When Richard Branson sold Virgin Records for a billion dollars in 1992, he wept. And not tears of joy. After telling his staff that he had sold the company, Branson went back home to his house in London. "I, literally, I did have tears streaming down my face," says Branson in an interview with Guy Raz on the podcast "How I Built This." "Then I ran past a sign that said, 'Branson sells for a billion.' I thought, 'I hope no photographer is going to catch me running past this sign with tears streaming down my face.' It looked very, very strange." Branson opened the first Virgin Records store in 1971 and the accompanying recording studio in 1972. But Branson has never been a man to run only one business at a time. He was simultaneously taking on British Airways with his upstart airline, Virgin Atlantic, and that's where he ran into trouble. British Airways employees resorted to underhanded techniques to poach Virgin Atlantic customers. Some called Virgin customers, pretending the travelers' flights were canceled and offered to rebook them on British Airways, recounts Branson. BA also targeted Branson's other endeavors in an attempt to find something they could use to discredit the overall brand. "They had people going to our clubs and going through the rubbish bins outside our clubs and looking for needles so they could leak stories to the scurrilous press about drugs in the clubs and so on," says Branson.
Branson took British Airways to court for its scheming and won. But litigation is expensive, and it's distracting, too. "We realised then that we needed the firepower to deal with BA," says Branson. "And that in order to keep all the jobs protected at Virgin Records and the airline, I needed to sell something." Selling a company that he had built from the ground up was painful for the entrepreneur. "I hate selling things because basically a company is a group of people," says Branson. "It was a very mixed feelings day." Branson said the decision was one of necessity, though. He had to think of his employees. "It is a very hard decision. I mean, it's a very necessary decision in order to protect everything else you have. You know, we've now got 80,000 people who work for Virgin and, you know, their livelihoods, their jobs, their children, everything depends on that. "And so you sometimes have to make tough decisions along the way." Make a positive difference in the lives of others and something that you can be proud of. This is the motto of the Virgin Group — or rather, its founder. Richard Branson is a British business magnate, investor, author and philanthropist with an estimated net worth of $4 billion, who ranks 478th place on the World’s Top 500 Billionaires, according to Forbes. Branson is the head of the company that has discovered some of the most famous brands in the history of music, like Genesis, Sex Pistols and the Rolling Stones. Over the years he has thrown himself into increasingly harder challenges, attempting to dominate countless areas of business, from trains to cosmetics, and even cars. Unlike many companies, the Virgin Group is one that expands over multiple sectors and industries, focusing on the importance of “customer experience” instead of any single product or service. Whether in the health, entertainment, travel, or communications industries, the Virgin brand has earned its place as one of the most desirable and well-known companies on the earth. It is said, that even Branson himself can’t say for sure how many businesses he’s affiliated with, but his commercial activities exceed an immense number of 400. Branson’s journey to success began over 50 years ago when he launched his first “business” at the age of 15. He founded Student Magazine after dropping out of high school. Student Magazine was a school newspaper, whose target audience was primarily students and the community in which the institute was located. According to Branson, the headmaster of the school said to his parents in almost prophetic-like terms: You will either go to prison or become a millionaire. Branson asked for a small loan of £4 from his mother and, in a short time, left his local area. Building on this small but important investment, the young publisher, together with his faithful associates, began interviewing rock stars and parliamentarians, attracting important sponsorships for his paper. It was a commercial failure, but — somehow — Branson was able to attract notables figures such as Vanessa Redgrave and John LeCarre to write for the magazine. A year later, he created a student advisory service centre to help young people with medical, psychological and legal problems. Soon, the amateur level he started from gave way to real publishing success. Despite all of this, the main interest of the resourceful entrepreneur remained to be music and the music industry. So shortly after completing his studies, Richard and his partners decided to take over a warehouse that was located on the top floor of a shoe store. The brand name “Virgin” — destined to enter in history — arose when Branson and Nik Powell formed a record shop. Branson and his colleague thought of themselves as virgins in business, hence the inspiration. Branson has described the “V” in the logo as an expressive tick, representing the Virgin seal of approval. The idea behind this business was to turn it into a cheap record store. In 1972, Branson built a recording studio and started a record label. A dozen record shops began to come to life around the UK and Branson started to think big. His first big break came when his friend and composer, Mike Oldfield, recorded “Tubular Bells,” an album that sold more than 5 million copies. Over the years, artists such as Steve Winwood, Paula Abdul, Belinda Carlisle, Genesis, Phil Collins, Peter Gabriel, the Rolling Stones, Janet Jackson, and many other well-known performers helped to make Virgin one of the top six record companies in the world. By 1977, the Virgin brand ditched their hippie image by signing a label with The Sex Pistols, a momentous move that transformed them into punk and post-punk labels of the era. Branson’s net worth was estimated at £5 million by 1979, and a year later, Virgin Records went international. The Virgin brand strategy didn’t stay within the realms of music, as Branson dedicated himself to another of his great loves: flying. In 1984, Branson diversified his business, designing the first “Virgin Atlantic” airplane. He saw a big opportunity but had little experience, and his new venture nearly failed before it got off the ground. During the initial test flight of Virgin’s only plane, a rented Boeing 747, a flock of birds flew into the engine, causing extensive damage. The incident meant that the airline was not able to become certified to carry passengers as they were without a working plane — but also could not generate money for repair costs without being certified. It was a catch-22 situation. Instead of panicking or giving up, Branson remained optimistic. Working fast, he restructured his companies and pulled money away from other ventures to ensure repairs could be made quickly and efficiently. His airline was able to get the certification it needed, and Virgin’s inaugural flight from Gatwick to Newark was a success. In 1985, Branson formed Virgin Holidays. Beginning in the 1990s, mergers with other companies and investments in other industries began to happen. In 1992, in order to keep his airline company afloat, Branson decided to sell the Virgin label to music company EMI Records for £500 million pounds. Branson later admitted that he wept when the sale was completed because the record business had been part of the very start of the Virgin empire. He later created V2 Records in 1996 in order to re-enter the music business industry, owning 5% of the company himself. Over the years, Virgin has encountered its fair share of struggles. Firstly, there were a series of brand problems in the mid-90s, including Virgin Cola, Virgin Brides, and even Virgin Cosmetics. But through it all, Branson was always the first to make fun of failure, even if the failure was his own. In 1994, Branson moved into another new territory and launched Virgin Cola, a soft drink designed to compete with industry giants Coca-cola and Pepsi. Early taste tests were promising, and early on, Branson had high hopes.
 However, it didn’t take long to show that Virgin Cola wasn’t selling. It was too similar to other sodas to build its own brand identity. The company folded after a few years, teaching Branson an important lesson in the process: if you’re not unique, you won’t get noticed. Branson has also made several advances into the fashion world and at one point, even launched an underwear label that was meant to compete with Victoria’s Secret, that ended without success. Perhaps the most surprising of the Virgin fashion ventures was Virgin Brides, a wedding dress and bridal boutique. Branson actually shaved his beard and donned one of the brand’s dresses for the launch event, but his short-lived attempted modelling career failed to drive sales. Branson’s multiple attempts to make Virgin fashionable reflect his willingness and drive, even when things weren’t working out. While he doesn’t easily give up on projects, he’s also unfazed when things don’t work out as planned. When Virgin Trains launched, it quickly became the most criticised operator in the railway industry. Despite this, Virgin Trains remain on the tracks today. After having created V2 Records which immediately bagged a place in the world record industry, Virgin turned almost all its interests toward its airline: Virgin Atlantic Airways. In addition to Virgin Atlantic Airways, dedicated to intercontinental travel, Branson additionally launched the European low-cost versions of Virgin Express, Virgin Blue and Virgin America in Australia and the United States. By 1995, the Virgin group made over £1.5m in profits. Among the many achievements made during this period, Branson also launched the Virgin Megastore chain and the Virgin Net. Three years later in 1998, Branson created Virgin Mobile which became a huge investment success after it was taken over by the NTL group to form Virgin Media in 2006. Today, Branson doesn’t sit on the board for the Virgin Media Company, but he does receive a minimum payment each year of £8.5m simply for letting the NTL group use the Virgin brand’s name. Shortly after this, Sir Richard Branson was knighted by Queen Elizabeth in the 1999 New Year’s Honours List for his services and contributions to entrepreneurship. The Virgin Group has found plenty of success in planes and trains, but automobiles were a totally different story. In 2000, Branson decided to launch Virgin Cars, an online business that aimed to change the way cars were sold in the industry. Unfortunately, the company was shut down within a few years of its arrival. In hindsight, Branson realised that what needed to change about within the automotive industry wasn’t how the cars were sold — but rather, how they were powered. Since then, he has invested heavily in creating environmentally sustainable fuels. Branson also applied a new rule across all of his businesses:
In 2004, Virgin Galactic was launched, taking Virgin’s brand awareness strategy to out-of-this-world proportions with an airline designed to fly among the stars. The company has yet to become a “mainstream” contender, but it continues to be an incredible example of what makes the Virgin brand so special. In the early 2000s Branson approached environmentalist Al Gore, as he had been investing in renewable energy and was becoming increasingly passionate about the battle to protect the environment and climate change. Going further, Branson announced the Virgin Earth Challenge, the largest philanthropic prize ever offered: pledging $25 million dollars to anyone who could find a way to help prevent climate change without seriously disrupting the way of life. The prize-winner should have found a way to scrub billions of tons of carbon dioxide from the earth’s atmosphere. To those who doubted its effectiveness, he responded by likening the prize to past cash inducements that have led to some of history’s most notable achievements in navigation, exploration and industry.
Virgin Digital opened its doors online in 2005. A music download site in the style of iTunes, this music platform boasted a massive library of songs. It also featured a digital music subscription service that foreshadowed later platforms like Spotify. Unfortunately, what Virgin Digital didn’t have was the iPod. The service fought a losing battle against Apple and pirated music sites for 2 years before shutting down for good in 2007. The loss was a reminder for Branson that it’s always better to forge your own trail than it is to follow in other companies footsteps. Contrary to popular belief, Branson is actually relatively frugal when it comes to luxury items, largely because of his childhood upbringing. His father was a barrister struggling to make his mark and not quite earning enough to match outgoings, and his mother was always finding things to make or sell to pay for holidays. Although Branson does have a history of luxury purchases, they’re often more an investment than a personal indulgence. According to Virgin’s website, Branson doesn’t intend to retire and “spends most of his time working on not-for-profit initiatives.” Branson has made the time to serve as a trustee for several charitable organisations. Among these are the Healthcare Foundation, a leading charity organisation that is instrumental in fighting AIDS through education. The Foundation has also become involved in a lobbying campaign, “Parents Against Tobacco”, to restrict tobacco advertising and sponsorship in sports. The challenges for Branson haven’t quite finished yet; Virgin Voyages is expected to take its first passengers in 2020. The courage, tenacity and unmistakable style of Sir Richard Branson inspires hundreds of thousands of entrepreneurs worldwide every day. Instead of being “promotional”, the Virgin brand strategy is all about offering value to a huge, diverse global audience. Branson teaches us to watch our competitors carefully, and sometimes even to play with them. In support of that, Virgin even has its own “Disruptors” video series, where it looks at what and who might be changing the industries it plays in.
Any of Branson’s failures could have derailed his entire career if he’d allowed it to — but as we have seen in this case — the mark of a true entrepreneur lies in the ability to adapt to changing circumstances. A true adventurer in both business and life, Branson will continue to push his limits — we can all stand to learn a bit from his bravado. Would you like to be featured in high profile magazine? Send us your email and we’ll get in touch! |
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