Across almost five decades in business, Sir Richard Branson has repeatedly disrupted his way to growth by successfully entering markets already occupied by established competitors. As he picked up Director’s Lifetime Achievement prize at the IoD Director of the Year Awards, the Virgin boss talked exclusively to us about the lessons he’s learnt along the way…
The squawking of flamingoes can be heard in the background as Sir Richard Branson picks up the phone at his Necker Island home. “Yes, I’m looking at about 350 of them right now,” he says. “We really are a bit spoilt while we’re here.”
It’s a stark comparison to the slate grey London sky that Director – on the other end of the line – is staring at from the window of 116 Pall Mall.
But, as we exchange pleasantries ahead of a chat about the business lessons the Virgin Group boss has learnt throughout his stellar career, he insists that his private British Virgin Islands retreat fulfils a much more important commercial role than simply providing him with an idyllic escape.
“Working from here, I can have time to think and dream about creating really exciting things and making sure that they become possible,” he says. “Also, you can have a life and spend a bit more time looking after yourself, your body and your family, instead of just working yourself into the ground.”
This focus on maintaining the headspace to create and stay focused on the bigger picture has proved to be one of the secrets of Branson’s enduring success – an entrepreneurial career that has spanned almost half a century, and which recently saw him voted the “most admired” business leader of the past five decades in a poll of FTSE100 and FTSE250 leaders by the Sunday Times.
Director’s interview with the Virgin Group boss – timed to coincide with his Lifetime Achievement prize received at the recent IoD Director of the Year Awards – took place days before the tragic Virgin Galactic accident in which a test pilot was killed, and a fortnight before the £1.25bn flotation of Virgin Money on the London Stock Exchange.
Neither, therefore, forms part of our discussion here – but, instead, he offers his wisdom on everything from making the perfect pitch, to constructing the ideal board, to completing a successful acquisition and even planning a timely exit from a venture. Here’s what he had to say:
If you were starting out in business again from scratch today, what would you do?
Sir Richard Branson First of all, you have to step back and think ‘what is a business?’ A business is simply somebody creating something that makes other people’s lives better. So if I were starting out again as a 16-year-old, I wouldn’t think ‘how can I create a business that makes me money?’ I would think ‘what is there that needs to be created, in what sector, that can improve people’s lives? Which businesses are not doing it well? Where could we do it a lot better?’
The best situation is out of personal frustration. I saw the Vietnam war going on when I was 15 and decided to start a magazine to campaign against it. At the end of the year, I hoped that more money came in than went out, but my main reason for being was to run a campaigning magazine.
Was that also the spirit behind Virgin Records and Virgin Atlantic?
Sir Richard Branson Yes, we started a record company because there was some music that nobody else would put out – it happened to be Mike Oldfield’s Tubular Bells. We moved into the airline business out of a horrible frustration with flying on other people’s airlines and not enjoying the experience, and we felt ‘screw it, we can do it better’.
So I think, if you’re starting today, you’ve got to think ‘where am I frustrated? Where can I improve the lot of other people?’ If you believe that global warming is a big issue and there aren’t enough clean-energy companies, then go into clean energy and spend your lifetime trying to convert everybody into running their lives on clean energy. If you can go into something that, in your lifetime, makes a big positive difference, so much the better.
Do you think we have a stigma around business failure in the UK?
Sir Richard Branson Well firstly, through things like Virgin StartUp [virginstartup.org], we find mentors for people – and we’ve learnt that people starting in business have a much bigger chance of succeeding if they have mentors.
We’ve spent time campaigning with various governments to get them to give loans to start-up businesses – rather than just loans to students going to university – and this government has been fantastically good in coming up with the [StartUp] loans scheme. But yes, there are going to be failures and that’s what a limited company is set up for – to encourage people to give it a go, for people to realise that when they’re trading with small companies there are risks attached to it and that they could go bust.
What advice would you give to young entrepreneurs about failure?
Sir Richard Branson Obviously we need to try to reduce the number of people who go bust. But it is the best education people can have – I think far better than any education they’ll have at university – being out there and trying these things. If you look at the history of people who’ve built really successful businesses, quite a few of them have had setbacks along the way and learnt from those, and in the end have become successful.
We’ve been extremely lucky at Virgin that we’ve never had a company go bust. But people who have had situations like that shouldn’t be ashamed about it as long as they’ve given it their best and learnt from it – and as long as they don’t give up, and get on and try again, they should be proud of the efforts that they’re putting in.
What have you learnt about coping with setbacks and bouncing back?
Sir Richard Branson Most of the things that we have done, we’ve set up small companies taking on giant companies, where we think that we can do better. Sometimes that’s succeeded, when we’ve actually got the quality absolutely right – like when British Airways tried to put us out of business.
We famously survived the dirty tricks campaign and Virgin Atlantic came out the stronger for it. Where we didn’t succeed was with Virgin Cola when we took on Coke. We had about two years where we were outselling Pepsi and Coke in all of the stores that we were selling it in Britain. And then they [Coca-Cola] sent the tanks over from Atlanta and our cola disappeared from the shelves with all the retailers in the UK and it was replaced with Coke.
The lesson we learnt from that was ‘there’s no point in taking on a bigger company unless you’re palpably of much better quality…’ When situations like that don’t work out, you learn from them and make sure you don’t make the same mistake again.
When it comes to winning new business, what’s the secret of the perfect pitch? You must have heard plenty…
Sir Richard Branson Yes, I took part in the Cape Argus Cycle Tour and instead of the elevator pitch I had the bike pitch. Every five minutes somebody would ride up alongside me and be pitching a new idea to me and then, as they broke away, another person would come along. It was quite tiring participating in that!
I’ve had people swim three miles from our neighbouring island to Necker Island to pitch us with an idea – they wanted to put gyms on our trains. So pretty much every kind of approach has been made. Some of those pitches have been successful and some multibillion-dollar companies were pitched by just one person originally… So I think: try to work out who you’re pitching to, work out what’s going to spark their interest, and then keep it short, snappy and go for it.
How have you maintained the culture of your businesses as they’ve grown?
Sir Richard Branson There’s not much point in running a business unless it’s disrupting the status quo, so we’ve always found the kind of people who love being disruptors and love creating.
We encourage them to have fun along the way and to be willing to pull the tail of our bigger competitors. As I mentioned at the IoD Annual Convention [in 2013], one morning we heard that British Airways were having problems getting the giant wheel opposite the Houses of Parliament erected – they had the world’s press waiting to see it go up, they were sponsoring the wheel. We had an airship company and I rang them up at 6am, scrambled the airship, and it flew over the wheel with a big logo across it saying ‘BA can’t get it up’.
We hit the headlines that day rather than BA… So it’s about being willing to steal the thunder of your competitors. But, at the same time, remain friends – although we’d had a bloody court case with Colin Marshall [the late, former chief executive of BA], once it was over I made a point of ringing him up and having lunch with him and remained friends with him for the rest of his life. I think that competing hard in the daytime but remaining friends in the evening is very important for all walks of life, and businesspeople as well.
You’re offering unlimited leave to staff in part of your business – why?
Sir Richard Branson It was the idea of my daughter Holly, who works for Virgin now. We decided to experiment with it in all our head offices worldwide and if it works there we’ll hopefully take it into other Virgin companies. In some companies it’s more difficult to do than others – if you’ve got a pilot and cabin crew working on shifts it could be awkward. We’re going to have to try to be imaginative, but I think it’s going to work and the initial feedback has been fantastic from all the people who work at Virgin.
Is this realistically something small businesses could do as well?
Sir Richard Branson I think that – generally – companies have got to be more flexible, allowing people to work from home, allowing people to work Fridays and Mondays at home if they want to, allowing people to job-share, to go part-time and so on. Flexibility is important. Can this work for small companies? I think so. Perhaps if somebody does decide to take a slightly longer holiday than normal then it might be expected of them not to turn off their work phone in the extended part of their holiday and maybe do a little bit of work. Flexibility goes both ways.
What’s the secret to making an acquisition work?
Sir Richard Branson When we took over the management of NTL:Telewest, and merged it with Virgin Mobile, the key thing was to get in a management team that genuinely cared for the people there, that went all-out to get the quality right, because it was dreadful before. If you can get the product right, so that when people go to the pub in the evenings and say they work for Virgin Media and other people say ‘that’s great’, that’s half the battle.
And what about making the difficult decisions concerning people?
Sir Richard Branson Well, if you do take over another company, don’t necessarily think ‘ok, there are tonnes of synergistic costs and we can get rid of lots of people’. Maybe that is a way forward, but maybe leave the company independently standing on its own two feet rather than merging it wholesale with your own company.
Often, owning a number of individual stand-alone companies run by different people can be more effective than having one giant company with lots of people working together. With Virgin Records years ago, every time the company got to 200 people I would split it in half and set up a new company. I’d get the deputy managing director, the deputy sales manager, the deputy marketing manager and say ‘you’re now the managing director, the sales manager, the marketing manager for the new company’ – we would find another building for them. Small is beautiful and lots of different entities can be good.
Should a business leader always have their exit from a venture in mind?
Sir Richard Branson For many years I felt selling a business was selling a group of people and that it would be absolutely the wrong thing to do. But when I was effectively forced to sell Virgin Records – as a result of the battles we were having with British Airways [with Virgin Atlantic] – I suddenly realised the incredible freedom it gave me.
Obviously, I was lucky enough to get a billion-dollar cheque from EMI, and that gave me the financial freedom to then build hundreds of businesses over the years and create tens of thousands more jobs than if I’d just stuck with the one company. So I think there are occasions when selling a company can actually free you up to do a lot more.
But I’m not the sort of person who would be very good at having my top company as a public company. Because it would not give me the freedom to do things like the space programme, which the public market might initially be worried about. So we’ll always keep our top companies private – but we will float subsidiary companies. If you’re the kind of person who wants to do a lot of entrepreneurial things, I would suggest you keep your top company private if you can.
What does the perfect board consist of?
Sir Richard Branson The best piece of advice I can give people reading this article is ‘put yourself out of business on a daily basis’. Find somebody better than yourself to do your job, freeing you up to think about the bigger picture, to firefight when you need to, and to move the company into new areas.
There are too many people running companies that try to cling onto everything themselves, get bogged down in detail and perhaps even get frightened about giving too much of the running to their deputy. From an early age I withdrew from the offices, put somebody else in charge, and that then enabled me to take Virgin forward into many new areas.
How do you make time for yourself, your mind and body, to recharge and come up with new ideas?
Sir Richard Branson Well, yep – I’m 64, so the most important thing if I want to continue doing what I’m doing for another 30 years is to make sure that I remain healthy. So when I wake up in the morning I’ll play tennis, I may go for a kite surf or go surfing, or paddle boarding – and so, by 8am, I would already have done a couple of hours of fun ways of keeping healthy and fit. Then in the evening when it starts cooling down I’ll do something similar.
I’ve always worked from home, and home happens to be the British Virgin Islands. I moved here with the idea of living and working in the most beautiful place in the world and making sure I remain fit and healthy. But because I stay fit and healthy, I’m working as hard as I’ve ever worked.
And finally, what are your thoughts on the IoD?
Sir Richard Branson I think it’s really important, it’s done a fantastic job over the years in looking out for British business, on campaigning on issues that the majority of British businesspeople feel are important. It’s the one organisation that directors of British companies take very seriously, and they love the conferences and they love representation. Keep up the good work!”