World Changers

When Sir Richard Branson, Britain’s most famous entrepreneur, launched Virgin Mobile USA, he did it in typical Branson style. Hoping to differentiate the new product from existing competition, he wanted to reinforce the brand message “nothing to hide” because there would be no hidden charges for the service. So Sir Richard rose above New York’s Times Square on a crane, then stripped down to a “nude” bodysuit, his loins covered with a Virgin cell phone. The cast of Broadway’s The Full Monty surrounded him, all in the same pose.

The flamboyant stunt earned him the publicity he sought—and yet another brand was launched in the sprawling entrepreneurial empire that is Virgin. With hundreds of companies all over the globe and roughly $10 billion in annual revenue, Virgin is—more than anything else—a reflection of Branson’s own interests, passions, and whims. Throughout the company’s history, many of Virgin’s most auspicious ideas—air and rail travel, cell phones, finance, Internet, hotels, and travel packages—have sprung from Branson’s wants and needs as a customer himself “The reason I went into business originally,” he says, “was not because I thought that I could make a lot of money, but because the experiences I had personally with businesses were dire and I wanted to create an experience that I and my friends could enjoy.”

No one would ever have guessed that Branson could have pulled it off. He quit school at the age of fifteen to start his first business—a Rolling Stone-like magazine where he could voice his personal objections to the Vietnam War. At the time, in 1966, he had no interest in running a business. Though he had dyslexia, Branson most wanted to be an editor. He turned out to be a far better salesman, selling some $8,000 in advertising for the first issue. With all his costs covered by ad sales, he didn’t even have to charge for the magazine on the newsstand.

Suddenly, Richard Branson, the teenager, was an entrepreneur. His initial fortune would ultimately be built in the music business. He bought crates of “cut-out” records from a discounter, selling them out of the trunk of his car until opening a successful mail order business in 1970. His strategy : simply undercut Britain’s stodgy retailers. Record albums were then sold under restrictive marketing contracts that limited price cutting. He later opened his first music store in London’s Oxford Street. Branson picked the name “Virgin” after it was suggested by one of his early employees because they were all new to business.

By 1972, Branson formed the Virgin Records music label, becoming successful by signing artists that no other record label would touch. When punk music emerged, for example, he signed the Sex Pistols. Later came contracts with Genesis, Peter Gabriel, and the Rolling Stones, making Virgin and Branson major players in the international music business. He eventually sold off the music business in 1992 to keep his airline company afloat.

Branson’s more daring ways can be traced to his mother, Eve, a former showgirl who relished adventure. She was one of the first flight attendants to fly over the Andes, when passengers had to don oxygen masks because the cabins were unpressurized. She also snuck into a male-only glider pilot training program by pretending she was a boy. Although his father, Ted, was a lawyer, he, too, encouraged his son’s risk taking—from crossing oceans in a hot air balloon to his latest efforts to create commercial space travel under the brand name Virgin Galactic. In July 2011, Branson announced that the company had taken over 440 deposits from future astronauts totaling $58 million.

What Virgin is about is taking on big conglomerates and moving into their territory and seeing if we can shake them up. We’ve managed to do that in the music business. We’ve managed to do that in the aviation business, and in the mobile phone business. And I think that is where the people who work for Virgin get their passion from. It’s being proud of the company they work for, being proud of the difference that Virgin is making.

In the early days we got heavily criticized for not sticking to our knitting. Lots of journalists said we were stretching the brand too far. They asked, when will Branson’s balloon burst, which actually came close on quite a number of different occasions. But that was a different balloon. The conventional wisdom in business schools was to specialize in one area. But it’s just not in my nature, and as it turned out, it was very fortunate because the record business, which was our first business, is struggling. And it’s very lucky that we went into mobile phones and other businesses that are doing extremely well today.

I’m the sort of person that says let’s just give it a try. If I’m flying on a domestic American airline, which I have done over the last thirty years, and I find the service is dire, which it has been over the last thirty years, then you don’t just talk about it. You get up and start an airline that gives people a choice. And I think that applies to a lot of businesses. If you’re frustrated with the way people are doing things, you just go and try to do it better than they’re doing it.

You get the best, fantastic people around you, you make sure they completely believe in what you’re doing, and you give them a lot of freedom to make mistakes as well as to make good things. Let them get on with it and don’t try to second-guess what they’re doing, and that’ll free you up as an entrepreneur to move on to the next thing.

I was young and inexperienced. At first I wasn’t even allowed to register the business name because the word virgin was thought to be rude. I had to sit down and, in my best fifteen-year-old penmanship, write a letter to the registry office that began, “Surely the word virgin is anything but rude; it’s the opposite of rude.” They eventually relented.

Most people who start a business from scratch are taking on much bigger corporations. But you have the advantage of being smaller. You’re more nimble. You can move quicker. If you’re going to change your business class seats [to compete with British Airways], you can change them far faster than they can. If you’re going to put stand-up bars in your planes, you can do it much quicker than they can. As long as you use your tactical advantages, you can survive.

We wanted to be the first airline with flat beds. BA actually found out what we were up to and a few months after our beds went on, they came out with a slightly better bed. It [the retrofit] cost us $100 million, but we chucked all of those beds within twelve months. For them to change again would have cost a billion dollars, so they didn’t. So if you make a mistake, you’ve got to acknowledge it quickly.

You’ve got to run each of your companies as if you own them personally. It’s like a private restaurant. If I’m on a plane or if any of our chief executives are on planes, I’ll make sure that I get out and meet the four hundred passengers on the plane and make sure that I spend time with all the staff. I’ll have a notebook in my back pocket and write all the points down.

Listening is absolutely critical. As a managing director, a chairman of a company, or the manager of a division with BlackBerrys and phones, you don’t need to get stuck behind a desk. You can get out, experience your businesses, experience your competitors’ businesses, and all the time just be working hard to improve on them, all the time motivating your staff. If I’m in a town, I’ll try to make sure that I take all the staff out on the town in the evenings. And because we’ll all be drinking a bit, I’ll make sure that notebook is in my pocket. So when I scribble something they have to tell me, I get ahead and do it the next day. You get a lot of truth from the staff when you’re out drinking. I think it’s important to let your hair down with the team.

It does come from the top down, and if you’ve put the wrong person in any of your companies, you can destroy a company very quickly. And that person’s got to do lots of things right. Bringing so-called experts from outside into a company above people who feel they were good enough for the job can be very demoralizing, so we try to promote from within. We try to make sure that a switchboard operator is not always a switchboard operator if they’re good enough to move up. A cleaning lady is not always a cleaning lady. At Virgin, the cleaning lady of a recording studio division ended up running the recording studio, and the switchboard lady in our mobile phone company in Canada now runs the Virgin Foundation in Canada. And both have done a tremendous job.

You’ve got to find people who are really good at dealing with people, motivating people, caring for people, and looking for the best in people. These are people who know how to praise. The word criticism should just not be a part of their makeup. They need to inspire people to really succeed.

I made and learned from lots of mistakes. In the end, the key is willpower. It’s just really hard work to make sure you can keep paying the bills. But I do think one can have too much respect for bank managers.

When we entered the airline business, the very first plane Boeing sent over to us ran into a bunch of birds and lost an engine. Because it hadn’t been delivered yet, the insurance didn’t cover that, so we were $1.5 million down before we flew our first flight, which took the whole Virgin Group beyond its overdraft facility.

Two days later, as I returned from the inaugural flight, our bank manager was sitting on my doorstep and telling me that he’s going to foreclose on the whole business if we don’t get the money in by Monday—and that was a Friday.

So I had to scurry around like mad over the weekend to try to get enough money to cover what I owed, which I just managed to do. For most people, bank managers are a bit like doctors—they never leave them because they have too much respect for them.

By daring to be disrespectful, we went from having a $5 million overdraft facility to having a $40 million overdraft facility with a different bank by the end of that week. Where one bank was willing to ruin us based on the assets we had, another bank was willing to give us more credit.

There’s plenty of ideas that haven’t panned out. Fortunately, because we don’t buy companies, we build companies from scratch, if something’s not working out it generally doesn’t cost us too much. And we like to take on the biggest. We were hoping to knock Coca-Cola into the number two position. I believe that Coca-Cola is still the number one cola company in the world. We had lots of fun trying. We landed in New York with a tank from England and went to Times Square and blasted the Coca-Cola sign out of the sky. But in the end, their guns were bigger than our guns. And they drove us off the shores.

Of course, you’re dealing with people, and pulling the plug on a company is pulling the plug on people. I definitely don’t follow the rule that I should follow, to cut your losses quickly. But I’m not apt to let things go too long. But even if you try something and fail, I think it’s good for the brand. Virgin is sort of the underdog brand, so if we try something and fall flat on our face, somehow it doesn’t do the brand too much harm. So we’re willing to take slightly bigger risks than some.

If you’re an entrepreneur and capable of building businesses to make money, you should also be capable of using your entrepreneurial skills to look at some of the intractable problems in this world. And through Virgin Unite, which we set up to unite all our staff, we put our entrepreneurial team on such issues as conflict resolution issues and diseases. Of all those things I suspect the one that we’re most proud of is an organization called The Elders, which is headed up by Nelson Mandela and Archbishop Tutu and President Carter. They’re twelve of perhaps the most respected men and women in the world with high moral authority and they try to resolve conflicts and have had considerable success over the last few years.

Ideally, since 80 percent of your life is spent working, you should start your business around something that is a passion of yours. If you’re into kite surfing and you want to become an entrepreneur, do it with kite surfing. Look, if you can indulge in your passion, life will be far more interesting than if you’re just working. You’ll work harder at it, and you’ll know more about it. But first you must go out and educate yourself on whatever it is that you’ve decided to do—know more about kite surfing than anyone else. That’s where the work comes in. But if you’re doing things you’re passionate about, that will come naturally.