I N AN EXCLUSIVE INTERVIEW WITH SELLING POWER,
Richard Branson shares some of the secrets that make him tick. It’s like a financial fairy tale. A middle-class English lad, without benefit of education (he dropped out of high school) or family connections (they were about as far from wealthy as possible), starts his first business at age 18 — a newspaper targeting students and makes his first million by 23. By 1992 he is worth a cool billion. After lengthy travels and numerous deeds of derring-do, he ultimately becomes chairman of the Virgin empire — comprising 350 companies that collectively took in more than $8 billion in revenue last year. His personal worth? According toForbes, which ranks him number 247 in the worldwide “wealthathon,” around $2.2 billion.
While he owns luxury properties around the world (and flies between them on his own airline), he spends most of his time on his private (ruggedly beautiful) Caribbean island, Necker (he owns all 74 acres) . He never carries keys. He never even carries cash. He was knighted by Queen Elizabeth II in 1999 — for business prowess, of course. In short, Richard Branson is very much like royalty. Only richer (the Queen is only worth $66o million).
Branson was born July 18, 1950, the first child of mild-mannered Ted and deter-mined Eve. Archetypal tales of his youth abound, but the most oft-quoted is that when he was four, his mother stopped the car, dropped him by the side of the road and drove off saying, “Find your own way home, Ricky.” Eve repeatedly encouraged the young Richard to test his limits and bragged to her friends that someday her son would be prime minister.
As it turns out, she aimed too low. Hampered by dyslexia, Branson was never much of a scholar. At 15 he dropped out of school and, along with two friends, founded a counter-culture magazine ironically titled The Student. His first real success came at the age of 20 when he got into the mail-order music business and founded the even-more-ironically-titled Virgin Records. In his autobiography, Losing My Virginity (Three Rivers Press, 1998), Branson credits a girlfriend with coming up with the name during one lazy afternoon.
Virgin Records introduced the musical groups Culture Club and Sex Pistols to the world and ultimately signed such big-name artists as Phil Collins, Janet Jackson and the Rolling Stones. Branson’s urge for expansion was relentless, and over the next 30 years he would buy or start more than 300 companies. Legend has it that once, while on vacation in Australia, he liked the drinks at a smoothie stand so much that he bought the company. He admits he can’t say “no” to anyone who comes to him with a good idea and describes his empire as “wildly kaleidoscopic” with interests that range from cosmetics to computers. Some experiments fail, but he’s quick to add, “I’ve never let a company go bankrupt. Even though we’ve closed a few of them, we always pay our creditors off and bow out gracefully.”
The majority of Virgin’s revenue comes from a handful of businesses — Virgin Atlantic and Virgin Blue airlines, followed by the mega-stores, mobile phones, the V2 record label and Virgin-Trains, which revolutionized rail travel in Europe. Each company in the Virgin group has its own CEO and board of directors, and Branson says success depends on “getting the right people around you and giving them all incentives.”
In the United Kingdom, it’s hard to walk a block without seeing the Virgin brand on a shop or billboard. Virgin ranked number two last year when European consumers were asked to name the companies that had the greatest impact on their lives. With Europe enthralled, and $450 million in cash burning a hole in his pocket, where does the 54-year-old Virgin king go next? America, obviously, and in a big way.
Branson is targeting the domestic American airline industry, which he describes as “the worst in the world. The best time to go into a business is when it’s being abysmally run by other people,” he adds, “so the time is perfect to launch Virgin Amer-ica.” When Branson was a record executive, he says, he “traveled all the time and hated it. I knew I could do a better job of running an air line, but I also knew it was a statistically risky thing to do. The joke was that the fastest way to become a millionaire was start out as a billionaire and go into the airline industry.”
Although known as a daredevil, Branson has a practical philosophy of risk. “Before starting any new venture, I consider the downside,” he says. “I ask myself, ‘Can I afford the worst that could happen?’ I knew that the profits from the record companies could offset the inevitable losses, and in 1984 I stuck my toe in very cautious-ly . I leased a plane from Boeing for one year.” Twenty-one years later, Virgin Atlantic is the second largest airline in the United Kingdom and making a tidy profit hauling Americans back and forth to Europe. Branson didn’t become Branson, however, by leaving well enough alone. Will the same American businesspeople who fly Virgin Atlantic to London be willing to pay for luxury transport between New York and Los Angeles? Branson is betting $500 million they will.
Last fall, 2004, in order to raise his profile in America, Branson created a reality series on Fox called The Rebel Billionaire. Sixteen contestants were in the hunt for Branson’s job, jetting around the world to exotic locations in what was essentially a 13-week commercial for Virgin Atlantic. The show tanked in the ratings
but remains a fascinating study in the two sides of Branson.
The first image is all James Bond — the show even had Paul McCartney and Wings’ “Live and Let Die” as its theme song. One reviewer described Branson as “swashbuckling,” an archaic adjective that seems fitting as he led the young job applicants through a variety of challenges, including bungee jumping, hot-air ballooning and jaunts into the weightlessness of outer space. Branson is known as much for his adventuring as his business acumen, and he has racked up a long list of accomplishments. In 1986 his boat the Virgin Atlantic Challenger 2 crossed the Atlantic in the fastest time ever. The next year he crossed the Atlantic in the hot-air balloon Virgin Atlantic Flyer with veteran balloonist Per Lindstrand, and five years later he set another record for a distance flight over the Pacific.
The common denominator of all these quests is that the Virgin logo was smacked on the side of every vehicle. Branson is all about branding and using his fame to associate the Virgin name with adventure, excitement, sex and youth. He promises that within four years the average citizen can go into space courtesy of Virgin Inter-galactic. (Or at least the average citizen who can cough up the projected ticket price of $90,000.)
Critics carp that Branson is turning space travel into merely another extreme sport and claim that Sir Richard is willing to risk his life to prove a point. He once sat in his pool during a hurricane on Necker Island in the Caribbean and let the storm blow around him just because he wanted the experience of riding one out. During his balloon adventures he’s had to be rescued from the sea on five different occasions. You may get the impression he created The Rebel Billionaire primarily to give himself 16 new playmates. There’s unfeigned glee as he shows off his bi-planes, balloons and boats — not bragging for the sake of bragging, but it’s rather an almost childlike shout of, “Can you believe how bloody cool this all is?”
It isn’t only about the toys — it’s also about the girls. Beautiful women are everywhere in the Virgin world and Branson is a huge flirt, known for grabbing women and turning them upside down, a maneuver he pulled with — of all people — Ivana Trump. “I misbehave all the time,” he admits.
Branson is sometimes presented as a man with an unfailing Midas touch, but there have been definite dips along the way, most conspicuously the failure of Virgin Cola. “This was the single biggest disappointment of my career,” he says. “I predicted we would take a third of the market share from Pepsi and Coke, and for about six months I honestly thought we’d pull it off.” He certainly began with a bang. In 1994 he drove an army tank into Times Square to announce the assault of Virgin Cola on Coke. An enormous Coke sign had been rigged with fireworks, so when Branson mock-fired on it, Coke erupted into faux flames. “It worked for a while,” Branson recalls. “We were beating Coke in the UK, which is absolutely unheard of, and then it just stopped. What I learned subsequently, was that back in Atlanta there was an English lady working for Coke, and she noticed we were sneaking up on them quite nicely in the UK market . She went to the CEO and said, ‘Virgin should not be ignored. It’s a company to be reckoned with.’ Her boss set up a SWAT team with her at the head to go to the UK and smash Virgin Cola. They went into the corner shops that were stocking us and offered them the best terms possible with Coke. We were completely squeezed off the shelves.”
How does he know this? The lady in question now works for him, and according to Branson, “One drunken evening at a party she leaned over and told me how she’d managed to personally crush Virgin Cola. It was quite funny.” Branson can afford to be forgiving. Even his failures, so long as they are duly noted by the media, are publicity coups. Besides, all is not lost. Virgin Cola still limps along as a brand, and the ever-optimistic Branson points out, “We’re number one in Bangladesh.”
There are two modes of Branson. The engine-revving, space-suit-wearing, woman -dipping Bond side is tempered by a sweetness that may be, in the final analysis, a greater key to his success. At the end of each episode of The Rebel Billionaire, a rejected applicant is left on the tarmac as the remaining contestants fly to the next destination of the competition. Branson is often compared with Donald Trump, and his show is clearly modeled on Trump’s reality series The Apprentice, but when it comes time to eliminate the hopefuls, Branson is the anti-Trump. “You’re fired” could never be his catchphrase; as he says good-bye he often seems on the verge of tears.
“I hate to fire people,” he says. “If someone in the company isn’t working out, it’s not like they’re shown straight to the door. We make a real effort to move them to a different job they’ll better suited for, and if we ultimately have to fire someone it’s at extreme situation and something that any good manager should be upset about.”
Branson remains close to his parents and two sisters and has been with the same woman for 28 years. (Although they have now only been married for 15 of those years, and then only at the suggestion of their 8-year-old daughter.) Wife Joan has ridden out the cycles of the business with him. “In the ideal world you always cover the downside,” Branson says, “but there have been times I’ve gone to my wife and said, ‘Excuse me darling, could you sign here? Nothing too much to worry about, just another of those nasty mortgages.”’
He dotes on his children. His beautiful 23-year-old daughter Holly is in medical school and son Sam, 20, has recently finished his gap year between high school and college. Nothing delights Branson as much as when his children and their friends visit Necker Island, where he has been known to act as a human target, running back and forth along the beach while the kids shoot at him with paintball guns. The goofiness is characteristic, and it’s part of his charm. Back in London, he eschews the typical trappings of the high-powered executive. There are numerous tales of him getting locked out of his own office, of having no cash to pay the cabbie , of writing phone numbers on his hand because he never carries a notepad. He claims to be incapable of turning on a computer. If publicity is on the line, he’s more than happy to play the fool, posing in a wedding dress to celebrate the opening of his Virgin Bride shop or arriving at a press conference via space travel with personal jetpack.
One of Branson’s best-known stunts involves a bet he made with Geoff Dixon, CEO of Qantas Airlines. When Virgin Blue first entered the Australian domestic airline market in 2000, that was merely the first move in Branson’s ultimate game plan---he wanted to get permission for Virgin Atlantic to begin inter-national flights between London and Sydney as well. Qantas wasn’t pleased at the thought of the upstart Virgin cashing in on their profitable Kangaroo Route, and Dixon expressed doubts that Virgin would be granted the permission.
Branson fired back with a wager. He said that if Virgin Atlantic wasn’t flying between London and Sydney within 18 months he would don a Qantas flight atten-dant uniform and serve Dixon’s passengers; if Virgin did get the route, Dixon would have to play air hostess on Virgin’s inaugural flight. The open letter induded a picure of Dixon’s grimacing face superimposed on the body of a Virgin flight attendant. Dixon was not amused and replied, “I’m running an airline, not a circus.” Once again Branson carried the day with his puckish wit, getting both the route and the last laugh.
Perhaps because of his utter lack of pretension, his employees are fanatically loyal. They all call him “Richard,” and even if Branson is halfway around the globe at the time, the comments of “Richard doesn’t like this” or “Richard expects it done this way” make it seem as if he’s just stepped out of the room. When he does show up, the energy level rises. On a recent flight I took between London and Johannesburg, Richard and his wife, Joan, strolled into the Virgin departure lounge in jeans and were immediately mobbed by upper-class passengers who greeted them like rock stars.
Branson welcomed the upper-class passengers onto the plane and even gave the preflight instruction speech, closing with his signature “Cheers.” It would be easy to dismiss all the chumminess as PR if I hadn’t awakened in the middle of the night in need of coffee and found Branson deep in conference with the flight attendants on how to better organize the galley . “We maybe ordering as many as 100 more planes in the next few years,” he says, “so of course I’m asking the staff what they think. These ladies are the first to notice if the little details aren’t quite right.”
That great American über brander Walt Disney once famously remarked that he created Disneyland for his daughters, making it “the sort of place I’d want to take my own children.” Disney’s line presages Branson’s claim that he designed Virgin to be “the sort of airline I’d personally want to fly on.” When you travel upper class on Virgin Atlantic, you experience an almost Disneyesque immersion into one man’s fantasy world.
The little details are evident even before you get on a Virgin plane. You’re picked up at home in a limo. The airport departure lounge is the prelude to a party — champagne, a salon and spa, lively music, free food, bright colors and hip memorabilia from Branson’s early days in the record industry. You board the plane through a separate door, and the parade of indulgences immediately begins. You receive a black jersey sleep suit to serve as a pair of pajamas, followed by a flight of wines, a menu of entrées, a travel kit of amenities and a staggering range of entertainment options. Virgin has coined a term for their frequent flyers — “jetro-sexuals” — implying that their clientele is the new jet set, the select few who know how to bring style and fun back to travel. “I’m not the sort of person who wants to be stuck in a seat for 12 hours,” says Branson. “I wanted a bar, room to get up and mingle with the other passengers.” If you make a new friend —a distinct possibility in the world according to Virgin--- he or she can join you at a fold-out table for dinner. Throughout it all, an in-flight spa therapist wanders the cabin offering neck and scalp massages in case anyone is stressed, although it’s hard to imagine why anyone would be stressed. This is luxury travel in its highest form, a mile-high pajama party. In the words of one of the contestants on The Rebel Billionaire, this is what happens when a hippie makes a billion dollars.
When it’s time to snooze, Virgin provides the longest and widest seat in the air, and on some flights, the seats actually flip over and transform into what Branson calls a “proper mattress.” (I slept eight hours between London and Johannesburg, a figure that matches the cumulative number of hours I’d ever slept on plane up to that point.) After you land, the Virgin arrivals lounge offers showers, breakfast, a professional shave for the gentlemen or a shampoo and blowout for the ladies, and someone to iron your shirt. Between a solid night’s sleep and the chance to clean up, you hit the streets of the new city genuinely refreshed.
Branson believes that Virgin America will flourish precisely because American carriers have cut back so severely on the perks in business travel. “Very few can offer an upscale experience .” he says, “which is why we’ve competed so well in the transatlantic market.”
Going after these high-end clients is an expensive gamble, as Branson well knows. When Virgin Atlantic first introduced its upper-class sleeper seats in 2000, customers were displeased because the seats didn’t frilly recline. The airline ripped them out and replaced them to the tune of $200 million. “There’s always a risk,” Bran-son says, “but the bigger risk is to let your reputation erode by not getting it right.” Virgin America will be fully filled, meaning it will offer at least some of the same upper-class amenities that Virgin Atlantic offers on transatlantic flights. But here’s the kicker: According to Branson, “The team in America thinks they can deliver more frills than any other American airline presently offers and still keep the price in line with low-cost carriers like Skyblue.”
High quality and low prices aren’t exactly terms one associates with the airline industry, but Branson is determined not to make the same mistake he made the last time he took on the big boys in America. “Our problem with Virgin Cola was that the product wasn’t differentiated enough from Coke and Pepsi,” he says. “Cola is pretty much cola, and they already had the clout and the counter space. But airlines can be very different from each other, and we’re nothing like the existing brands.”
One thought kept running through my head during my Virgin flight — wouldn’t it be great to live like this all the time? Or, more to the point, wouldn’t it be great to be Richard Branson? Lots of people have money, but few seem to enjoy it as much. “I’m living my dream life,” he says. “ Work and play are the same thing.” Will Richard Branson live happily ever after? What a silly queshon. He’s living very happily right now.•
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