Virgin: Richard Branson

[MUSIC PLAYING] You know, I find the bank manager sitting on my doorstep, and stupidly, I invited him into the house, and he tells me that he's going to close the whole virgin group down on the Monday. And I don't normally get angry, but I just literally stood up and pushed him out of my house and told me he wasn't ever welcome there again, which is not maybe the best thing to do to your bank manager. [MUSIC PLAYING] Brahman PR, it's how I built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. [MUSIC PLAYING] I'm Guy Razz, and on today's show, the story of how Richard Branson took a record shop and built it into an airline of bank, space tourism, cola, and more than 200 other businesses all under the name Virgin. [MUSIC PLAYING] When a lot of people think of the word mogul, I suspect many of them would put Richard Branson at or near the top of that list. His company, Virgin, is practically everywhere-- banks, phones, cruises, trains, plane, spaceships. But the thing about Richard Branson is that he's also failed, and failed pretty badly at a lot of the businesses he started. And today, on the show, we're going to talk a lot about those failures. But let's start with Richard Branson as a teenager, a high school dropout who decided to start a magazine. Well, I started when I was 15, that was 50 years ago. And in those days, the word entrepreneur didn't exist. And I don't think I would have been that interested in being an entrepreneur. What I wanted to do was start a magazine to campaign against the Vietnamese war and have a voice for young people. So I left school to run the magazine. I mean, you launched this magazine. It's called Student Magazine, right? Yeah. And how did you even know how to typeset the magazine and publish it, and how did you even know how to do that? The best way of running a business is just to throw yourself in the deep end and learn all those things and ask lots of questions and listen, listen, listen. And that's what I did. I mean, I was young, enthusiastic. People were very willing to help. And I managed to attract a lot of people who believed in the idea in the quest. And I was a quick learner. But I had to be. What was amazing, like, what kind of articles did it run? And who would buy it? It had a circulation, which is quite big and of over 100,000 copies in issue. It was actually a glossy magazine so that people didn't think that it was just a magazine for students. And we got all the best cartoonist to work for it. We got some of the best photographers in the world. We had celebrities like Vanessa Redgrave and Jean-Paul Sartre and Jean-Lake Harry Wright. Did you get these people when you were 16 or 17 years old? I suspect that I didn't know failure. So the idea of somebody would say no is something which I couldn't-- wouldn't have been able to understand. Remember James Baldwin was visiting London and I found out which hotel he was in. I turned up at the hotel. And those days, the tape recorders were three foot by three foot. So I was lugging this massive tape recorder with real tapes. And somehow I think he took pity on me. I think it helped me being 16 and young and invited me in and had one of the best interviews of my life. So you were running this magazine. You were dyslexic. You are dyslexic. So you already had some trouble with making out words. How did you do that? I interviewed eloquent people. So I would make a point of only interviewing people who spoke well so I could then transcribe their words word for word in my editorial of the magazine. And I said, not the kind of magazine that's going to embellish what people write. We're just going to give you it word for word. And that got over my problems of dyslexia. And was it making money? Was it profitable? Were you like-- It was surviving, basically. We only brought out the edition when we had enough advertising to pay for the printing and the paper costs. We didn't have any financial backing at all. So I would ring up Coke and tell them that Pepsi was advertising and then maybe get Coke and then ring up Pepsi and try telling the Coke was advertising. So we did everything we could just to get enough advertising to get the magazine out. But the magazine became a vehicle for other things. So I mean, through the magazine, I ended up setting up an advisory center for young people. Young people would contact the magazine with all sorts of problems. I mean, loneliness, suicidal, psychiatric, venereal disease, pregnancy issues, and so on. So we set up a center that was a gay free help and advice to young people. And then one day, I just threw in a little advert saying, "Virgin Records 10% to 60% off any album on any label." And got a big response. Nobody'd ever sold music at a cheaper price than the normal retail price and it was the starter version. Version records? Yeah. [MUSIC PLAYING] So you put these ads in saying, we will sell your records for a discount rate. But how did you get the records? How are you actually able to buy them? Well, the record-- they're a good question. The record companies wouldn't supply us the records because we didn't have the credit. So we'd advertise, we'd get people's money, and then we'd go to a local record shop, and we'd bargain. You know, we'd say, look, we can give you 3,000 orders now. And in the end, it became so successful that we had articulated lorries coming up behind this tiny little record shop in Nottingham or Gate. And then they would be taking them off the lorries through the shop, you know, through the shop, into our vehicles, the other side. And in the end, the record industry decided that they'd better deal with us directly and stop the charade. [MUSIC PLAYING] So version records began as one record shop, right? Yes. I mean, we only opened a record shop when the post office went on strike for two months. And our mail order company then looked in peril. So we then went above a shoe shop in Oxford Street and found an empty space and threw some records and pillows on the floor and headphones. And we had a queue about half a mile long of people going through the shoe shop, a little windy stairs. And it became a very hip thing in the '70s for people to do. And I guess this was around the time when you stumbled across a kind of a shady scheme? Well, I stumbled across it by mistake. We had an order of records from Belgium, which we'd never had before. And so we filled up our van and we drove to Belgium. But on the way there, going through France, they said, have you got a carne? And we had no idea what a carne was. I was 18, 19 years old. And they said, that's a piece of paper to prove that you're going to leave them-- where you say you're going to leave them. And so they sent us back to England. But we still had the records in the boot of our car. And we got a 35% reduction because the English tax man thought that we'd exported them. Which meant that you could sell your records at a lower price? Yeah. So if you export records, you don't have to pay the 30% tax. So, notally, we sold them in England. And anyway, I got caught. And a number of other records shops are doing the same thing. We got a rap on our back of our hand. And it taught me in life that sleeping well at night is a good idea. It's not good. Yeah, I can't write. So how did you go from being a record store shop to turning into a label? Well, one day, somebody played me a tape, which I loved. And we didn't have a record company. So I took it to seven record companies. Nobody would put it out. And so I thought, it's great. Let's start our own record company. Let's record this album and distribute it. Exactly. And let's see if we can get some traction with it. And the album, it was a 15-year-old, who layered over all these beautiful instruments. And no words at all. So that's why record companies thought this could not possibly sell. This record was-- It was Michael Field's tubular bells. Which sold like millions of copies, right? It sold millions of copies. And we also managed to get the footage into the exorcist, which was completely the opposite. I think the style of the music. Of course it's in the exorcist, of course, yeah. Right. So that helped break it into number one in America as well. Yeah. But I mean, it wasn't an immediate hit. Mike was a very shy, retiring person. He wouldn't do interviews, which is not easy when you've got an artist. And on the way to the first concert, where the only concert he'd agreed to do, where we'd pull together Stevie Wynnewood from Traffic and Mick Taylor from Rolling Stones. And a lot of other great artists to play with him. On the way there, he just said, look, Richard, I can't go through with it. I can't go on stage and face people. And I was driving an old beaten up card that I'd been given for my wedding. And so I pulled in and said, look, Mike, I know you can't psychologically make it. But if I was to give you the keys to this card, you think you could overcome your psychological fears. And he paused for a second and said, I think I might be able to appear after all. So I lost the car, but that concert was a little bit more very instrumental in his success. (upbeat music) - You were like 22, 23 at the time, I guess. - Yeah. - You had dropped out of high school. How did you have the confidence to just do this, to start a record label? I mean, you didn't know anything about record labels. Was it just that you were young and you figured, you know, what the hell? (laughs) - If you can run one business, you can run any business. People say, you know, how can someone, if in the record business go into the airline business or how can someone, you know, and so on. I mean, a business is an idea that's gonna make other people's lives better. That's all the businesses. And if you've got such an idea, then find people who can help you turn that idea into a reality. You know, find people who've got experience in that sector, find people who don't have experience in that sector who can come and, you know, bring fresh ideas and shake up a particular sector. And have a lot of fun at it. (laughs) That has been my philosophy. - But I mean, that hasn't worked out for you every time, right? Because even with things like Virgin Airlines, it wasn't just an easy launch from the start. - Yeah. What actually happened was Boeing sent us to 747 and we didn't get the insurance until we got our aeroplane to certificate. And on our very, very, very first test flight, a flock of birds went into one of the engines, which meant that it was gonna cost us about $700,000 to fix overnight. And it was that $700,000 that pushed us over our limit. The bank that gave us our overdraft facility. - Basically a line of credit, right? - Yeah. You know, I come back and find the bank manager sitting on my doorstep and stupidly I invited him into the house and he tells me that we've gone slightly over our overdraft facility and that he's gonna close the whole Virgin group down on the Monday. And I don't normally get angry, but I just literally stood up and pushed him out of my house and told him he wasn't ever welcome there again, which is not maybe the best thing to do to your bank manager. - So what happened? - Over the weekend we rang all our various record companies around the world and we scraped together the money and by Monday we got our overdraft facility down. And then interestingly by the Friday we'd found another bank that instead of giving us a three million pound overdraft facility, it would give us a 30 million pound overdraft facility based on the same set of figures. Sometimes I think people get too wedded to the doctor, they know or the accountant they know or the bank they know and it's important to be willing to test the water with the competition as much as possible. - Yeah, so you had to, I mean to keep the airline going, you had to make a decision about the record company, right? - Yeah, British Airways quite quickly launched a, what became famously known as the Dirty Tricks campaign. So we had about four planes flying and they went to extraordinary lengths to put us out of business. They had a team of people illegally accessing our computer information and ringing up our passengers and pretending that they were from Virgin telling them that flights were cancelled and switching them on to BA. They had people going through my rubbish bins and trying to find and criminating stuff. They had people going to our clubs and going through the rubbish bins outside our clubs and looking for needles so they could then leak stories to the scourulous press about drugs in the clubs and so on. And in the end we took them to court. We won the biggest damages in UK history and it was Christmas time. It became known as the BA Christmas bonus. We distributed it to all our staff equally and we actually rather hope that BA will do this again every Christmas. But anyway, we realised then that we needed the far part to deal with BA in order to keep all the jobs protected at Virgin Records and at the airline. I needed to sell something and so very sadly, we sold Virgin Records. We got a billion dollars for it so it would make sure that we kept BA honest. But I hate selling things because basically a company is a group of people and it was a very mixed feelings day. Are they cried when you send the contract? I ended up talking to our staff and then running back to my house down Laverite Grove and I literally, I did have tears streaming down my face and then I ran past a sign that said, "Branston sells for a billion" and I thought, "I hope no photographer is going to catch me "round running past a sign with tears streaming down my face." They look very, very strange. Is that a hard decision to make to fold things or do you feel like? No, it is a very hard decision. But it's a necessary decision in order to protect everything else you have on occasions. We've now got 80,000 people who work for Virgin and their livelihoods, their jobs, their children, everything depends on that. Sometimes you have to make tough decisions along the way. So, such as out of curiosity, would you, if you had to fly in British Airways today, would you do it? Yes, I mean, I would jokingly maybe put a basket over my head. I might get the neighbor next door to taste the food first. In just a minute, why Richard Branson put on a wedding dress and why he decided to take it off? I'm Guy Ross and you're listening to How I Built This from NPR. It's How I Built This from NPR. I'm Guy Ross. So, two years after he sells Virgin Records, Richard Branson decides to take on two of the biggest brands in the world. Let's talk about Virgin Cola. Okay, what was the thinking behind this is 94? What was the thinking behind launching Virgin Cola? Somebody turned up at my office one day and said, "I want to do a blind test with you." And they gave me three drinks to drink. And they said, "All right, which one do you like the best?" And I took my blindfold off and I pointed to the one that I liked the best. And it wasn't Coke and it wasn't Pepsi. It happened to be this other one. And so, we then did the same test at our kids' school. And the same thing turned out, overwhelmingly, the kids loved the one that wasn't Coke and wasn't Pepsi. So, we decided to launch Virgin Cola. Based on that test at the kids' school, it's a bit. Yeah, yeah. So, it exploded in England. Like right off the bat. Right off the bat. I mean, it became, you know, like the headline of the biggest newspaper in England, you know, I mean, it's Virgin Cola. I mean, the British loved it. Was there like some national pride involved, too? Yeah. I mean, here's somebody taking on the biggest company in the world, which, you know, foolish person, but we had some big smiles on some days thinking, you know, Coke is the best known brand in the world. And, you know, if we could top or co, we thought it would be a lot of fun. Anyway, so everything was going great. And we decided to launch an America. And then we got a Sherman tank, so we arrived in Times Square as you do in a Sherman tank. We crushed all these Coke cans, and we'd power-attack up the Coca-Cola sign the night before. In Times Square. In Times Square without anybody knowing about it. And we then turned the tanks on it. The Coca-Cola sign went up in flames, but I mean, it didn't really, but, you know, we looked like it did. And, anyway, we were now launched in America. And what was going on at Coke was they went to any country that we were doing well in. They started in the UK. And Virgin Cola just disappeared from all the shelves. What did they do? They just went to retailers and get. Like, how did they.? They went to retailers. They gave them offers they couldn't refuse. And, you know, Tesco's that had. You know, like, shelves and shelves of Virgin Cola suddenly. They just had no Virgin Cola on their shelf. It was a very systematic kneecapping job. Did you see it happen right before your eyes? Were you watching this happen? I was. I didn't know what was going on, except that I knew that retailers were suddenly delisting us. And. And it was a couple of years later that my new bank manager from Lloyd's Bank took me out to dinner. And she had just joined Lloyd's and her previous job had been at Coke. And she proudly told me how she managed to drive us out of business. Wow. It's like the Godfather or like Goodfell is all of a sudden someone like something just disappears. Exactly. Now, I mean, it's definitely a business version of the Godfather. I mean, BA played it on us. But fortunately, you know, we were a much better quality airline so we survived in that case. And of course, the court case helped. And then when Coke tried it on us, I mean, the problem was that, you know, we didn't have something completely unique. You know, we had a great brand, but Coke had a great brand. The taste of the Cola was maybe marginally better, but you know, it was neither here nor there. So since then, what I learnt from that was only to go into businesses where we were palpably better than all the competition. And what point did you decide this isn't going to work? We should just stop doing this. When I realised that we were the number one Cola in Bangladesh, I know we're else, I think we finally decided to call it today. Right. So folding Virgin Cola was not as agonizing as selling Virgin records? It wasn't because Virgin Cola was a soft drink, unhealthy sugary. And so it really didn't. You know, it didn't have the same, yeah, no, we by then I'd already moved on to new ventures, new challenges. And I mean, I'm somebody that, you know, I'll fight tooth and nail to make something succeed, but the moment I realize it's not going to succeed, the next day I will have forgotten about it. I mean, I'll just move on to the next venture. Yeah, but I mean, failing must sting a little bit. Yeah, no, look, if something's not working, I mean, you know, the advantage that Virgin had relatively quickly, was that we had cash to try things out. And what's important when you do have cash is that you do try things out. There are a lot of companies when they get cash, they want to conserve that cash, they're frightened of taking any risks with it. But, you know, you cannot really be a true entrepreneur if you don't have failures along the way. Because you're not pushing, that you're not pushing the limits if every single thing you do turns to gold. So, so let me ask you about another interesting venture, Virgin Brides. This was an idea to sell bridal wear, right? It was launched, I think, in '96. What was the genesis of that company? I love the name. The problem, of course, was that there weren't any. And so we had no clients. We soon realised that there was a. But why would you want to go into selling bridal wear? Did you look at it and say, this is an area to be tapped and disrupted? No, that was one of our more foolish things. A lovely lady came along to me one day and said that she wanted to set up a bridal shop. And she gave me lots of good reasons as to why other bridal shops weren't doing it well and so on. And you liked her energy and her conviction? Yeah, exactly. I was investing in her. And when we launched the shop, I was made to dress up in a beautiful bridal gown. Yeah, lots of photos of that. And I had my beard and mustache shaved off. And I think that most likely put a lot of people off as well. So it wasn't the prettiest sight. But there have been quite a few things that we've just tried. And, you know, if it had got traction, you know, in one shop we might have gone to two. We might have gone to three. We might have gone to three hundred. So I think by trying things you learn about an industry and then you see whether there's any way that you can make a difference in a particular industry. Yeah. And then when do you know when to shut down a venture? Like is there a moment when you actually know, is it as simple as just looking at a profit and loss sheet? I don't really, I'm dyslexic. I don't know. Right, a profit and loss sheet. Now I think, you know, if a venture starts losing money, it will certainly be on red alert in my mind. And we'll think very hard about how we can turn it around. You know, so cutting your losses reasonably early on is a good idea. I haven't always been good at that. I mean, for instance, Virgin Megastore is we clung on far too long and cost us a lot of money. But, you know, sometimes emotions can get in the way. When you're thinking about starting a business, where do the ideas come from? I mean, as I've said, I think the best businesses come out of frustration. So if you have a bad experience, you know, with another business somewhere in your life, you think, you know, it's good we could do it better than this. Even if you don't know much about it, just do it. You know, get in there. I mean, like many years ago, I wanted to invest some money and somebody gave me a bit of paper. And at the bottom of the bit of paper, it said, bid off a spread, 5%. So I happened to say, what does that mean? And he said, that means we take 5% of your money before we start investing it. You know, so I thought, screw this, I'm going to set up our own bank. And we'll make sure that, you know, there isn't any jargon like that to hide the real charges. And we'll be very transparent, very open bank. And Virgin Money is now, you know, the prime challenge of bank in Britain. And I didn't know, you know, my experience of banks was bank managers coming and banging on my door and trying to put us out of business. So, you know, I didn't know a lot about it, but I found people who know a lot about it, who run it and left them get on with it. So I want to ask about your latest venture, Virgin Galactic, which I think is probably your most ambitious project yet. Yes, I think tremendously exciting. We're planning to put hundreds of people into space, hopefully thousands of people into space, only 500 people have ever been into space. And, you know, 600 wonderful engineers working day and night to make it a reality. It's taken a lot longer than we thought. There's been heartache on the way. But, you know, we hope that we're close to finally being there. I mean, when you're dealing with something so complex like space travel, right? And particularly the craft that you are building, there inevitably is going to be failure. I mean, there's always failure in a huge mission like that. Of course, you had a pretty big one a couple years ago with Crash. How did you, how did you feel when you found out about it? I mean, what went through your mind? Gutted. I mean, it was most, I was on Neckar Island and I was actually talking to my son, who was in a centrifuge unit training for a space flight. Right, because you were planning to launch? Yeah, we weren't, we weren't many months away. But our test pilots, who, I mean, test pilots are, I think the bravest people in the world almost. I mean, they had to put everything through its paces. And, you know, sadly, one of them made a mistake and a custom his life. Fortunately, his fellow test pilots survived. How did you, how did you keep up morale in the company after that happened? Obviously, you know, talk to all of our staff, you know, met the relatives. And, you know, dealt head on with the press, which you have to do. And, you know, for, for 12 hours, I wasn't sure whether it was worth continuing. But, you know, once we realized it was a pilot error, not a technical error, I was able to tell all the engineers that it was nothing to do with them. And, that the basic craft was sound. And, you know, once again, you have to learn from it to make sure it never happens again. And, and that's what the team will have done. And when, when do you think you're, you'll get to space? I've made the mistake of saying when I think I'll get to space before. And, and I've been trained by my PR team not to give out dates in case we miss them. So, we'll see how we go. By the way, how many companies are, are they now under the Virgin name? There's a couple of hundred companies around the world. I'm in Virgin. Do you know how many are view lost count? I don't know the exact number. Why so many companies? Do you know it's a hell of a lot better than just having one company. They, if you have one company and something goes wrong, you don't have any companies. If you have 250 and one goes wrong, you've got 249. I mean, I try a lot of things. And sometimes I fall flat on my face. Sometimes they succeed. And sometimes they succeed overwhelmingly. But also, you know, life is a lot easier in that I found great people to run things on a day-to-day basis. And I can sit back and look at the bigger picture. And dream about exciting new projects, which is what ready an entrepreneur is all about. Richard Branson is the founder of the Virgin Group. By the way, when he dropped out of high school, his headmaster said, "Congratulations, Branson. I predict you'll either go to prison or become a millionaire." He was right on both counts. Branson did spend a night in jail for failing to pay taxes on those records back in 1971. And for a period of time, he was a millionaire. That is, before he became a billionaire. And please don't turn us off just yet. In a moment, we're going to hear from you about the things you guys are building. Thanks for sticking around, because we are now at the very end of the show, which means it's time to hear about the things you're building. And this week, we've got a story coming out of Southern California. My name is Allison Hans, and I started a company called Living Zesty. And what Living Zesty does, we'll get to in a moment, but long before she launched the company, Allison spent two decades raising her kids, which is a full-time job. You know, and you're busy and you're home, and you're driving, and everybody everywhere. And then all of a sudden, your youngest gets her driver's license. And when that happened, it meant that all of a sudden, Allison had some extra time on her hands. And I'm kind of a serial entrepreneur, and I'm always thinking, "Oh, what can I do? What can I sell?" The idea of what to sell didn't come to Allison right away. But one day last spring, she was visiting her sister-in-law, and she saw workers pulling out the grass from the front lawn and replacing it with artificial turf. What they'll do is they'll just unroll it. It's like carpet, and they'll just cut around where, you know, the flower bed is. And then so they can't really use this kind of odd shape, so they take it back with them and throw it out. Now, because there's been a drought in Southern California, a lot of homeowners are doing this with their lawns. They're just taking at the lawn and replacing it with artificial turf. turf, which means there is a lot of artificial grass left over. I'm like, thinking, you know what? We can make use of this one more time. So one day last spring, Allison grabbed some of the leftover scraps from her sisters from Juan. She went to her garage, she took a box cutter, and she carved out a circular dormat made of artificial grass. It's surprisingly soft, and it looks really like real grass. Like it has this clean look, and it didn't go into landfill. So like green and clean, right? The mat looks so cool that Allison posted a picture on Facebook, and she said, "Hey, does anybody want to buy this?" I listed it, went for coffee, four years later, come home, and there's like 11 people who are like, "Oh, I want one, and oh, I'm next, and do you have any more?" And I'm like, "Wait a minute. I'll be on to something here." So Allison started to collect more scraps of artificial turf. In fact, installers were so happy to get rid of it, they gave it to her for free. She got her son to design the logo, and she made her own website. You know, you could do her pretty shoes drink, you know, the 199 Go Daddy domain name. So that's how I did it. So there's not a huge expense. Since Allison launched her website a few months ago, she sold about 50 of the mats, but she says she hopes this is the beginning of something much, much bigger. I liken it to throwing out chom, you know, when you're fishing. A lot of my days sometimes is throwing out that chom into the ocean to attract the fish, and so some days you just don't get any bites, but, you know, then some days there's a bite. That's Allison Hans. She lives in Mission Viejo, California, and her company is called Living Zesty. We really love hearing the stories about the companies and the things and ideas that you're building. And if you want to tell us about them, go to build dot npr dot org that's build with a D dot npr dot org. And thanks. Hey, thanks for listening to the show this week. If you want to find out more or listen to previous episodes, you can go to how I built this dot npr dot org. Please also consider subscribing to our show on iTunes and do us a favor, write us a review while you're there. You can also write directly to us at hibt@npr dot org. And if you want to send a tweet, it's @how I built this. Our show was produced this week by Rund Abdel Fata with music composed by Rumpteen Aroblui. Thanks also to Niva Grant, Sanas Meschkinpur, Maria Paz Gutiores, and Jeff Rodgers. Our intern is Claire Brin, I'm Guy Ross, and you've been listening to How I Built This from NPR. Hey, just a quick thing. Latina USA has something really special this week. It's a radio documentary about the controversial Puerto Rican independence fighter Oscar Lopez Rivera, who was given clemency by President Obama just a few days before he left office. It's a story with secret identities and safe houses and FBI manhunt and even a little bit of revolution. You can find Latina USA on the NPR One app and NPR.org/podcasts.