Whether promoting cell phones while naked or pioneering tourist space-travel, the billionaire uses unusual methods for success. In his new book, "Business Stripped Bare", he shares his tips for entrepreneurs. An excerpt.
IntroductionI spoke to him nearly every day, using him as a sounding board. He seemed to me the kind of business expert who could enhance our thinking. He gave us good advice on the Virgin One account. His name was Gordon McCallum. He used to work for the business consultancyMcKinsey & Co., and I knew he’d been doing some work for Wells Fargo — to do with consumer banking and financial services and major retailers including JC Penney. I trusted him. I knew a lot about him — but it suddenly dawned on me one day:
‘Gordon? Do you work for us?’‘Yes,’ he replied.‘I mean, are you an employee?’‘No, Richard, I’m not. I’m still working as a freelance consultant atthe moment.’Oh.‘Well,’ I said, ‘you’d better come for a job interview. See youtomorrow at the house.’ And I put the phone down.I can’t remember much about that night but I must have had fun; when Gordon turned up at my place in Holland Park, at 9 a.m. sharp, I was still in bed. In fact, I couldn’t seem to get out of it. So I tucked myself under the sheet and called him up and said:
‘Well, I’d like to offer you a full-time job.’It was not the kind of meeting he had expected, but he rose to thechallenge. ‘What kind of job?’‘What kind of job would you like?’Finally Gordon cracked. In all his years at McKinsey he had never come across this technique as a way of identifying corporate talent. He burst out laughing, but he wasn’t put off. ‘I’d like to help Virgin develop a much clearer business strategy for the brand and help youexpand it further internationally.’This made a lot of sense. It was what I’d been hoping for.‘What would your title be?’ I said, and leaned over to grab my dressing gown.He thought about it. ‘Something like Strategy Director?’‘Fine – we’ll call you the Group Strategy Director of Virgin.’We sorted out the money, and the deal was done — and I went off to have a shower.Is this any way to do business? Absolutely.
At its heart, business is not about formality, or winning, or ‘the bottom line’, or profit, or trade, or commerce, or any of the things the business books tell you it’s about. Business is what concerns us. If you care about something enough to do something about it, you’re in business, and you’ll find ideas in this book that will help you. This is a business book for everyone, whether or not they imagine themselves to be ‘business people’.
Making the most of Gordon’s considerable talents and playing fair by him was not a ‘business decision’ I had to make — it was simply my business, my concern, my affair. I’m no less a businessman when I’m in a dressing gown — and I’m certainly not more of one when I put on a suit. This was brought home to me pretty sharply in July 2007, during an hour-long session at the Aspen Ideas Festival. I was being interviewed by Bob Schieffer, the former CBS news anchorman of the Evening News. This is the man who moderated the 2004 presidential election debate between George W. Bush and John Kerry.
Bob knows his stuff, so I expected a grilling. He could see that underneath my brash exterior I still harbour some nervousness about speaking in public, so he started off warm and generous, getting me nice and relaxed, conversing about all kinds of matters from terrorist extremism to space tourism, before he delivered his sucker punch. I had left school at fifteen to set up a student magazine, and Bob asked me why I had gone into business.I just stared at him. I suddenly realised I had never been interested in being ‘in business’. And, heaven help me, I said so, adding: ‘I’ve been interested in creating things.’Now, feeble as that sounded on the stage at Aspen, that’s the gist of my thinking about business. It shouldn’t be something outside of yourself. It shouldn’t be something you can stand away from. And if it is, there’s something wrong.Over the years, the Virgin Group has made it its business to run railways, build a spaceship, launch a new airline in Africa, and help fight Aids and HIV. These are our concerns. Not all of them are ‘businesses’ in the usual sense — and the journalists who have accused the Virgin Group of making no business sense are right, but in the wrong way. The greatest and most unusual achievement of the Virgin Group is that, unlike most businesses, it remembers what it’s for.Business is creative. It’s like painting. You start with a blank canvas. You can paint anything — anything — and there, right there, is your first problem. For every good painting you might turn out, there are a zillion bad paintings just aching to drip off your brush. Scared? You should be.
You start. You pick a colour. The next colour you choose has to work with the first colour. The third colour has to work with the first colour and the second. The fourth colour ... You get the idea. You’re committed now. You absolutely cannot stop. You’ve invested.There is no reverse gear on this thing. People who bad-mouth businessmen and women in general are missing the point. People in business who succeed have swallowed their fear and have set out to create something special, something to make a difference to people’slives.
Are the colours just right? Are the planes polished? Do the crew look good? Are they comfortable? Are the seats OK? What’s the food like? It costs how much ... ?And whether you’re a surrealist or a CEO, there are always bills to pay and money always arrives later than you ever dreamed possible. In the teeth of a downturn, petty financial hassles can turn into major, life-changing crises, and tough decisions often have to be made.
This is the side of business that journalists like to write about — but it’s the least exciting, least distinctive part of business. It’s secondary. It’s dull. What really matters is what you create. Does it work or not? Does it make you proud? When I meet people around the world they often say to me I must have a wonderful life. They’re not wrong. I am a very fortunate person. I have my own island in paradise, a wonderful wife andfamily, loyal and entertaining friends who would walk over hot embers for me, and I for them. I travel a great deal and I’ve had many life-affirming adventures and experiences. Even George Clooney once let slip that he’d swap his life for mine — much to the excitement of my wife!Success has made much of this possible. Would I have been happy without my successes in business? I’d like to think so. But again, it depends on what you mean by business. Would I have been happy had I not found concerns to absorb me and fascinate me and engage meevery minute of my life? No, absolutely not, I’d be as miserable as sin.Today the Virgin Group spans the world. It is truly an internationally recognised brand name, trusted and enjoyed by many hundreds of millions of people across the continents of the world.Could it collapse overnight? Almost certainly not: we’ve built it to contain any amount of damage, by organising it into around 300 limited companies. I think we’ve proved that a branded group of separate businesses, each with limited liability for its own financial affairs, makes sense. We’re never going to have a Barings Bank situation where a rogue trader is able to bring down the whole Virgin Group. One disaster isn’t going to cause 50,000 job losses worldwide. Forty years’ worth of work isn’t going to be flushed down the toilet overnight. And although the combined Virgin Group is the largest group of private companies in Europe, each individual company is generally relatively small in its sector. And so we have the advantage of being the nimble ‘underdog’ player in most markets.At the time of writing, we are sailing straight into a brute of a storm. More than a year ago now, tens of thousands of poorly advised families in America ran out of money to pay their mortgages. They lost their homes. Their misfortune is now being visited upon the rest of us on a global scale, as the sub-prime mortgage crisis convinces bank after bank to reduce its lending. One major UK bank has already collapsed. Some global financial institutions have needed massive government refinancing. It’s not a disaster — yet. But the price of oil is going through the roof, and consumers throughout the world are noticing the difference to their fuel and heating bills. Their response is perfectly sensible: they’re not buying things. But this in turn could spell real trouble for the consumer businesses on which many national economies depend.Like any business, the Virgin Group has to steer around all these obstacles. In "Business Stripped Bare" I’ll be looking at the key elements that have brought success to our companies, despite poor economic conditions and changing markets.In business, as in so many other creative endeavours, the idiots’ guides are for idiots. Like you, I’ve scanned the airport bookshelves. Like you, I’ve browsed the business books. Like you, I’ve felt my heart sinking. There are exceptions — I’ll mention the ones I’ve enjoyed as I go — but in general these business writers are a dreary bunch. Most of them seem to be writing about what business is like from the outside — not about what it’s like to actually do.They’re writing, in some abstract way, a prescription for how to paint a picture. They’ve got nothing to say about painting a bad picture, or about how to tell a good picture from a dozen bad pictures, or how to let go when a good picture turns out to be bad, or how to live withyourself when you realise you’ve thrown a good picture away, or ... You get the idea. Every business, like every painting, operates according to its own rules.
There are many ways to run a successful company. What works once may never work again. What everyone tells you never to do may just work, once. There are no rules. You don’t learn to walk by following rules. You learn by doing, and by falling over, and it’s because you fall over that you learn to save yourself from falling over. It’s the greatest thrill in the world and it runs away screaming at the first sight of bullet points.Most of what I have done with the Virgin Group is about my own gut instinct. I’ve never analysed what I do in any formal way. What would be the point? In business, as in life, you never step into the same river twice.So all I can do for you now (and I firmly believe that this is all anyone can honestly do) is map the territory I’ve seen. The good news is, I’ve covered a lot of territory. On 11 November 1999, surrounded by near-naked women, I announced Virgin Mobile from inside a giant see-through mobile phone in Trafalgar Square, London. Three years later, in Times Square in July 2002, I paid homage to the hit British film "The Full Monty"; wearing only a cellphone to cover my shame, I unveiled Virgin Mobile’s partnership with MTV. The point of these hugely enjoyable stunts was that, with Virgin, what you see is what you get.Well, there are no stunts here (the editor tells me we can’t afford a pop-up section), so I’ll just have to rely on the title to get this book’s message across. I’ve stripped Virgin’s businesses bare. Rather than banging on about how successful they are, I’ve written about what mycompanies are actually about. What were our intentions? How well, or how badly, did we realise our early hopes? I’ve gone through my notebooks and diaries, hunting for common themes and ideas, and I’ve divided what I’ve found into seven sections. I’ll be looking at:
- People
- The brand
- Why delivery is vital
- What we learn from our mistakes and setbacks
- Innovation as a driver for business
- The value of entrepreneurship and leadership
- The wider responsibility of business
I think of our brand as one of the premier ‘way of life’ brands in the world. Whether you’re in the United States, Australia and New Zealand, Japan, South Africa, India, Europe, Russia, South America or China, the Virgin brand means something. The Virgin brand is about enjoying life to the full. By offering customers excellent value for money in so many areas of their lives, we aim to make them happier.These values do not come cheap. These values must be paid for. Our Virgin Mobile business in America still holds the record as the fastest company to generate revenues of over a billion dollars. That’s faster than Microsoft, Google and Amazon. We’ve created more business multimillionaires than any other private company in Europe — and we’re among the top twenty in the United States. Business requires astute decision-making and leadership. It requires discipline and innovation. It also needs attitude, a good sense of humour and, dareI say it, luck.
We turn entrepreneurial ideas into outstanding businesses. We receive hundreds of business ideas every month, often directly via our website. We employ a gatekeeper — a corporate development assistant — whose job it is to record, log and classify all ideas as they arrive. Shethen passes them on to our experts. They read through and research the best of them. A tiny number are passed to our investment professionals — whole teams of them, working in London,Switzerland, New York, Shanghai and Sydney — and they are more forensic about business than the detectives on Crime Scene Investigation.What if we like your idea? If you’ve seen the BBC’s Dragons’ Den — or American Inventor, its US equivalent — then you know what’s coming. We will strip you bare. We normally invite people to come along to Virgin’s Investment Advisory Committee and present their plans in London, New York or Geneva; and sometimes in the Far East, in Japan or China. At these weekly meetings we have a team of six Virgin managers we can pull in to help examine projects. So that our own vested interests don’t blind us to new opportunities, none of the committee runs a Virgin business on a day-to-day basis – but they work closely with all of the top people who run our businesses and bounce ideas off them all the time.Our global chief executive, Stephen Murphy, who operates in Switzerland, and Gordon McCallum (our UK chief executive), ask some very tough questions. They will rigorously push and pull your business plan about to see if there is a profitable business underneath. Facing thecommittee can be daunting for the uninitiated — and you are normally expected to be well prepared, with the facts at your fingertips. But these people don’t bite, and (unlike some of their television counterparts) they are not remotely rude. They can ask for more meetings so that deeper questions can be answered. Often the committee meets several times before a final decision is given. We look at spending plans, income forecasts, the marketing budget, and when the company is likely to break even. We work out our exit strategy — will it be a sale, or a flotation on a stock market? And, above all, we look at the key managers who will be running the business. This is the holy grail for us, because it’s the people that make a great business idea work.More often than not, after all things are considered, they’ll recommend that we don’t invest in your business. The possible reasons for this are so many and various, they’re not even worthagonising over. Dust yourself off. Learn what lessons you can. Make your next call.The Virgin team acts just like any other commercial venture capitalist organisation. It assesses your potential, whether it fits with the group’s ambitions and strategy, and of course brand values, and what the possible returns and profits will be. Then it works out what kind of stake the Virgin Group should take. In return, the new company gets the full range of Virgin’s expertise — and I’ll agree to help raise the profile, make key introductions and offer any advice that I can.The Investment Advisory Committee are my trusted lieutenants and they know almost everything there is to know about the Virgin global business. I’m rarely at their meetings — the team don’t like my interruptions and interference. I know this because they have anickname for me. They call me Dr Yes — a parody of the wonderful James Bond movie "Dr No".If I like your idea, but the investment committee have concerns, then I usually ask them to go and find solutions to the problems they’ve identified. I prod these people constantly. I remember, before we developed our mobile phone business, I was on to them every weeksaying: ‘Why aren’t we in this yet?’ The committee didn’t want to launch Virgin Blue, either, but in the end they saw sense! But, you see, I have an ace up my sleeve. If I believe in your business idea, I can be quite persuasive in getting people to accept my point ofview. I never do this lightly — but, as I’ve said, usually go with my gut instinct, disregarding whole volumes of painstaking research. I would love to be able to tell you that every ace I’ve played has turned out to be a Virgin Blue or a Virgin Mobile. But I can’t — which is why I makemy senior colleagues at Virgin very, very nervous!Should we decide to go ahead with you, we sign up as branded venture capitalist (occasionally, as unbranded investors), take a stake in the company, and then look for a return on that investment after about two to five years.And that, the cynics will say, is that. Of course, businesses also have a duty of care for the health and well-being of their people (and you will hear what we have done in South Africa for our staff with HIV/Aids). Beyond that, though, business is ‘just business’: a scramble for profit. Right?Well, that might describe crime; it certainly doesn’t describe business. Ethics aren’t just important in business. They are the whole point of business. We’re in business to make things. And when you decide what to make, that, right there, is an ethical decision. The more successful you get, the bigger and harder the ethical questions become. I spent the first half of my career creating businesses that we could be proud of, that paid the bills and ensured that the Virgin Group was strong and survived. It has been our aim to establish Virgin as the ‘Most Respected Brand in the World’. It has to be one that is trusted in each and every marketplace. I think once the Virgin Galactic space programme starts, we have a chance of being the most respected brand in space too!On the back of that work, I’ve built the second half of my career, creating what I call ‘war rooms’, to tackle environmental problems and disease, bringing together global leaders to form the Elders — compassionate people who wield their huge influence for the good of humanity. The entrepreneurial skills we use to get these projects up and running are the same ones we used to create Virgin Records and Virgin Atlantic. Why would they be any different? Business is about getting things done. No, scratch that: business is about getting better things done (whilst building profits) and setting up a not-for-profit ‘social’ business is not really any different to setting up a commercial business.Make no mistake: being better is hard to do, and only gets harder the bigger you get. If you’ve got a brand with 300 companies, you’ve got to be diligent and make sure that nobody makes a mistake that damages the business’s reputation. That means no bribes, no backhanders and no hidden payments to oil the wheels of commerce. It means treating people fairly and equitably.Now the stakes are even higher. The threat of climate change is the biggest challenge we face as a planet. Virgin is, among many other things, a transportation group. A rail travel company. An air travelcompany. With a space tourist start-up. So we’re making things worse — right?Well. We cannot unmake air travel — or space travel for that matter. No one in business can unmake anything, any more than a band can unmake a song. Can you unmake your hangover? Your indigestion? Your children? Your last week’s work? No. Welcome, then, to the first law of entrepreneurial business: there is no reverse gear on this thing.Virgin is dedicated to developing new renewable fuels and energy sources and greener technologies in rail, air and space to cut all our carbon footprints. It is responding to the current crisis decisively, the only way a business can: by making things. Virgin is trying to do a credible job for the environment. By making better things, it’s making things better — and in this book, I hope to show you how. I’ve enjoyed an incredible life — and I hope there is much more to come. I’m planning to work till I drop and I’ll continue to challenge myself as long as I enjoy good health and still have my marbles. And I hope that the fortune that I have been granted can bring enormous opportunities to other people and make a real difference. I hope you find "Business Stripped Bare" a useful read. My experiences may even shake up your ideas about what business is. They’ve certainly shaken up mine.
Excerpted from "Business Stripped Bare". Copyright (c) 2008 by Richard Branson. Reprinted with permission from Virgin Books.