Losing My Virginity
Everyone knows who Richard Branson is: the entrepreneur famous for the ‘Virgin’ brand name, the adventurer who has crossed oceans in a hot air balloon, the philanthropist knighted by the Queen.
What most of us know about Branson comes from snippets on television and newspaper articles, but there is a reality behind the image that only a good autobiography reveals. There are hundreds of ‘how I did it’ stories by well-known businesspeople, but Losing My Virginity is one of the best. This is thanks to the rich material Branson has to draw from (he is an inveterate note taker and diarist, and his scribblings over a 25 year period enabled the book to be written), but also because he manages to avoid self-aggrandisement.
This commentary covers the 572-page updated 2005 edition, which, whether you are an aspiring entrepreneur or not, is a fantastic read. The book demonstrates that being different is not an obstacle, but almost a requirement, in achieving prosperity.
‘You will either go to prison or become a millionaire’: 1
Born in 1950, Branson enjoyed a happy childhood, with parents who considered their children equals and who often set challenges to make them self-reliant. Though decidedly upper middle class, the family never had a great deal of money, and Branson’s mother was always thinking up ways to earn extra income from cottage industries in the garage.
At the private school he attended, Stowe, Branson was considered a bit slow and lazy. He was, in fact, dyslexic and admits that by age 8 he still couldn’t read and was hopeless in maths and sciences. As British schools worship the sportsman, he channelled his energies into doing well on the field. On leaving school, his headmaster said to him, ‘You will either go to prison or become a millionaire’.
Branson’s first entrepreneurial success was a national magazine for students, which included interviews with Mick Jagger and John Lennon. He admits he did not go into it to make money, more as a fun enterprise. In fact, it did not make money, but was kept going with the help of his friends and a bit of advertising.
Branson’s clique were all obsessed with music, and he hit upon the idea of selling records cheaply through mail order, particularly ones that were not stocked in the high street stores. The business mushroomed, but a postal strike made him realize how vulnerable it all was. He began looking around for a retail space.
‘You will either go to prison or become a millionaire’: 2
The first Virgin record store became a hang out for young people, and was the first to cater for the youth market exclusively. Many more stores followed around Britain.
The early days of Virgin were anything but ‘regular’. The business was run not from office quarters but basements, church crypts and houseboats, with plenty of hangers-on helping out, only some of whom were earning the standard Virgin salary of £20 a week. Branson never obeyed the business rule to not work with your friends; most of the Virgin inner circle for the first fifteen years were people who had grown up with him. Though there were inevitably fallings out, this accidental management strategy was remarkably effective.
In an atmosphere of free love and plenty of drugs, someone had to be getting up early and worrying about paying the invoices and salaries, and Branson was unusual in his coterie for not indulging much, preferring instead “…to have a great time and keep my wits about me.” Behind the barefooted, long-haired hippy was a businessman who wanted to make a difference.
Though his chain of record shops was growing, with all the overheads it was actually losing money. Branson accidentally fell upon a solution to the problems that would almost fulfil the bad part of his headmaster’s prophecy. He began buying records wholesale, saying they were to be sold in Belgium, and thus escaping hefty UK domestic sales duties. After three trips taking the records across the English Channel to imaginary buyers, which he then sold at great profit back in the Virgin stores, his activities were discovered by the Customs and Excise men. To escape jail he had to pay back three times the amount not paid in duties (£60,000 in 1971 – a lot of money). Under tremendous pressure, he somehow met the payments from store earnings, but the experience burned him, and he resolved never to do anything approaching illegality again. Barely 21, he was growing up fast.
Entering the big time: music
Fond of the idea of having his own record label whose acts could be promoted through the Virgin stores, Branson scraped together money to buy an old manor house in Oxfordshire, which was slowly converted into a recording studio.
The first act Virgin signed was an unusual choice. A young musician called Mike Oldfield had spent months perfecting a recording that had no vocals and lots of bells and other unusual instruments. This was a bizarre first choice for what was intended as a rock music label, but it paid off. Oldfield’s album Tubular Bells was one of the biggest selling of the 1970s, and bankrolled Virgin’s early years in the business. It later attracted The Sex Pistols, Culture Club, Phil Collins, The Human League and other stars to its fold, and by the early 80s had become a label to contend with. Branson had achieved his wish for a ‘vertically integrated’ music company, in which the Virgin stores, including the famous Virgin Megastores, could promote the bands that Virgin Music had signed.
Entering the big time: airlines
With his focus on the music industry, Branson had never considered starting an airline. But when he received a proposal to establish a transatlantic service to compete with British Airways, he could not resist. Against the better judgment of his advisers, he called Boeing in Seattle and negotiated to lease a 747 for a year, ‘just to see’ if the whole idea would work. Virgin Atlantic was soon a reality, aiming to satisfy the demand that Freddie Laker’s Laker Airways had tapped before British Airways had forced it out of business.
Virgin Atlantic almost never got off the ground. On the inaugural flight, a flock of birds flew into one of the uninsured engines, ruining it at a cost of £600,000. This brought the company over its overdraft, and it came close to being bankrupted. Only an emergency recall of cash from Virgin’s overseas operations got it through. Between 1984 and 1990 Virgin Atlantic remained tiny, however, with only a handful of planes.
The fuel price jump brought on by the first Gulf War was a major obstacle, as was the sudden loss of passengers after the events of September 11, 2001. Virgin also had to contend with a constant ‘dirty tricks’ assault from British Airways, which saw Virgin as a threat that had to be crushed, whatever the means. As Branson’s airline soaked up more and more cash, its bankers were losing patience, and he was led to a painful realization: either sell Virgin Music, and keep Virgin Atlantic flying, or lose the airline and leave the Virgin brand name in tatters, not to mention losing thousands of people’s livelihoods.
Again, in spite of the good advice of family and friends, Branson took the decision to sell Virgin Music, which he and his team had spent 20 years developing. It was a harrowing decision, particularly as he had just signed The Rolling Stones to Virgin, marking the culmination of the label’s rise. He had ‘lost his virginity’. But the sale brought £560 million, or $1 billion, and gave Branson the freedom to chart to course of the Virgin group of companies without bankers yapping at his heels. His share of the sale, he noted, gave him money ‘beyond his wildest dreams’.
The Branson style
Branson notes that, no matter what people may tell you, there is no ‘recipe’ for business success that can be applied to any field. There is, however, a Branson style of doing business that might be instructive for the aspiring entrepreneur.
Throughout the book, Branson never comes across as an exceptionally brainy person. Rather, the secrets of his success could be boiled down to:
Branson’s main criterion for entering a new market or industry is that it be ‘fun’. There has to be room to shake up stodgy markets and provide something new. Unfortunately, this often involves being the minnow trying to take on corporate whales.
During the war with BA, there were lots of rumours that Virgin Atlantic was about to go bankrupt. At one point it owed £55 million to banks, and Branson had to do a tremendous juggling act to keep things afloat. He notes at one point, “It sometimes seems to me that I have spent all my life trying to persuade bankers to extend their loans.” Since the Virgin group has always reinvested profits back into the businesses, it has never had a cash cushion like established corporations, so there was always the danger of it running out. Every record deal he made seemed like putting the company on the line, and it was only in the mid-90s that the Virgin group could relax a little.
Branson’s reflection on these difficult years provides good advice for anyone in business under financial pressure: “However tight things are, you still need to have the big picture at the forefront of your mind.” Whenever he found himself in a tight spot and his advisers suggested shrinking back a little and playing it safe, this was the point where he would actually go out on a limb.
Other insights include:
What is amazing about Branson is the number of his achievements which have nothing to do with business. A large portion of the book, and some readers will feel the most exciting bits, relates to his various efforts to break world hot air ballooning and ocean powerboat records. Why has he felt compelled to go off on such adventures (which have brought him close to death several times), when he is already someone – with his wealth, success and happy family – who ‘has it all’? His answer is simply that it adds another dimension to his existence and makes him feel alive.
One of the interesting parts of the book is the soul-searching that came upon him on turning 40. Was he going to spend his life creating and building companies? Surely there was something more? For a time, he considered selling off his assets and going to university to study history. Today, however, he puts much of his non-work energies into philanthropy. A friend of Nelson Mandela, Bill Clinton and other luminaries, he has put time and money into HIV Aids, African wildlife, peace in Northern Ireland and now, global warming.
Yet it is through his companies that he has changed people’s lives the most, constantly seeking ways to deliver new value to the public, whether through low cost flying, mobile phones or cheaper credit cards. As this is written, ‘Virgin Galactic’ is on track to be the first company to offer commercial passenger flights into space. This enterprise fulfils Branson’s business criterion of only going into fields that are fun and exciting, yet where there is also money to be made. What could be a better definition of a prosperous life?
Source: 50 Prosperity Classics: Attract It, Create It, Manage It, Share It by Tom Butler-Bowdon (London & Boston: Nicholas Brealey).