Richard Branson, the founder of Virgin, is the only person in the world to have built eight billion dollar companies from scratch in eight different sectors. One of those companies, Virgin Mobile USA, reached a billion dollars in revenue faster than any other company in history, faster than Google, Microsoft and Amazon. So how does he do it? What mindsets, tactics, strategies, practices and philosophies have enabled this extraordinary entrepreneur to build a privately held business empire of over 200 companies operating in over 15 countries and across multiple industries (travel, publishing, retail stores, gyms, telecommunications, entertainment, financial services, healthcare, beverages), all proudly carrying the Virgin brand?
This article draws on insights from three books: Losing my Virginity (1998); Screw It, Let’s Do It (2004) and Business Stripped Bare (2008) to unpack what makes Branson and the Virgin brand so successful.
Richard Branson was never educated in a business school or university; in fact he did not even finish high school. He learned his business lessons “on the street”. Action, experimentation and adaptation are central to his development of a powerful and practical business philosophy – a philosophy from which we can all learn a great deal. Central to his philosophy is his ability to deal with paradox – he has learned to become comfortable with ambiguity and he has developed a mindset that enables him to effectively develop innovative new businesses within the context of contradiction and uncertainty. Many people regard Branson as a flamboyant, attention-seeking prankster/adventurer billionaire with a high-flying playful lifestyle. Yet, when you examine more closely how he does things you soon discover that he is very deliberate and reasoned in the way he uses his time to maximise his impact in different areas of his business empire. He pays very close attention to detail when necessary; making copious notes about what needs to be improved. He is dedicated to execution and delivery and he still has an active hand in managing many aspects of his business empire. Thus, although he does some wild and crazy things that attract a great deal of media attention, these antics most often have a clear purpose and contribute effectively to the expansion of the Virgin empire. Here are seven specific paradoxes that appear to have contributed significantly to the business success of Branson and to the growth of the Virgin Brand.
The Branson mindset
- Be gutsy but protect the downside risk
Branson is nothing if not gutsy. Calculated risk lies at the core of what he has achieved as an entrepreneur. He has shown guts and bravado in the small things and the big. His idea to launch an airline came when he and his wife, Joan, were stranded in an airport in the Virgin Islands on route to Puerto Rico after an American Airlines flight was cancelled. “The terminal was full of stranded passengers. I had had enough,” he says. “I called a few charter companies and agreed to charter a plane for
$2 000 to Puerto Rico. I borrowed a blackboard, divided the charter cost by the number of people stranded, and wrote down the number. We got everyone to Puerto Rico for $39 a head”. In addition to small nervy things he also did massive, sometimes scary things. He took on a number of the world’s super brands, including Coke and British Airways. In some instances Virgin came out on top and in the other instances Branson was left licking his wounds. Yet he was never discouraged and has always been keen for the next big business adventure. He makes the point that “to be a serious entrepreneur, you have to be prepared to step off the precipice. Yes it’s dangerous. There can be times, having jumped, when you find yourself in free fall without a parachute. There is a real prospect that some business ventures will go smashing into the ground. It has certainly been very close at times throughout my own business life. Then you reach out and grab a ledge with your fingertips – and claw your way back to safety.”
Yet whenever Branson has taken on risk, he always sought to protect the downside and was clear on what he was putting in and what he was willing to lose. “What’s the most critical factor in any business decision that you will ever have to make?” he asks. “Basically, it boils down to this question: If this all crashes, will it bring the whole house tumbling down like a pack of cards? One business mantra remains embedded in my brain – protect the downside”. He protected the downside in every venture that he went into: when he bought his first plane he negotiated a deal with Boeing to sell it back to them in the first year if things did not work out; when he went into mobile phones, he used others’ networks instead of building his own to avoid the massive capital investment and when he went into cola he set aside what he was willing to spend (and lose if necessary) so that he would not be drawn into pouring more and more money into a venture with an uncertain future.
- Simplify things but appreciate complexity
Branson almost always seeks to understand and describe issues in their simplest form. Most people in business seek to make things more complex – consider the international accounting standards, or Porter’s Five Forces1, or a description of the reasons underlying the recent financial crises. All these things require a deep level of analysis and an examination of intricate detail just to understand what is going on. Yet, when Branson looks at a new business or a problem within an existing business, he always strives to explain it, for himself and for others, as simply as possible. He says: “It is vital to think clearly, reducing business to its essentials…Complexity is your enemy. Any fool can make things more complex. It is hard to make things simple”.
Making things as simple as possible allows him to appreciate the essence of an issue or a business model and to evaluate a proposal or a problem based on gut feel and intuition, without getting too wrapped up in numbers, analysis and calculations. His simple approach to business helped him make quick and efficient decisions when deciding on an approach to get into mobile telephony, when making decisions about setting up a consumer finance arm and when first making a call about setting up an airline. In all cases he merely considered key issues from the customer’s perspective and came up with simple solutions to solve a clear customer need. Yet, while Branson is all about simplicity, he does not shy away from complexity. Although he will often, in a humble way, try to describe himself as a simple person, he takes the time to understand the intricate key details of an issue when he realises that simplification will not give him the answers he needs. He has therefore educated himself on key, complex details pertaining to global warming. He has researched and tried to get into the gritty detail of the social and scientific factors driving the Aids pandemic and he educated himself on banking regulations in the process of trying to make a bid for Northern Rock (the massive banking institution first hit by the mortgage crisis in the UK). Thus, Branson is neither simple nor complex, he is both. He first tries to simplify issues and if that does not give him the solution he needs, he delves into the complex details, often with the help of experts.
3. Listen to experts but make your own decisions
Branson has always surrounded himself with brilliant people. A large part of his success can be attributed to his uncanny ability to quickly and easily tap into the collective wisdom of those around him. He has never once been a specialist in any area where he has set up a business – he knew nothing of journalism and publishing when he first started a magazine called Student as a sixteen year-old school pupil yet he asked lots of questions of anyone in the know and hired people who had worked for a magazine before. After a few months of running the business as a high-school pupil, using the school’s pay-phones to call advertisers, he dropped out of school to focus on the business full time and continued to learn from others who were willing to share their business knowledge and insight with him.
When creating Virgin Atlantic he tapped into the experience and wisdom of Sir Freddy Laker, the founder of Skytrain, a no frills, low cost airline offering transatlantic flights that was launched in 1977 and squeezed out of the market by the major airlines in 1982. In 1984 Branson had meals with ‘Freddy’, called him numerous times and unashamedly asked him for help and advice. When making a bid for Northern Rock, he convinced Sir Brian Pitman, “the leading banker of his generation and a man of huge know-ledge” to become the chairman of the committee making the Virgin bid. This did not come easily, says Branson, “But I pestered him and eventually he relented. He would at least hear us out”. After hearing them out and agreeing to come on as chairman, Branson had the most knowledgeable and credible person possible to help him understand the risks and rules related to banking.
Yet, in spite of always looking for the best people to help provide information and insight, Branson is adamant that the final decision must belong to the person taking the risk. Entrepreneurs cannot outsource the important decisions and the development of big ideas. He says: “You need to flesh out your own ideas. You need to do your own research. You need to take responsibility for how you plan to turn an idea into action. That way when you approach the experts – the accountants and the legal brains – they have something to get their teeth into.”
4. Tackle adversity head-on but have a plan B
In the first week that Virgin Atlantic flights were flying from London to New York and back again, Branson got a visit from the bank. Virgin was “insolvent” they told him. The company had used its three million pound facility and he was told he would need to shut the airline down and cut his losses. Branson spent an anxious few days literally hiding from his bankers while he put arrangements in place to extend his overdraft facility with another bank. He could see that Virgin was in a temporary bind yet others told him he had failed and should shut the thing down. If he had believed them we may never have had Virgin planes flying all over the world today. He says that in every one of his businesses there were moments of extreme challenge, where doubt set in and he questioned whether the initial grand idea would ever work. The true entrepreneur must be able to “distinguish between real and apparent danger… you need to understand the challenges to your enterprise and face up to them. Equally you have to resist the temptation to overreact at the first sign of trouble.” He goes on to say, “ If you’re hurt, lick your wounds and get up again.
If you’ve given it your absolute best, it’s time to move forward … as I write this the economy is deteriorating; it may be that some of you will be faced with this task in the near future.” Although Branson is a big proponent of persistence, he has also learned to recognise that it is important to have a plan B. One cannot just press on down a particular path if something significant changes. When Branson set up Virgin Records, his LP mail order business in 1970, he took out adverts in many music magazines to say that Virgin would be selling LPs via mail order. Everything was in place and orders were flowing in but a few days later “the post men and women of Britain began a bitter dispute for more pay. The strike lasted forty-four long and desperate days for us – and our business dried up. We needed to diversify the brand. Fast,” says Branson. “Here I learned another key fact about running a business: try to have a plan B.” A few days later they had secured a short-term rental on some retail space in Oxford Street and a few weeks later they had opened a music retail store, giving the company an alternative distribution channel.
5. Be yourself but learn from others
In his most recent book, Business Stripped Bare, Branson is very explicit about his understanding of entrepreneurship: “It’s about turning what excites you in life into capital, so that you can do more of it and move forward with it. I think entrepreneurship is our natural state – a big adult word probably boils down to something much more obvious like ‘playfulness’. I believe that drudgery and clock-watching are a terrible betrayal of that universal, inborn entrepreneurial spirit.” Therefore, at its core, entrepreneurship is about being yourself and doing what you want to do the way you want to do it. But while Branson believes it is important to be true to oneself, he also embraces the opportunity to learn and borrow ideas and insights from other entrepreneurial legends. In the book he goes into great detail about what he has learned from Herb Kelleher, the founder of Southwest Airlines, from Steve Jobs, the founder of Apple, from Sergy Brin and Larry Page, the Google founders and from Nelson Mandela (no explanation necessary). He has carefully examined the mindset and practices of these people and adopted what he believes will work for him and for the Virgin group of companies.
6. Diversify but know what’s core
Branson points out that diversity of the Virgin Group is one of the brand’s key strengths. The diversity of revenue streams, industries and geographies will give it the ability to endure in the economic downturn. “Right now everyone in battening down the hatches and preparing for the twenty-first century’s first really big global recession. Virgin turns out to be ready for the storm as well, because its risks are spread; the failure on one part – even a major part – will not ruin the whole.” Although Branson sees this as a strength of the group, many times Virgin has been accused of being a disparate group of companies with no common core and no real focus. Yet, despite the group’s diversity, Branson is absolutely clear about the group’s focus and what binds its many companies together. He says: “Contrary to appearances, Virgin is as focused as any great company. Its oddness comes from what it focuses on. We might have hit upon the exception that proves the rule: our customers and investors relate to us more as an idea or a philosophy than as a company… Virgin’s success seems to contradict the wise rule that you should stick to what you love… I have never made any secret of what gets me out of bed in the morning. It’s the challenge. It’s the brand…. what gets me up in the morning is the customer, the idea of giving the customer a good time. ”
7. Be patient and observe but take bold action
Branson is most often depicted as a person who takes quick, risky decisions, many of which have paid off, making him very rich over time. Yet he explains that he and the managers in the Virgin group are often more watchful and cautious than depicted in the press. “This is the unseen part of the business,” he explains, “the part that nobody ever discusses because, to be fair, there’s not a lot to discuss. The secret to success in any new sector is watchfulness, usually over a period of many years. It’s hard to spin waiting and watching into a vibrant business lesson, but if there’s one thing you take away let it be this: that Virgin’s sudden emergence as a leader in cutting edge industries was decades in the making. You need a huge amount of sheer curiosity to make it in a new sector.” While being watchful one does need to come to the point of taking action and this is where one’s entrepreneurial inclinations play a key role.
Branson describes an entrepreneur as a person who has “the dynamism to get something started. They view the world differently from other people. They create opportunity that others don’t necessarily see and have the guts to give it a go.”
These seven paradoxes capture the healthy tension that any entrepreneur needs to embrace and Branson has done a remarkable job of recognising paradox and developing a business philosophy for making the most of conflict and contradiction. He is the ultimate entrepreneur and an inspiration and voice for other entrepreneurs, as reflected in this bold statement: “Entrepreneurship is business’s beating heart. Entrepreneurship isn’t about capital; it’s about ideas. A great deal of entrepreneurship can be taught, and we desperately need to teach it, as we confront the global challenges of the twenty-first century. Entrepreneurship is about excellence – not excellence measured in awards, or other peoples’ approval, but the sort one achieves for oneself, by exploring what the world has to offer. I wrote to someone recently who, like me, is dyslexic. I said that it is important to look for one’s strengths – try to excel at what you are good at. What you’re bad at actually doesn’t interest people, and it certainly shouldn’t interest you. However accomplished you become in life, the things you are bad at will always outnumber the things you are good at. So don’t let your limits knock your confidence. Push them to one side and push yourself toward your strengths.”
Branson: A man of many milestones
For Sir Richard Branson, getting the most out of life has come from a combination of business and pleasure–though this guy’s idea of pleasure tends to be a little warped. Hot air balloon crash landings in the ocean. Boats sinking out from underneath him. Fighting arctic wind and temperature in ’round-the-world attempts. What follows are the highpoints from Branson’s life–so far.
1950–Richard Branson is born in Blackheath, South London. No word on whether he was the first baby to leap from crib to crib on his way to a record.
1967–Branson set up a charity called Student Advisory Centre, which came on the heels of his first successful business, a magazine called Student.
1970–Branson, barely 20 years old, founded Virgin, which operated out of the trunk of his car for a time and then was established as a mail-order record business.
1977–Bucking other record labels’ conventional wisdom, Branson signed the Sex Pistols to his Virgin Records music label, which the budding entrepreneur had founded in 1972. Virgin Records is now part of EMI.
1984–In a move that led to a protracted lawsuit with British Airways, Branson founded Virgin Atlantic Airways. He eventually prevailed against British Airways and received a hefty settlement.
1986–No longer content solely with the buzz of starting new businesses, Branson unleashed his adventuresome side. In 1985, he made an unsuccessful attempt to cross the Atlantic by boat in world-record time. He had better luck in ’86, breaking the record by a couple of hours in the Virgin Atlantic Challenger II, successor to a waterlogged Virgin Atlantic Challenger.
1987–Eschewing the water for the air, Branson became the first human–and, presumably, the first creature of any kind–to cross the Atlantic Ocean in a hot air balloon, the Virgin Atlantic Flyer, the largest balloon ever.
1991–Not to be outdone–by himself–Branson crossed the Pacific Ocean in another, even larger, hot air balloon, establishing a record for some other adventuresome soul to chase.
1997–In a move that may seem odd to Americans and their car-centric culture but makes perfect sense to Europeans, Branson founded Virgin Trains.
1998–Branson made his last attempt to circle the globe in a balloon, coming up short with an unscheduled stop in Hawaii. (Even the guy’s letdowns lead to sunny places.)
2004–Not content to leave behind the trappings of sea and land, Branson founded Virgin Galactic, with plans to provide sub-orbital spaceflights for those willing to spend $200,000 or more to leave behind the trappings of gravity.
2007–The merger of several media companies with different media interests led to the founding of Virgin Media Inc., a provider of television, mobile phone, internet and land-line phone services.