not a unique phenomenon in Stockholm at the time but Emanuel was never one to let frustration block his path or force him
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to resign and accept his fate when he met a visiting Russian emissary at a party in Stockholm he was suddenly confronted by a Crossroads another new Arena to seek Fame and Fortune now remember that line Alfred Nobel never forgot poverty the decision was as
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difficult as any Emanuel would ever make for he had to leave andreetta that's his wife and their three sons behind can you imagine put yourself in his shoes you are 36 years old you have a wife you have three sons you are bankrupt you in
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debt you have no track record that to indicate that you are capable of having bringing a successful you invent a lot but you have no track record to show that you can actually bring successfully one of your inventions to Market and you
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get on a boat and you wave goodbye to your family not sure when you're going to see them again so he first goes to Finland then he goes to Russia and so this idea of swedes seeking fortune in Russia was not new this this a great uh paragraph I got
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to read to you about the stuff going on during Peter the Great says from the time of the Vikings to the time of the nobels there were thousands of swedes who in an endless repetition of war and commerce fought plundered traded and
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settled in Russia Swedish technicians were implo employed by the Zars Swedish metal workers and gunsmiths laid the foundations of a weapons industry a swed established the first Glassworks Swedish prisoners of War were used by Peter the
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Great to cut a 3M path through the forest for his great Boulevard in the heart of his new city swedes seeking fortune in Russia was not new and this massive risk that Emanuel took which is going to change the trajectory of his
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descendants lives forever wind up working out because the Swedish military was not interested in emanuel's underseen minds but the Russians were enthusiastic so I'm going to skip over a big part here he does a demonstration and this is what I mean about how
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enthusiastic the Russian military was the mine exploded when it was struck by a small boat the general was estatic he rushed over to Nobel and kissed him and then started to dance the general had been under considerable pressure to find
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a successful underwater mine which Nobel is the first person to invent this is September 1840 he is 39 years old this is a remarkable description it was the first sizable subsidy Emmanuel had ever received Ed and he uses that money to
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establish a factory 2 years later he's making enough money to actually send for his family can you imagine as I could not imagine being away from my kids and my wife this long it's incredible for the first time in his life he enjoyed a
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certain Prosperity a comforting and encouraging feeling of success in the summer of 1842 he sent for his family now this is wild he was gone for 5 years okay during his 5-year absence his wife and her and his three sons had scraped
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out a simple existence that at times bordered on poverty their only source of income came from a little milk and vegetable store that she operated the boys now check this out this is wild the boys Robert and Ludwig so Robert's the
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older brother Ludwig's the middle and Alfred's the youngest okay Robert and lwi lwig to survive had to sell matches on the streets of Stockholm now how crazy is that a couple episodes ago on episode 348 I covered the book The match
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King which is about the founder of the Swedish match company which still exists to this day by the way and we see in this story the early days of what's going to turn into the Nobel family Dynasty sustained by their young kids I
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mean these are young kids they're probably seven eight years old at the time selling matches on street corners in Stockholm and so once he has his family back together and he has all of his sons in Russia he does a a brilliant
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thing this is the phenomenal education that he sets up for his sons he says they were instructed solely by tutors Robert and Ludwig primarily in engineering Alfred in chemistry which is hilarious because you could think of lwig as an engineer and Alfred's Empire
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is going to be in chemistry and all three in Swedish Russian German French and English they were also put to work in the factory moving from one position to another learning the business of running a business that is a great line
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learning the business of running a business acquiring from Direct on the job exposure practical lessons in the problems and challenges of management execution and administration now Emmanuel is going to have about a 20year period of relative Prosperity
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before he goes bankrupt again how could that possibly happen there's two issues here he's much more of an inventor not an entrepreneur he has two really big mistakes one he's got one customer which we'll get into a minute and two he
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doesn't have the financial discipline that his son Alfred will have he expands too fast he's not conservative he's not really paying attention to his costs Alfred was probably the most gifted entrepreneur of the family and so his
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dad didn't have that but his dad did have a lot of success inventing and producing and so in addition to the success of his underwater mines he's also manufacturing Marine engines and then he's steadily expanding the factory
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until had about a thousand employees his reputation as an inventor and one of Russia's leading engineers and industrialists were all striking indications of emanuel's success the Ultimate Rewards for his diligence his persistence and his genius despite the
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achievements and the recognition Emanuel was not in a secure financial position his entire business depended on the contracts that he was getting from Nicholas the Zar at the time Nicholas is going to die the new Zar takes over this
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is Alexander II and suddenly those contracts those promises mean nothing there's a I think it was the Navy sales that said two is one one is none you cannot only have one customer your business cannot depend on a single
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customer the many pledges of contracts made to Emanuel by the Ministers of Nicholas were ignored by the Ministers of Alexander his pleas and protest that he had expanded his payroll and Factory in order to honor those contracts went
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unheeded by 1857 he had a surplus of Labor a surplus of supplies and no orders for Emanuel the decline was a disaster without his government contract he could not keep the factory running there was also the problem of Emanuel
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himself this is what I mentioned earlier he's less of a businessman and Factory director than he was an inventor he was simply not the man to manage an Enterprise that had grown to the to the size and his tremendous talents lay in
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fields other than management he was more inventor than entrepreneur his two sons will be both and this had to happen I think this leads directly to their success because they are capable of learning from their father's mistake Robert Ludwig and Alfred would never
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forget the bitter lessons of their father's failure for Emanuel then 58 there would not be another chance it was all over 22 years after he had sailed from Stockholm as a bankrupt man he returned again bankrupt but what I love
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about him is he's relentlessly optimistic and he has faith in his sons so he says his dreams are going to have to be realized by the next generation of nobels and he was not pessimistic about that next Generation this is what he
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said if my sons work harmonous har harmoniously and carry on the work that I have begun I believe that they will never want for their daily bread for there is still much to be done here in Russia so it is shortly after this where
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l opens his own Factory and so something that's been implanted or I guess a habit that's implanted in my mind from Charlie Munger is like when you're analyzing somebody's business success you try to look for waves that they were able to
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Surf and so lwig is actually going to surf this idea of Surfing is in Port Charlie Zac I think I covered it back on episode 329 but lwig is going to surf a change and there're going to be beneficial government policies from the
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government of Russia and then this explosion in population growth and new industry development essentially an industrial revolution comes to Russia at the time and so it says lwig took full advantage of the recent reversals in government policy in contrast to
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emanuel's last years in Russia the Ministries the war Ministries that is were it's insane I think we're going to get to it but I think more than a third of Russia's budget at the time went to military uh the Ministries were once
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again beginning to encourage domestic manufacturing the greatest stimulant to this new industrial initiative was the Emancipation Act of 1861 which was the liberation of 40 million Russian peasants that are now flocking from the
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countryside into these news like City centers and then the the the areas that are springing up against these around these giant factories all these people are coming to the cities and they need jobs and So within 20 years there's
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going to be 250 new factories that pop up they said they call this a belated Awakening to the opportunities of the Industrial Revolution so he's going to start making weapons and things that support weapons so he start making making cast iron
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artillery shells and then gun carriages which he gets I think he builds the best gun carriage in the world so a gun Carriage plays the same role that like a carriage does for a human The Carriage carries a human this is a carriage that
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covers this giant piece of artillery the thing that would pop to mind is if you think about like a civil war Cannon they're usually on like two big wheels and you kind of pick it up and move it to a different spot that what what
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allows that uh Cannon to move as a gun Carriage that is what uh what Ludwig's making he's also going to make rifles and rifle stocks for the Russian military which inadvertently or accidentally leads to his discovery of this giant and brand new indust oil
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industry inside of Russia we'll get there in one second but this is the important thing I always say learning is not just memorizing information learning is changing your behavior he is changing he's actually learned from his father he
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is changing his behavior more than a third of the state budget went to the military but lwig was careful to avoid total dependence on such contracts and to are to rely on the spoken or even written word of government Ministries he
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had no intention of repeating his father's costly mistake so Ludwig's Factory becomes the country's largest manufacturer of gun carriages rifles and here's what happened he see he's expanding so rapidly he cannot find the
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talent so this idea that he keeps having to import Swedish talent to build the Russian manufacturing and weapons industry and he's going to do the same to build the oil industry is something that pops up over and over again in the
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book so it says the task finding Talent was just as difficult for lwig as it had been for his father and the solution for both men was to recruit as many swedes and fins as were willing to work in Petersburg as Factory orders increased
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so did the size of the factory and the number of workers this meant additional sweds fins and an occasional norion on the payroll and another phenomenon that he is surfing is the fact that the entire continent the entire European
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continent was engaged in a giant arms race so keep in mind this is two years after the American Civil War so he's got this very successful and expanding manufacturing business and he's got all these factories where did he get the money to do this his dad was bankrupt
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they were not a rich family yet and this is another example of this maximum that I just see over and over again in the biographies that relationships run the world so not only the contracts are coming from relationships that he had
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and friendships that he had but also the financing so there's a captain in the artillery this guy named buildering he had been a close friend of lwigs he needs 200,000 rifles and so he goes to the war Ministry and he says Hey lwig should be the one that
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that makes this for us another one of his friends and this guy was also friends with his dads was one of the people that made this was influential making this actual decision like being an actual decision maker for this this guy's name is Carl I'm not even going to try to pronounce his last name so it says is undoubtedly to Ludwig's benefit that one of his best oldest and trest friends was in a key position to influence the decision Carl was the
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liaison off officer once assigned to Emanuel his father he was also the Chief Inspector for the rifle and ammunition factories he had previously had served as the head of armories and Lieutenant General Carl is also the person that
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arranged the financing for Ludwick so it says in the early 1870s Carl had loan lwig his Securities his Carl Securities to use as collateral for bank loans to expand the factory lwig had to pay 5% interest for the Securities in 6% on the
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borrowed cash but these were bargain rates in a country where bank loans were not easily procured such support relationship and encouragement was a most valuable asset for Ludwig's Industrial Enterprises so already said lwig is the
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most fascinating character this entire book and there's a ton of interesting characters in the book and not only is you know he's a great manufacturing genius he's a great entrepreneur but he also it always is capable of like thinking for himself and making his own
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decisions and he was one of the uh had the best reputation I think in all of Russia for actually giving a about the well-being of his employees at a time when that was just unheard of in many cases I'm going to get to this they
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talked about well I guess lwig is the first person or one of the first PE people to realize increased care of your employees actually in leads to increased productivity and it's describing like the the you know all these people are
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coming in from the countryside sometimes they're immigrating from other countries they're working in you know inhospitable uh Factory environments and they said that cattle in many cases would have resisted the cramped quarters that they
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put humans in and so lwig innovates in every single aspect of his business I I don't think I've brought this up yet and I should have from the very beginning so I apologize what's fascinating to me is is lwig and Alfred they're going to have
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this dual success at almost the exact same time different Industries they have wildly different approaches Alfred is like a delegator he has a essentially Monopoly lwig is operating in an intense uh intensely competitive industry and he
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does everything himself but again I think this is just one of the greatest things that you you learn from reading all these biographies of entrepreneurs it's like there's not one path and now reading about both of them and their
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personalities is like it's very obvious that they built businesses authentic to their true selves so I should have said at the beginning but keep that in mind I'm going to go into what he did for his employees and at this time there nobody
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was doing this LW made certain that his workers accommodations were adequate and well wellmaintained he built new housing he encouraged them to save a portion of their wages and establish a Savings Banks for his employees he regularly
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added substantial sums from his own profits into the employee Bank he refused to employ children he reduced the workday from the usual 14 hours to 10 and 1 half hours and instituted the first profit sharing plan in Russia he also started a series of free
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educational courses for his workers decades before the business World discovered that overall and productivity are promoted by a generous and concerned attitude towards employees lwig Nobel was doing it and then the description of just this
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remarkable inventor and entrepreneur and genius that lwood was there's a million things that he's going to different things that he's going to work on but I want to go back to this idea it's really important learning from mistakes is
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changing your behavior right so he realizes we need a bunch of just consumer products we can't just rely on the military and so at the time you have Carriage drivers you know these are HSE drawn carriages the roads in Russia
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shouldn't even be called Roes it was hilarious they said that the coach the roads were so bad in this area where they are that the coach drivers would sit sideways with their L legs hanging off the carriage so they could jump off
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easily when they were get when they hit the inevitable like giant hole in the road in the road so lwig makes the Nobel wheel this carriage wheel that can actually withstand and not break and the result was a monopoly on the market this
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is also going to tie to this idea that the Nobel family had excessively high standards and as a result over time they were able to build this incredible brand based on quality the Noel name m meant something they're in fact later on as
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they dominate the the Russian oil industry you know they talk about their employees were proud they wore the fact that they were noelites that they worked for the Nobel family as a badge of honor because that meant they were the best
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now I need to the reason I'm also telling you this is because one he's learning from his father but two this is like Ludwig's emo for everything he wants to control everything from the invention to the manufacturing to the
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sale to everything and so they invent the wheel they manufacture it then they set up all the sales organizations all over like all over Russia recruitment of the sales force establishment of the sales districts the administrative and
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financial Direction all were planned and implemented in Ludwig's office this goes back to he's much more of like a micromanager involved in every single detail like a more like a Steve Jobs and a Walt Disney than his brother Alfred
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Nobel which I'll get to he was interested in these administrative details as he was in engineering design and processes of manufacturing a fanatic for work he was constantly in the plant to check on the operation of some machine he had designed to supervise
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insulation to oversee repair there was no facet of production or distribution or direction that escaped his attention he had demonstrated that whatever was produced in the Nobel Factory was worthy of comparison with any competing product
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from abroad so that is an overview and an introduction into lwig we will return to him in a second I need to get to Alfred cuz the brothers are con constantly involved in each other's businesses there's so many letters
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between the brothers I wish there was some kind of book where you could just see their correspondence back and forth considering that the bulvik invade and kind of take over everything I bet you a lot of that correspondence was uh
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destroyed but it's it's just fascinating so let's get to Alfred this is such a fascinating family there there's twin success twin success of lwig and Alfred are happening at the exact same time so by the time that lwig is going to start
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building in the oil industry by that time Alfred already had a dozen Dynamite factories all over the globe and how that came to be was fascinating because he got the idea from his former chemistry tutor remember going back to
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what I said about what his father did that was so brilliant for his sons that he's like we're going to hire tutors you know that you guys are going to study engineering you're going to do chemistry you're going to learn all these
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languages so his former chemistry tutor tutor had told Emanuel his father okay about these Italian experiments with nitroglycerine that's going to be the active ingredient in Dynamite when when Alfred uh tames this and had recommended
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it for use in making more powerful Land and Sea mines Emmanuel had no time for such research but his son Alfred did and this is what I mean about how the familyes constantly supporting them when Alfred is doing his demonstrations the
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first time he successfully detonates what's going to turn into Dynamite his brothers Robert and Ludwig are there observing and then this next sentence is something that's really important it's not the first person to invent something
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that gets Rich it's the first person to match that invention and build a phenomenal business around that invention Alfred was not the first to experiment with nitroglycerin but he was the first to combine successful experimentation with a genius for
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business organization and financial management I double underline financial management he is probably the shrewdest person in his entire family when it comes to managing the money watching the costs of the business he was very
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conservative he did not want to expand faster if it meant putting the survival of his business at risk what did Steve Jobs tell us a few weeks ago victory in our industry is spelled survival all the money is in the future do not interrupt
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the compounding and the way to interrupt the compounding is if you over optimize for growth at the expense of durability the other book that I'm reading this week starts out I'll give you a little sneak peak 1,000 sqt store into a $40
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billion company it starts 60 years ago they did like $8 billion of Revenue last year the inability to build a durable business would have for close that opportunity that $8 billion a year opportunity that's 60 years into the
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future that opportunity that most humans are incapable of seizing so now I'm going to introduce the third brother Robert Robert is the older brother he is in this family like the underachiever yet a single spur of the- moment decision changes the trajectory of the
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entire family it could have been easy to be the older brother because a standard set by he's got two younger brothers that are complete overachievers it says the standard set by two such overachieving brothers would be hard for
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anyone to match and so Robert is working for Ludwig lwig is making all these rifles and rifle stocks for the Russian military he's like hey can you travel to this section over here because they're known to have phenomenal uh supplies of
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like walnut wood and lwood gives Robert 25,000 rubles to buy up the whole stock of Walnut Wood Robert is going to travel to this place called Baku Baku is going to be where they build the their giant oil company so we can call this section
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Robert's pivot in all his travels he had never seen anything like Baku and in all his dreams for personal enrichment he had never seen greater potential there were Parcels of oil rich land in Baku along with a small Refinery so he goes
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he's like I'm not buying your Walnut Wood I want your refinery his offer was the Walnut money all 25,000 rubles of it a sudden decision taken without consultation with either lwig after all it was Ludwig's money or Alfred the
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family expert expert in matters of finance and investment when he returned to Petersburg he would have to convince his brother that he had found a much better investment for the money than rifle stocks and this is the remarkable
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thing about business you only have to be right once up until this point Robert had failed repeatedly he just needed to wait until found the right opportunity so it says his two brothers looked upon this scheme with as much enthusiasm as
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they had viewed Robert's other projects first it was fireproof bricks then kerosene iron glycerin and now petroleum what next but here is one of the most important things in this book Robert had an innate talent for this opportunity
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and they're going to Target a market full of second rate Talent second rate competition and what he realized is like these refineries these are yals they don't know what they're doing and we're at the very beginning of a giant oil industry so Robert is also a
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very good chemist in in fact Alfred who's a who hired some of the best Chemists in the world said that his brother was a very good chemist and so in a short time Robert was able to suggest improved methods of refining the
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crude oil that's coming out of this Baku Baku region in Russia to produce higher grade kerosene than was the norm for his for the competitive refineries and they can combine the the talents that the family had the fact that they could
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build very suff phisticated manufacturing facilities and so very very quickly Robert's modernized Refinery produced the highest quality kerosene that had ever come out of Russia where the usual product was then known as Baku sludge it was
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unquestioning one of the be was the best of the 140 refineries crammed in this town of Baku listen to this going back to this main theme it was an all Swedish operation the main chemist was Swedish the engineer and production Chief was
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Swedish the machine shop foreman was Swedish and in two short years they were achieving what in later years would be expected of anyone associated with the Nobel company producing the most reliable product establishing new
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standards setting a pace which others had to follow providing goals and guidelines in All Phases of a new industry so Ludwig is about to move his attention into this brand new oil industry that's springing up in Buu I need to tell you what Buu was like at
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the beginning and the contrast of what lwig is going to impose very similar to what you know Rockefeller did there's a reason they're called the Russian Rockefellers he you know he essentially found this very chaotic uh brand new
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industry and he imposed order and his his will and order on it so it says it was a raw merciless and often barbaric Society ruled by an adventurous Frontier spirit and dominated by greed in the insatiable search for riches typical of
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a gold rush mentality there was a proverb among Russian businessmen that whoever lives a year among the oil owners of Baku can never again be s cized which is the perfect opportunity for someone like lwig the time the place
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the setting were ideal for Ludwig's particular genius when lwig Nobel entered Buu in the spring of 1876 a man with vision had arrived it was the real beginning of the oil industry every phase of the business would have to be examined every area rationalized
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improved and modernized so there's a ton of detail but I just want to pull out two sentences because this is one of the best things if you can find yourself in a situation where you you you're attacking a market full of second rate
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competition and second rate Talent which is exactly what lwig is doing he has these ideas for he shares ideas with all the quote unquote competitors in his field obviously you're going to have to have some kind of organization in the
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early oil he realized just like rockfeller did and they're just like nope like they're at the very beginning they don't know what the hell they're doing they're low they're producing lowquality product and they're just not interested in change say others were
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simply not interested in any new idea they had a complete lack of Enterprise so what what he would do is obviously he's not looking around like oh I wonder if this is a good idea no one else is doing I guess I won't do it he's like no
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I believe the idea is rational it should happen so he'll just go and build it and then people try to imitate him and they they're just not as talented as he is the competition then started to build their own pipelines frequently failing
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to match nobel's standards and erecting a maze of Jerry Built leaking and ill-fitting pipes and then one thing that lwig does is he's constantly inventing he's leading the way in his industry he's the first think about how
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crazy how much how many other fortunes after this are built off of oil tankers and super tankers like Daniel Ludwig like aeristo and Asis Ludwig is the one that invented the oil tanker and it's it was just very common sense listen to his
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approach if it could be transported in bulk meaning oil carried from one Harbor to another in large tank lwig believed that the product would could compete with more traditional sources of fuel there had to be a fast reliable economic
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means of moving Lakes of oil the size of this industry is nuts which I'll get to that that that description Lakes of oil is not hyperbolic this is lewig thinking right he's like there has to be a fast reliable economic mean means of moving
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Lakes of oil from the isolated regions where it's readily available to the heavily populated centers where it's in demand this invention is going to be later described as the most important fact in the entire history of the
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petroleum industry that is nuts when you think about it the petroleum industry may be the world's most valuable industry that's ever been created so lwig argues the facts of his case very rational person the standard oil barrel
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weighs 64 lb that's 20% of the oil that it can hold which means that a fifth of any cargo of a barrel of oil consisted of wood that could only be shipped One Way CU you're not shipping empty oil barrels back the other way Ludwig's
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arguments were as logical and persuasive as they seemed to him failed to sway the opposition this is what I mean this is just second rate competition why because they're just mimic they're just coping they can they're in they're
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incapable of independent thought there was absolutely no support for the scheme it was too great a risk because it had never been done before and then his personality very different than alfreds who's going to essentially have a technical Monopoly it says lug would
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made not effort to keep secret any part of his designs and he rejected the pleas of his associates and shareholders that he' take out patents he did not wish to profit in that manner to restrict dissemination of ideas that could benefit the entire industry this is incredible okay so you know they're they're small when he starts doing this and then keep in mind this book is from 1976 okay so it's even bigger and more developed now but the
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main theme of what I want to tell you is a good idea this is a note out myself a good idea not abandoned will always grow larger than expected and so they talk about the fact that you know he his first oil tanker smaller and then he
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just realizes like oh we can keep getting these bigger and bigger and bigger until the size of tankers increased to levels never dreamed of with captains of the ship having to use bicycles to move from one end of the ship to the other a good idea not
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abandoned will always grow larger than expected and so when I'm going to read this overview of this phenomenal business that lwig built and a description of lwig himself you'll see why he was my favorite character in this entire book lwig nobel's tanker fleet
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was the most dramatic innovation in the Russian petroleum industry of the 1870s but it was only part of the general transportation and distribution system which he conceived and organized pipelines to carry the raw oil from
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field to Refinery and the finished product to dox side tankers to carry that product 600 miles north smaller tank barges for Trans shipment barges for moving the oil up the mighty River Railroad tank cars and barges carrying
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the oil from all cor or to all corners of the Empire retail Distribution Center centers in every major area of population a labor force of thousands from field to Consumer drilling for oil building barges fitting pipe refining
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kerosene repairing tank cars and ships pedaling the products this was lwig nobel's Empire within the Russian Empire he created it in 10 years from well to Wick it was all Nobel it was the achievement of an individual who thoroughly dominated all aspects of an industry which he was literally creating as he went along he was President chief engineer sales manager an entire research and development department chairman of the board and Market analyst
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an incomparable insatiable overachiever his deeds in Russia were without parallel absolutely incredible you know it also incredible human nature human nature is just funny to me even after he's done all this he he tries to share
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ideas throughout his industry and he always receives not always a alarmingly number amount of times negative responses and he said the best thing he's like well the only thing you do when you receive a negative response is you take out a pen and paper and you do
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it yourself this guy's optimism this his mentality I've just I absolutely loved it this is a great quote of his on struggle opposition never really bothered lwig never really impeded his progress or diminished his determination
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this is what he said said an industrial undertaking properly managed and well organized involves constant struggle its success is dependent upon foresight perseverance industry and economy struggle is to be expected lugwig was accustomed to making
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his own decisions traveling his own Road and he was certainly used to opposition okay so now I want to go back to this idea I mentioned earlier that I think is really beneficial the idea that the the twin successes of wig and Alfred are
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happening exact same times they're operating different Industries they have different personalities they have different ways approaching their business yet at the time this is taking place they're two of the most successful
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and richest entrepreneurs on the planet and so this goes on for a few pages I just want to compare and contrast them because I love this idea again there's no formula just do whatever is authentic to you self-sufficient independent with
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a Devotion to work and a Reliance on its routine the sweds demand a high level of order in that work so they both share this okay a sense of purpose and perspective in their own rational civilization for the Nobel their Boyhood
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of poverty strengthened that motivation he who does not work need not eat declared Ludwick and so their father is going to weigh in on what he thought were the the difference between the sons Emanuel believed that it was Alfred who
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demonstrated the greatest industry but lwig the greatest genius for Alfred his rule was never to do myself what another could do better or at any rate as well he wanted to delegate everything possible Alfred Nobel was certain that if you do everything yourself in a very
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large concern which concern at this time in history it's just a business okay in a very large business the result would be that nothing will be done properly and whoever tries to do it all himself will be worn out in body and soul and
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ruined that is Alfred's perspective let's go to lwig and Alfred Alfred was a very like morose man I don't know if you'd want to be like friends with him Ludwig Drew people in he was very charismatic Ludwig was not a person
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easily forgotten even after the briefest encounter he was in the words of his closest collaborators a personality in the fullest sense of the word he dominated every audience he revealed at once an inner Clarity of purpose and
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deep concentration of power Alfred preferred to be aloof from his employees Ludwig's home was in front of his Factory lwig spent many hours with his engineers and draftsmen his Factory foreman and his section Chiefs I don't think Alfred ever had kids lwig had 18
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11 of the 18 survived infancy lwig was at heart an optimist and hopeful about Mankind as hopeful about Mankind as he was about his own capabilities and career Alfred more pessimistic and definitely had a cynical view of his
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fellow man what they had in common was that lwig and Alfred both pushed themselves at such a pace that physical exhaust Bon probably would have overcome far harder types Alfred was more interested in the financial aspects of business lwig regarded Financial
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speculation as a refuge for those who were too lazy to work lwig competed in a heavily competitive market Alfred essentially had a monopoly these were alien considerations to the man whose own industrial Empire was based on a
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product that he alone controlled he alone determined the qu quantity of dynamite to release onto the market he alone decided which plants in which country should should charge what price competition was of little to no concern
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to him and he could run his business from a hotel room in any country he chose Alfred delegated lwig was an entrepreneur who was never content to delegate to merely invest but who always insisted on becoming personally and totally committed so lwig is going to
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die relatively early he's going to die at 57 we're not there yet there is going to be this like triarchy is the way I described it and maybe I've just been watching too much Game of Thrones but the triarchy of the Russian oil industry
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at this time once they see the success that the Nobel family had is standard oil comes in and then the Rothchilds are also financing and trying to break the rilds actually finance and develop uh the second largest which's going to wind
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up being the second largest Uh Russian oil company and so they're going to be a major headache for the nobels for the next two generations and so this war between them is going to be known as Europe's second 30-year war between
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standard it's going to be Dutch Royal shell the Rothchilds and then the Nobel family but I do want to point out a very fascinating idea where it's like well outside success attracts a lot of attention and is in turn is going to
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attack attract a lot of competition and so the one place on the planet at which Rockefeller and standard oil are not dominating is in Russia and so they have there's a series of taxs but this is a great description of what was happening
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cuz the the NOA family is producing just so much oil at this point in late November Standard Oil cut prices Rockefeller already controlled more than 90% of all American Oil exports and was the domineering force in all World
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Markets except Russia but the this is such a great Line This Is Why I'm reading this section to you but the price of Monopoly is eternal aggression the price of Monopoly is eternal aggression and when the Americans saw nobel's sudden and
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successful invasion of their markets they quickly counterattacked and then once you understand the scale just boggling brain breaking scale of the Russian oil industry at this time it makes sense why you know Standard Oil and Rockefeller
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were not going to ignore them and they were going to try to fight this is insane okay one Nobel oil well a single one gushed over 11,000 tons of oil a day that is more than the total oil flowing from all 25,000 wells in the United States at
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that time these gushers would come out sometimes so fast and unexpectedly that they would shoot a stream of oil that's 225 ft straight up into the sky that stream of oil would then be carried by a winds a mile and a half away you'd have
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entire towns which would the outside their houses would be drenched in oil from these gushers and just like you and I have talked about in the past of like the I've done a few episodes uh I did this book called The Big Rich and
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another book called wildcatters about the the first and second oil Revolutions in Texas and what I love about reading about oil it just it draws the craziest character so there's a guy this 6 foot 3 inch giant of a peasant okay he worked
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as a servant in the Baku office of one of the Zars local military Representatives he saved some of his meager earnings from his paycheck he buys a small Vineyard on the outskirts of town Under The Grapes that he thought
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he was buying just happened to be Lakes of oil by the turn of the century that peasant that giant peasant began became a man of fabulous wealth and fabulous extravagances his son inherits the wealth and he becomes Russia's greatest
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Gambler a collector of paintings racehorses and beautiful women he would throw parties that look like from out of the pages of Arabian Knights he would Swagger across Europe keeping a large Entourage and then growing enormously fat with his Movable Feast and his
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permanent luxuries one of these people that turned from peasant unly rich they spend their money on hilarious things and one of them built this giant Palace and the beginning it's it's shaped like a dragon and to get into the palace you
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have to actually go through the entrances the dragon's Jaws I wish they had a picture of it because it sounded amazing but lwig was very different from this they were obviously very wealthy but they didn't waste their time you
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know just throwing parties he liked to work lwig liked to work and he was very proud that he was considered one of the very few they considered like the the Baku oil industry completely dishonest and so it says lwig was proud
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of his own particular guarantee and that of his company if you can find in Baku any man who can prove that we've been dishonest that we cheat or refuse to address any substantial grievances we will face inquiry in your presence and
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if guilty make amends from every report in this book lwig was a great man and unfortunately he had severe health issues he had issues with his lungs he had heart disease and at the early age of 57 years old his heart fails and he
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dies now the business turns over to his son Emanuel a few years later after Ludwig's death both other brothers Robert and then Alfred Nobel also die now emanuel's life story is also incred incredible because he's going to be one of the wealthiest people in Russia and
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he's the one that has to dress up as a peasant and leavea okay that's going to happen about 15 years into the future but he's also remarkable because if it wasn't for Emanuel there' be no Nobel Prize he's the won Emanuel is the one so
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this is Ludwig's son Alfred nobel's nephew he is the one that saves the Nobel Prize because other people in the Nobel family wanted Alfred nobel's will overturned they wanted that his gigantic fortune and so you have kids of the
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other brothers that are doing everything in their power to try to void Alfred's will and keep that fortune in the family and so one of the lines in here is kind of humorous cuz one side of the family does not have the financial security
51:24
that the other nobels did these are Robert's kids and it says it could not have been easy to stand by and let all that money go to strange people in distance lands because they had written books or devised some new formula So So
51:35
that obviously made me chuckle but it is Emanuel alone that is fighting the entire family he's like no we have to honor what Alfred Nobel wanted and so he says he had made his position clear he would not fight the will he was
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interested in preservation of the family name and honor in strict adherence to the wishes of Alfred he told the other relatives of his let the last will in Testament speak for the soul and this also speaks to the ethics and the morals
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that was passed down in the family because not only is other family doing this they they're all they're all sweets right the Swedish King calls Emanuel before him he's like hey even the king opposed this idea and Immanuel refused
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to back down even from the King this was the result the will was validated and the Nobel Foundation was established it took courage to oppose popular sentiment to fight his own family and to Brook arguments with the King and then I think we need to move on to
52:28
one of the main lessons of the book um I think I've understood this because I'm the son of Cuban immigrants and I just cannot fathom how my grandfather who was 38 years old uneducated didn't have any money didn't speak English worked in a
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shoe factory and at a butcher shop understood the danger that his family was in when Castro took over and moved to a country where he didn't know anybody and didn't speak the language and so grow going up with these stories
52:57
that you hear over and over again this is something I talked to Sam zel about when I had lunch with him too because you know his family escaped the Holocaust they got out I think they were on the last train in Poland as somebody
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that's grown up in America I think you can have the assumption that you know the way things are now is the way things will be forever and you it's hum history just shows like how fast things can change Emanuel is the third generation
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of one of the wealthiest and most respected families in Russia and he escapes hidden as a peasant people come into the factories and murder their employees and so now we have an account of what it was like to experience the bik revolution not knowing what was
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going on and so there's an executive in the Nobel company that kept a diary and it goes remarkable how fast things change the diary lasts for less than two weeks and I just want to pull out a couple lines that are spread across
53:51
several days they're they are in order so it starts Thursday street cars stop running strikes in several factories the police clear the streets of demonstrators shouting bread Friday strikes are spreading confrontations
54:03
between police and the people streets cleared and closed off from crowds Saturday police often disguised as soldiers and kacs hold the crowd in check dead and wounded lying on the streets Sunday stores have boarded up their Windows the police are shooting
54:21
cacs are using whips in the evening a lot of shooting drivers who are CED off the corpses talk about hundreds Monday all offices and workshops are closed we let anyone go home who wants to an employees nephew was killed by a
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straight bullet hit him right in the forehead as he was standing in a window watching the activities on the street Tuesday as we were walking to the office we came under Fire shooting at us from both sides of the street in the evening
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we do not use any rooms facing the street and this is why between 9:00 and 10 at night I opened the door to my study just slightly lighting the front window for a second machine gun fire sprayed the entire facade of the building Wednesday more house searches
55:05
the person who lives on the floor below us is arrested and taken away and what's remarkable is even after all that he ends the journal the worst is probably over the Anarchy in Petersburg soon spread to other cities the collapse of
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the Imperial government and the abdication of the Zar the wives and children of nobel's Swedish employees mooved back to the safe shores of their neutral country Lenin and his bull seized power they wasted no time showing
55:28
the nation the meaning of totalitarian Revolution all newspapers but their own were suppressed editors were imprisoned and the only printed or spoken word permitted was that of the Bolsheviks their Avalanche of decrees covered every
55:41
phase of economic political spiritual and intellectual life the workers and soldiers demanded great sums of money from the industrialists Nobel factories succumbed to the chaos and closed down transport was nationalized factories
55:55
were nationalized owners and managers dismissed Bank deposits seized prices skyrocketed the Zar and his family were murdered the petroleum industry was nationalized this is the craziest sentence in the book a former insane
56:11
asylum inmate was named minister of war and promptly proposed the election of a donkey to the council to represent oppressed animals an illiterate sailor was placed in charge of the schools and a well-known pimp was given control of public Public
56:27
Welfare discipline and routine were replaced by endless series of meetings decrees and denunciations none of the Nobel Chiefs really believe that the danger was more than a passing phenomenon and that the Bolsheviks could continue very long in
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power this idea that this won't last things will go back to normal is a very common reoccurring belief in history around both Wars and Revolution these are not stupid people and yet they couldn't have been more in correct and
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they realized this is when they have to get out are they're going to be killed the last nobels had departed after 34 of a century the Swedish Saga of a family in Russia came to a Bitter End all of their assets are seized all their
57:09
factories Emmanuel the son of lewick goes back to Sweden and this is goes back to his even his grandfather and his father this Relentless optimism that they had in their blood Emanuel had found great pleasure in life even in Exile he refused to be consumed by anger
57:26
and bitterness his few remaining years were not going to be wasted worrying or falling victim to a paralyzing pestilence of hate and frustration in Baku all visual proof of the Nobel name was removed the pre-soviet Slate wiped
57:42
clean wrenched from a place in history reduced to the category of nonperson Emanuel the father Ludwig Robert and Emanuel the grandson and all those Nobles who struggled and strained to build and create disappeared into the midst their Glory power and honor
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obliterated by those who seized what they had created their acts long forgotten by those secure from such a miserable fate this book is amazing there's so many stories that I couldn't get to I could do a podcast on you know entire
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chapters multiple podcasts because there's just so much detail in this book but I really wanted to focus on lwig cuz that's the person that resonated with me the most so for the full story highly recommend you buy the book if you buy
58:31
the book using the links that's in the show notes on your podcast player or by going to Founders podcast.com you'll be supporting the podcast at the same time that is 359 books down 1,000 to go and I'll talk to you again soon