One day that spring, Virgin USA's Dan Porter, who came to Virgin with extensive expertise in technology

and music, rang me up and said: 'ichard, Virgin !usinesses are all inherently social, whether it's health
clu!s, mo!ile phones or airlines" So is music" #ou've !een !uilding incredi!le communities every summer
with V $estivals in the U%, so while America waits &or the airline to launch, what do you say to throwing the
largest music and art &estival on the 'ast (oast) *ive Americans a taste o& the Virgin !rand)'
'+ow ,uic-ly can you get it going)' . as-ed" A !ig splash could !e /ust the thing, . thought, and it wouldn't
have to ta-e as long as starting an airline" . do li-e live music and !elieve in the re/uvenating powers o&
parties" And . certainly en/oyed camping"
'*ive us seven months,' Dan said with a gulp"
0ow, we'd never put a &estival together in the largest music mar-et in the world, and what did the Virgin
USA team -now a!out &estival logistics, &inding the right campsite, loc-ing down the !est date and
convincing 12,222 people to give it a go) .t too- the right -ind o& magic and chemistry to create something
li-e the U%'s V $estival" (ould it !e replicated in America)
3he US team decided to launch two &estivals, one on the 'ast (oast in the US and one in (anada" 4oth
would !e called Virgin $estival 5 we were luc-y enough to have a !rand name that didn't sound li-e a
corporation or a cleaning product" 6e
then had to &ind concert partners who shared our vision7 while the &estival was a !usiness, it wasn't /ust
something to ma-e money !ut an extension o& the !rand and the Virgin li&estyle, so every detail had to !e
per&ect"
3wo independent promoters with a strong aesthetic sense and vision /oined up: Seth +urwit8, the last
great independent roc- promoter in a cut9throat mar-et o& giant corporations that were swallowing concert
venues and record la!els whole7 and Andrew Dres-in, promoter and trusted partner who had started
3ic-etwe! with Dan" 3hey &elt as strongly as we did a!out putting on an incredi!le experience so they didn't
hesitate to spend an extra !it o& money &or the !est line9up, the !est production, the !est &ood, the !est
drin-s" .t was important to stay true to the original values !ehind setting up V $estival !ac- in :;;< 5 a truly
punter9&ocused &estival" 3hey identi&ied 4altimore as a site in the north9east that was under9penetrated and
in close proximity to hundreds o& colleges and several -ey mid9si8ed to large US cities" Virgin =o!ile US
/oined up as a sponsor and o&&ered their expertise in mar-eting to a youth&ul target audience"
=eanwhile, in 3oronto, the Virgin =o!ile (anada team 5 including mar-eting gurus 0athan osen!erg
>recruited &rom Virgin =o!ile Australia to start Virgin =o!ile (anada? and Andrew 4ridge 5 !egan to
trans&orm the lush 3oronto .sland Par- into Virgin $estival grounds"
6ithout a &antastic headliner, there is no &estival" .n a stro-e o& luc- and genius, the 6ho decided to tour
that summer and
Seth signed them up to open &or the ed +ot (hili Peppers in 4altimore" .t was to !e their only mid9Atlantic
stop" Once the 6ho /oined us, we -new the &estival was going to ma-e a strong &irst impression"
Dan even convinced my son Sam to get in on the excitement" .n @une, less than three months !e&ore the
&estival date, Sam -ic-ed o&& tic-et sales at the Union S,uare =egastore in 0ew #or- (ity" +e was &lan-ed
!y a row o& lads wearing nothing !ut soc-s in a tri!ute to the ed +ot (hili Peppers" A&terwards, Sam rang
@ac-ie up in the U% and convinced her that he did the media event in nothing more than a soc- 5 than-&ully,
my son has more modesty than his &ather and was only winding her upA
. had a !usy Septem!er that year" On ; Septem!er . helped -ic- o&& 3oronto's Virgin $estival and then
went down to 0ew #or- to announce during the (linton *lo!al .nitiative that :22 per cent o& pro&its &rom
Virgin *roup's transportation interests would !e invested in clean energy" Days later, my wi&e @oan and Sam
and . travelled to 4altimore &or the US &estival" As . wal-ed across the grounds and shoo- hands with
thousands o& &estival9goers, . was struc- !y the num!er o& people who than-ed me &or !ringing Virgin and
the &estival to the US" =any /o-ily than-ed me &or saving the 'arth !ut . reminded them that it is /ust as
much their responsi!ility as it is mineA
6hile the 0orth America mar-et is very di&&erent &rom the U% mar-et, one thing was clear: we all love a
!rilliant party" So we responded to each individual mar-et !ut also gave them
signature Virgin touches, most o& which were inspired !y the U%'s V $estival" 6e wanted to !e remem!ered
&or unsurpassed production ,uality, Virgin Angels who helped people in charming and unexpected ways,
chill9out areas, delicious &ood and !everages" 6e partnered with su!9sponsors who agreed to contri!ute to
the overall consumer experience, not /ust their logos, and our stages weren't named a&ter athletic shoes or
radio stations" 4ecause we too- it seriously as a !usiness, people got to en/oy it as a party" .n B22C we
launched V $estival Australia >Sydney, *old (oast, =el!ourne and Perth? and the Aussies de&initely -now
how to partyA
.n an era o& digital downloads and headphones that tune out the rest o& the world, the live9music
experience o&&ers something di&&erent, authentic and communal" .t provides a rare chance to gather with
people to catch &avourite acts and also ma-e unexpected discoveries" Dittle did we -now that thirteen years
ago when @ac-ie and @ames came to me with the idea o& starting V $estival in the U%, we would !e in the
vanguard o& new music &estivals in 0orth America"
@ust as competition is a great thing &or airline passengers, competition will !e a great thing &or music &ans"
=any new &estivals have sprouted up since that summer, and eventually the !est will last"
So, the milliner says to his son: 'Don't worry, lad" People will always need hats"'
6hat he means is: 'I will always need hats"' +ats are his li&e,
and he is proud o& what he does"
.s his attitude a healthy one)
O& course it is" 0o !usiness lasts &or ever, and !eing true to your li&e's wor- carries with it the ris- that you
may lose your &uture" 3his is the deal we ma-e with the world: that we exercise our &ree will and accept the
conse,uences" >. love !allooning, and it's almost -illed me on several occasions"? 'very ris- is worth ta-ing
as long as it's in a good cause, and contri!utes to a good li&e"
O& course, i& your !usiness involves the investment o& other people's money, you are under certain legal
and moral o!ligations" #ou may have to adapt your !usiness to meet those o!ligations"
4ut . have every sympathy 5 especially in the light o& changes in the music !usiness 5 with those
companies who delivered a thing well, with care and pride, long a&ter the thing !eing delivered had lost its
currency" .t's a classic case o& doing the right thing at the wrong time" Sometimes it's a mista-e" Sometimes
5 and there's not a !usiness !oo- on the shelves will admit this sorry &act 5 it's not a mista-e at all" .t's /ust
something dying"
Virgin is not especially aggressive in the mar-etplace" >6e &ight hard and long when we have to, !ut we
don't do dirty tric-s and we don't go loo-ing &or punch9ups"? And heaven -nows, Virgin's success is not down
to its crystal9clear vision o& the &uture" .& it were, you'd !e Virgining our company
valuations on the .nternet rather than *oogling them 5 and our =egastores would have !een sold o&& in the
eighties"
Virgin's success is primarily down to the consistent way it's delivered on its !rand proposition" (losing the
!oo- on Virgin =usic was pretty pain&ul, whichever way you spin it" 4ut !ecause the central proposition o&
the Virgin !rand is a!out customer experience, Virgin has overall &ound it less pain&ul than most to innovate
products or services to satis&y changing consumer demands" $or us 5 and we may !e uni,ue in this 5 a
change o& industry, and a move into a new sector, does not entail a wholesale change in our philosophy or
li&e's purpose"
6hat astonishes people is less our a!ility to move into new sectors 5 a&ter all, venture capitalists do this
all the time 5 than the speed with which we deliver" 6illingness to change /o!s is one thing, !ut how do we
sometimes manage to hit the ground running so &ast)
Delivery is never rocket science" 6hen we move &rom sector to sector, .'d say a!out ;2 per cent o&
our core delivery strategy comes with us and slots straight in, without ad/ustment, without &uss, without
trou!le" *etting to grips with an un&amiliar in&rastructure is simply a ,uestion o& wor-load 5 o& mastering
detail" . haven't yet had to !e initiated into the mysteries o& a ca!al, and neither have the people . wor-
with"
+owever complex the !usiness is, you should !e a!le to !oil it down to a proposition that ordinary people
can understand" 6hen an industry delivers its proposition in a way that's totally
loopy and counter9intuitive, either you've made an elementary mista-e and need to go !ac- to your
research, or the entire industry is pulling a &ast one and is out to rip o&& the customer" And i& that's the case,
then you, the wide9eyed innocent, are li-e the !oy who declared that the emperor wasn't wearing any
clothes" #ou are a!out to change everything"
3his can happen" .n &act, it happens all the time" .n &act, here at Virgin, we could write a book on how
o&ten this happens"
6elcome 5 &or starters 5 to the airline industry"
3here are a &ew contenders &or Virgin's greatest ever !usiness deal" 4ut the epitome o& our spirit was the
way we hired a /um!o /et to start up Virgin Atlantic in :;EF" O& all our enterprises, it's the classic case o&
snatching an opportunity when it appears and ma-ing it happen" 3he creation o& Virgin Atlantic is the per&ect
case study o& how we have gone a!out our !usiness since then" 'ven today, many years on, it shows our
pure audacity and it still de&ies all !usiness9school logic"
. was interested in an airline as a !usiness idea, !ut it was really my &rustration as a &re,uent &lyer that
crystallised the idea &or me" . was spending more and more o& my time in the air and, along with every!ody
else, . was having a thoroughly horri!le time o& it" 3here were no redeeming &actors a!out &lying with 4ritish
Airways, PanAm or 36A" 3he ,uality o& service was dire and the sta&& loo-ed !ored and morose" 3hen, at
the turn o& the eighties, came the straw that !ro-e the camel's !ac-"
@oan and . were supposed to !e &lying &rom the Virgin .slands to Puerto ico, when the scheduled
American Airlines &light was cancelled" 3he terminal was &ull o& stranded passengers" .'d had enough" .
called a &ew charter companies and agreed to charter a plane &or GB,222 to Puerto ico" . !orrowed a
!lac-!oard, divided the charter cost !y the num!er o& people stranded, and wrote down the num!er" 6e got
everyone to Puerto ico &or GH; a head"
3he utter &rustration . had !een &eeling while &lying on other people's airlines convinced me that Virgin
Atlantic should !e a &un airline with a ring o& ,uality and one that got all the little details right &rom the start"
4ut our !ig !rea- had to wait till $e!ruary :;EF, when an American lawyer called andolph $ields came to
me with news that there were landing slots availa!le &or a 4ritish9!ased carrier &rom *atwic- airport, outside
Dondon, to 0ewar-, 0ew @ersey" andolph had !een haw-ing the idea o& a !udget !usiness airline around
all the usual airlines, !ut they were too close to the realities o& the mar-et and remem!ered the harsh
lessons o& $reddie Da-er and $lorida9!ased People's 'xpress 5 airlines that had !oth collapsed under
pressure &rom the &our transatlantic &lyers, 4ritish Airways, 4ritish (aledonian, PanAm and 36A" 3he
esta!lished airlines had conspired to put $reddie out o& !usiness !y putting pressure on =cDonnell Douglas
not to supply him with planes7 they persuaded the !an-s not to lend to him when he needed it7 and they
slashed &ares to undercut him" .t was a good old9&ashioned mugging, and it succeeded" 3he 4ritish pu!lic
never &orgave them, !ut what did they care)
andolph had o!viously drawn a !lan- and . must have !een on a list o& his last9gasp record9la!el
maveric-s" .n any normal !usiness an unsolicited caller might get through to the chie& executive's PA, then
!e told to drop a letter in >or these days, send an email? to arrange a meeting on another day" 4ac- in :;EF,
however, we were !ased on the canal !oat and . made a point o& answering my own phone" andolph got
straight through to me" +e had a very persuasive pitch: he told me there were lucrative landing slots up &or
gra!s !ut they had to go to a 4ritish carrier" 0ot only this, !ut no!ody else would !e a!le to get in on these
slots once they were assigned" .t was a genuine opportunity" 6as . interested) . as-ed him to send me a
proposal and . too- it with me to the country to read over the wee-end"
andolph was proposing a !usiness9class9only airline, !ut . thought a mix o& !usiness and economy
would !e !etter so that we could &ill the planes at 'aster, (hristmas and !an- holidays" . agreed to put I:
million into the pro/ect to get it going" .n the meantime, . needed to !ecome an airline expert overnight"
. phoned $reddie Da-er and he told me . didn't need to !uy a plane 5 that wasn't the way it was done" +e
explained that the !an-s !ought the plane in a deal with either Air!us, 4oeing, Doc-heed or =cDonnell
Douglas, and then the airlines leased the planes, guaranteeing to pay monthly &ees"
. put in a lot o& the legwor- to &ind out all . could a!out starting an airline" 6e registered the name Virgin
Atlantic and su!mitted our application &or the slots" 3hen . &ound the
4oeing telephone num!er through international directory en,uiries" 3he actual conversation still ma-es me
laugh" . remem!er calling Seattle and as-ing to !e put through to the senior vice president &or sales" '+ello,
this is ichard 4ranson &rom Virgin here and .'m interested in ac,uiring a secondhand CFC,' . said in my
politest 'nglish accent"
3he guy at the other end said: '6hat does your company actually do)'
'6ell,' . said, 'we put out !ands li-e the Sex Pistols, 4oy *eorge and the olling Stones"'
'Oh" eally) 6hat did you say your company is called) JVirginJ)'
At the time, worldwide aircra&t sales were in the doldrums and 4oeing was having pro!lems shi&ting its
&leet o& second9hand CFCs, with many par-ed up and decommissioned in the Ari8ona Desert" So he didn't
put the phone down on me" . thin- perhaps he was intrigued !y my chut8pah" +e too- my details" And he
/o-ingly said at the end o& our conversation: '6ith a name li-e Virgin, as long as your airline goes the whole
way, we'll consider selling you a planeA'
4oeing sent a salesperson over to meet me" +e was a lovely old guy who stayed in a hotel &or &our
months while we tried to get the deal sorted" 4oeing &inally agreed that i& the airline didn't wor- out, they
would ta-e the plane !ac- at the end o& the &irst year"
3his meant that we could start our airline -nowing that, i& .
screwed up completely, . had hedged my !ets" Doo-ing !ac-, it was one o& the !est decisions . ever made"
6hat's the most critical &actor in any !usiness decision you'll ever have to ma-e) 4asically, it !oils down
to this ,uestion: If this all crashes, will it bring the whole house tumbling down like a pack of
cards?
One !usiness mantra remains em!edded in my !rain 5 protect the downside" 4y having the option o&
giving 4oeing their plane !ac- a&ter a year, Virgin's total exposure was I1 million
5 hal& what we were ma-ing at Virgin ecords" So we were gam!ling an accepta!le six months' loss, &or an
enormous potential upside" .& disaster struc-, it would hurt us, !ut it wouldn't !ring the whole pac- o& cards
crashing down" 'Protecting the downside' is one o& the very &ew !usiness tenets that we try to adhere to at
Virgin" #es, there have !een occasions when we have !ro-en our own rule, times where .'ve said, 'Screw it,
let's do it,' mortgaged my home and really stuc- my nec- out" 4ut that's something . don't recommend"
.t was soon very clear that there was no way we could launch a new transatlantic airline unless we had
wor-ing capital o& at least IH million" 6e had to raise more cash"
6hile all this was going on, . -new that we needed to run Virgin's other !usinesses on a more
pro&essional &ooting" So . approached Don (ruic-shan- a!out /oining as chie& executive to sort us out"
Don's arrival &reed me up &rom the record !usiness to learn more a!out the airline industry"
. phoned $reddie Da-er >again? and invited him to lunch on my house!oat Duende and he told me why
he had &ailed 5 and what . must do to avoid his mista-es" +e warned me that 4ritish Airways would !ecome
the enemy, that they were ruthless and had destroyed his !usiness"
6e had to protect ourselves against currency &luctuations" 3he &ixed instalments &or the /um!o were due
in US dollars, !ut sterling's value was plummeting against the dollar" Our customers were paying &or tic-ets
with U% pounds, and we had to !e care&ul not to get stung"
6e were also responsi!le &or insurance 5 and here we nearly came unstuc-" 6e could only get insurance
when the (ivil Aviation Authority in the U% had given us &ull certi&ication &or airworthiness" So we undertoo-
a test &light, the plane too- o&&
5 and a &loc- o& !irds &lew straight into the engine" 6hich exploded"
A new engine was going to cost us I<22,222 5 and, naturally, !ecause we'd had to a!ort the test &light,
we weren't insured yet" 3his nearly !rought down the whole o& Virgin as it /ust too- us over our overdra&t
limit" Don and the other directors wanted me to postpone the launch date, !ut once . was sure everything
was sa&e, . wanted our airline to get going"
.n those &our months or so to get the airline going, we had to learn every single thing a!out the airline
!usiness, &rom reservations to tic-et sales and whether to sell our tic-ets through travel agents or to sell
them direct" . had to &ind out
a!out mar-eting to let people -now a!out our new airline, and to design and colour the plane" At night, .
wor-ed on planning the interior designs, selecting &a!rics and even discussing the menus and the choice o&
wines" 6e had little or no !udget &or advertising, so . too- $reddie's advice" +e told me not to !e shy, and to
use mysel& to promote the !usiness"
$our months to learn how to deliver an airline" 0ot easy" 4ut de&initely doa!le" 3hose !usiness leaders
who see-, in interviews and in their writings, to turn their industries into complex pu88les, su!tle chess
games o& one sort or another 5 these people really, really annoy me" .t isn't enough &or them that they're
good !usiness people: they have to !e (on&ucius" 3o listen to them, you'd thin- you must !e !orn into an
industry to ma-e any headway in it" And this is rarely true unless you are tru&&le hunting" A !asic
understanding o& the !usiness, gleaned !y immersing yoursel& in every little detail &or months or even
wee-s, is o&ten enough to get you started" 3he volume o& in&ormation you'll need to hac- through will !e
high 5 so &ind some &riends to help you 5 !ut the underlying !usiness model is always &airly simple"
Remember to communicate, and pay attention to detail" #ou wouldn't !elieve how &ar you can
get, /ust !y remem!ering and practising those two rules" 4ut the evidence o& their e&&ectiveness is there &or
all to see, on our Virgin Atlantic &lights" And many o& our original decisions are still in place" 3he !ar in our
!usiness class was uni,ue to Virgin at the time, and it's still there" 3he ru!y9red uni&orms were really
gorgeous
out&its, and they still are" 6e went &or a &irst9class product !ut charged a !usiness9class &are 5 and that
remains our philosophy today"
So, on B: @une :;EF, we too- to the air &rom *atwic- in Maiden Voyager" .t was a &light &or many
&riends, &amily and other well9wishers" @oan and . sat with +olly on our -nee throughout the &light" 4ut the
airline was very nearly still!orn" 3he day . returned, (outts 4an- visited my home to say that since we had
reached the overdra&t limit, they would now start to !ounce our che,ues" +ere we were, one o& 4ritain's
most success&ul private companies, and expected to ma-e I:B million pro&it, and they were threatening to
ma-e the whole Virgin group insolvent !ecause we were /ust over our IH million &acility" As . said,
communication is important 5 and to that we might now want to add the words, 'especially communication
with one's !an-A' 4ut honestly, in my view, at that time, (outts was hopeless" Short o& employing a
spiritualist and a Oui/a !oard, we were never going to get through to these people" 3hey had no insight at all
into our individual pro/ects and su!sidiaries" 3his would have to change" 4y the end o& the wee- we'd
switched !an-s to Dloyds, who increased our overdra&t &acility ten&old to IH2 million" Don't !e a&raid o&
changing your !an- i& they are unreasona!le" 4an-s are not &or li&e" 4ut don't put it o&& till the last minuteA
(ash &low was exceptionally tight in the early years" Passenger num!ers were highest in the high9
summer season, yet our costs were &ixed throughout the year" 4ut the exciting
&eeling &or everyone at Virgin Atlantic was that people loved &lying with us &rom the very start" 6e had a
sense o& humour, which . thin- is important, and our pilots and ca!in crew were all up &or the great
adventure" =y nasty experience with (outts 4an-, meanwhile, had taught me that we needed to have a
pro&essional relationship with our !an-ers 5 -eeping them in&ormed o& every move and letting them -now
precisely our intentions 5 and we needed corporate managers such as Don (ruic-shan- to do this &or us"
.n the &airy tale, when the little !oy starts laughing and pointing at the na-ed emperor, everyone 5 including
the emperor 5 realises the emperor's mista-e, and the little !oy is instantly vindicated"
6ell, li&e's not li-e that" Det me ,uic-ly tell you o& a couple o& occasions when we laughed and pointed at
some ludicrous !usiness a!surdity 5 and the emperor's ministers rushed over and promptly smothered us"
On B1 Octo!er B22H, =atthew Parris wrote in The Times: '6hen we were younger we thought ourselves
the &irst generation when everyone would &ly &aster than the speed o& sound" 6e were to !e the last, not the
&irst"'
+e was writing a!out the last commercial &light o& (oncorde" 3he 4A 22B service &rom 0ew #or- touched
down at Dondon +eathrow at :<"21 on BF Octo!er B22H, !ringing the &irst supersonic transportation era to a
close twenty9seven years and nine months a&ter it !egan"
4ritish Airways and Air $rance's decision to ground the &leet was a disgrace&ul one !ecause it was ta-en
and executed to ensure that no!ody else could ever &ly the planes again, in some cases !y literally cutting
o&& the tips o& their wings" .t was an insult to (oncorde's engineering !rilliance" 6e -new that we could ma-e
a go o& the service, and Virgin mounted a Save (oncorde campaign" 4ut it came to nought, due to 4ritish
Airways' insistence that no one else could maintain and run the &leet" 3hey hurriedly dismantled the planes
and dispersed them to museums around the country 5 /ust to ma-e sure" .t was a deplora!le way to end
such a glorious era"
At the post9&light !ash 4ritish Airways chairman Dord (olin =arshall was -een to show the H22 guests,
who had /ust arrived on the three &lights, the live 44( news report o& the historic arrivals" 3o his horror, the
soundtrac- accompanying the picture turned out to !e !y @ohn +utchinson 5 a &ormer (oncorde pilotA @ohn
lam!asted 4ritish Airways &or retiring the aircra&t while still in its prime, and very generously sang my praises
&or trying to -eep her &lying"
Sir (olin disappeared !ehind the screen 5 and the sound suddenly cut out, apparently inter&erence &rom
all the 3V satellite vans par-ed near!y " " "
3he moral is that it is important to stic- to your guns" 3he pu!lic isn't stupid, and . thin- we've reaped huge
rewards &or !eing &orthright in the mar-etplace"
.n :;;C . came to share my experience a!out the lottery
!usiness with 3ha!o =!e-i, who was then the deputy president o& South A&rica" . thought a national lottery
would !e an excellent way o& raising vital &unds &or the nation"
A lottery is a licence to print money !ecause there is no competition" 3here are no ris-s at all in running a
national lottery, and it is also one o& the easiest companies in the world to set up" 3he &ormula has !een
tried and tested worldwide" .n almost every country and state the lottery is run so that :22 per cent o& the
pro&its go to good causes" 3he country appoints a trustworthy !usiness person with lottery experience and
he or she hands the pro&its straight to the government's charita!le arm &or distri!ution to the most important
causes in the country 5 usually &or education, health or &ighting poverty" 6hat these lotteries don't have is a
level o& shareholders creaming o&& the pro&it !etween the person running the lottery and the good9cause
&und"
. had made two unsuccess&ul !ids &or the 0ational Dottery in the U% 5 in :;;F and B22: 5 and to this day
it still perplexes me that (amelot, the company that runs the lottery on !ehal& o& the government, and who
employed *3ech >one o& whose directors tried to !ri!e us during our !id?, has !een allowed to ma-e so
much money at the expense o& good causes"
3here was not a lot o& love lost !etween me and (amelot in those days" 3he lottery company once hired
=adame 3ussaud's, the &amous waxwor- attraction in Dondon, &or a corporate evening" A !rother o& one o&
our Virgin Atlantic sta&& was at the party and &ound that my wax model had !een temporarily
removed and put in the !room cup!oard &or the evening" Actually, . thin- my e&&igy too- one loo- at the
company it was -eeping, and wal-ed"
So . said that i& South A&rica set its lottery up in the right way, it could !e a provider &or good" 4ut . was
anxious they didn't ma-e the same mista-e as 4ritain" . was seriously concerned that some in the !usiness
community were putting pressure on the government to set it up as a pro&it9ma-ing scheme &or the !usiness
community"
. pointed out that the (onservative government in the U% made that mista-e in :;;F and instead o& the
lottery !eing something the whole country has !een proud o&, it is tal-ed a!out, even among regular tic-et
!uyers, with some contempt" At the time, the opposition Da!our Party realised this terri!le mista-e and
pledged to turn the lottery into the people's lottery when (amelot's licence ended"
.n B22C, with Da!our still in power, (amelot were given the licence &or a third time 5 another political
promise !ro-en !y a government once in power"
. tried hard to convince 3ha!o =!e-i and the president not to ma-e the mista-e that was made in the U%"
4ut it seems that, in the end, they also &ell into the same trap as the U%, and granted the licence to a
commercial company, Uthingo =anagement"
Sometimes you will &ail to trans&orm a !usiness !ecause o& other people's short9sightedness" Other times,
you &ail !ecause o& other people's greed" .t's that simple and that galling" 3he
&ight you lost will turn out to !e worth it down the line: the pu!lic will respect you &or it, and show you great
loyalty therea&ter"
Delivery is the moment where your good intentions meet the real world" Delivery is !est approached
steadily, and with &ortitude" #ou'll need stamina and patience to deliver well 5 especially when every!ody is
out to -ill you"
$or a long time . have nursed an am!ition: to run a pro&ita!le airline in America" 3he most important word
in that last sentence is 'pro&ita!le'" .t was easier said than done, and although the new !a!y is now doing
extremely well, the arrival o& Virgin America, our airline in the US, was a slow and pain&ul !irth"
3he United States o& America is littered with the carcasses o& 4ritish !usinesses 5 and roc- !ands too 5
that have tried to ma-e it !ig and then &oundered" . wanted Virgin to !e di&&erent, and Virgin ecords USA
and Virgin =o!ile USA showed what could !e done" 4ut airlines 5 with their huge amount o& &ederal
regulation, issues o& ownership and industry resistance 5 are a di&&erent !all game" .t's a !it li-e Arsenal
playing in the American 0ational $oot!all Deague"
3he &irst hurdle was the certi&ication process" Under US law, &oreigners can own as much as B1 per cent
o& the voting e,uity in a US airline and an additional BF per cent o& the non9voting stoc-" . expected
negotiations !etween the US and the 'uropean Union on aviation treaties to loosen this, letting in
greater &oreign investments and stimulating competition" 4ut it wasn't happening ,uic-ly enough, and we
had to ensure that at least 1: per cent o& the !usiness was owned !y Americans"
3he arrival o& $red eid to lead Virgin America, in April B22F, was a !oon" $red, the &ormer president and
chie& operating o&&icer o& Delta Airlines, had a welter o& airline experience spanning more than twenty9&ive
years, and he -new his way around 6ashington, D(" Our legal and political advisers were anxiously
pursuing an operating certi&icate &or Virgin America" .t was all highly sensitive, and $red cautioned me and
the Virgin people that even the slightest o&&9hand remar- !y any o& us in any venue o&&icial or otherwise
could easily trigger a ninety9day delay in certi&ication" .t was election year, and our application had uni,ue
aspects which made it &righteningly easy &or a hostile party to trip us up" And there were plenty o& them:
$red told me that every single airline in America was dreading our entry into the mar-et"
A&ter ;K:: and its a&termath, . saw an opportunity to capitalise on the wea-nesses o& the !ig US carriers"
United Airlines was operating in (hapter :: !an-ruptcy protection, and American Airlines and (ontinental
were slashing costs and sta&& to compete" .'ve !een as-ed i& there are such things as insurmounta!le
pro!lems in !usiness" . thin- there were &or these legacy airlines, with their large payrolls, outmoded
practices and ageing &leets o& planes" According to The conomist in B22C, their own poor management
and circumstances !eyond their control 5 oil prices tripling, terror
attac-s in B22: and a plummeting dollar 5 lost them a cumulative GH1 !illion in the &ive years to B221, a
mind9!lowing amount o& money &or investors to lose"
6e honestly thought that !y a!iding !y the rules o& the US government and the Department o&
3ransportation, a timely decision would !e made" 6e did not expect it to drag on and on" Our application
turned out to !e a lesson in naivety" 3he US DO3 is not accounta!le to anyone a!out when it approves
applications, and it too- its own sweet time" 'xisting US airlines, although visi!ly &ailing to serve the pu!lic
with decent &ares and service, !ecame involved in a spectacular &ili!ustering process to delay and deter us
&rom getting o&& the ground" 6e were a visi!le threat, with our new &uel9e&&icient aircra&t and a genuine &ocus
on the consumer experience" 0oticea!ly a!sent &rom all the ganging up were the two airlines we'd surely
compete with: @et4lue and Southwest" #ou would thin- they had more to lose yet these two healthy and
strong airlines didn't /ump up and down and cry, '3his isn't &air"'
3o meet the DO3's hurdles, the Virgin *roup moved heaven and earth, ma-ing concessions !eyond what
was re,uired !y US law" $red eid reassured the American regulators that our airline was indeed '4orn in
the USA'" A tranche o& sophisticated investors were on !oard, and those investors hired Don (arty, a thirty9
year industry veteran and &ormer chairman and ('O o& !oth (anadian Paci&ic and American Airlines, to
lead the !oard" Virgin had a statutory right to three !oard directors !ut we gave up one"
'ventually, in =ay B22C, we were granted approval 5 !ut there was a sting in the tail" $red was told !y the
Department o& 3ransportation that since he'd !een ta-en on !y me personally >which was not true? 5 and .
was a &oreigner 5 he would not !e allowed to run the !usiness"
3his was a !low &or $red, and &or us: we had to &ind someone else to lead it" Virgin America should have
!een ready to launch at the end o& B22H" .nstead it launched in August B22C" .t had ta-en nearly &our years
5 Virgin Atlantic too- &our months" During our !attle to cut through the *ordian -nots o& US regulation, six
new planes sat idle on the ground &or nearly eighteen months" 3hey alone !urned G:: million !e&ore we
made a penny" .n its &irst year, Virgin America has won all sorts o& awards, including !agat's '!est &irst9class
service in America' and '!est domestic airline' in Travel " #eisure's 6orld 4est Awards" 3he airline has
stimulated competition among carriers and created thousands o& /o!s" And as a consumer champion, Virgin
is ma-ing good on our promise o& a !etter overall experience and !etter prices whether you &ly Virgin
America not"
Virgin America's new president and ('O David (ush, &ormerly o& American Airlines, and his team have a
uni,ue !usiness model with the -ind o& &lexi!ility needed to cleverly navigate these tur!ulent times" 3hey're
continuing to deliver a great &lying experience to a small !ut growing num!er o& ur!an point9to9point centres"
0ow the !attle is to ma-e the airline pro&ita!le" At a recent 6ashington Aviation lunch an American
Airlines director said to a colleague that it was ironic that American Airlines had lost one o& its !est people
as a result o& its own lo!!ying on (apitol +ill to get rid o& $red eid" Some clouds do indeed have silver
linings"
All !usinesses, at least when they start, want to !e agents o& change" 3his is not always easy 5 especially i&
you're operating on a shoestring in a developing country with poor in&rastructure, and where the delivery
systems are held together !y little more than !ri!ery" .n those circumstances, pretty much anything new is a
threat to your !usiness"
',ually, it is all very well !eing cast as an agent o& change in an am!itious, developing country 5 !ut you
can never a&&ord to &orget that your arrival is going to hurt people" 3he welcome changes you're !ringing in
may well loo- li-e threats 5 and almost certainly will be threats 5 to existing interests" 3hese interests may
loo- rather paltry to you, !ut they're li&e and death to some"
$nowing when to tread carefully, and when to put your foot down, is a lesson all !usinesses
must learn, i& glo!alisation is ever to !ring a!out change &or the !etter"
@une B22F: . was with my &amily, playing tennis in our garden in Ox&ordshire, when the call came through"
. wasn't too surprised to get the summons" $or a &ew years, . had !een in discussions with several 0igerian
o&&icials a!out airline services into A&rica" 0ow . was to go to Paris and meet the 0igerian president himsel&"
0igeria is a great entrepreneurial nation and there are many excellent !usiness people throughout the
country" 4ut it is hampered !y poor in&rastructure"
(hie& Olusegun O!asan/o, now the &ormer president o& 0igeria, is a commanding character" A retired
army general who has served his country, he is a towering presence throughout A&rica" 6hat . li-ed a!out
President O!asan/o was that he came across to me >then? as a very honoura!le man" +e li-ed me, and .
him" 3hat's the way it is in !usiness" 3he president was very open and honest a!out the pro!lems o& the
past" +e was now pursuing a programme o& privatisation" 3he airline industries, however, posed serious
di&&iculties, particularly regarding regulation" .n the past, the president ac-nowledged, there had !een all
-inds o& shady deals and lo!!ying done !etween the airlines and the aviation suppliers" +e wanted a much
&airer and transparent system" >Dater, in my note!oo- . wrote: %In all my dealings with him and his
cabinet, never a hint of corruption& ' desire to cut through red tape and get things done"'? .
agreed, saying that we weren't interested in !eing involved with anything that meant !ac-handers or
'special' payments" .& he wanted us to help, then we would wor- together on a !asis o& trust"
3he airline industry across parts o& A&rica has an atrocious record on sa&ety 5 planes crash ,uite regularly,
particularly in Sudan and 0igeria" . wanted to use our expertise to ma-e a di&&erence" 4ut . was also very
mind&ul o& a&&ronting people's sensi!ilities 5 a 6esterner criticising a developing nation even
as it tries to turn things around" =y experiences with Virgin 0igeria were to throw these tensions into sharp
relie&, as we struggled to attain world9class excellence in an underdeveloped and undercapitalised industry"
. had told the president that my vision was the creation o& 'a world9class airline with a spirit o& A&rica and
0igeria at the hu!'" .t was certainly something that O!asan/o thought would give 0igeria a renewed sense o&
stature" 4ut we had to set a!out a serious issue: the A&rican air tra&&ic control system was in need o&
overhaul and investment, its operators were in dire need o& retraining 5 and 0igeria had one o& the !lea-est
aviation trac- records in the world"
.n early Septem!er B22F, . was in 0igeria's capital, A!u/a, &or another meeting with the president" .t was
nearly : a"m", and a long ,ueue o& 0igerians were waiting patiently in the corridor o& one o& the city's !est
hotels" $ortunately . was a!le to /ump the ,ueue, as government advisers whis-ed me to his top9&loor suite"
+e put his hand on my shoulder and said: '. li-e you, ichard"'
'3han-s, =r President,' . said, rather !owled over !y such a welcome" ''rm, what is it a!out me that you
li-e)'
'. li-e the &act that you never wear a tie" . hate those stu&&y 'nglish gentlemen with their ties"'
Our tal-s went extremely well and . was a!le to say that he could !e assured o& Virgin's commitment to
his country" 6e shoo- hands on the deal, and the next day we launched a new
airline &or A&rica"
. -new the president admired our &lagship, Virgin Atlantic" 3hough launched as a cut9price airline, its
success was also !ased on giving the !usiness traveller the !est customer service in the world" 6e'd
o&&ered our !usiness travellers what &irst9class passengers on other airlines didn't get" 6e had pioneered
com&orta!le reclining seats, &lat !eds, lounges with hairstylists and masseuses, and a motorcycle and limo
home9pic-up service"
.n economy, Virgin Atlantic was the &irst to provide personal video screens in every seat9!ac-, so that the
traveller could choose the &ilms and television shows he or she wanted to watch"
0igerian Airways had !een the nation's &lag carrier &rom :;<1 until B22B, !ut it had !een overrun with
!ureaucracy and riddled with corruption" During the summer o& B22F, the 0igerian &ederal government
proposed a new &lag carrier as part o& its privatisation process" 3hey wanted Virgin's support" On 3uesday
BE Septem!er B22F 5 the same wee- we were ma-ing an announcement a!out Virgin *alactic 5 . &lew &rom
Dondon to A!u/a to /oin President O!asan/o once again and the =inister o& Aviation, =allan .sa #uguda, to
sign a =emorandum o& =utual Understanding, which &ormally esta!lished Virgin 0igeria as a new &lag
carrier"
3he airline was created with a G12 million investment, the shares split !etween the 0igerian investors,
with 1: per cent,
and Virgin Atlantic, with F; per cent" 3he aim was to widen the o&&ering in time on the 0igerian stoc-
exchange" .t was set in stone that the home !ase would !e =urtala =uhammed .nternational Airport >==.A?
in Dagos, &lying to Dondon, A!u/a, %ano and Port +arcourt, then to A!id/an, Accra and Da-ar" Although we'd
!e a minority partner in this new airline, . wanted us to !ring all our expertise to help our 0igerian partners
create the !est airline, not /ust in A&rica 5 !ut in the world"
6e !rought in Simon +ar&ord, who had wor-ed with 4ar!ara (assani on setting up 4ritish Airways' low9
cost airline, *o, to !e the ('O, and he set a!out his tas- with alacrity" +e signed up %P=* and Philips
(onsulting to handle recruitment 5 a -ey area &or us" 6e were swamped with applications 5 nearly B1,222
wanted to /oin the airline"
Virgin 0igeria was to !e !uilt &rom scratch: a modern airline with excellent service" 6e !elieved the
!usiness would create several thousand /o!s within &ive years and, indirectly, a &urther B22,222 /o!s"
6e set a!out !uilding a !est9in9class terminal &or Virgin 0igeria at ==.A, and commissioned 'DS to
deliver us an integrated airline reservations, tic-eting and !aggage system that was as good as anything
else in the world" 6e signed a deal to lease the &irst o& our Air!us AHB2s, with sixteen !usiness9class seats,
&or the domestic routes"
=eanwhile, Simon and his team were wor-ing to &inalise
approvals &rom the 0igerian (ivil Aviation Authority" On :H @une B221, tic-ets went on sale 5 via phone,
travel agents and the .nternet 5 &or our inaugural &light &rom Dagos to Dondon +eathrow, arriving at 3erminal
H" 3he tic-ets were sold out within a &ew days" 6e aimed to &ly wee-ly at &irst and then three times a wee-
operating an Air!us AHF29H22, with :EC economy, BE premium economy and F2 !usiness9class seats"
Our maiden &light le&t Dagos &or Dondon on 3uesday BE @une" 3he aviation minister, .sa #aguda,
presented the &irst group o& trained ca!in crew with their 'wings to &ly'"
.n the &ollowing days the domestic services would !e launched too" 3he initial &eed!ac- was tremendous"
One regular &lyer, Dan '-pe, said the sight o& Virgin 0igeria's aircra&t on the tarmac in Dondon had &illed him
with 'a sense o& pride' that a 0igerian carrier was now doing a great /o!"
.n the &irst ten months, we &lew 122,222 passengers on our six planes, two Air!us HF29H22s, an AHB29B22
and three 4oeing CHC9H22s"
On :: @uly B221, President O!asan/o sent Virgin a note to than- us &or our commitment: '. !elieve that
your role in the aviation sector will !ring innovation, competition, new technology and, o& course, a lot o&
satis&action to the 0igerian pu!lic"'
+e then went on to remind me that there was a need to '0igerianise' the sta&& at all levels in order to
anchor the &uture o& the airline on indigenous capacity &rom management through
to technical and ca!in crew" '. -now that you have put a ,uality training &acility and programme in place" .t is
my expectation that you will use these &acilities to train 0igerians in all critical areas o& airline management
and operations"'
6e did indeed" 6e put a lot o& time and e&&ort into training and recruiting sta&& &or the airline" 6e set up a
technical partnership with the 0igerian (ollege o& Aviation 3echnology to train new pilots who would then !e
sent away to get experience on short9haul airlines" 6e also set up apprenticeships, and o&&ered automatic
employment to those trainee engineers who success&ully completed their courses"
6ithin the &irst year we were a!le to expand services to Du!ai, as well as increasing the internal domestic
routes &rom Dagos to A!u/a, Port +arcourt and %ano, as well as Dagos to @ohannes!urg"
.n 0ovem!er, having ta-en the airline through its momentous launch 5 a remar-a!le /o! in such a short
time 5 Simon +ar&ord decided it was time &or someone else to ta-e the reins7 he announced that he was
moving on" +is /o! was ta-en up !y (onrad (li&&ord, who had come with me and Simon on my &irst trip to
0igeria in :;;<" .t was a challenging time to !e ta-ing over, !ut (onrad, who had set up Virgin Atlantic's
operations in 0igeria, was ready to ta-e the airline to its next stage o& expansion"
+owever, . can't deny that . had some concerns a!out the way things were going"
$or the existing 0igerian airlines there were serious pro!lems" One was !an-rupt, and while it had
enough cash to cover the cost o& crews, landing and navigational &ees, &uel and insurance, there was no
money le&t &or reinvestment and maintenance" Another had only one servicea!le plane" 3he remainder o& its
&leet was grounded !ecause they could not &und maintenance" 3his was a simply atrocious situation"
3he $ederal Airports Authority o& 0igeria still re,uired a lot o& help to ma-e things wor- more smoothly"
3he &eed!ac- . received told me that outside Virgin 0igeria, things were !eing very !adly run" .t was going
to ta-e time to create a super! new airline in A&rica" Our competitors in 0igeria still had planes &alling out o&
the s-y and customers plummeting to their deaths"
On BB Octo!er B221, a B19year9old 4ellview Airlines 4oeing CHC too- o&& &rom Dagos with six crew and :::
passengers on !oard" A&ter passing through :H,222 &eet, the plane stalled, tipped and nosedived into the
ground" Although the aircra&t came down nineteen miles north o& Dagos, it too- the rescue teams nine hours
to locate the wrec-age" 3he plane had an old search9and9rescue system which hampered search e&&orts"
On :2 Decem!er, a Sosoliso Airlines D(:2 &rom A!u/a crashed on landing at Port +arcourt, -illing :2;
people" Among those who died were seventy9one students o& Doyola @esuit (ollege in A!u/a who were
returning home &or their (hristmas holiday"
A &ew months later, again at Port +arcourt, an Air $rance /et was !adly damaged a&ter crashing into a
herd o& cows" 3han-&ully, this time, no one was hurt"
3hen, on :E Septem!er B22<, a Dornier BBE military plane crashed -illing &ourteen o&&icers, including ten
generals" .n another 0igerian crash, a num!er o& senior politicians were -illed"
Delivering the Virgin !rand in A&rica is important 5 it must stand &or the same values as in other parts o&
the world: integrity, sa&ety and a commitment to customer service" =aintaining the highest standards o&
sa&ety is something that can never !e compromised, and over the years several international transportation
groups have !een &orced to pull out o& A&rica !ecause the cut9throat local competition chooses to ignore the
regulations"
6or-ing in the 0igerian mar-etplace was !ecoming increasingly tough" . and my team in Virgin 0igeria
were growing increasingly &rustrated" 6e were striving so hard to !uild a sa&e, high9,uality airline, !ut we
&ound ourselves thwarted at every turn" 6e were incurring all the costs o& putting together a ,uality
operation &rom scratch, !ut in a mar-et that put sa&ety and ,uality last" 6e were, in the end, /ust an airline:
we couldn't hope single9handedly to trans&orm the industry's entire in&rastructure" 6e needed help"
. appealed to the president to ensure that companies that were not prepared to operate to the correct
standards or who cut
corners were dealt with rapidly" .& necessary, he should ta-e steps to remove their Air Operator's
(erti&icates" .t was simple: unworthy aircra&t should !e &ixed 5 or scrapped"
0ot long a&ter, a directive arrived, &orci!ly e/ecting Virgin 0igeria &rom its operational !ase at Dagos
3erminal : >home o& Virgin Atlantic's 0igerian operation?, and relocating it at 3erminal B"
6e wanted to -eep all o& our operations in one terminal 5 to create a hu!, rather than !e split across two
terminals 5 and this was the !inding contract we'd entered into with the government" (onrad and his team
were trying to create an airline that could e&&ectively compete on the world stage" 3he airline had grown
dramatically since B221, operating thirty &lights per day with an excellent sa&ety record" Splitting the airline
would increase costs considera!ly"
6e prepared to challenge the directive in the courts 5 and /ust hours !e&ore the hearing, agents who
appeared to have the approval o& the $ederal =inistry o& 3ransportation and the $ederal Airports Authority
o& 0igeria came in the night li-e ma&iosi with sledgehammers and demolished our !usiness9class lounge"
. had to write to President #ar'Adua, O!asan/o's successor, as-ing him to intervene personally in this
dispute" . -new that 0igerians wanted an international and domestic airline that they could !e proud o& 5
and we'd wor-ed hard to deliver this" 6hat we needed now was some common sense and cool heads
to ensure that disputes never again escalated in this way"
$ortunately, the president too- on !oard what . said in my letter, and as this !oo- is going to print the
issue appears to have !een resolved"
L
Out o& recession, new ideas and new !usinesses o&ten grow" 4ut how do you deliver new products to a
mar-et that's !arely staggered &ree o& the emergency room) +ow do you get people who've spent the last
months or even years &ire&ighting to thin- strategically) 3his was one o& the challenges &acing me as . set
out to create mo!ile networ-s across the world"
Since :;;1, . had !een harrying our Virgin management team in Dondon to &ind a way into the growing
mar-et &or mo!ile phones" .n the last &i&teen years, the mo!ile has !ecome the personal possession that has
most changed the way we live and wor- across the glo!e" .n :;;E more mo!ile phones were sold
worldwide than cars and personal computers com!ined" 4ut the early dominance o& the giant mo!ile phone
companies was not doing the consumer any &avours" . was increasingly &rustrated and -een to get involved,
!ut we had neither the &irepower nor the in&rastructure" 6hat we had was the Virgin !rand and a service
ethos"
$ollowing *ordon =c(allum's arrival, we &ocused on mo!ile phones as the sector meriting our greatest
attention" One o& the downsides was that Virgin adio, our $= radio licence, was doing well, selling
advertising slots to the ma/or phone
companies, and the management were trying to discourage me &rom anything that might /eopardise their
revenue" 3he competitive mo!ile companies were spending huge amounts and there was a &ear 5
un&ounded, in my view 5 that we might lose their custom"
*ordon =c(allum, Stephen =urphy and the team identi&ied a report &rom *oldman Sachs which they
thought might whet my appetite" .t was all a!out =V0Os, and as you can pro!a!ly imagine, it wasn't exactly
!edtime reading"
An =V0O is a mobile virtual network operator& .t's a phone company, !ut a phone company without
any o& the usual telecoms paraphernalia" 0o telephone exchanges, no phone masts, no networ-s, wires,
switches or ca!les under the ground" .nstead, an =V0O rents time and !andwidth on another carrier's
system"
.'m always scouring around &or a !argain" And you can usually trac- them down where someone has
produced too much o& something and isn't selling enough even to cover their costs" 3his was happening all
over the telecoms industry" 3he !ig mo!ile phone operators had paid vast sums up&ront &or their mo!ile
in&rastructures 5 now they needed to pull in revenue, and so were -een to lease time to others"
Our &irst call was to 4ritish 3elecom, the U%'s national phone company, employing tens o& thousands o&
people" Since they had !een privatised, 43 had !een &orced !y 'uropean Union regulations to allow other
phone and .nternet service providers
to piggy!ac- on its massive, &ixed9line networ-" Setting up our own stand9alone telecoms company didn't
appeal to us" During our tal-s . met 3om Alexander, a &ormer pro&essional go9-art racer, who was wor-ing
with 43 (ellnet as deputy commercial director" =y instincts a!out people are usually pretty sharp, and .
li-ed 3om" +e shared my passion &or !usiness" >+e later told me his &ather had !een an inventor in the
horticultural industry, and that this had inspired his entrepreneurial strea-"?
6e thought 43 (ellnet would ma-e a good partner, so Virgin made an o&&er" 6e started &leshing out how
(ellnet as a 'consumer9&ocused, youth9oriented mo!ile !usiness' might wor- with us 5 and we were also
-een to wor- with 43 to secure a third9generation >H*? mo!ile phone licence" (ompetition &or these &ive
licences on o&&er in the U% was proving so &ierce 43 (ellnet had to a!andon discussions with Virgin to
concentrate on their !id >and, as we su!se,uently discovered, on one o& the most success&ul re!rands . can
thin- o&, to OB, with a much more youth9&ocused orientation that competes head9on with Virgin =o!ileA?"
0evertheless, . called 3om" '6hy don't you come over and have a chat a!out setting up a new company)'
3om came over that same day to my house in Ox&ordshire and we sat with a note!oo- and pen and
plotted how we might run an =V0O"
*ordon and . managed to persuade 3om to /ump ship, !ringing with him his colleague @oe Steel, then in
his early thirties and a mo!ile phone whi88" =eantime, we !egan loo-ing &or another partner, now that 43
(ellnet had pulled
out to pursue its !id &or a H* licence" OneBOne was a company operating in the south9east o& 'ngland, in
the area contained !y the =B1 or!ital motorway" 3he company was a /oint venture !etween (a!le M
6ireless and US group =ediaOne, and they were -een to tal- to us" OneBOne's strategy o& &ree wee-end
and evening calls had le&t it with a networ- that hardly anyone used during the day" . was sure that Virgin
could &ill their dead air"
6e signed a deal on : August :;;;, announcing the plan to launch Virgin =o!ile in 0ovem!er" 3ogether
we were committing over I:E2 million to the /oint venture, using our high street chain o& Virgin =egastores
and V Shops as our retail channel" 4ut a &ew wee-s later, (a!le M 6ireless announced it was selling
OneBOne" Deutsche 3ele-om swooped to !uy and it loo-ed as though Virgin =o!ile was dead in the water"
. decided to intervene" . went to see Deutsche 3ele-om !oss on Sommer to smooth the position" 3o their
credit, the *ermans got up to speed with our plans incredi!ly ,uic-ly" And to our delight, they li-ed what
they saw: they agreed to proceed and signed o&& the /oint venture, with OneBOne now !ecoming 39=o!ile"
3he Virgin *roup and 39=o!ile each invested IF2 million, giving us IE2 million" And we started
negotiations with oyal 4an- o& Scotland and @P =organ &or extra !an- de!t o& I:22 million" .t was one o&
the U%'s !iggest ever start9ups, employing more than 122 people with plans &or another 122 /o!s within two
years" (ity analysts .nvestec +enderson
(rosthwaite Securities valued the !usiness at I:"H< !illion 5 and we'd yet to ma-e a pennyA 6e had the
seed money" 6e had the con&idence o& the analysts" 0ow we needed to prove ourselves" $ast"
If you are a late entrant to a market, you need to be radically di(erent to win over
customers" $irst9mover advantage is o&ten cited in !usiness as giving the early players the edge, !ut there
are plenty o& occasions when this isn't the case" .n Virgin's &avour is the power o& the !rand, and its arrival
into a mar-et can cause some shoc- waves" 3his was what we hoped to do with the mo!ile phone mar-et"
6hile 3om and @oe were whi88es in the telecoms &ield, they re,uired an in&ormal lesson in the Virgin
!rand" 3he !est person to deliver this was @ames %ydd, who had !een wor-ing on the launch o& Virgin (ola"
@ames was an advertising executive who had -nown 6ill 6hitehorn since their !eer9drin-ing days in the
student union at A!erdeen University, and he had wor-ed in a num!er o& high9pro&ile consumer !rand
companies" Di-e so many people who now wor- &or Virgin, he arrived in :;;H to help the airline &or three
months and ended up staying" 6e'd had a woe&ul !usiness9class campaign and . wanted to scrap it" @ames
&ixed it and thought it would !e &un to hang around Virgin &or a while, so we gave him one hell o& challenge:
the mar-eting o& Virgin (ola and Virgin Vod-a" 3a-ing on (o-e was, as .'ll discuss later, one o& our more
am!itious !usiness adventures" .n :;;E, . as-ed him to /oin the team on the Virgin =o!ile pro/ect as !rand
director"
=eanwhile, the ma/or mo!ile phone companies were ma-ing the consumer's li&e complicated 5
deli!erately" Across 'urope, the consumer demand &or mo!ile phones was shooting into the s-y 5 yet the
cost o& the latest stylish 0o-ia, 'ricsson, Siemens or =otorola was o&ten prohi!itive" So the phone
companies !egan tying the unsuspecting consumer into two9 and three9year9long contracts" '(on&usion
mar-eting' was the spurious tag" A customer would sign up and pay &or B22 minutes o& voice and :22 text
messages, !ut i& they used more than this they were charged more per minute not less, as you might
expect &or !eing a good customer" 3his was !army logic" O& course it was: it was designed to &ool people"
3he industry was deli!erately shrouding itsel& in complexity to &leece people"
@ames %ydd and 6ill 6hitehorn attended a day9long powwow at a +ert&ordshire hotel to discuss the way
ahead with a do8en OneBOne people, including Alan *ow, the &inance director, and 3im Samples, the
managing director" 3he discussion was a!out how the Virgin !rand might !e e&&ectively applied to the
mo!ile phone mar-et" 3here were plenty o& mo!ile phone specialists there who could recite the technical
spec, !ut they weren't people who understood our !rand" . heard later that @ames and 6ill !ecame a little
aerated when they tried to de&end Virgin =o!ile as a consumer9led mo!ile phone product"
$or Virgin, a recurring pro!lem has !een that some people who have tried to do !usiness with us thin-
they have !ought a la!el to stic- on the &ront o& a product 5 that 'Virgin' is only a
mar-eting tagline" On the contrary, Virgin has to !e the consumer's champion, rather than /ust a !old red
logo" .t has !een a di&&icult /o! over the years, explaining the commercial !ene&it o& this approach 5 !ut .
thin- the success o& Virgin =o!ile has proved !eyond a shadow o& a dou!t that it wor-s" 6e started &rom
the !asic premise: i& you rip o&& the consumer, then you will destroy the integrity o& the !rand" .t's as simple
as that"
So we would not &ollow the 'con&usion mar-eting' o& the other guys" . wanted the whole mo!ile !usiness to
!e simple enough that even . could understand what . was !eing charged" .t's a !asic !usiness message" .&
the directors can't get their head around the pricing structure o& anything, then how on earth is the
consumer going to wor- it out) And we would move into the prepay mar-et so that more young people and
those on lower incomes could /oin the mo!ile phone revolution"
6e needed to -eep the tari&&s simple" . wrote in my note!oo-: ' #et people know e)actly what they
are paying for * and reward those who stay with us& +ames said think tins of beans, -The more
beans they buy the cheaper the price&.'
@ames told me later that all the phone people loo-ed on in horror when it was suggested that we ma-e li&e
easy &or people" .t wasn't what our telecoms partners wanted at &irst" 3hey wanted to continue with the
esta!lished charging structure" @oe Steel had experience o& this -ind o& pricing plan
5 so we as-ed him to turn it on its head" +e got it straight away" 6e loo-ed at discounting 5 which had to !e
a central
part o& our o&&ering 5 and rewards &or loyalty" .& your whole &amily !ought mo!ile phones it would !e cheaper7
i& it was a Virgin to Virgin phone call it would !e cheaper" So there was a distinct reason to !uy Virgin" 6e
wanted people to come into Virgin =egastores to !uy their phones and purchase their prepaid vouchers &or
airtime, and we signed up a huge num!er o& places 5 &illing stations, high street chains, local corner shops,
even nightclu!s 5 where people could top up their mo!ile phones"
$or the launch we set a simple tari&&: :1p &or the &irst ten minutes, then :2p &or the next ten and then 1p
a&ter this" Dater, . wanted to ma-e this even simpler" 6e settled on :1p &or the &irst &ive minutes and 1p a&ter
that" 3here would !e no con&usion a!out pea- or o&&9pea-, local or national calls" (alls to other mo!ile
networ-s would !e charged at a &lat rate o& H1p per minute" (ustomers would pay I:B"12 &or a one9o&&
service pac-, including a S.= card, phone num!er and I:2 o& &ree airtime" And they would !e a!le to !uy
their own phone, choosing &rom seven models priced !etween IC2 and IHE2"
Once all this was set in stone . had &aith that the team we had put together would !e a!le to run and
deliver a great !usiness" . wasn't let down 5 each one o& the Virgin =o!ile team could &eature in a !usiness9
school case study o& how to !uild great colla!orative !usiness teams" *raeme +utchinson, who played with
a heavy metal roc- !and that made two al!ums, was our head o& sales" Andrew alston in the customer
services o&&ice wor-ed exceptionally hard to ensure consistency across our
call centre" Steven Day, the &ormer Daily )press /ournalist, /oined as director o& communications and did
a !rilliant /o! o& -eeping us in the news, as well as helping with investor relations"
3om, @oe and the team had a real sense o& autonomy at Virgin =o!ile" . didn't need to !e involved day9to9
day, !ut . was sent regular in&ormation and &igures, which . loo-ed at each night" $rom the o&&, the !usiness
acted li-e a listed company 5 and that's how all start9ups should try to !ehave" . loved going to the call
centre in 3row!ridge in 6iltshire to meet the exu!erant sta&& and /oin in the parties 5 they -new how to let
their hair down and . was exceptionally proud o& them all 5 and delighted &or their success" 3he young
3row!ridge sta&& would turn out in &orce when . came to visit and they all volunteered to !e Virgin Angels at
the V $estivals, helping people put up their tents and handing out goodie !ags" One o& our parties got a little
out o& hand and the local paper declared on its &ront page that it had !ecome an orgy, in which drun- young
people coupled indiscriminately in the nightclu! car par-" *ood luc- to them, . thought: since outside it was
minus ten degrees with a &oot o& snow" Accurate or not, this nonsense was !etter than a &ull9page
recruitment advert 5 the &ollowing wee- we were inundated with people wanting to wor- at Virgin =o!ileA
3he launch idea was a great caper too: extremely saucy, it made the headlines in all the ma/or U%
newspapers" On :: 0ovem!er :;;;, . appeared with seven very attractive women
5 all na-ed, except &or some strategically placed orange cushions 5 announcing Virgin =o!ile in a giant
see9through mo!ile phone in 3ra&algar S,uare, in the centre o& Dondon" Our slogan was: '6hat you see is
what you get"' . said the con&using range o& o&&ers and tari&&s out there was /ust there to &ool people, and that
i& everyone in the U% with a mo!ile switched to Virgin, they would save a com!ined I:"< !illion per year"
3he =etropolitan Police turned up to &ind out i& our lovely ladies really were stripped !are" 6e made a
swi&t exit"
. had no idea, !ac- then, how success&ul this !usiness would !ecome"
On B: $e!ruary B22:, . was in (annes at the H*S= 6orld (ongress, and . announced our intention o&
ma-ing Virgin =o!ile the &irst glo!al =V0O, with non9stop plans to serve ten countries across &ive
continents in the coming years" . in&ormed the delegates a!out our partnership with Singapore
3elecommunications which would result in the launch o& Virgin =o!ile Asia that summer, and said that
partnership plans &or Virgin =o!ile USA would !e announced imminently"
. said 'urope, A&rica, (hina, .ndia, .ndonesia, +ong %ong, 3aiwan, Vietnam and elsewhere throughout
South9'ast Asia and the Paci&ic im were all ripe &or =V0Os" . &elt . had to explain how it all made sense" '.
!elieve no sel&9respecting *S= or &uture U=3S networ- could a&&ord to !e without an =V0O"' >3here were
so many acronyms in this !usiness, .'d
had to spend the morning rote9learning them" $or the record, *S= stands &or *roupe SpNcial =o!ile 5 the
most popular world standard &or mo!ile networ-s" U=3S 5 Universal =o!ile 3elephone System 5 is its
successor"?
.t was easy to see why you might want to set up an =V0O" 3he start9up costs are tiny compared to
!uying an existing mo!ile !usiness, and practically non9existent when compared to the cost o& !uilding a
new networ-" 4ut what were the !ene&its &or existing networ- operators)
=V0Os are great at cutting networ- churn" .& a customer is going to leave an operator isn't it !etter that
they go to the =V0O partner than to a rival) 3hen at least they are still on the networ- and there's a hal&9
share o& ongoing revenues" 3he =V0O has its !rand and the networ- has its own !rand, and di&&erent
!rands attract di&&erent people" 3wo good !rands together will invaria!ly attract more custom than one good
!rand on its own" So, . argued, networ-s should thin- o& =V0Os as a -ind o& insurance policy" (olla!orating
with an =V0O spreads the ris-s o& the !usiness" 3he H* standard had made a lot o& extra services possi!le
5 &rom on9the9go email to video messaging 5 !ut no one really -new how !est to exploit, pac-age or sell
these services" 'So,' . argued, 'an =V0O with a di&&erent strategy on the same networ- increases the
li-elihood o& success, while stimulating tra&&ic and revenues"'
.t wasn't the wittiest presentation . had ever given and it wasn't the glit8iest" 4ut my audience was
certainly paying attention" 3he mar-et was in a ,uandary, and people were
anxious to &ind H* !usiness models that would wor-"
3he original mo!ile networ-s were !uilt mainly &or ordinary voice telephony, and assumed transmission
rates that these days seem ,uite slow" At the end o& the :;;2s, the .nternational 3elecommunication Union
created a new set o& standards called H*, so that networ- operators could o&&er users a range o& more
advanced services, including video calls and high9speed .nternet access" 4ecause H* networ-s each use a
much narrower !and o& the radio spectrum than the old networ-s, there was now room on the spectrum &or
newcomers to come and try their hand at the mo!ile telecoms !usiness" At least, that was the theory"
6hat actually happened was rather di&&erent" .n *ermany and in the U%, &or example, the governments'
auctions o& H* licences impoverished the very mar-ets they were supposed to encourage" .n the U%, the
auction e&&ectively imposed a crippling tax on mo!ile phone operators" .t all helped *ordon 4rown and 3ony
4lair and their 0ew Da!our pro/ect" 3he money heading &or the U% government's co&&ers was an
un!elieva!le IBB !illion, which was a lot o& schools and hospitals" 3o that extent you could see why they
were tempted into ta-ing advantage" 4ut it !ac-&ired in a way, as the auction winners spent so much on
their licences that they ended up really dragging their &eet !uilding their networ-s and developing the very
services that the government wanted to promoteA 6e were concerned that 39=o!ile might not give us
access to H*, so we wanted to !id ourselves"
Our consortium decided to stic- at I:"1 !illion, and when !idding &or licences !egan, we were decisively
outgunned !y silly money" On 1 April B222 we pulled out o& the !idding" At the end o& April, the winners were
announced: 3.6, the (anadian 3elecoms company in which +utchinson 6hampoa, !etter -nown &or H,
have a sta-e, paid IF"H !illion7 43, OneBOne and Orange, around IF !illion7 Voda&one paid a swingeing
I1"; !illionA
6e had had a luc-y escape !y stic-ing to our principles and only !idding what we thought the licence was
worth, not allowing ourselves to get carried away !y the open gam!ling nature o& the process itsel&"
L
.n $e!ruary B22:, as . was spea-ing at (annes, descri!ing what . !elieved was the &uture &or mo!ile
telecommunications
5 even as . was /uggling, or trying to /uggle, all those unlovely capital letters, li-e something out o& Dr Seuss
5 Virgin =o!ile's plans were gathering pace in the United States"
.n America, the pro!lem with the mo!ile mar-et wasn't so much that the government had suc-ed the
!lood out o& it, !ut more that everyone was reeling &rom the sheer cost o& creating the in&rastructure you
need to ta-e &ull advantage o& the H* standard" .n the wa-e o& deregulation, companies had piled !illions o&
dollars into new communications gear to deliver everything &rom telephone services to via!le 3V networ-s
to high9speed .nternet capacity" 3he capital spending on
in&rastructure was massive 5 more than G:22 !illion in B222" Do8ens o& telecoms start9ups set in place
during the previous &ew years !egan running out o& money and &olding" 4etween @une and Septem!er
B222, the telecoms giants in the US also !egan to melt down" /usiness 0eek in Septem!er tal-ed a!out
an industry downturn as the 4ig 3hree local phone companies
5 Veri8on (ommunications, 4ellSouth and S4( (ommunications 5 watched their shares slide"
Annual revenues 5 increasing at a respecta!le :2"1 per cent a year 5 were simply not -eeping pace with
the cost o& these soaring capital pro/ects" .nvestors were getting their &ingers !urned" 3his was what made
Virgin =o!ile's =V0O such an intriguing option &or our new partners, Sprint"
3he pro!lem was, Sprint was hurting /ust as much as every!ody else" 3hey were spending more and
more time &ire&ighting, less and less time thin-ing strategically" Sha-en !y a !ad set o& ,uarterly results,
Sprint !egan to lose their enthusiasm &or our innovative scheme" 3hings !egan to loo- dodgy and a&ter
nearly a year and a hal& o& discussions and investment there was pressure &rom the &inance team to shut it
all down" (harles Devine, the president o& Sprint P(S, the wireless division o& the US telecoms giant,
wanted to go ahead, !ut he was &acing strong opposition" .t was time &or a last9gasp e&&ort" *ordon
encouraged me to phone Sprint's group president, on De=ay, and the chairman and chie& executive, 4ill
'srey"
. said it wouldn't cost them a lot"
0o response"
. said it would ma-e money &or them in a new category"
0othing"
. wheeled out the !ig guns" . told them we could trans&orm their stu&&y image"
0othing"
'Doo-,' . said, &airly desperate !y this time, 'you need a !rand li-e Virgin" ight now you're the phone
company o& choice &or
. " " &or young Republicans"' And 4ill changed
his mind" 6e were on"
.n @une B222 Red 1erring, the !usiness technology maga8ine, listed the ':22 =ost .mportant (ompanies
in the 6orld' and their !randing" Virgin didn't ma-e the list" 2orbes maga8ine spent time &ollowing me &or a
cover story in @uly B222 and its writer =elanie 6ells concluded that our !rand was stretched too thinly
across too many !usinesses" *ordon =c(allum had told me to my &ace that Virgin was still 'a 4ritish !rand'"
6e needed to !e more &ocused and show we could deliver an outstanding product to tough international
mar-ets" 6e needed to prove ourselves in the right place" And that place was the United States"
.n Octo!er B22:, Sprint and the Virgin *roup o&&icially announced our /oint venture 5 a Virgin9!randed
=V0O
running on Sprint's P(S digital system" Our aim was to target &i&teen9 to thirty9year9old consumers in the
United States"
Our eyes and ears in America was $rances $arrow" .'d as-ed her to /oin the !oard o& Virgin Atlantic !ac-
in :;;H and she was a thought&ul and incisive person" She was now ('O o& Virgin USA, the head,uarters
o& the Virgin *roup in 0orth America, responsi!le &or expanding the Virgin !rand, developing new !usiness
and managing investments in the region"
(onventional wisdom had it that the prepaid mar-et simply wouldn't wor- in the United States" Prepay
phones e&&ectively guarantee anonymity, and people told me that the only people wanting phones li-e this
were the three Ps mar-et: pimps, pushers and prostitutesA 6e were less than charmed !y that argument"
6e said that it was &undamentally wrong7 that the prepay phone was an attractive category &or younger
people who didn't want to lum!er themselves with niggling &inancial commitments"
6e were reminded o& an extremely smart guy called Dan Schulman, the ('O o& Priceline"com, one o& the
most recognised !rands on the .nternet" Dan, who had previously !een president o& A3M3's consumer
mar-ets, was /ust then !ringing Priceline"com into pro&it" 6e had already !een tal-ing to him a!out Virgin
Atlantic &lights on his price comparison site7 now we !egan tal-ing a!out the &uture o& mo!ile phones" On :1
@une B22:, we were a!le to con&irm the rumours 5 and we launched Virgin =o!ile in the USA"
.n the U%, we had now signed up our one millionth customer" .n /ust nineteen months we had esta!lished
a record as the &astest growing mo!ile !usiness 4ritain had ever seen" >.t had ta-en Orange more than
three years to hit a million customers, OneBOne in excess o& &our years, Voda&one more than eight years
and (ellnet almost a decadeA?
6e were already rolling out Virgin =o!ile Australia to a mar-et that was gasping &or innovation7 Virgin
=o!ile (anada, $rance and South A&rica would &ollow once we had per&ected the !usiness model" .n a
=emorandum o& Understanding with Sprint, we said our intention was to launch a Virgin =o!ile9!randed
/oint venture company in the USA"
Sprint would !e hosting the &irst =V0O in the US" 3his gave us a head start7 !ut . -new that others would
!e watching with interest, and it wasn't long !e&ore Disney tried 5 and &ailed 5 to do their own =V0O deal"
6e soon needed a larger in/ection o& capital" 6e needed a !igger corporate hitter" 6e as-ed the executive
headhunters +eidric- M Struggles to scour the mar-et and they coincidentally suggested Dan Schulman
who moved to us &rom Priceline"com in =ay B22:"
(omplex as this account has !een, . hope it's clear !y now that you don't necessarily need an accounting or
a legal !rain to run a success&ul !usiness" Our approach has come !y as-ing ,uestions"
6hat i& we create a product and it's the !est in the world 5 will there !e a mar-et &or it) 3he answer to this
isn't as o!vious
as it loo-s at &irst" .& ,uality always won out in the mar-etplace, the 4etamax videotape &ormat would have
trounced V+S and there would !e more Apples than P(s"
.&, on the other hand, . as-ed you: 'Do people want to &ly with the !est airline in the world)' 6ithout any
&igures or num!ers, your answer would !e '#es'"
6hen you're &irst thin-ing through an idea, it's important not to get !ogged down in complexity" 3hin-ing
simply and clearly is hard to do" .t ta-es concentration and practice and sel&9discipline" educing those
initial reports on the =V0O model to a simple !usiness proposition too- wor-" .t also, dare . say it, too- a
pinch o& courage on the part o& Virgin ris-ing its !rand and on the part o& those who le&t cosy /o!s to ma-e
the vision a reality"
.t's easy to !e hoodwin-ed !y technical9sounding detail, and to parrot it at others, and to &eel important in
doing so" .t's hard to as- the naive ,uestion" 0o!ody wants to loo- silly"
4ut . would say you can never go too &ar wrong !y thin-ing li-e a customer who's new to the !usiness"
6hy do these mo!ile charges ma-e no sense) 4ecause they ma-e no sense, that's whyA 4ecause they are
there to &ool youA .t staggers me to this day that, when we entered this lucrative and exciting young mar-et,
we were the only one in the crowd pointing and laughing as the emperors o& the phone industry strode !y"
.t's easy 5 too easy, in &act 5 to relin,uish your responsi!ility &or your idea to experts" 3his is almost always
a mista-e,
!ecause experts are only experts in their &ield" 3hey're not experts in your idea" At this stage, the only
person ,uali&ied to assess your idea is you"
#our initial !usiness ideas may lac- detail" 3hat's &ine 5 !ut it doesn't give experts anything to wor- with"
As- them &or their opinion, and they'll give you something !ac- that's generic, predicta!le and &airly useless"
. -now that i& . present an unready idea to experts such as 'rnst M #oung or =c%insey, they will advise me
how much money . stand to lose" .&, on the other hand, . go to Pricewaterhouse(oopers or %P=* with the
same idea, they could well tell me how much .'m going to ma-e" .n neither case do . learn anything use&ul
a!out my idea"
#ou need to &lesh out your own ideas" #ou need to do your own research" #ou need to ta-e responsi!ility
&or how you plan to turn an idea into action" 3hat way, when you approach the experts 5 the accountants,
the legal !rains 5 they have something to get their teeth into"
Virgin's move into the &inance sector astonished many, and still raises an incredulous eye!row among
some politicians and heads o& industry" $inance, surely, is sacrosanct: an impossi!ly arcane and rare&ied
practice 5 the province o& experts)
Our success in the &inancial sector has come &rom as-ing very clear ,uestions o& ourselves, and then
>and only then? surrounding ourselves with experts who are demons at cutting through the ver!iage to the
relevant details" An expert who ma-es things more complicated isn't doing their /o! right 5 and
&ran-ly, this is pro!a!ly your &ault" An expert should ma-e things simpler" An expert should give you twenty9
twenty vision" *iven the right tools to do her /o!, she is a marvel to !ehold"
'nter @ayne9Anne *adhia"
@ayne9Anne ,uali&ied as a chartered accountant with 'rnst M #oung and went to wor- with 0orwich Union,
the insurance and pensions giant" She !ecame one o& their rising stars, wor-ing in unit trusts and P'Ps, a
tax9e&&icient personal savings product" 0ow she was loo-ing &or her next move"
One day in :;;F she too- the train to Dondon, in time &or lunch with Alastair *ornall, a P agent who ran
(onsolidated (ommunications" On the train, she &lic-ed through a copy o& 1ello," 3here was an article and
colour photographs &eaturing a !earded and grinning ichard 4ranson tal-ing a!out the Virgin *roup"
'. read that article and . thought, *osh, it's so di&&erent &rom 0orwich Union7 it must !e &antastic to wor- &or
a guy li-e that,' she later told me"
She mentioned the article to Alastair" Alastair was a &riend o& owan *ormley, who had /ust /oined Virgin
and was the !rains !ehind a /oint venture pro/ect !etween 0orwich Union and Virgin" .t was called Virgin
Direct"
@ayne9Anne came to see me &or a meeting at +olland Par-" 3here was a lot o& commotion !ecause we'd
/ust set up Virgin (ola" She recalls ringing the door!ell at +olland Par- and
having to &ind her own way around" She wandered up the stairs and &ound me wor-ing in one o& the
!edrooms" . led her into the snoo-er room where her !oss Philip Scott had !rought along all the papers to
review" 6e wor-ed on the plans to launch Virgin Direct in the snoo-er room, then we went !ac- downstairs"
Philip had a ,uic- gin and tonic and le&t to catch his train"
. shoo- my head and said to @ayne9Anne: '+ow li&e moves" One day we're dealing with the Sex Pistols,
the next day we're dealing with pensions"' . pointed to the chair Philip had !een sitting in" 'Sid Vicious was
sitting there not so long ago"'
'eally)'
'#eah" #ou see that corner there)'
'#es)'
'3hat's where he threw up"'
6e signed the deal to set up Virgin Direct on :; Decem!er :;;F, with 0orwich Union and Virgin !oth
putting in IB million"
6e wor-ed hard to get the deal done, the !usiness launched and all the regulatory approvals in place, !ut
we still managed to have some proper &un" . thin- that's what @ayne9Anne li-ed a!out Virgin"
Virgin Direct in Decem!er :;;F was a new player !ecause it was one o& the &irst &inancial service
companies to sell products over the telephone" @ayne9Anne said to me that approval &rom
DAU3O >the Di&e Assurance and Unit 3rust egulatory Organisation? and .=O >the .nvestment
=anagement egulatory Organisation? would ta-e months and months" . thought at &irst she was tal-ing
a!out her .talian cousins" . said: '. can't understand this, @ayne9Anne" 3his is a relatively small company 5
we launched an airline in ninety days"'
4ut we pushed on and the com!ination o& 0orwich Union, @ayne9Anne and Virgin gave us enough clout to
get the /o! done on time"
6e needed a new computer system and we approached the !ig players" .4= estimated it would cost IC
million and would ta-e many months to !uild" 6e didn't have that -ind o& money and we didn't have that
amount o& time" So one o& @ayne9Anne's colleagues, %evin evell, and a computing &riend, set up the &irst
system &or Virgin Direct in his attic in 0orwich" .n all, it cost us I:C,222" On Sunday 1 =arch :;;1, Virgin
Direct was launched on that system, with sixty people ta-ing the telephone calls at Discovery +ouse,
6hiting oad, which is still the o&&ice o& Virgin =oney" . went up to 0orwich &or the launch" 3he o&&ice loo-ed
pristine, it sported the new signage, and all the computers were wor-ing" 3he !oss, owan *ormley, wasn't
there as he was due to appear on the 44('s Money 3rogramme to explain our arrival on the mar-etplace"
So . too- the lead: . /umped on a des- and shoo- open a !ottle o& !u!!ly 5 li-e they do on the $ormula One
rostrum" .t &i88ed up !rilliantly into the air, over all the cheering sta&& and over &our o& the P(s" 3he
computers started &i88ling" 3hen they !lew up"
.t was clear &rom day one that the Virgin !rand was going to succeed in &inancial services" 3he sta&& were
!rilliant and wor-ed their soc-s o&&" 3he I:C,222 attic computer system !ecame the prototype as we
launched li&e insurance and pensions too"
0orwich Union didn't have the appetite &or !uilding a !igger !usiness, !ut Virgin Direct needed the capital
to grow" So in :;;C 0orwich Union sold its 12 per cent sta-e in Virgin Direct to A=P, the Australian li&e
assurance !usiness and owner o& Pearl Assurance" A=P and Virgin !ecame &i&ty5&i&ty /oint venture partners"
.n 0ovem!er :;;< . wrote to *eorge 3urn!ull o& A=P, proposing 'a !usiness plan to launch a !asic
mortgage &irst >together with a card? &ollowed !y a mass9mar-et card'"
3he ,uestion was: how) Almost all o& the U%'s high street !ranches had approached me to tal- a!out
!an-ing and &inancial services" 3hey wanted to shelter under the um!rella o& the Virgin !rand" As simple as
that" 4ut Virgin wanted to do much more than stic- their logo on someone else's product" 3hen, in :;;C, .
was contacted !y the oyal 4an- o& Scotland, at the time !eing run !y *eorge =athewson and $red
*oodwin" $inally, here was a company that wanted to innovate"
3he idea around the Virgin One account was revolutionary and simple 5 even . could get my head around
it" .t had originated in Australia where it was increasingly popular" .t was a!out putting all o& a customer's
products together" At the
end o& each evening your net !alance is charged interest" =ost people have a separate mortgage, current
account and savings, and you're paying interest on the whole mortgage" .& you roll everything together,
you'd have a lower negative !alance and you could pay o&& your home loan more ,uic-ly"
*eorge =athewson, a shrewd and canny Scot, went to see @ayne9Anne *adhia in 0orwich" +e was
enthusiastic !ut, at the same time, seemed reluctant to ma-e a &uss a!out this great product"
'#ou don't seem to want to shout a!out this,' @ayne9Anne o!served"
+e replied that i& it were success&ul, he would ta-e hal& the pro&its7 i& not, no!ody would -now he had
anything to do with it"
4ut in &act *eorge and his team were !rilliant and our relationship is a long one that has lasted to this day
>he advised us on our !id &or 0orthern oc-?" +e said to the Virgin One team that he wanted us to !uild a
!usiness around what wor-ed &or customers" +e admitted that i& 4S could have done it themselves as a
mainstream !an- they would have, !ut they li-ed Virgin's culture o& innovation and our history o& delivering
on our promises" .n Octo!er :;;C, the Virgin One account was launched internally to Virgin *roup sta&&, and
then rolled out in :;;E" . admit it was a di&&icult start !ecause the U% pu!lic weren't used to the idea o&
putting all their eggs in one !as-et, however sa&e it might !e" 4y Octo!er :;;E, we
had opened B,222 Virgin One accounts" 3he &ollowing year we opened ;,222, and :1,222 the year a&ter
that" 6e were up and running"
3he dinner9party !rigade !ecame our !est promoters" Doctors, lawyers and pro&essional people were
converting to its merits7 they told their &riends, and the idea !egan to spread through recommendation" 6e
heard that people would ta-e their Virgin One cards out at meals with &riends and sell the idea" .n !usiness
terms, this is pure gold" #ou can't !uy this -ind o& advocacy" .n 0orwich, Virgin One recruited people who
wanted to help the customer and ma-e a di&&erence 5 it was a huge part o& the training" 3here were no
sti&ling scripts to &ollow, or average tal-9times to listen to" 6e /ust answered the ,uestions" 6e hired people
who !elieved 5 li-e we did 5 that Virgin was on a revolutionary crusade to change !an-ing in the U%" One
theme was 'uncommon people' 5 that those who wor-ed with us and our customers were special !ecause
they were 'uncommon people'" 6e had !ase!all caps, 39shirts and /ac-ets made &or :,122 sta&& and &or
customers, to trumpet our attitude o& going the extra mile"
.n B22:, 4S could see this was a great !usiness" 3hey decided they wanted to !uy :22 per cent o&
Virgin One" 3hey already had 12 per cent, !ut the remaining part was held !y Virgin Direct, which was a
&i&ty5&i&ty /oint venture !etween Virgin and A=P" . owned a ,uarter o& this and there was a lot o& discussion
a!out the shareholding" . had lunch with $red *oodwin and $red was ,uite clear with me: he didn't have a
huge amount o& time &or A=P"
. wrote in one o& my note!oo-s: '2red 4oodwin& 5Don%t want to come into three6way venture& Try
to buy out other 78 per cent of Virgin 9ne& :ome up with basis to take out 78 per cent&
;omehow chemistry< us and 'M3 don%t get on& 1ave relationship with :4=>&5'
On a near!y page . added: '' game of Monopoly& I used to en?oy playing Monopoly as a child&
Recently I began to realise that I%ve never stopped& Mortgaging my hotels to keep uston
;tation& Mortgaging my houses to ac@uire the >tilities& /orrowing from the bank to pay for
everything, ;elling everything to pay the bank,'
6e eventually sorted out a deal with A=P" Once it was announced . phoned @ayne9Anne"
'.'m really sorry"'
'A!out what)'
'A!out losing you" .'m phoning to say how sad . am today"'
'Sorry) 6hy)' she said" '.'ve /ust got a very decent che,ue and so have my team"'
'6ell, . &eel as i& .'m selling you and the guys along with all o& the &urniture" .'ve signed a clause with the
oyal 4an- saying we can't go into mortgages in the U% &or the next two years" Doo-: i& you don't li-e
corporate li&e in two years' time, come !ac- to us"'
3wo years to the day later, . phoned" 'Are you happy)'
=y call had surprised her, and pleased her, !ut 5 yes 5 she was happy" She was doing extremely well
with Sir $red, helping develop the One account, and the $irst Active account" She was now responsi!le &or
all o& 4S's consumer &inance in the direct mar-et 5 and later the whole mortgage !usiness in the U%" She
was such a &it and capa!le person: it occurred to me that she should !e running a !an-"
She -ept in touch and on :; Decem!er B22< 5 the anniversary o& launching Virgin Direct 5 she le&t 4S,
departing on good terms" 6e were -een to get her !ac- to Virgin to ta-e hold o& our money !usiness"
Duc-ily *ordon managed to persuade her to return a&ter a short rest, and she re/oined in =arch B22C" .
phoned her &rom 0ec-er: '@ayne9Anne 5 welcome home"'
4y then Virgin Direct had evolved into Virgin =oney 5 a /oint venture model o&&ering products with several
di&&erent partners, whilst the !usiness is owned !y our group" Virgin =oney underta-es the mar-eting and
designs the products 5 credit cards, savings and investments, li&e and general insurance
5 while our partners provide the rest" >4an- o& America operate our credit cards, which means the cards are
on 4an- o& America's !alance sheets, not Virgin'sA? 4ut >possi!ly &ortunately given the un&urling o& the
mortgage crisis? we hadn't !een a!le to get !ac- into the mortgage !usiness since selling the One account"
. as-ed @ayne9Anne and the team she !rought with her to re9esta!lish the One account on another
level to &ill the gap le&t !y all the struggling mortgage lenders" .t was this spring!oard that gave us the a!ility
to ma-e a proposal &or 0orthern oc- 5 which .'ll tal- a!out in the next section"
.n this chapter .'ve tried to demonstrate how Virgin has delivered on some o& its !est ideas" .'ve tried to
illustrate the importance o& good communications and attention to detail" .'ve stressed how vital it is to thin-
clearly, reducing a !usiness to its essentials" Do not underestimate the e&&ort re,uired to do this" .t is very
hard to loo- outside your own industry, and thin- the way a customer thin-s, particularly i&, as is li-ely, your
li&e's e&&orts are devoted to one operation, in one sector"
Virgin's !rand values o& in&ormality and plain spea-ing are incredi!ly use&ul to us in our day9to9day
delivery o& !usiness, !ecause they -eep us grounded" 3hey stop us &rom losing touch" 3hey prevent us &rom
ever, in our wildest nightmares, contemplating anything as sel&9de&eating as 'con&usion mar-eting'"
emem!er: complexity is your enemy" Any &ool can ma-e something complicated" .t is hard to ma-e
something simple" Use experts wisely" Direct them" *ive them wor- to do" 3hey're not there to hold your
hand" .gnore &la-" emem!er, everyone has an agenda, so the advice you receive &rom outside your trusted
circle is not /ust to !ene&it you" Almost all o& it will !e well meant, !ut even the !est o& such advice needs
interpreting"
$eep a cool head& Aou%re in business to deliver change, and if you succeed, the chances that
no one will get hurt are virtually Bero" 3his is the rough and tum!le o& !usiness" 4e sportsmanli-e, play
to win, and stay &riends with people wherever possi!le" .& you do &all out with someone, ring them a year
later and ta-e them out to dinner" 4e&riend your enemies"
'ngage your emotions at wor-" #our instincts and emotions are there to help you" 3hey are there to ma-e
things easier" $or me, !usiness is a 'gut &eeling', and i& it ever ceased to !e so, . thin- . would give it up
tomorrow" 4y 'gut &eeling', . mean that . !elieve .'ve developed a natural aptitude, tempered !y huge
amounts o& experience, that tends to point me in the right direction rather than the wrong one" As a result, it
also gives me the con&idence to ma-e !etter decisions"
=y plans ac,uire detail as . test them against ,uestions that on the &ace o& it are really ,uite simple 5 and
more to do with emotions than &igures" .& we create the !est health clu! in town, will existing gym users go
to all the !other o& trans&erring their mem!ership to us) .& the answer is '#es', then we will give it a go and
see i& it wor-s"
3his is the point where !eing a well9&unded company puts you at a tremendous advantage" 4ig
!usinesses can a&&ord to do this sort o& thing" 3he good news &or small !usinesses is that the !ig ones rarely
!other to use their advantage to its maximum" 6hy) 4ecause they've &orgotten how to thin- li-e
entrepreneurs" 6orse still: many o& them have &orgotten how entrepreneurs &eel"
4
Learning from Mistakes and Setbacks
Damage Report
In 1969 I made the biggest mistake of my life. It was an event referred to as recently as late
!!" by the Liberal #emocrat M$ %ince &able in the 'o(se of &ommons d(ring %irgin Money)s
bid for the *orthern +ock bank. 'e said, when s,eaking (nder -. ,arliamentary ,rivilege, that
I was not a /t ,erson to r(n a bank. In the -., nearly forty years after a la,se in 0(dgement, I
was still being ,illoried.
. was nineteen years old and driving a shipment o& records to 4elgium when . stum!led on the &act that
records !ought in *reat 4ritain that were intended &or export were not su!/ect to purchase tax" So . !ought
the records . needed, pretended they were &or export, and then sold them to 4ritish customers" 3he whole
ploy involved driving &our 3ransit vans loaded with records to Dover, ta-ing them to $rance, then returning
on the next &erry with the records still on !oard" .t was not only illegal, it was really pretty stupid" .n =ay
:;<;, . was caught red9handed !y += (ustoms M 'xcise, put in a cell overnight and charged under Section
H2: o& the (ustoms M 'xcise Act :;1B" .t nearly -illed o&& my entrepreneurial dreams7 than-&ully it didn't 5
!ut it did teach me a hard lesson a!out never doing anything illegal or unethical ever again" . hadn't &ully
appreciated the seriousness o& what we were doing or the potential damage it could do to my reputation" .t
was my mum
and dad who !ailed me out, putting up their home as security" .n the end, customs agreed not to press
charges as long as . paid !ac- three times the tax that had not !een paid 5 around I<2,222 5 and . was
spared a criminal record" 6hat . didn't -now at the time was that the !ig record retailers were pulling the
same stunt in a more systematic way, and they too soon ran into the same pro!lem"
A&ter this shoc-, all the sta&& got together and we agreed to wor- night and day to settle our de!ts,
expanding the company as &ast as we possi!ly could in order to pay o&& these de!ts and to avoid me going
to court"
.t too- us three years" 4ut . learned a very important lesson: never do anything that means you
can%t sleep at night&
One thing is certain in !usiness" #ou and everyone around you will ma-e mista-es" 6hen you are
pushing the !oundaries, this is inevita!le 5 and it's important to realise this" 'ven when things are running
well, there is always the prospect o& a new reality around the corner" Suddenly, all the good decisions you
made last wee- are doing you untold damage" 6here on earth did you go wrong)
At Virgin, we have always !een prepared to &ace the &acts 5 however unpalata!le they might !e" $ailure
usually occurs when leaders avoid the reality o& !usiness" #ou have to trust the people around you to learn
&rom their mista-es" 4lame and recriminations are pointless"
.n !usiness, as in li&e, there will always !e external ris- &actors
that are !eyond your control" Oil prices triple" A terrorist !lows himsel& up in a shopping mall" +urricanes
level entire cities" (urrency &luctuations leave !ehind trails o& !an-ruptcies"
4ut you can ta-e measures to mitigate and manage !usiness ris-s" 3hen, i& disaster stri-es, at least your
attention won't !e split every which way !y other worries" 'lways, always, have a disaster protocol in
place" 4ecause i& something truly horri&ic occurs, a lot o& &rightened people are going to come to you
loo-ing &or answers"
On BH $e!ruary B22C, at around E":1 p"m", one o& our new Pendolino tilting trains 5 travelling at :22mph
5 /umped over a set o& points in (um!ria in the north9west o& 'ngland, on a remote and scenic part o& the
6est (oast =ain Dine"
On !oard was =argaret =asson, an elderly lady travelling !ac- to her home in (ardonald, near *lasgow"
=argaret 5 her &amily and &riends called her Peggy 5 was thrown around in the coach as the train slid along
the rail!ed and then careened down a steep em!an-ment"
$or ten years, Virgin 3rains had !een sa&ely carrying millions o& passengers all over the U%" Virgin
Atlantic, meanwhile, had &lown millions o& customers around the glo!e without in/ury" 3hat night, li&e
changed in our !usiness" 6e had our &irst casualties" =argaret =asson was dead" Several other people
were seriously hurt"
Oermatt, Swit8erland" =y &amily and . came o&& the slopes
a&ter a !rilliant day's s-iing" 3here had !een a welcome dump o& snow and everyone agreed it had !een a
per&ect day" .n the evening, exhausted, we all sat down together to watch a &ilm in the local cinema, when .
&elt eight or nine gentle !u88es on my mo!ile phone" . went outside" 3he text message said there had !een
a rail accident and that it was (ode 4lac-, indicating that it was serious" . phoned our then director o&
communications, 6ill 6hitehorn >now president o& Virgin *alactic?, who sits on the !oard o& Virgin 3rains"
3he call went to voicemail 5 an unusual event &or a person who is always in touch with me" . called 6ill's
wi&e, Dou, on her mo!ile and she reminded me that it was his !irthday7 &or the &irst time in a year, he had
actually switched his phone o&&" . phoned 3ony (ollins, the managing director o& Virgin 3rains, and the man
responsi!le &or !uilding the Pendolino trains"
'.'m a&raid it's a serious derailment" 3he train's gone down a ravine and the police are trying to get to the
passengers" 6e should prepare ourselves &or the worst"'
'.'ll !e there in a &ew hours,' . said" '(an you meet me)'
'.'ll pic- you up when you get in" @ust let me -now your arrival time"'
. couldn't get a helicopter !ecause the snow . had /ust !een s-iing over and having such &un on was still
&alling, shutting down much o& Swit8erland" 3he airports at Sion and *eneva were !oth out o& action" 3he
!est . could manage was to drive to Ourich, which was &ive hours away" . hired a car and drove
through the night" . got the &irst &light out o& Ourich at <"H2 a"m" 3he &light went to =anchester and . met up
with 3ony (ollins and with 6ill, who had &lown in &rom +eathrow" 3hey !rie&ed me on the latest situation,
and then we caught the 44( morning news" 3he reports said the train was intact, and that this had
contri!uted to the large num!er o& survivors" 3hat was heartening: Pendolino 0o" H;22HH, :ity of
4lasgow, li-e all our new trains, had !een deli!erately !uilt li-e a tan-" An interim accident report, later
con&irmed, suggested that a trac- &ailure was responsi!le &or the accident" 3his news, too, reshaped our
tas- and made it somewhat easier, !ecause we could !e &airly certain !y then that nothing Virgin 3rains had
done or &ailed to do had contri!uted to the incident"
As we headed to the oyal Preston +ospital in Dancashire, however, we still had little idea o& the scale o&
the accident" 3he hospital registrar there said the emergency services had !een gearing up &or over :22
casualties when they &irst heard the news" 4ecause the Pendolino carriages coped well, only twenty9&our
people needed to !e ta-en to hospital 5 still, the scale o& the medical preparations we saw was daunting"
6e went up to *rayrigg, to visit the crash site" .t was as i& a massive +orn!y model railway set had !een
pic-ed up !y a spoilt giant and dashed to the ground" 6ith a /olt . recalled how much .'d had to argue with
the Department o& 3ransport 5 which provides large su!sidies &or the railway system 5 to allow us to
increase the sa&ety speci&ications o& our trains" .& this had happened to any o& our old 4 rolling stoc-, the
in/uries and the mortalities would have !een horrendous" As it was, the carriages had held together" 'ven
the windows were intact"
.t was while . was surveying the devastation that . was &irst told a!out the !ravery o& one man" Since that
time, whenever . thin- o& the courage o& our test pilots, or my &riend the explorer Steve $ossett, who's sadly
lost to us now, or the !allooning guru Per Dindstrand, . also consider the resolve it must have ta-en to deal
with F22 tonnes o& derailed train" 3he actions o& the train driver .ain 4lac-, a &ormer policeman, were
incredi!le" Once the train had derailed, its own momentum propelled it a &urther <22 metres along the
rail!ed" .ain !attled to slow the train down on the stones" +e stayed in his seat &or a ,uarter9mile, trying to
control the train" +e didn't protect himsel& !y running !ac- &rom his ca!" .nstead, he did everything he could
to save his passengers, and in the process he sustained serious in/uries to his nec-" .t was his sel&less
action that averted more casualties" .n my !oo-, he is a true hero"
6e stared num!ly at the wrec-age &or a while, then returned to the hospital"
. met =argaret =asson's &amily in the hospital mortuary, o& all places" 3hey were clearly devastated" .
o&&ered them my condolences" 6e &ound ourselves hugging each other"
3he next minute 5 or that's how it seemed 5 . was &acing television cameras and a press pac- hungry &or
answers" .
thought . was going to cho-e up" . came very close, !ut held it together and stuc- to the &acts as we -new
them on the day"
At the time . couldn't say much" Again, . o&&ered my condolences to Peggy's &amily" . also expressed my
gratitude to .ain, who lay in another hospital near!y with in/uries that would -eep him o&& wor- &or many
months" Our other on9!oard sta&& 5 %aren 3aylor, Dere- Stewart and *ordon 4urns
5 had all !ehaved in an exemplary &ashion, and well !eyond the call o& duty, ignoring their own minor
in/uries in order to lead customers sa&ely &rom the train"
A&ter that, i& . wanted to help people 5 the police, emergency and hospital wor-ers, the mountain rescue
volunteers, railway colleagues &rom Virgin, 0etwor- ail and other companies 5 the !est thing . could do
was to -eep out o& their way" . le&t &eeling unsatis&ied: was there really no more that . could do) 3here didn't
seem to !e, !ut . com&orted mysel& with the thought that at least .'d !een there"
.t is a !oss's duty to get to the scene as ,uic-ly as humanly possi!le" .& you delay showing your &ace in
pu!lic a&ter something li-e this, recriminations, anger and !lame set in" 3his will !e !ad enough &or you7
imagine what all that con&usion and worry does to the people who've !een a&&ected !y the incident" .n my
view, i& the press are demanding early answers &or good and /ust reasons 5 and that was very much the
case here 5 it is imperative &or !usiness executives to !e prepared to &ace the media at the &irst opportunity"
'very senior executive should !e capa!le, i& push comes to shove, o&
!ecoming a visi!le company spo-esperson" . remem!er, a&ter a serious plane crash at %egworth in @anuary
:;E;, Sir =ichael 4ishop, who was ('O o& the airline 4ritish =idland, spo-e to the media straight away with
great clarity and care"
6hen Virgin 3rains was putting its own emergency procedures in place, we analysed a num!er o& serious
rail incidents, and had !een consistently appalled !y the amount o& time it too- !e&ore anyone stood up and
said: 'Spea- to me a!out this'" And we were daunted at how &ast con&usion and !lame set in as people
waited &or any -ind o& statement &rom any!ody a!out what had happened and why"
So our disaster9planning scenarios have three main aims: to get to the scene &ast7 to !e e&&icient in
dealing with the passengers, sta&& and media7 and to !e honest a!out what is happening" 3he other lesson
to come home was that the tremendous planning and re&usal to s-imp on costs on !uilding the Pendolino to
the very highest standards in the world really paid o&& and saved the lives o& people who would not !e here
today i& they had !een travelling in the old trains we replaced"
L
#ou can't protect yoursel& against the unexpected, so you need to -eep your house in as good an order as
you can" .& disaster stri-es, you don't want to &ind yoursel& doing twelve things at once and misprioritising
them in pu!lic" .t's vital, there&ore, that you ta-e control o& your internal !usiness ris-s 5 the ones you can
in&luence"
.'ve &ailed to &ollow my own advice here on a couple o& occasions 5 and .'ve always regretted it" $or
instance, .'m not always good at cutting my losses" . should have &aced up to the realities o& the mar-et and
sold o&& Virgin =egastores years !e&ore we did" =y decision to overrule my colleagues and hold on to them
&or too long cost us a lot o& money, only !alanced !y the &act that the chain's very existence and !rand was
the distri!uting channel and !edroc- o& the early success o& Virgin =o!ile"
. don't thin- that a chairman need &all on his sword i& someone messes up in the company" (hairmen must
learn &rom the incident and try to ma-e sure that particular mista-es are never repeated" An apology on
!ehal& o& the company 5 perhaps in a pu!lic &orum, sometimes in person to the individual who has !een
messed up 5 is an appropriate starting point" . -now !usiness !oo-s that say you should never admit to
&ailure, !ut . would not tolerate such an attitude among my people" . see nothing wrong with admitting a
genuine mista-e"
An entrepreneur has to ma-e the tough calls" Some say it re,uires a ruthless strea-" . don't agree" . don't
thin- .'m ruthless, although . have !een portrayed that way !y a &ew people who don't really -now me and
have never met me" 3here are some things in my !usiness li&e that . regret 5 and . have made mista-es
a!out people" One o& my &aults is that . have o&ten !een so &ocused on a !usiness pro/ect or an idea that .
have !een una!le to appreciate what was going on in someone's li&e right in &ront o& my nose" .'ve tried to
learn &rom
this, ta-ing extra time to listen" Actually, . thin- it is counterproductive to !e ruthless" Aou%ve got to treat
people as you would yourself, or better&
Det's !e clear a!out the manager's responsi!ilities here" 3here's an idea a!road that people no longer
resign when they should" 3o hear some people spin it, you would thin- resignation is the only e&&ective
action the manager o& a trou!led company can ta-e" 3his is patent ru!!ish" And &or the record, there never
was a time in !usiness or political history when talented people resigned over tri&les, or out o& some notion
o& honour" .t's a myth"
.& something catastrophic happens to a company, and the chairman actually appointed that person who
caused this systemic &ailure o& the !usiness, then the chairman certainly needs to consider his or her
position" .& a ma/or !an- does not have the security systems in place to protect itsel& &rom a rogue trader,
and that trader does immense damage to the company, then, yes, the chairman or chie& executive should
pro!a!ly consider resigning their position" 3hey are ultimately responsi!le"
.n most other cases, managers should stay where they are and sort their messes out" .t's what they're
paid &or, a&ter all" =ost importantly, someone should apologise &or the mess happening in the &irst place"
#ou de&initely should get the !est people around you when con&ronted with a serious pro!lem" Don't try to
deal with it all
!y yoursel&" Don't !e a&raid to see- help and advice" .& someone else is !etter than you at dealing with it,
then &or goodness' sa-e delegate it" And e,ually &or goodness' sa-e, don't /ump down their throats i& they
&ail"
=y management team rec-on B22H wasn't exactly a vintage year" 3hat was the year Apple's &irst iPod
personal music player was emerging" 6e had a couple o& very !right people &rom Palm who came over with
their own &un-y version o& the =PH and a range o& accessories" 3he analysis didn't truly stac- up according
to the management team !ut . insisted we push on with it: our very own =PH player, Virgin PulseA 6e had
to ma-e some heroic assumptions a!out how to scale up !ecause we were !uying the devices &rom (hina
and 3aiwan" 6e spent GB2 million on designing and !ringing it to mar-et 5 and our products were critically
acclaimed in the United States 5 !ut it didn't have the simplicity o& the iPod and the cost o& manu&acturing
/ust throttled us out o& the mar-etplace" Apple had ta-en a lea& &rom 3exas .nstruments, the poc-et9
calculator experts who dominated their mar-et &or many years" .& you drive down the retail price &ast enough
when you are the dominant player, you never allow anyone else to catch up !ecause they can't ma-e
enough money" .t re,uires the dominant player to !e !rave, !ecause it can mean canni!alising your existing
sales !y dropping the retail price" 3hat's what happened when iPod introduced the cheaper and smaller
iPod nano 5 it slammed the door on anyone else trying to !uild signi&icant mar-et share !eneath them" 3he
Virgin Pulse !om!ed and we had to write o&& GB2 million"
.t's o&ten hard when you're &ocusing on the day9to9day in !usiness to admit that what you thought was
right !ecomes wrong" $or example, we put a truly innovative upper9class seat on Virgin Atlantic's planes in
B222" +owever, we too- too long to develop them and did not -eep the pro/ect secret enough" 4ritish
Airways got wind o& what we were up to >and even got hold o& our plans? and out9innovated us with a !etter
seat" (ustomer &eed!ac- was swi&t and !rutal" People were voting with their credit cards and travelling with
other airlines
5 and our airline !egan to su&&er" 6e could have -ept the seats until they depreciated, !ut we decided the
mista-e was /ust too ghastly to live with" 6e cut our losses and dumped them" 3he cost to us) I:22 million"
3he !ene&it to us) 6e now have the !est !usiness9class &lat !eds in the world, designed !y our own team,
and we have created a product our rivals cannot match" 6e have easily recouped our losses with this
decision"
.t's em!arrassing to admit this stu&&, and . thin- it's a &ear o& em!arrassment that discourages many
chairmen and !osses &rom doing their /o!s properly" .t's all very well sitting there wondering why your
!usiness is disappearing, !ut it's only !y getting out &rom !ehind your des- and sampling the products that
you will ever see what's going wrong" 6hen you have &ound out what is going wrong, the next step is to get
the team involved to &ix it rather than &ire them" 3hat way, you can -eep your team together and close the
door on rivals who might !ene&it &rom your mista-es !y hiring the very people who have /ust learned the
lesson the hard way"
Starting a so&t9drin-s war with (oca9(ola was cra8y" .t was one o& our highest pro&ile !usiness mista-es,
though it was also one o& the things that raised the pro&ile o& the Virgin name in America" Daunching Virgin
(ola in :;;F, we were having &un and revelling in underdog !ravado, so pleased to !e snapping at the
heels o& the !iggest dog in town" 3a-ing on (o-e taught us two things: how to ma-e a great cola with a
di&&erent taste7 and how to antagonise a glo!al !usiness that !rought in GBE !illion in B22C, with pro&its o& G1
!illion"
.t was only several years later that . learned how (oca9(ola eventually set up a S6A3 team to ensure
that Virgin (ola never got a proper &oothold in the so&t9drin-s mar-et" #es, we somehow contrived to !lind
ourselves completely to the power and the in&luence o& a glo!al !rand that epitomises the strength and
reach o& American capitalism"
+ere's how we did it 5 and, whatever you do, don't try this at home"
3he Virgin 3rading (ompany, a wholly owned Virgin su!sidiary, was our !everage start9up division" Virgin
Spirits, a /oint venture with Scottish whis-y distiller 6illiam *rant, had !een esta!lished to mar-et and
distri!ute Virgin Vod-a" #ou can still en/oy a !ottle o& Virgin Vod-a 5 it's availa!le on Virgin Atlantic &lights,
along with our special *len&iddich Scotch whis-y"
3he Virgin (ola (ompany was a /oint venture with the (anadian so&t9drin- company (ott (orporation, the
world's
largest supplier o& retailer own9!rand soda drin-s" (ott !ottled own9!rand products &or such chains as AMP,
Do!law's and Sa&eway in (anada and Al!ertson's, % =art, Sa&eway, C9'leven and 6al9=art stores in the
United States" Virgin (ola was introduced in the U% in :;;F and we originally achieved success in the pu!
and restaurant trade" . was convinced !y the late *erry Pencer, the chie& executive o& (ott (orporation, that
we were in a position to ma-e a strong !id &or a portion o& the glo!al mar-et" A&ter all, (ott had customers in
Australia, 4ritain, +ong %ong, .srael and @apan, and these were -ey mar-ets &or us" 4ut (ott !aul-ed at
ta-ing on (o-e directly" 6e should have listened"
6e -new there was a lot going on !ehind the scenes" One o& 3esco's main !uying team, @ohn
*ildersleeve, a senior director who was a non9executive o& several companies, had indicated that they
would ta-e one million cases o& Virgin (ola" 3he next we heard, he had told Simon Dester at (ott that they
wouldn't !e supporting us a&ter all" 3his was three wee-s !e&ore the launch 5 and the invitations had gone
out &or the event at Planet +ollywood in Dondon"
. phoned @ohn to as- why the change o& heart" +e said: '.t was a very &ine decision 5 the door's not
completely closed"' +e -new . wanted to ma-e a press announcement, and he -new . needed the
con&idence o& having a ma/or retailer on !oard" '4ut we have two concerns" $irst, there are some
commercial considerations" 3hey can !e resolved" 4ut second, there's this whole ,uestion o& the !rand
positioning and what it might do
&or us"'
+e explained to me that a solus arrangement 5 an exclusive deal with 3esco 5 is a two9edged sword" +e
said 3esco would !e identi&ied with the product whether it was good or !ad" .& . got &ed up with it in three
months' time, it would re&lect on 3esco 5 good or !ad" +e said when Sains!ury's launched their own (lassic
(ola, 3esco adopted a position that they would only sell '3he eal 3hing'"
@ohn said that he was worried that we might !e a !it in&lammatory in the way we attac-ed (oca9(ola" +e
pointed out that (o-e had !een very good customers &or 3esco and the last thing he wanted was (o-e
!eing ta-en out o& his stores" 3his was an honest opinion that . respected" . could see 3esco's position, !ut it
was very important &or Virgin (ola to !e on the supermar-et shelves 5 pre&era!ly on o&&er at the end o& the
aisles"
. explained that every company we start, we stic- with7 that we wanted to give the pu!lic more choice7 and
our campaign was &ocused on de&ending our position and explaining why we were !etter 5 we weren't
interested in merely slagging o&& a competitor" . told him this applied to all our campaigns 5 even to Virgin
Atlantic's !attle with 4ritish Airways" . pointed out our reputation among consumers was very good" >A 0OP
mar-et research survey in a recent edition o& 3R 0eek was conveniently to hand to !ac- this upA? 4oth
David Sains!ury o& Sains!ury's and Archie 0orman at ASDA had also told me they would stoc- Virgin (ola"
3he next day @ohn came to see me in person" As a conse,uence o& the call and our meeting, 3esco
changed its mind and decided to stoc- our cola" .t was a wonder&ul !oost &or us" .n Decem!er, sales o& cola
went up H< per cent in 3esco stores 5 and C1 per cent o& these were sales o& Virgin (ola"
3hen (o-e started to ma-e li&e more di&&icult &or us"
. was in a Virgin 3rains meeting when one o& the &ormer 4ritish ail executives told me he had !een on a
management away9day at an assault course, and he had met some (oca9(ola managers" +e'd as-ed them
what they were doing on the assault course" 3hey replied: '6e're getting ready &or action with Virgin (ola"'
. thought the story was over the top at the time, !ut with hindsight . can see that, once (o-e had wo-en
up, o& course they had read the launch o& Virgin (ola as a declaration o& war"
(o-e's commandos went into action" (oca9(ola's secret recipe is a syrup essence shipped to hundreds
o& independent !ottlers around the world and they are responsi!le &or producing, pac-aging, distri!uting and
merchandising" (o-e visited every !ottling !usiness and said they didn't want Virgin (ola to !e produced !y
their !ottlers" .t wasn't simply the cola
5 the !ottlers also depended on their livelihoods &or the other so&t drin-s in the (o-e port&olio, such as
Sprite, $anta, Diet (o-e and =inute =aid: all highly lucrative !usiness &or the !ottlers"
.n :;;E, we ac,uired (ott's share o& the !usiness and relaunched Virgin (ola with a &urther GB1 million
investment" Our goal: to ta-e on (o-e on their home territory" (o-e wanted war" So we drove a 4ritish tan-
into 3imes S,uare in 0ew #or- and &ired a moc- round at the (oca9(ola sign >we'd secretly had it wired up
the night !e&ore !y a pyrotechnical team and it loo-ed li-e it had gone up in smo-e? !e&ore ploughing
through a massive wall o& cola tins" Sightseers ran wailing &rom the s,uare and we nearly ended up in /ail"
.n 4ritain, Virgin (ola was &lying o&& the shelves" .n $rance, we were closing in on Pepsi, doing well in
4elgium and Swit8erland and negotiating a &ranchise in @apan and .taly" 6e thought we might !e a!le to
pull it o&&"
.n B22F, . was invited to meet my new corporate !an- !oss, Diana 4rightmore9Armour, a very !right
woman wor-ing in Dondon &or Dloyds 3S4" 6e were en/oying a &un evening when she revealed to me:
'ichard, you don't -now this, !ut . was wor-ing &or (oca9(ola in Atlanta when you launched Virgin (ola 5 .
-new what an impact you would have so . persuaded the senior management to set up a S6A3 team to
ensure that Virgin (ola &ailed"'
. was ,uite ama8ed" .n :;;C, we -new that (oca9(ola were -een to drive us out o& !usiness !ut we didn't
realise to what extreme"
'. was at a senior executive meeting when it was reported that you were preparing to launch the cola into
America" =ost
people at the head,uarters were rather !lasN" 3hey didn't really -now a!out Virgin and thought it /ust
another local so&t9drin- !rand"' 4ut she garnered support &rom one or two 4rits at the meeting and they
helped her warn the !osses: '3his isn't /ust anyone 5 this is ichard 4ranson, who has a lot o& clout and can
!uild a ma/or !rand" 6e need to stop this as soon as possi!le,' she told them"
6hile (oca9(ola had &ew worries a!out a regional !rand competing in a local mar-etplace with (o-e and
its other products, it didn't want to &ace another competitor such as Pepsi" =y dining companion revealed
how a team came to 'ngland to set up another team to ensure that distri!utors and shops were all given
extra incentives to sell (o-e 5 and -eep us o&& the shelves" . heard later that the num!er o& (o-e people
trying to stop us was !igger than the whole o& our team in Virgin (olaA 6e truly were the underdogs"
A&ter gaining a pea- o& C1 per cent o& sales at 3esco and over :2 per cent o& total U% mar-et sales, sales
started to decline" (oca (ola's S6A3 teams were !eginning to punish us" (o-e started discounting cola
more cheaply than !ottled water 5 an o&&er we couldn't match: we simply didn't have the money" 3he only
way to ma-e money on a commodity where the price is so low is to ensure that you sell huge volumes 5
that's what the (oca9(ola company does" (oca9(ola threatened small retailers that they would ta-e out
their &ridges i& they continued to stoc- us" 3hey also hinted that they would withdraw (o-e altogether &rom
the same retailers"
Our (o-e escapade led to a num!er o& articles as-ing whether Virgin had a proper strategy in place" A
/usiness 0eek cover article ,uestioned whether we had the a!ility to manage Virgin's 'chaotic' empire"
6ell, o& course we had" 6e were a way9o&9li&e !rand, o&&ering a consistent and en/oya!le experience to our
customers whether they were &lying the Atlantic or ma-ing a mo!ile phone call" Virgin wasn't chaotic
5 it was utterly &ocused on the /o! o& realising its core values in many diverse sectors"
(olas are a drin- young people en/oy, so we &igured a Virgin (ola would !e a good idea" (oca9(ola is a
huge corporation, and since Virgin is all a!out out&oxing the !ig guy, we leapt at the opportunity to ta-e them
on" (olas are pretty much indistinguisha!le as drin-s, and much o& the customer's en/oyment comes &rom
!randishing their &avourite !rand7 the Virgin !rand was popular, so how could we lose)
6e lost !y ignoring the gaping hole in this otherwise rather solid9sounding proposition: as a cola
manu&acturer, we weren't the people's champion" 3hey already were" They were getting their product into
people's hands, every day, everywhere" They were o&&ering their product at an un!eata!le price !ecause
they had the !iggest economies o& scale on the planet" They were o&&ering their customers a rather nice
so&t drin- into the !argain" And their !rand name was so ingrained in people's minds that when they as-ed
&or a (ola, they'd call it a '(o-e'"
#es, (oca9(ola played hard!all against us" 4ut we had already lost" 6e still produce Virgin so&t drin-s,
!ut in a much
more targeted and niche way" And Virgin (ola is still the num!er9one cola drin- 5 in 4angladeshA
. notice that ed 4ull has launched its own cola" . -now it will ta-e them some time and a large tranche o&
money to win signi&icant mar-et share" 4ut then, as a drin-s company, this is their core !usiness"
And perhaps the !est thing to come out o& our Virgin (ola escapade was a !rilliant new company called
.nnocent Drin-s, run !y some entrepreneurial guys who were at Virgin (ola and saw a gap in the mar-et &or
&resh &ruit smoothies and have now !uilt a !usiness worth several hundred million dollars" 6hile still with
Virgin they set up a stall at the V &estival to have revellers sample their products" 3hey had two !ins: a 'yes'
!in and a 'no' !in" 3hey as-ed people whether they should give up their &ull9time /o!s to start the company"
People tested the product and !y the end o& the day, the 'yes' !in was over&lowing" Our loss, !ut even i& it
isn't a Virgin (ompany, . get a real surge o& satis&action to -now that these guys cut their teeth in a Virgin
!usiness and made it wor-"
4ac- in :;C:, when . was more gung9ho, . wrote in my note!oo-: ' 0e don%t need lawyers"' 4ut over the
years, stating our agreements in clear and unam!iguous terms has proved, again and again, to have !een
vital &or our success" Our contract with 39=o!ile, in particular, turned out to !e a vital document &or us"
.ncurring unnecessary legal &ees can ruin your start9up, !ut the answer, . now thin-, is not to ignore the
lawyers, !ut to get the !asics right &rom the very !eginning"
Any start9up !usiness should sit down and ta-e a long hard loo- at its legal agreements"
Our Virgin =o!ile !usiness was going exceptionally well in the U%" 3here was an incredi!le !u88 5 we
were hitting the !ullseye o& the U% youth mar-et with &un-y and irreverent adverts and great deals" 3om
Alexander and the team were single9minded a!out the !usiness and piling on thousands o& new customers
and there was a sense o& &un" .n the &irst three months o& B22H the turnover was exceeding I: million a day"
Our television adverts were scooping awards &or innovative mar-eting 5 and we were stealing mar-et
share &rom Orange, Vodaphone and even our networ- partner, 39=o!ile" .n the U%, we were a!le to use the
American rap superstar 6ycle& @ean &or a cult advert" .n it, he unwittingly signs a contract that leads him to
!eing !ound as a trailer par- sex slave" .n an attempt to escape he is su!se,uently imprisoned &or '!reach
o& contract'" 3he underlying message o& '4e care&ul what you sign' demonstrated the !ene&its o& switching to
non9contract Virgin =o!ile"
$or all o& us at Virgin =o!ile, however, that advert had ac,uired a second, private meaning"
Our original deal had 39=o!ile putting in the networ-, and Virgin arranging handset procurement,
mar-eting and the Virgin =o!ile !rand" .t all wor-ed smoothly 5 until a new American executive, +arris
@ones, arrived on the scene in 4ritain" +e really set the cat among the pigeons"
+e was smart" +e loo-ed at our original contract and saw we had a /oint company worth I: !illion, o&
which Virgin owned 12 per cent: a &antastic success story in which !oth parties were doing well" +arris
@ones 5 and ultimately his !osses 5 were desperate to o!tain our shares and were willing to try a num!er o&
di&&erent tactics to get hold o& them"
6hat was their pro!lem)
3hey saw the Virgin =o!ile deal as /ust another cost, !ecause &or every customer on Virgin =o!ile, 39
=o!ile paid us a monthly mar-eting &ee" 3his payment was a termination charge which 39=o!ile collected
&rom other networ-s to connect their callers to Virgin =o!ile's customers" Virgin =o!ile was entitled to this
termination &ee, even though we didn't own the networ- in&rastructure" .t was in !lac- and white in the
contract"
39=o!ile were saying that the terms o& the contract were legally ,uestiona!le" 6hile we thought the
agreement was crystal clear, going to court over this was &rightening: 39=o!ile was a su!stantial !usiness
and had poc-ets deep enough to &und an expensive litigation" 'very day spent dealing with lawyers is not
only costly, it's hugely time9consuming &or -ey executives" Our relationship soon !ecame very sour indeed,
and our cherished &lotation loo-ed increasingly remote"
3he case ended in the +igh (ourt in Dondon 5 and 39=o!ile lost" 3he /udge, it was reported, said that 39
=o!ile's conduct was 'deserving o& moral condemnation'"
3he head o& 39=o!ile in *ermany handled the &allout well" +e was good enough to invite me over to
*ermany so that he could apologise to me in person 5 a decent gesture, and one we appreciated" A&ter
many months, we managed to secure an out9o&9court settlement with +arris @ones's &ormer !osses in
*ermany and with a new U% team led !y his successor 4rian =c4ride" Due to the court ruling they had to
sell us their shares &or I: >4rian &ramed the coin in a presentation caseA?, and they o&&ered Virgin =o!ile a
new airtime contract that it still operates with today" 3han-s in large part to him, we managed to steer our
way towards a stoc-9mar-et &lotation"
3he lesson o& all this is that you need to get your !asic !usiness contracts properly sorted out" It%s
always worth getting the contract right in the Crst place" And !e prepared, on occasions, to go to
court to de&end the company" .'m a&raid that when you draw up a contract &or a /oint venture, you have to
ta-e into account what might happen i& there is a &alling9out
5 or, worse still, when someone is trying to screw you" .t would !e lovely i& all !usiness could !e done with a
handsha-e
5 and . have done plenty o& success&ul !usiness this way in the past 5 !ut there are unscrupulous people
out there, and you have to guard yoursel& and your !usiness" 6e have never lost a ma/or court case in &orty
years o& doing !usiness" .n the *3ech case >where . was awarded su!stantial li!el damages?, the 4ritish
Airways case and the 39=o!ile case, we have stood !y our decision always to &ight our corner"
3rotect your reputation& Don%t be afraid of making mistakes"
3hese are the rules . live !y" 3hey ought not to contradict each other !ut many !usinesses wrongly
assume that they do" #et there is no denying the ris- that mud stic-s, and a damaged reputation in !usiness
can &ollow you around &or years" #ou can deliver on every promise, -eep your word, deal &airly, show
&or!earance 5 and the world can still throw you curve!alls that mess up your reputation" And long a&ter you
have learned your lesson and moved on, others will still !e harping on a!out this or that mis&ortune, this or
that error" .'ve -nown plenty o& talented and trustworthy !usiness people who have carried the shadow o&
past errors around with them, and whose careers have su&&ered as a result"
3here is no way to solve this pro!lem, !ut there are ways to mitigate its e&&ects" (ertainly you should
never -eep your head down" 3hat will do you no good at all 5 it'll simply con&irm someone's lousy opinion o&
you"
. would say, &irst o& all, that you should improve your communications" At Virgin, we ta-e a great deal o&
care to -eep the press up to date with what we're doing" Aside &rom maintaining a high pro&ile, this helps
decent /ournalists put any old, !ad news in context" Our culture o& openness also prevents !ad news &rom
!uilding up a head o& steam !e&ore it reaches the pu!lic" 3he pu!lic is actually pretty &orgiving o& most
!usiness errors except hypocrisy, and stalling almost always !ac-&ires"
6e also practise what we preach" 6e loo- &or people with exciting, dynamic (Vs, not spotless ones"
6e're not pushovers,
!ut we're happy to ta-e chances with people, to move them around, to see how they tic- and where they &it
in" 6e don't pin the !lame on people, or marginalise them when things go wrong" 3his culture pays
dividends the longer we're in !usiness, !ecause eventually people realise that we're a company that -nows
how to deal with its pro!lems, and is willing to ta-e chances"
Over the years the Virgin !rand has earned the reputation o& !eing bold and unafraid" .sn't it
extraordinary how &ew !rands communicate &earlessness) (ommercially, our reputation &or &earlessness
has !een li-e gold dust" .t turned our !attle with (oca9(ola, which was commercially !ad &or us, into a story
that, in !rand terms, strengthened customer loyalty"
An error9strewn reputation is more damaging as rumour than it is in &ace9to9&ace dealings" Satirical
maga8ines li-e 3rivate ye are always horri&ied to discover how many success&ul and &amous &riends stic-
!y &igures who are supposedly 'disgraced'" 4ut that's not so surprising: individuals are !etter than groups at
/udging someone's character"
#our &riends are your allies in the !attle to improve your reputation a&ter a -noc-9!ac-" 3hey will not only
advocate &or you7 they will &ront &or you" 3heir reputations will help yours recover" Distinguished people
aren't stupid, and cultivating someone to ta-e advantage o& their reputation isn't going to wash" 4ut they are,
to a &ault, generous and understanding" >3hey've !een through the mill7 they -now what li&e's li-e"? So don't
!e a&raid to as- the senior &igures in your circle &or
advice and help"
. -now what .'m tal-ing a!out here !ecause in B22F, when we were considering options &or the &lotation o&
Virgin =o!ile on the Dondon Stoc- 'xchange, one o& the perceived ris- &actors was me"
.nvestors usually have short memories" 4ut the elder mem!ers o& the (ity o& Dondon pinstripe9and9!races
!rigade recalled that . had ta-en the Virgin *roup on to the stoc- mar-et with huge &an&are and expectation
in 0ovem!er :;E<, and then, a&ter the great mar-et crash o& Octo!er :;EC, . o&&ered to ta-e it !ac- into
private hands again" . could &eel the thic-, red letters stamped on my &orehead: '+ealth 6arning: 3his =an is
Dangerous"'
3he &lotation o& Virgin had attracted more applications &rom the pu!lic than any previous stoc- mar-et
de!ut, aside &rom the massive government privatisation o& gas, electricity and telecoms" 0onetheless, my
&irst experience o& Virgin as a pu!licly listed company was one o& the most misera!le times o& my !usiness
li&e" . !ecame very disillusioned with the constant round o& analysts' meetings and investor roadshows" .
hated !eing accounta!le to institutional shareholders who didn't appear to understand our philosophy 5 and
. -now a lot o& executives wor-ing in plcs have a certain sympathy &or my viewpoint" 4ut no!ody was &orced
to 'ta-e a !ath' when we changed tac- 5 and our investors got their original sta-e !ac- plus a healthy
dividend"
6hat happened was this" .n :;E1, our &ledgling Virgin Atlantic airline &ound itsel& entrenched in a
transatlantic price war, and our cash was !eing s,uee8ed" =y advisers at the time convinced me that we
needed to expand the e,uity !ase o& the group" Don (ruic-shan- too- on the tas- o& organising an initial
pu!lic o&&ering &or Virgin's music, retail, and vision !usinesses, which were com!ined into the Virgin *roup
plc, a pu!lic corporation with H1 per cent o& its e,uity listed on the Dondon and 0ASDAP stoc- mar-ets"
Doo-ing !ac-, it was a &unny sort o& o&&ering" Virgin Atlantic was considered &ar too ris-y an investment
and was excluded &rom the share o&&ering" So were our nightclu!s, Virgin +olidays and Virgin (argo" #et
Virgin Atlantic !ecame 4ritain's second largest long9haul airline, Virgin +olidays the num!er9one long9haul
holiday company, the clu!s have made a &ortune and Virgin (argo grew to handle nearly :22,222 metric
tonnes o& cargo !y B222A
'arly in :;E<, Don and 3revor A!!ott, who was !rought in !y Don as &inance director, raised IB1 million in
a private placing o& converti!le pre&erence shares &rom =organ *ren&ell" 3here was no legal commitment to
convert this to e,uity in the event o& a &lotation, !ut it all seemed remar-a!ly easy" .n the pu!lic sale, the
&inancial institutions would convert their pre&erence shares into :1 per cent o& the listed !usiness, and we
would create new shares &or other investors, raising a &urther IH2 million" 3his still gave me 11 per cent o&
the Virgin *roup, while outside investors held HF per cent" 3he !usiness,
which twelve months earlier (outts 4an- had nearly &orced into insolvency, was valued at IBF2 million"
Some o& the cash raised was moved into Voyager, the company set up to invest in Virgin Atlantic"
During early :;EC, we used money &rom the &lotation to plot the ta-eover o& '=. =usic &rom 3horn '=., !y
!uilding up our shares, and to open an American music su!sidiary, Virgin ecords America" 0aturally, !oth
pro/ects soa-ed up our capital" 3hen the stoc-9mar-et crash in Octo!er :;EC hit us 5 and . made a mista-e"
. continued to !uy shares in '=. as they were plummeting" Don (ruic-shan- and our non9executive
directors raged at me: 'ichard, you cannot do this" #ou are throwing away good money a&ter !ad"' .t was
/ust the sort o& thing we should have !een doing i& we'd had deeper poc-ets, !ut we didn't"
As the world recovered &rom the Octo!er shoc-, . expected the share price to /ump !ac- a&ter we
announced our results, more than dou!ling pro&its &rom I:F million to IHB million &or the year ending @uly
:;EC" 4ut the price o& our shares had &allen along with every!ody else's, &rom our &lotation price o& :F2p to
/ust over C2p" Dou!le your pro&its, halve your share value: this was !army logic" .n @uly :;EE we told the
mar-et that we were conducting a management !uyout 5 and at the original price o& :F2p per share" . didn't
want to let down the army o& smaller investors 5 including many close &riends 5 who had put their savings
and &aith in our !usiness" 6e too- out a IH22 million loan to do this, which meant that our gearing was
very high" =y dream o& ta-ing over '=. =usic came to an end there and then" 3he (ity o& Dondon had
misunderstood our !usiness 5 we would now go o&& and !ecome one o& the largest groups o& private
companies in the world with several ,uoted investments to !oot"
.n B22F, . hoped that the &lotation o& Virgin =o!ile in the U% would enhance our already considera!le
reha!ilitation in the eyes o& the (ity"
$rom early on there had !een speculation in the !usiness press that we would &loat, with the ;unday
Times calling Virgin =o!ile the new /ewel in the Virgin crown" 4ut there were a &ew wo!!les as we headed
&or our stoc-9mar-et &lotation in @uly 5 mostly caused !y external mar-et conditions, which made it di&&icult
&or &irms to !ecome listed on the Dondon mar-et"
.ronically, we were due to &loat in the same wee- as Premier $oods, the ma-ers o& 4ranston Pic-le, which
gave the newspapers a chance to dust down their '4A0SO0 P.(%D'' headlines"
+ow would investors view the return o& a ma/or 4ranson !usiness in @uly B22F) 3his time round, the
circumstances were entirely di&&erent" . had learned a great deal a!out !usiness in the intervening years,
and . -new that, while my !earded and smiling &ace was used in the newspapers, . choose not to !e a
!oard director o& any o& our pu!lic companies, and there&ore would not !e in direct control" (orporate
governance was a
whole new !all game in B22F, and &rom day one, Virgin =o!ile was set up and acted li-e a plc9in9waiting"
A highly experienced team o& corporate !usiness &igures was !rought in to help 3om Alexander so there
would !e no replay o& the :;E2s" (harles *urassa, chairman o& 3U. 0orthern 'urope, and prior to that chie&
executive o& 3homson 3ravel, /oined as chairman, and (aroline =arland, a non9executive director o&
4ur!erry and 4an- o& .reland, upert *avin, well -nown &or his wor- as head o& 44( 6orldwide, and David
=aloney, chie& &inancial o&&icer o& De =eridien +otels, all /oined the !oard as non9executive directors" 3hese
were heavyweight players who would steer the team as they /oined the $3S' B12 index"
3om Alexander and his team, aided !y the non9executive !oard, had experience and pedigree" 3hey
re,uired my !ac-ing only as a signi&icant investor, and, o& course, &or the Virgin !rand7 so they let me !e
honorary presidentA
Our &inancial num!ers were very good, and Virgin =o!ile had !een run scrupulously &or the mar-et" .
-new that the :;EC experience might put o&& one or two investors" 6ell, so !e it: there was no one &orcing
people to invest i& they didn't li-e us"
On H2 @une B22F, Virgin =o!ile announced its intention o& see-ing a &ull listing o& its shares and all Virgin
=o!ile employees who had wor-ed &or the company &or more than a year received a gi&t o& &ree shares" @P
=organ and =organ Stanley acted as !oo-9runners and sponsors and with .nvestec
Securities they also acted as underwriters"
On C @uly B22F, we said that the indicative price per share would !e !etween BH1p to BE1p, ma-ing the
!usiness worth over I: !illion at the top end o& the valuation" 0ot a !ad return, . thought7 perhaps we were
!eing too optimistic" As the mar-et worsened, we had to temper our expectations, and on B: @uly Virgin
=o!ile announced an o&&er price o& B22p per share, valuing the !usiness at IE:: million, with proceeds o&
I:B1 million and share capital o& I122 million"
. could hardly complain, particularly given the di&&icult mar-ets which had seen several other .POs
a!andoned during the year" 3he Virgin *roup made around IF22 million &rom Virgin =o!ile !eing &loated on
the Dondon Stoc- 'xchange, and has invested this money in new Virgin ventures in the United States,
(hina and A&rica" =emories o& :;EC and the '4ranson $actor' never !ecame a serious issue 5 and Virgin
=o!ile has continued to grow"
L
6hen li&e isn't going well, it's very hard &or a company to stay &lexi!le enough to meet the challenge" Virgin
=o!ile USA has !een trading punches in a &ierce mar-et since the !eginning" .t has pretty much done
everything right 5 and it's still !y no means out o& the woods"
6hat delights me is the way the company has continued to innovate its way out o& trou!le" A de&ensive,
conservative, cautious mindset 5 a natural enough reaction when things get
tough 5 can -ill you stone dead in a competitive mar-etplace"
0hen your very e)istence is threatened, you have to change" 3his is one o& the hardest lessons to
learn in !usiness, !ecause it's so counter9intuitive" Plus, as you'll see &rom Virgin =o!ile USA's experience,
it's /ust plain hard to do"
6e'd had a !rilliant start in B22B and were -ic-ing ass" Virgin =o!ile USA was giving young Americans
the &eatures they wanted, while o&&ering a straight&orward price plan with no contracts to sign and no &ine
print" 4ut !y B221, the prepaid mo!ile phone mar-et was a dog&ight" A&ter &our years, Dan Schulman and his
team were &inding conditions tough" 4igger competitors 5 with deeper poc-ets 5 started to s,uee8e Virgin
=o!ile USA, targeting the prepaid customer"
Dan responded with great products" Our $lasher VC &lip phone had a &lash camera, two9way picture
messaging, 'superphonic' ringtones, downloada!le games and custom graphics, and it was Virgin =o!ile's
&irst handset to plug into our new higher speed networ-" 3he price was great, too" And somehow it still
wasn't enough" .t was costing us more and more money to win mar-et share"
3he American team had ta-en out a large loan to ma-e an impact in this vast territory, and it loo-ed at one
stage that de&aulting might !e a real possi!ility" 3o add to their woes, they had supply pro!lems, and
pending legal action with Virgin's ma/or handset supplier, 0o-ia" . heard &rom Dan that employee morale
was draining away, as our planned .PO was pushed &urther and &urther into the &uture" 4onuses were
slashed and the very via!ility o& the company was in ,uestion" Shareholders were concerned" One thing
was &or sure: our current strategy wasn't sustaina!le"
Dan spent a wee-end alone and came up with his new mani&esto, Virgin =o!ile ising" .t was his clarion
call to the company and to himsel& to regain the leading position and &ocus on a set o& radical actions" %eep
&our million customers sweet" esolve the de!t and morale issues" Sort out legal matters with 0o-ia,
$reedom and 3elcordia" elaunch the !usiness" All within six months"
.t was outrageous" .t was gutsy" . loved it 5 and so did his team"
.n B22< Virgin =o!ile USA overhauled itsel&" 3he !rand underwent a complete revamp, as did the
handsets, as did the distri!ution networ-" 0ew services li-e Sugar =ama >a way to earn extra minutes?,
Stash >a prepay de!it card? and e*eneration >a charity networ- to assist homeless young people? !uilt on
emerging youth trends" 4y the end o& @uly !usiness was improving dramatically" 'ven against (ingular, who
also had low9price handsets, Virgin was a!le to grow its mar-et share" 3he customer !ase rose to F"<
million, an increase o& B2 per cent, and revenues went &rom negative to positive" Virgin customers sent or
received :"1 !illion text messages, one &rom every customer every single day o& the year" .n addition, they
downloaded :1 million ringtones and B"1 million games" 4y Decem!er B22<, Virgin =o!ile USA customers
were using ;12 million minutes o& mo!ile phone
time" 3hat's a lot o& chat"
6e got ready &or our trip to 6all Street" On :: Octo!er B22C, Virgin =o!ile USA announced its initial
pu!lic o&&ering, selling BC,122,222 shares o& Virgin =o!ile USA, at G:1 a share"
0o one ever said !usiness was going to !e easy, though 5 B22C was Virgin =o!ile USA's &irst year o&
pro&ita!ility, with a net income o& GF"B million" 4ut &ive months a&ter the &lotation, things were not loo-ing so
good" 3he US stoc- mar-et was going into a tailspin caused !y the su!9prime mortgage crisis and the
collapse o& 4ear Stearns !an-" ecession loomed" 3he share price was hit !y a general downturn in the
mar-et and increased competition" Some analysts were !eginning to ,uestion the =V0O model 5 and our
stoc- price hit GB a share" 3his was a disappointment to all o& our investors" 4ut . was convinced it would
!ounce !ac-"
Dan, too, was up!eat and clear a!out Virgin =o!ile's &uture prospects" '6e thin- we have one o& the most
attractive value propositions in the mar-et, and that our !usiness is well positioned &or the &uture,' he told
investors" . agree" 3hroughout its &ive9year operating history, Virgin =o!ile USA has driven industry
innovation and . !elieve that i& it -eeps its nerve, and continues to simpli&y and evolve its products and
services, it will generate increasing demand"
$or all its trou!les 5 or perhaps !ecause o& them 5 . am incredi!ly proud o& Virgin =o!ile USA" 3he
company has had
the guts to innovate its way out o& trou!le" As the poet o!ert $rost said: '3he !est way out is always
through"'
Dan -new that, and really !it the !ullet" +e -new that i& a company needs reinvigorating, it needs a
complete sha-e9up &rom top to tail" +e -new not to con&use the intense physical retune o& a company
relaunch with the corporate com!9over o& a mere re!randing exercise" +e -new to address the !asics 5 to
clear the company's de!ts and settle its legal issues" And he -new to -eep his sta&& onside with &ull, honest,
direct corporate communications"
Virgin =o!ile USA deserves to succeed" And i& you &ollow its example in di&&icult times, so do you"
On the evening o& Sunday :C $e!ruary B22E . too- the ri!!ed motor launch &rom 0ec-er .sland across to
4iras (ree- in the 0orth Sound o& Virgin *orda" 3he daylight was &ading and there was a !ris- !ree8e, so .
was wearing a cashmere /ersey7 not my normal attire in the (ari!!ean" 4ut . &elt a chill 5 a chill o&
despondency"
6ith me was yan 6est >-nown to everyone on 0ec-er as 6esty?, 0icola Duguid, my then personal
assistant, and Pro&essor Dan %ammen" Dan and 6esty had come to tell me how our sustaina!le tourism
pro/ect on neigh!ouring =os,uito .sland was progressing" Dan's energy la! at 4er-eley, University o&
(ali&ornia, was underta-ing some computer modelling &or us to create a low9car!on island holiday resort: all
windmills and solar panels"
4ut my mind was elsewhere, and . was terri!ly disappointed" $ive months o& hard wor- !y do8ens o&
people across the Virgin *roup had /ust come to nought, and . was mourning one o& the most audacious
deals we had ever concocted" 3he num!ers were !ig, and the ris- to the !rand created over &orty years was
huge" 3here could have !een serious repercussions &or the !rand i& we &ailed to turn the !usiness around"
4ut . -new we had done our preparation" . -new success had !een within our grasp" And . -new we could
have done a good /o!" 0ow, o& course, no!ody will ever see the results"
6e had lost our !id to rescue the em!attled 0orthern oc- !an-"
As we gathered on the /etty . said: 'ight, chaps, .'ve /ust heard that they're nationalising 0orthern oc-"
So i& it's all right with you, . thin- .'m going to get drun-"'
3his story illustrates so many o& the positive points .'ve tried to ma-e in this chapter and throughout the
!oo-" 0evertheless, when the stars are set against you, there really may !e nothing you can do" 4lame and
recriminations o&&er a spite&ul sort o& short9term com&ort, !ut they're toxic, and can only only stunt your &uture
enterprises"
3he opportunity emerged in August B22C as the international credit crunch !egan to !ite" $or many
months . had !een watching closely as the situation tightened, and . eventually decided to sell all my non9
Virgin personal shareholdings in the stoc- mar-et &or cash" .t turned out to !e a wise move: . was
luc-ier than many with e,uity in 0orthern oc-" Over the next &ew wee-s, pro!lems !egan to un&old as the
mortgage !an-s were una!le to get loans" 4ut we didn't expect one o& the !iggest collapses in 4ritish
!an-ing history"
@ayne9Anne *adhia, meanwhile, was up to her eyes in mud 5 though in a good way" On Sunday :<
Septem!er she was with her &riends, Susan and osemary, !eing pampered at the Sto!o (astle health spa
near Pee!les, outside 'din!urgh" 3he Sunday papers were tal-ing a!out the collapse o& 0orthern oc-,
and @ayne9Anne pondered that Virgin could do something with this
" " "
She sat up, dropped the paper on the &loor and cast around &or a phone"
She called *ordon =c(allum"
'Don't !e da&t,' was his initial response" '.t's a step too &ar"'
3hat evening she !lasted o&& a &ollow9up email to *ordon and Stephen =urphy"
1i there
:all me insane, but I have been thinking hard about how we might take some advantage from
the current situation at =orthern Rock * and help out at the same time& I think there are a
number of opportunities * ranging from the possible to the outrageous&
D& 'ccept that the big balance sheet providers will take the assets and look to take the
systems etc& for a decent price&
2. Do a deal with a :iti or /9' E/ank of 'mericaF where they buy the company but we put in
the brand so they get a Virgin6branded retail presence in the >$&
3. Talk to =orthern Rock and the /ank of ngland direct& Richard could be used as frontman
to make some sense of the crisis& =orthern Rock could be rebranded Virgin and the /ank of
ngland stand behind the current loan facility& 0e could withdraw from mortgages for the
time being and focus on savings to rebalance the balance sheet * and with Richard fronting a
saving campaign * /ranson making sense of the current crisis * it%s all now about increasing
savings and reducing debts etc&
4. 0hatever happens, I think we should do some research into who people would trust with
Cnancial services now& I bet the answer will be * Richard /ranson&
9n the one hand I know that this all sounds pretty batty, but on the other hand *
discontinuities in the system make it right for change * and I think we could do something, if
Richard was able to speak to Darling or /rown to ask how we can help&
0hat do you think? I%ve restrained myself from copying this to Richard until I got your views&
+6'&
*ordon's reply was his usual mix o& caution and common sense" '. thin- :" is interesting and the rest is
!attyA Det's tal- tomorrow morning"' Stephen was e,ually cautious"
@ayne9Anne decided to phone me directly" She as-ed me i& .'d seen the ,ueues outside 0orthern oc-'s
!ranches on the news"
. certainly had"
'6ell) Do you thin- we should give it a go)'
'Screw it,' . said, 'let's go &or it"'
#ou can only get into pole position !y giving something a try" Over many years, Virgin's !usiness aim has
!een to &ind a strong position in a game9changing mar-et" 6e've done this in the record !usiness, media,
telecoms, health clu!s and the airline industry and will soon do it in space travel" 6e put ourselves out
there, searching &or new opportunities" And we -now that they are more li-ely to come our way i& we get
ahead o& ourselves and prepare the ground &irst"
0ext day @ayne9Anne tal-ed through her '!atty' ideas with Peter 0orris, one o& our long9term advisers,
and a man who had run 4arings" Peter said straight away that Virgin should start to loo- at the idea
seriously" 4y now *ordon and Stephen had got their !reath !ac- and were over the shoc- 5 it was time to
thin- how !est to assem!le a team to ta-e on this enormous tas-" Our 0orthern oc- adventure had !egun"
3he &ollowing day . phoned =att idley, the chairman o& 0orthern oc-" . told him we would love to see
how we could help save the !an-" =att is a charming man" +e appeared delighted to ta-e the call: '3his is
great news, ichard" 3he Virgin !rand is /ust what the !an- needs,' he said" 'O& course, you do realise
you're going to need literally !illions o&
pounds)'
'Ohh, yes,' . said" And . thought to mysel&: /illions? Did he really say billions)
'.'m con&ident that can !e arranged,' . said" 6ell, o& course he said !illions" +e was a !an-"
'. &ully understand,' . said, and !y then, with sweat !eading my !row, . really did"
3he !an-'s position had !ecome pu!lic at E"H2 p"m" on 3hursday :H Septem!er B22C, when the 44(
reported that 0orthern oc- had as-ed &or and !een given emergency &inancial support &rom the 4an- o&
'ngland" 3he &unding &acility was &inalised in the early hours and announced to the Dondon Stoc- 'xchange
at C a"m" 6ithin hours o& opening, long ,ueues !egan to &orm outside 0orthern oc- !ranches across the
U%" 3he we!site collapsed and its phone lines were /ammed" 3his was shoc-ing news: the &irst run on a
!an- in the United %ingdom since Victorian times"
3here was a great deal to admire in 0orthern oc-, and . wanted to protect and save what was good
a!out it" 6hen the run on the !an- !egan . watched the television pictures o& the ,ueues along with
every!ody else" 0ow, the ,ueues were undenia!ly distur!ing, they were the story" 4ut !eing in the
!usinesses .'m in, it won't come as any surprise that . also had my eye on the &ront o& those ,ueues, where
0orthern oc- spo-espeople were trying to reassure some very worried customers" . admired the way the
sta&& turned out at the
!ranches and dealt with people as they demanded their money !ac-" 3hey stood right in the &ront line,
calmly advising customers" . heard &rom inside that everyone had come in to help 5 it was all hands to the
pumps"
3he !an- had wea-nesses: yes, they had got themselves and their customers into a whole heap o&
trou!le !y !orrowing short in the money mar-ets &or long9term mortgages" 4ut hindsight is easy: the !an-
had !een popular with intermediaries 5 the &inancial advisers who recommended the !an-'s mortgages 5
and they had very modern systems in place" .t was an engine that was &ine in its way 5 !ut too hungry &or
the road it was on" .t had run out o& petrol" Our /o! was to see how it could !e made to wor- again on a
more environmentally !enign &uel than the short9term money mar-ets"
$irst o& all, we needed to put together a winning team" 6hile much o& the media interest was to &ocus on
me personally in the coming months, it won't surprise you to learn that .'ve neither the time nor the s-ills to
run a !an-" As &ar as the rescue team 5 a &ormida!le group o& people led !y @ayne9Anne *adhia, the head
o& Virgin =oney 5 saw things . was very much in the !ac-ground" 'ach evening . would ring @ayne9Anne &or
a catch9up, and to see i& there was anything . could do"
Stephen =urphy appointed @ames Dupton o& *reenhill to help us in Dondon, along with Peter 0orris's &irm
Puayle =unro, and Andrew 4alheimer o& top law &irm Allen M Overy 5 we had the ma-ings o& our team" 6e
needed to -now how to deal
with a company the si8e and scale o& 0orthern oc-" 'Do you really thin- we can get this)' 3heir answer
was that i& we could secure the &unding, then it was made &or us" 4ut only i& we could get &unding"
So . was given the tas- o& drumming up support &or our e,uity consortium" One o& our team du!!ed it
'dialling &or dollars' 5 and certainly . was a!le to use some top9&light contacts to pull people on !oard" . also
made a num!er o& more personal calls to ensure there would !e goodwill towards a private rescue !id
5 . was given the green light at the highest level"
6e !uilt up a !usiness plan to explain how we would turn 0orthern oc- into the Virgin 4an-" >. had toyed
with the idea o& calling it Virgin oc-s, do&&ing the cap to our roc-9music origins7 @ayne9Anne gently !ut
&irmly dissuaded me"? =y &irst port o& call was A.*, the insurance group who sponsor =anchester United
$oot!all (lu!" 3hey were very -een to support us" .t was a &lying start" 6e went on a roadshow, presenting
our plans to the !ig glo!al !an-s" Our longstanding relationship with the oyal 4an- o& Scotland paid
dividends 5 they re,uested that we deal with them, and their partners, (itigroup and Deutsche 4an-,
exclusively" 3his was a !rilliant !oost &or us" 6e now had in place a possi!le investment o& I:: !illion >yes,
!illionA?
On $riday :B Octo!er B22C, we unveiled our consortium o& heavyweight &inancial !ac-ers" Our team
included 6il!ur oss, the veteran distressed de!t investor7 A.*, the world's largest insurance company7
$irst 'astern .nvestment, led !y
Victor (hu7 and 3osca&und, the hedge &und led !y =artin +ughes and chaired !y Sir *eorge =athewson"
>Sir *eorge, the &ormer chie& executive o& the oyal 4an- o& Scotland, was very -indly acting as our senior
adviser while we loo-ed &or a chairman"?
3he Virgin team went to $resh&ields, the Dondon law &irm, &or an initial meeting with the 0orthern oc-
management team, when Adam Applegarth, the !eleaguered chie& executive, was still in situ" @ayne9Anne
told me later that she had !een hugely impressed with the 0orthern oc- team's willingness to divulge
in&ormation, and with their diligence in trying to sort out the mess" $ollowing this meeting, 0orthern oc-
opened their data room to the Virgin team"
4ut now there were other competitors eyeing up the !an-" .nvestment &irms Olivant, (er!erus, @(
$lowers and $ive =ile were all up against our plan" .t appeared that this was going to !e a competitive !id
and, given the credit crunch, the !attle &or &unding was li-ely to !e &ierce"
.t was clear to us all that we needed a credi!le senior &igure to pull the pro/ect together" So @ayne9Anne
allotted me the tas- o& persuading Sir 4rian Pitman 5 the leading !an-er o& his generation and a man o&
huge -nowledge 5 to !ecome our chairman"
. had wor-ed with Sir 4rian &or years on the !oard o& Virgin Atlantic and through our connection with
Singapore Airlines" . li-e and admire him" At seventy9six, his !rain is as sharp and
&ocused as ever" +e is on the !oard o& (arphone 6arehouse, and .3V, and is a senior adviser to =organ
Stanley" Stephen and @ayne9Anne had spo-en and met with him several times as we re&ined our proposal"
+e was extremely reluctant to get involved and told me it would !e di&&icult to turn the !an- around"
4ut . pestered him and he eventually relented" +e would, at least, hear us out"
@ayne9Anne went down to his home in 6ey!ridge to give a two9hour presentation" +e saw enough to
realise our !id was credi!le" +e understood, too, that it re,uired a man o& his gravitas to shape it" +e made
some welcome suggestions to the plan, and came up to Dondon a couple o& days later to meet the team"
4ut he still wasn't saying yes"
3he pressure on us grew" Dee och&ord, oyal 4an- o& Scotland's =anaging Director o& $inancial
.nstitutions Securitisation >. wonder how he descri!es himsel& at parties)? phoned to say that in order to
support us they needed to !e assured that we would have a suita!ly ,uali&ied chairman" So @ayne9Anne
called Sir 4rian in Surrey as-ing him once again to consider" $inally, he agreed" .t was a coup" @ayne9Anne
phoned Dee to reveal the name" +e was delighted: '3hat's &antastic news"'
Sir 4rian attended all our -ey meetings 5 including sessions at the 4an- o& 'ngland, the U%'s $inancial
Services Authority and the 3reasury 5 and he was !y &ar the most distinguished
and experienced o& all the senior !an-ers who attended these sessions" Our credi!ility was esta!lished"
.n the &ace o& the credit crunch and the su!9prime pro!lems in the United States, our recession planning
needed to !e &aultless" $irst o& all, it had to satis&y the regulators" Our !id chairman was a stic-ler on that"
3his was the ,uestion we had to as- ourselves, i& we were to protect the downside: '6hat would happen in
the worst9case scenario, in which the housing mar-et in the U% goes into a deep recession)'
3he ,uestion Sir 4rian was posing was a poignant one, as well as a practical one" Once, when @ayne9
Anne as-ed him why he had agreed to /oin us, he said there were a num!er o& reasons 5 !ut one was that
he remem!ered how 0orthern oc- had loo-ed a&ter miners' &amilies during the stri-es o& the :;E2s"
Apparently they stopped as-ing &or mortgage payments while the stri-e was on, and ris-ed lots o& !ad de!t"
4ut they lost nothing, and the miners and their &amilies -ept their homes" Sir 4rian said that a !usiness with
such an honoura!le history deserved to !e rescued"
Our plan was to in/ect I:"B1 !illion o& new cash plus Virgin =oney as a !usiness" 3he cash would have
come &rom Virgin, 6il!ur oss, 3osca&und and $irst 'astern, and the plan was to allow the existing
shareholders to participate in a rights issue that would ena!le them, on very pre&erential terms, to recoup
their investment over the coming years"
Un&ortunately, it had still to dawn on 0orthern oc-'s
shareholders what a !ad state their !an- was in" 3heir general &eeling was that ours was a poor o&&er" .t
wasn't, as !ecame all too clear" 6e really were !eing a!out as generous as we could possi!ly !e 5
especially given the need to introduce so much new capital to satis&y the regulator's re,uirements" >O&
course, . don't !lame the shareholders: as . said earlier, hindsight is easy"?
3wo leading hedge &unds made it clear to the government that they would vote against the Virgin deal and
&orce nationalisation i& the government chose us over their own rescue plan" . &eel that -ind o& rhetoric
!egan to &orce the prime minister's hand7 despite the need &or a ,uic- deal, the government couldn't !e
seen to support us and have the shareholders vote against us" 3he process was going to !e a long9drawn9
out one, !ut we were all set up to wor- it through"
6e reported that without an in/ection o& new capital o& I:"B1 !illion, 0orthern oc- !an- would not !e
a!le to withstand a recession o& the magnitude o& the early :;;2s" 6e disclosed our reasoning and our
&igures to the $SA and they appeared very happy with our wor- and prudent assumptions" .ndeed, this is
my answer to those who suggested that . was only in all this to mug the 4ritish taxpayer o& !illions o&
pounds at little ris- to my own !usiness" Sir 4rian explained this to me in star- &igures several times" ' 0e
have got to lose GD&H billion in total as the consortium before the ta)payer loses anything&'
0evertheless, we were con&ident" Our plan showed that we could repay all the de!ts !y B2:2" 4y early
B22;, according to
our &igures, Virgin 4an- would have lost IH22 million7 it would !rea- even !y B2:2, and grow a&ter B2::"
3his was an enormous ris- &or all o& our e,uity providers, and &or me personally" Virgin's normal rate o&
return in !usiness is around H2 per cent" 3he returns here would !e a!out hal& that 5 !ut applied to huge
&igures" . was entering alien territory" Stephen and *ordon tal-ed me through the process and we weighed
up the ris- to the group" 6e all agreed we would press on"
6e had to do many presentations to our e,uity consortium to -eep them with us" Date in the day @ayne9
Anne presented to =artin +ughes o& 3osca&und" *iven the increasing cost o& &unding, she wondered i& we
would need to ma-e people redundant" =artin was adamant that we should carry the cost o& excess sta&&
until the !usiness was thriving again 5 he /ust didn't want the spectre o& /o! losses to mar our !an-" Di-e
most really success&ul people .'ve met, =artin was more interested in doing the right and proper thing than
the easy and expedient one"
'very night at < p"m" the Virgin team hoo-ed up &or a con&erence call led !y Stephen and *ordon" .t was
our opportunity to catch up with each other and agree the next steps" Ours was a collegiate approach, using
the wisdom o& seasoned !an-ing pro&essionals, each o& them a veteran o& a signi&icant merger deal" 0o one
else had this treasure chest o& -nowledge, and . was extremely proud that the Virgin name could attract
such top9notch people" .n !usiness, this -ind o& team support is in surprisingly short supply"
6il!ur oss was a hard tas-master" @ayne9Anne sat up till the small hours on a num!er o& occasions as
he stress9tested her on all the downside scenarios" =y !usiness view is always to protect the downside 5
and this was one o& Virgin's !iggest ever gam!les" 6il!ur was much more interested in how much he could
lose, rather than how much he could gain" .n ma/or !ids li-e this, involving !illions o& pounds, success
comes &rom identi&ying the downside 5 and covering it 5 &ar more than planning &or the upside" 6il!ur
wanted to ma-e sure that we were prepared &or every eventuality" +e !ecame convinced that we were" Sir
4rian, the $SA and the 4an- o& 'ngland agreed, and declared us their pre&erred !idder"
3he hedge9&und investors 5 who had !een !etting on the share price 5 were livid at the prospect o& us
ta-ing over" As we approached (hristmas, the credit s,uee8e was getting tighter and tighter" All over the
(ity, ma/or !an-s were announcing pro!lems caused !y a lac- o& li,uidity" 6hile our lines o& &unding with
4S and their partners were still open, the cost o& that &unding was getting more expensive" 6e !egan to
loo- at our num!ers and we all agreed it was !ecoming too expensive to !orrow" .t was starting to loo-
unattractive &or us 5 and we considered withdrawing" .t was then that the 4an- o& 'ngland and the
government stepped in and o&&ered support !y suggesting 'wrapped sovereign !onds'" 3hese were !onds or
gilts issued !y the government and paid &or at a commercial price" All o& the !idders would have access to
this &unding, and so the merits o& each proposal could at last !e considered with a degree o& o!/ectivity"
3his would certainly ease the pressure on us, !ecause we -new our !id was already in very good shape"
3rue, we would as a conse,uence &ace stringent 'uropean Union restrictions on &air trading" .& we were
getting government9!ac-ed !onds, this would give us an advantage over commercial !an-s, and we would
have to !e restricted when competing with them, until we'd paid these loans !ac-" 3his was only &air, and
we had no pro!lem with it" 3he government said that there would !e no dividends until the U% taxpayer was
paid !ac-" 3his, too, was only reasona!le: Virgin would have repaid the money !ac- to the taxpayer !e&ore
we too- anything"
3he Virgin team were interested and waiting &or a term sheet to come out &rom *oldman Sachs /ust as .
was heading out to (hina on a high9level !usiness trip with senior 4ritish !usiness &igures and *ordon
4rown, the prime minister"
6e were delayed in leaving !ecause o& the emergency landing o& 4ritish Airways' 4oeing CCC at
+eathrow" 3hey had lost power in !oth engines as they descended, and through the immense s-ill o& the
pilot the plane had crash9landed on the grass !e&ore the runway saving every!ody on !oard" .'ve had my
run9ins with 4A over many years !ut you have to hand it to them: they employ &irst9rate &light crews" 3he
atmosphere on our &light was one o& ,uiet elation, the surroundings reminding us o& the li&e9saving e&&orts o&
the CCC's captain and &irst o&&icer"
6hen we arrived in 4ei/ing, . phoned @ayne9Anne as-ing i&
the *oldman Sachs pac-age had come in yet"
'#es, it's /ust come through"'
'*ood,' . said"
'6hat's !een happening on the &light)'
'6hat do you mean)'
'.t's all over the news that you and *ordon 4rown have !een having private tal-s a!out 0orthern oc-"'
'+a ha"'
'0o" 0ot Jha haJ" 6hat are you up to)'
3here was a long pause"
'@ayne9Anne, please tell me you're /o-ing a!out this"'
'.t's on the news now,' she said"
3here were &orty /ournalists at the !ac- o& the plane, and one o& the rival consortium's P advisers" *ordon
4rown had passed through the plane to tal- to them, pausing to tell me what he then told them: that he'd !e
issuing the *oldman Sachs term sheet to all the !idders within the next twenty9&our hours"
3hat was it" 0othing else" At any time" 0ever mind in &ront o& &orty /ournalists and a pac- o& hedge9&und
managers who wanted me out o& the pictureA
#et the entire (hina trip was to !e coloured in the 4ritish media !y a supposed 'sweetheart deal' !etween
me and *ordon 4rown" 3he herd instinct o& the 4ritish media did lasting
damage to our chances" 3here were even cartoons o& *ordon 4rown !eing in my poc-et 5 and . !eing in
his" 6hether it was malicious or simple over9exu!erance, .'ll never -now" 6e were told that the prime
minister and the 3reasury still &avoured a private sector deal, !ut . thin- the whole (hinese episode must
have in&luenced his team's eventual thin-ing"
3he media played a ma/or role, even !eyond the (hina trip, in the whole evolution o& the 0orthern oc-
story" During the crisis, 4ryan Sanderson, now 0orthern oc- chairman >a&ter =att idley's resignation?,
told @ayne9Anne that every paper had a /ournalist dedicated to the story and that they were !eing told to
come up with a new story every day 5 that made &or too &ertile a &ield o& gossipA
3he 3reasury didn't help matters when it started negotiating in the press, too" @ohn %ingman, the civil
service power !ro-er in the 3reasury charged with running the show, actually told our team that, in any
decision made, the government would have to ta-e account o& the view o& o!ert Peston, the 44('s
!usiness editor" 0ow o!ert is a very li-ea!le guy and a good /ournalist, !ut we thought it was odd that he
o&ten had in&ormation a!out our proposal !e&ore we were toldA
3he most !i8arre coverage &or @ayne9Anne &ollowed an early9evening call she had with %athryn *ri&&iths at
the Daily Telegraph" Di-e everyone else, *ri&&iths wanted to -now how much Virgin would earn out o&
!rand licence &ees" She was told that it would !e an arm's9length amount similar to that charged at other
companies 5 including Virgin =edia" 3hat
meant a!out : per cent o& income 5 which, given the pro!lems with 0orthern oc-, amounted to very little
each year &or years to come" 0ext morning the Telegraph 4usiness9page headline screamed: '4A0SO0
3O =A%' IB22 =.DD.O0 $O= $''S $O O(%'" Our press team as-ed them how they had concocted
this &igure, and were told it was calculated over twenty9&ive yearsA .t all contri!uted to the idea that . was
trying to ma-e a &ast !uc-" 6hen @ayne9Anne later went to 0ewcastle and tal-ed through the num!ers with
the 0orthern oc- management team, David @ones, the &inance director, as-ed why we had excluded the
licence &ee &or using the Virgin !rand" 4ut we hadn'tA +e /ust couldn't !elieve the amount was so tiny as to
!e irrelevant" 'ven Sir 4rian, in his interview with the 2inancial Times in early $e!ruary, stressed the
returns would !e unexciting and that no!ody 'will ma-e a -illing'"
+e went on to say: '6e've satis&ied ourselves that with the capital we are putting in we'd have enough
pure e,uity in this thing that, i& the worst came to the worst, the shareholders would lose money, not the
taxpayer"' #et the whole 4ranson5 4rown 'sweetheart deal' notion !egan to grow arm and legs" .t even
reached Prime =inister's Puestions in the +ouse o& (ommons on 6ednesday BH @anuary"
David (ameron, the leader o& the (onservative Opposition, as-ed *ordon 4rown a!out the taxpayers'
exposure under the prime minister's !ond scheme" .t !ecame part o& a political !oxing match !etween a
new prime minister on the ropes and an Opposition leader determined to throw some mischievous
punches"
'Det us !e clear: the rescue pac-age is as much &or his reputation as it is &or the !usiness" .& the !onds are
not paid !ac-, and i& 0orthern oc- &ails to meet its o!ligations, what is the total exposure) +ow much)'
'3he loans and !onds are secured against the assets o& 0orthern oc-, which, as everyone understands,
has a high9,uality loan !oo-" .t is our intention to get the !est deal &or taxpayers: they will get their money
!ac-, and ma-e a pro&it,' said the prime minister"
(ameron then claimed the &igure was I11 !illion 5 a neat rhetorical tric-, achieved !y lum!ering every
household in the country with a hypothetical second mortgageA
.& the press around that (hina trip was extremely damaging to our !id >and it was? so was the political
point9scoring in Parliament" 3he Di!eral Democrats were particularly aggressive, hiding !ehind
parliamentary privilege to insult and !elittle us"
Vince (a!le, the =P &or 3wic-enham and deputy leader o& the Di!eral Democrats, sounds an amusing
guy and he's !een an excellent per&ormer in the +ouse o& (ommons" +is sound !ites have enlivened
proceedings in the 4ritish Parliament, !ut then, in the +ouse o& (ommons, li!el laws don't apply: he can say
pretty much what he wants to"
And he did: '(an the (hancellor tell us what =r 4ranson is going to contri!ute) =y understanding is that
he is proposing
to put in IB12 million in -ind, not cash, to ac,uire a !an- worth I:22 !illion, or &orty times that value"' A !an-
worth I:22 !illionA) .& so, it certainly wouldn't have !een in trou!le"
4eing a!le to come out with this sort o& thing unchallenged clearly went to his head, !ecause he went on
to claim that . had !een involved with this 'sweetheart deal' with the government" +e tal-ed a!out
'nationalising the ris-, and privatising the pro&it'" 3hen he cast aspersions on me personally saying that . was
not a &it person to run a !an- 5 and that . had a criminal record gained when . was nineteen" 3his was
untrue, o& course, and the only reason he -new o& my stupidity was !ecause .'d chosen to !e open a!out
the story in #osing My Virginity some &orty years a&ter it had happened" . do hope he paid the &ull cover
price &or his copy"
. appealed to 0ic- (legg, the new leader o& the Di!eral Democrats, as-ing that they depersonalise the
campaign" Sir 4rian Pitman and @ayne9Anne *adhia o&&ered to meet Vince (a!le 5 !ut he re&used to see
them, insisting on meeting me"
On =onday F $e!ruary, the announcement o& Olivant's withdrawal piled more political pressure on
chancellor Alistair Darling" +is hope &or a !idding war !etween Virgin and Du,man Arnold's private e,uity
group simply &i88led out" 3he 2inancial Times headline summed it up 5 'OD.VA03 A4A0DO0S O(% A3
::3+ +OU ' 5 and he was reported to !e 'stunned'" Olivant's proposal had attracted the support o&
0orthern oc- shareholders including S= and A4, the hedge9&und investors, who had amassed :E per
cent o& the
!an-" 3hey were opposed to the Virgin deal !ecause they simply weren't going to get as much out o& it"
At the very last minute, we were as-ed to increase our government guarantees and add an extra I:225
B22 million &or e,uity warrants" 3his was stretching it &or us, and in the same wee- . came across a lot o&
comments that we were 'getting the !an- on the cheap' and '!ene&iting &rom the upside, without ta-ing
downside'" 3his was news to me"
.ndeed, towards the end o& the whole process, Stephen =urphy spo-e to 6il!ur oss who made it clear
that as the government were see-ing to tighten all the terms, the ris-s in the deal were getting more
su!stantial while the returns were now !ecoming marginal" 6il!ur warned that he could not accept any
&urther reduction given his responsi!ilities to his investors" 6e had to respect this as 6il!ur is a hugely
experienced investor in international mar-ets, and he and 3osca were our -ey investor partners" 3he
government was >rightly? see-ing a massive amount o& new capital to protect the U% taxpayer, !ut wasn't
recognising that this has to !e rewarded &or the ris-s involved" 3hat position was never going to wor-"
.n the end, . thin- the very thought o& a !usiness 5 despite ta-ing the ris-s 5 eventually ma-ing a return on
its investment threw *ordon 4rown and his !eleaguered (hancellor o& the 'xche,uer into a panic"
3he prime minister too- the decision to nationalise the
0orthern oc- !an- at B p"m" in Downing Street, a&ter he and Alistair Darling concluded there was no other
option" 3heir announcement was not diplomatically handled" Our only surviving rivals &or the !id, 0orthern
oc-'s own internal management team, were still answering ,uestions a!out their rescue plan when
*ordon 4rown declared his decision"
A&ter our disappointment . received a cordial phone call &rom *ordon 4rown, re,uesting that . didn't ma-e
too much noise and nuisance a!out the decision" +e told me that nationalisation was the right option" .n the
!ac- o& my mind . couldn't help !ut wonder whether the U%'s press hysteria a!out me !eing on a trip to
(hina with the prime minister had put the -i!osh on our chances" Still, . did as . had !een as-ed: . didn't
ma-e a &uss" . issued a statement saying we had su!mitted as strong a proposal as we could, and that .
was 'very disappointed'" And . was certainly disappointed enough to &eel . deserved those drin-s at the 4iras
(ree- !ar that night"
On re&lection, the whole 0orthern oc- saga represents to me a case o& the government loo-ing &or the
most politically expedient solution and not planning &or the long term" Virgin, as a private company, had
!een willing to ta-e 0orthern oc- o&& the government's hands and ma-e it wor- again" 6e could have
developed a !rilliant !an-, the Virgin 4an-, out o& it, and . am con&ident we would have generated new /o!s
!y doing so" As it is, the Da!our government will !e &orced to shrin- the company ,uic-ly, cut the /o!s and
get the money !ac- to limit any political &allout" 3here isn't much innovation or product
development in this route and certainly not more competition in the !an-ing mar-et 5 and the poor old
taxpayer gets all the downside ris-"
4ut governments and civil servants can't run !usinesses 5 that's !een proven a depressing num!er o&
times all over the world, and &or years in the U% we had daily experience o& their ineptitude every time we
!oarded >or weren't a!le to !oard? what they laughingly called a 'train'" 4usiness is not in their ma-e9up" 3o
!e &air, it's not their /o!, any more than running a !an- single9handedly would ever !e mine"
And that, o& course, is the point: I was never going to run the bank& . -now my limitations" . -now
what .'m good at, and what .'m not good at" . would never pretend that . could run a !an- 5 and that's why
we !uilt a credi!le !an-ing team" @ayne9Anne *adhia o& Virgin =oney, *ordon =c(allum and Stephen
=urphy o& Virgin =anagement, Sir 4rian Pitman, Sir *eorge =athewson, 6il!ur oss, an immensely
success&ul US investor in di&&icult turnarounds, and advisers such as @ames Dupton and Peter 0orris" 6e
had assem!led a &ormida!le team o& serious !an-ers and investors and in the end we were the only real
show in town" Our lawyers had a !etter understanding o& the company's legal position than the company's
or government's own advisers, while @ames, Peter and their teams ran rings around their opposition" =y
vision was to ma-e it possi!le that the !an- could !e saved, !y &inding really good people to run it"
0ationalising 0orthern oc-) . thin- it was the wrong
decision which will haunt not only this government !ut whoever is elected to hold the reins o& power in
4ritain &or years to come"
. spent the day a&ter nursing my poor head" 3he press cuttings were &iltering through and we received a
num!er o& emails and calls &rom well9wishers" 3he (hancellor sent me a note than-ing me &or Virgin's
interest and our o&&er !ut reiterating that nationalisation was the !est option &or the !an-"
. couldn't and can't agree with that, and it saddens me to thin- o& all the good wor- that's !een
undervalued, and all the opportunities that have !een lost"
.nasmuch as it was in me to &eel anything that day 5 aside &rom the thro!!ing in my head 5 . &elt, and . still
&eel, a great deal o& sympathy &or the people wor-ing within 0orthern oc-" 3he sta&& were tremendously
decent people caught in the middle o& a pu!lic nightmare" 3hey wor-ed every hour, every day o& the wee-,
&or many months, and they remained up!eat" .'m positive they would have en/oyed !eing part o& the wider
Virgin &amily"
And @ayne9Anne's own team played a !linder too" Virgin =oney's &inance director, Dave Dyer, and its
strategy director, =att 4ax!y, wor-ed with total commitment" 3hey more than em!odied the Virgin spirit and
put a great many personal and &amily matters on hold while we aimed &or the pri8e"
@ayne9Anne phoned me on the 3uesday a&ter the announcement" . was worried a!out her" She had !een
a
stalwart, driving the process &or us, plus she and her hus!and Asho- had a &ive9year9old daughter to loo-
a&ter" @ayne9Anne had spent a hell o& a lot o& time away &rom home, her wee-ends were ta-en up with some
he&ty reading o& reports and num!er crunching, and most nights she wor-ed long past midnight" . thought
she might !e very let down"
'. hope you're not standing on top o& a !uilding and a!out to /ump,' . said"
'Oh, don't worry, ichard,' she said chirpily, '.'ve spent the wee-end loo-ing over the &igures o& 4rad&ord M
4ingley and Alliance M Deicester"'
=y head !egan to thro! again" A lot" '$or heaven's sa-e, why)'
'3hey !oth loo- ripe &or a ta-eover" Disten " " "'
3hat was the -ind o& spirit that cheered me up" At Virgin, we move on"
6hat i& you can't move on) 6hat i& there is nowhere to move to)
Assuming you're not !urning other people's money in their &aces, you could always per&orm the hardest
tric- in the !oo- o& !usiness tric-s: get very small, very specialised and very expensive"
. would a!solutely count this as innovation, and o& the highest cali!re: you're ta-ing a large operation and
&inding ways to scale it down, retarget it and remar-et it, all the while adding !uc-etloads o& value to /usti&y
the hi-e in price" And it's very
hard to do 5 not least !ecause you're in so much pain as you're doing it" >.ndeed, your old !usiness is dying
around you"?
6hat is the &irst thing we do at Virgin when we're &aced with a pro!lem) 6e get together promptly to loo-
&or the answer to a single ,uestion: '.s there a way out)' And we then go right to the endgame and as-:
'6hat is the ideal way out o& this pro!lem &or everyone)'
#ou need to !ecome :22 per cent &ocused on trying to &ind that way out" .& it's a ma/or pro!lem, give it :22
per cent o& your time and energy until it is sorted" 6or- night and day to resolve it, and try to delegate
everything else that is going on" .&, having done this, you &ail to resolve the pro!lem, then at least you -now
you've done everything in your power you can" =ove on" .& it means ta-ing a hit, then ta-e it on the chin"
Don't even thin- a!out it again" If you%re hurt, lick your wounds and get up again& If you%ve given it
your absolute best, it%s time to move forward&
As . write this the economy is deteriorating7 it may !e that some o& you will !e &aced with this tas- in the
near &uture" *ood luc-" And may the next chapter, which is all a!out innovation, give you some servicea!le
ideas"
1 Innovation
' Driver for /usiness
In 1926 I gave an interview to a 3ritish m(sic ,a,er. 4he headline was )3+5*S6*)S
36M3S'7LL). I said that we were ,lanning to ,(t every alb(m and single on to a small
,ortable com,(ter bo8 and that the listener wo(ld be able to b(y it and ,lay any record they
wanted, listening thro(gh mini9head,hones. I said it wo(ld revol(tionise the m(sic ind(stry :
and ,eo,le believed me. I got frantic ,hone calls from some ma0or record com,any bosses
,leading with me not to la(nch s(ch a device. 4hey told me it wo(ld blow away the record
ind(stry. 4hen I ,ointed o(t the date. It was 1 5,ril : 5,ril ;ool)s #ay. <hen the editor of the
,a,er fo(nd o(t, he wasn)t am(sed.
$i&teen years later, Apple sold its &irst iPod"
Already, in this !oo-, we've tal-ed a lot a!out innovation"
The best, most solid way out of a crisis in a changing market is through e)periment and
adaptation" 4usinesses sur& the waves o& changing circumstances, and . can't o&&hand thin- o& any
industries whose !est players are not constantly engaged in reinvention o& one sort or another"
=a-ing changes and improvements is a natural part o& !usiness, and &or sole traders and very small
companies, the distinction !etween innovation and day9to9day delivery is
!arely noticea!le and unimportant" .t's all /ust !usiness, and creative, responsive, &lexi!le !usiness comes
easier to you the smaller your operation"
Darger operations command more capital, and so, in theory at least, their range o& possi!le actions is
greater" 4ut complexity soon gums up the wor-s o& an organisation as it expands" >One marvellously
!ac-handed (hinese curse runs: '=ay you employ more than a hundred people"'?
3his is the point at which entrepreneurial &unctions !ecome separated &rom management &unctions" 3his
ma-es a lot o& sense 5 as you'll see when we loo- at di&&erent &orms o& !usiness leadership in the next
chapter" +owever, the separation o& day9to9day !usiness &rom the motive energy that !irthed the company
does cause pro!lems" Suddenly, innovating is seen as something extra, something special, something
separated &rom the activities the company normally engages in" 3his is when niggles !ecome endemic,
intracta!le pro!lems7 morale declines7 and the !usiness !egins to lose its way in the mar-etplace"
Virgin's management style is uni,ue, designed to !oth empower employees and avoid a culture o& &ear" A
couple o& other companies encourage new ideas even in their day9to9day operations" 3hese are very
di&&erent companies &rom Virgin, and . admire !oth o& them immensely"
Since :;C<, with design and ease9o&9use its !usiness mantra, Apple has simply -ept inventing and
improving" 3he sale o&
over :22 million iPods and three !illion downloads &rom i3unes is proo& o& their success" 6hile other
!usinesses have !een caught in the &ree &all o& the record industry revolution, Apple has !een a!le to &ire up
a new generation o& listeners, not /ust with music !ut with podcasts, radio shows, 3V shows, movies " " "
Steve @o!s and his colleague Steve 6o8nia- !oth had a passion &or gadgets and !egan as electronic
entrepreneurs in :;C2" Six years later they were listed in the 2ortune 122 rich list" .n B22E, Apple had a
mar-et capitalisation o& G:21 !illion, ahead o& Dell and /ust !ehind .ntel" 3he original Apple =ac, which was
released in :;EF, was descri!ed !y Steve as 'the &astest and most power&ul computer ever placed in the
hands o& a large num!er o& people'" .t was a trans&ormational product" Steve later stepped !ac- &rom the
sharp end o& the !usiness 5 which promptly started to go into reverse" +e returned as its saviour"
+e is see-ing per&ection all o& the time, and &rom that original mouse9driven Apple =ac, through to the
iPod and the revolutionary iPhone, he has pushed the &rontiers o& technology in a creative way" And Apple's
products have trans&ormed people's lives" On Apple's campus at (upertino in (ali&ornia, innovation is driven
!y a com!ination o& perseverance at tac-ling large, intracta!le pro!lems and, as a 1arvard /usiness
Review article in $e!ruary B22< descri!ed it, Steve @o!s playing his part as the 'great intimidator'"
4y all accounts, Steve is a di&&icult man to wor- with !ecause
o& his impossi!ly exacting standards, !ut his co9wor-ers are &illed with a sense o& 'messianic 8eal' to gain
Steve's approval &or their wor-" +e is meticulous a!out the details and 8ealous a!out protecting all the new
&eatures that give his !usiness that vital edge" 3hat's leadership"
Apple is an iconic glo!al !rand that inspires emotional attachment" #et the logo is only very su!tly
em!ossed on their products" Steve @o!s and his team -now exactly how to design, manu&acture and then
deliver high9,uality products to the mar-et"
Steve immerses himsel& in the mar-eting campaigns and product launches himsel& 5 he has chosen to !e
!oth the manager and the entrepreneur, and in his case he has !een success&ul playing !oth roles" +e's a
rare animal" Per&ecting the &ine art o& delegation is normally essential when you're running a large company"
Steve is more 8ealous than he needs to !e, !ut it seems to wor- &or him" .t gives the pu!lic and investors
con&idence that the admiral is at the helm 5 with his hand &irmly on the tiller" Steve has that rare !usiness
,uality: the acute intelligence to see what the pu!lic wants" #ou can tell this !y the way Pixar Animated
Pictures, which he co9&ounded, has had a stream o& !loc-!usters which have earned a stac- o& Academy
Awards, including such successes as Toy ;tory, ' /ug%s #ife and 2inding =emo" Pixar's &amily &ilms
have grossed more than GF !illion at the !ox o&&ice" Steve was there when it merged with the 6alt Disney
(ompany in B22< and he remains on Disney's !oard o& directors" +is unrelenting genius
is at the heart o& everything Apple does and, in my view, this places Steve in a !usiness class o& his own"
6hile . ac-nowledge that Apple's products have trans&ormed lives 5 and you only have to wal- along a
street to see the u!i,uitous white earpieces o& the iPod 5 . rec-on it is another '.nvented9in9America' !rand
that has made the most signi&icant di&&erence to the shape o& our connected world" . have !een as-ed:
'6hat is the greatest !usiness invention o& the last &i&ty years)' 3hat's a tough ,uestion !ecause you need to
&actor in the mo!ile phone, D0A testing, the personal computer and the .nternet, !ut . thin- the winner has
to !e *oogle's power&ul search engine"
*oogle has allowed ordinary people to &ind things out much more ,uic-ly" .t has led to more immediate
choice 5 and increased consumer power 5 and a &reer &low o& in&ormation, -nowledge and ideas" .t is &ar
more than /ust a search engine 5 it has !ecome an engine o& change" *oogle's mission is 'to organise the
world's in&ormation and ma-e it universally accepta!le and use&ul'" 3hat's a no!le am!ition" .t has allowed
political, cultural and interest groups to &lourish" .t has !rought the democratisation o& in&ormation on to a
glo!al scale 5 something that was unthin-a!le /ust ten years ago" .t has also !rought a great deal o& &un into
our lives"
.'m honoured to !e good &riends with !oth Darry Page and Sergey 4rin, the &ounders o& *oogle" . was
&lattered to !e as-ed to o&&iciate at Darry and Ducy's wedding on 0ec-er" Darry and Sergey won't mind me
descri!ing them as gee-s 5
indeed, with them it's a !adge o& honour 5 !ut they !oth have strong personalities" 3heir characters
complement each other when they are wor-ing on a pro/ect" 3hey get on very well and never, ever disagree
with one another in &ront o& sta&&, clients or investors" .n the world o& !usiness, this re,uires remar-a!le sel&9
discipline" .& they have a disagreement, they will wait until everyone has gone out o& the room and only then
will they discuss the matter" 3hey are !ound together !etter than the !est marriages, and their personal
chemistry is an intrinsic part o& their !usiness success"
3oday *oogle attracts the !rightest technical talent" . love the idea that employees are encouraged to
generate and develop new ideas, and that technical sta&& spend B2 per cent o& their wor- time doing
something they choose to do" 4y giving their people ownership over their wor- in this way, the company and
its customers have !ene&ited enormously" Among many other innovations, this scheme has !rought us
*mail, Adsense, *oogle 'arth, *oogle =aps and *oogle 0ews, which aggregates headlines &rom around
the world" 3he company excels at .3 and !usiness architecture" .t continually conducts experiments to test
its system, and then improvises and improves, and it has a !ac-!one o& people who are acutely analytical"
Sergey and Darry understood early on that they are not managers" 3heir trade now is in &inding ideas and
turning them into !usinesses or other enterprises" 6hile they conceived *oogle and !uilt it, they also &ound
a !rilliant ('O in 'ric
Schmidt, who runs the company on a day9to9day level" 'ric was the ('O o& 0ovell, and he also sits on the
!oard o& Apple" +e is steeped in the technology world !ut he -nows how to deal with &inancial matters and
the investment community" 3his is a classic example o& how the roles o& entrepreneur and manager can !e
separated 5 a theme explored &urther in the next chapter" At *oogle, !oth sides o& the !usiness are given
room to !reathe" 'ric's day9to9day management o& the company allows Sergey and Darry to commit
themselves to the search &or new ideas 5 and to en/oy some o& their wealthA
One o& our Virgin team was visiting *oogle's +P in =ountain View and told me they have an enormous
white!oard detailing the strategy o& *oogle" .t is *oogle's =aster Plan and there are thousands o& ideas on
the !oard, all contri!uted !y the employees" One o& the -ey tas-s along with '+iring networ- engineers' and
'+iring hardware engineers' was '+ire ichard 4ranson'" . don't need to !e hired: .'m always happy to help
Sergey and Darry"
On April $ool's Day B22E we announced the launch o& Virgle, a partnership !etween Virgin and *oogle
loo-ing at creating a community on =ars in the next &i&teen years" 6e were advertising &or volunteers to
travel on a one9way tic-et to =ars" .t was concocted over dinner at 0ec-er when we tal-ed seriously a!out
the creation o& a human colony on =ars and what it might loo- li-e" 6e then pondered who we would invite"
Our announcement made headlines around the world and had do8ens o& !log sites !u88ing with activity"
6ere we
/o-ing) O& course we were /o-ing" =ind you, &i&teen years !e&ore Apple started selling iPods, . was /o-ing
a!out porta!le digital music players" 6ith that in mind, we've registered the Virgle !rand 5 /ust in case " " "
.nnovation can occur when the most elementary ,uestions are as-ed and employees are given the
resources and power to achieve the answers" 3hat's how Virgin America did it" 6hile the legal team &ought
to convince the Department o& 3ransportation that Virgin America was indeed a US9owned carrier, the Virgin
America design and &inance teams &ocused on ta-ing care o& !usiness, and that was the !usiness o&
creating a totally di&&erent and !etter &lying experience" 0hat does a great travel e)perience look and
feel like? 1ow would it be di(erent from anything else >; travellers have e)perienced? 0hat
would it take to knock their socks o(?
4uilding an entirely new way to &ly re,uired a team o& specialists who respected each other's expertise !ut
didn't hesitate to &ight &or what they !elieved was important, who wor-ed in close proximity round the cloc-,
made decisions swi&tly, and passionately !elieved in their vision &or the customer" .ronically they themselves
were the customersA
6hile understanding that the airline was to !e under US control, Virgin USA ('O $rances $arrow was
convinced that the issues the &lying pu!lic truly cared a!out 5 the actual product and experience 5 should
!e without e,ual in US s-ies" +er &irst &ocus was to go a&ter the !est talent &or customer service and design,
and where !etter to loo- than people
leaving Virgin Atlantic)
As .'ve said !e&ore, Virgin employees, a&ter they've started a shiny new Virgin company or run a mature
one with aplom!, are worth holding on to !ecause they love the !rand they helped !uild and their
experience and -nowledge o& the !rand are priceless" 0ew companies are a great way to -eep them
challenged 5 and to -eep them within the &amily"
Adam 6ells, a whi889-id &rom Virgin Atlantic's design team which had created the award9winning upper9
class suites, and 3odd Palows-i, Virgin Atlantic's customer service specialist, were !rought in as part o& the
original customer and product insight team" 3hey were ,uic-ly &ollowed !y talent o& the li-es o& (harles
Ogilvie, a cutting9edge interactive entertainment guy"
3his small !ut dedicated group !egan to dream !ig" 3he team didn't inherit dra! legacy planes and they
weren't stuc- in the status ,uo" 3hey were empowered with the Virgin !rand to do things di&&erently7 there
was no other way to create a completely di&&erent experience" 0hat if we got rid of check6in lines?
0hat if we turned the airplane into a living room? 1ow can we give control back to
passengers? 0hat should we put in our toilets? 1ow can airplane seating e)press freedom?
'nd how can we e)press that freedom from the moment passengers reach the ticketing area?
$lying is generally a passive experience" $rom the moment you enter the airport, you are told what to do"
(laim your
!oarding pass here" Put your luggage there" Stand in line, ta-e your !elt o&&, remove all li,uids 3he on!oard
experience is no !etter" .& you're luc-y, the ca!in crew &lips on a heavily edited movie that no one really
wants to watch" And that's &ollowed !y a trolley o& unhealthy snac-s that !loc-s you &rom the loo"
6hat you don't have is &reedom" 3he Virgin America team !elieved they could &ind a way to give it !ac- to
you, and they did" >Sorry, they're geniuses !ut even they couldn't ma-e chec-9in go away"? 3hey designed a
li!erating experience, one in which you could genuinely do what you wanted with your &lying time" #ou want
to wor- on your laptop) Open it up and go, there's plenty o& room" unning out o& power) Plug it in, charge
up your computer and play a game while you're at it" 6ant to chat with your cousin who is a &ew rows !ac-)
3ry seat9to9seat chatting on the in&light entertainment screen using the P6'3# -ey!oard at your armrest"
$eeling pec-ish) Order a sandwich &rom your seat, and a &light attendant will deliver it to you when you
want it" 6ant to listen to music) (reate a music playlist) 6atch a movie """ in =andarin (hinese) *o &or it"
.t's all there right in &ront o& you"
#ou will not get !ored on our &lights"
So innovation has to !e appropriate &or your !usiness" .t must &ul&il a need, and it must give you an edge
over your competitors" Our &ood9ordering system was an extension o& our service philosophy, the idea that
the ca!in crew wanted to give passengers control" 0o airline in the world !ut Virgin America o&&ers on9
demand &ood ordering" 6e decided that &ree airline
&ood was a &ailed model" $ree is not necessarily good7 customers have low expectations and the airline is
pressured to slap down the a!solute !ottom9,uality snac-" 4ut our team as-ed some ,uestions and o&&ered
a simple solution: i& you pay a little !it, you will get what you want" (ustomers had passively accepted the
norm o& &ree peanuts and then nothing at all """
3he Virgin USA !rand team did some research on Virgin's US customers and learned that they tend to !e
open, am!itious, very social and up &or trying new things" .t says something a!out you i& you choose to &ly
with Virgin" #ou can thin- o& &lying as !eing trapped on a plane with strangers !ut we thin- our passengers
have more in common with each other than they would with passengers on a legacy carrier" 3he team li-ed
the idea o& giving people a real opportunity &or community creation, whether it's on the entertainment system
or chatting with the person next to you or texting someone a &ew rows away"
6e -new !road!and was coming !ut couldn't time it, and we needed a stopgap to invite people to chat
and interact in the ca!in" So (harles put chat rooms and seat9to9seat chatting in the in&light entertainment
system, with -ey!oards at every seat" .t's a totally new way o& stretching out and interacting while !eing in a
con&ined space" And through those little seat9!ac- entertainment screens, we created a social community" .t
didn't hurt that our small new airline's tight9-nit ca!in crew was &riendly, remem!ered repeat passengers and
helped to ma-e
each &light &eel li-e a party"
6hile the commercial team was a!out to order millions o& dollars' worth o& planes, the !rand team was at
the next des- demanding a !righter shade o& white &rom the seat supplier" 3he supplier had never had this
sort o& re,uest !e&ore7 in &act, seat9!ac- colour choices ranged &rom ten shades o& !eige to the same o&
purples and greys """ !ut no white, and de&initely no whiter9than9iPod white"
Dighting on planes tends to !e harsh and grim, so Adam designed a mood lighting system with special
controls that was custom9developed &or us, a &irst &or aeroplanes" 4ecause no whiter9than9iPod white option
was availa!le, we gave the seat9!ac-s a uni,ue coating, giving the lighting a slee- sur&ace to re&lect o&& and
washing the ca!in with soothing light7 it was a deli!erate visual experience to give the impression o& space
and &reedom"
3hese simple details are the stu&& o& Virgin" .& that's what !usiness pro&essors call innovation, &ine"
.nnovation is o&ten what you didn't -now you wanted until you got it" 0ow the other airlines loo- outdated
and neglected, so they will have to catch up to our innovation" And so the cycle o& competition goes"
Di-e any Virgin company, the Virgin America team were surrounded !y, learned &rom, and in&luenced
ama8ing specialists" (olleagues are your !est resource at Virgin companies: open and thought&ul people to
!ounce cra8y ideas
o&& 5 which don't seem so cra8y when the person next to you shares your vision and can help you realise it"
3he Virgin !rand demands people li-e that, people who are going to as- tough ,uestions and demand
excellence and something di&&erent"
(ould the team have wor-ed as e&&ectively in a di&&erent setting, a di&&erent company) 3hey were indeed
extraordinary !ut the circumstances were e,ually unusual" 3he team weren't motivated !y getting ahead 5
there was no corporate ladder and they weren't inspired or intimidated !y a !ureaucratic hierarchy" 3hey
were empowered and they owned the product, and they would have to live with it once it launched"
4ecause the !rand is -nown &or !eing a leader and going against the grain, there's a !it o& pressure to
innovate 5 not /ust &or the sa-e o& innovation !ut truly to deliver something !etter"
Virgin America also !ene&ited &rom !eing the underdog" 3he airline was a start9up minnow &ighting the
legacy shar-s that wanted to -eep its planes grounded" 3his do9or9die mission was motivating"
.nnovation doesn't necessarily mean !eing &irst or !iggest, !ut !eing the !est" 6e weren't the &irst carrier
to introduce low9cost &ares to Americans" 6e aren't interested in &lying into every airport in all &i&ty US states"
6e want to o&&er travellers an excellent &lying experience to a small !ut growing num!er o& ur!an point9to9
point centres" 6e have a model that gives us the &lexi!ility to navigate these tur!ulent times" 6e want
people to en/oy &lying again and that's why Virgin America continues to &ocus and innovate on the customer
experience"
(ustomers are tal-ing a!out Virgin America" 3hey're writing in their !logs a!out a vacation and how it
started with a &light on Virgin America and how much &un they had on their &light or how clever the sa&ety
video was" 3hey're uploading on their $lic-r pages snapshots o& themselves on our planes or the in&light
entertainment screen"
3his tells me we're doing a pretty good /o! o& it so &ar"
3he power o& research and development is great 5 too great /ust to !e let out to gra8e on the existing
mar-et" *overnments and power&ul philanthropists have understood this &or centuries, and have tried, o&ten
,uite success&ully, to harness innovation to their own long9term purposes" . am !ecoming more and more
involved in ,uestions o& how we can !est direct capital investment to address the pro!lems which we -now
are round the corner, !ut which are not yet driving the day9to9day responses o& the mar-et"
Schemes to encourage advances in a particular &ield are not new, o& course" 3he &irst recorded pri8e
created !y the 4ritish government was launched in :C:F, o&&ering &inancial incentives to the inventor who
developed a device capa!le o& measuring longitude within hal& a degree o& accuracy" 3his was vital wor- at
the time, !ecause 'uropean sea&aring nations, including 4ritain, were &inding themselves caught up in
increasingly violent s-irmishes with each other 5 all !ecause they couldn't agree on the location o& !orders
and treaty lines in territories &ar away &rom their home shores"
$i&ty9nine years later the pri8e was won !y @ohn +arrison, a sel&9educated #or-shire cloc-ma-er" 3he
pri8e 5 IB2,222, a vast sum &or its time 5 made his &amily's &ortune"
.'ve always li-ed the idea o& pri8es" 'ven i& a pri8e isn't awarded !ecause the competitors &ail in their
attempts to win it, the very &act that there is a target to aim &or can drive an idea &orward to early maturity" As
&ocus points &or venture capital, technical innovation and entrepreneurial am!ition, pri8es are hugely
valua!le" And as we've !een discovering at Virgin *alactic, our space9tourism operation, pri8es li-e the
Ansari Q Pri8e capture the pu!lic imagination, providing the commercial applications o& the &uture with a &irm
&oundation"
.ndeed, success in the world o& aviation has !een !uilt on winning trophies" .n Decem!er :;:B @ac,ues
Schneider 5 a $rench industrialist and a &anatical !alloonist 5 o&&ered a trophy &or a seaplane race" 3his was
the Schneider 3rophy" 3o secure it 5 and to pic- up C1,222 &rancs in pri8e money 5 a pilot needed to win
three races in &ive years" .n :;:; aymond Orteig, a 0ew #or- (ity hotel owner, o&&ered the GB1,222 Orteig
Pri8e &or the &irst non9stop transatlantic &light !etween 0ew #or- and Paris" .t was eventually won !y (harles
Dind!ergh in :;BC 5 while the Schneider 3rophy was still up &or gra!s" .n :;B1 the U%'s air ministry &ormed
a racing team at $elixstowe, Su&&ol-, and commissioned the designer eginald =itchell to develop a
monoplane to compete &or the 3rophy" 3he result was the Supermarine S1, which spawned successive
improvements" 3he S<4 !ro-e the world speed
record !y &lying at F2Cmph, a record that remained un!ro-en &or &ourteen years 5 while another direct
successor, the legendary Spit&ire &ighter plane, pro!a!ly saved 4ritain &rom invasion !y 0a8i *ermany"
Pri8es are not the only way to encourage research and experiment" 3ax !rea-s serve innovative
!usinesses well" Various schemes have !een rolled out !y successive governments, with varying degrees
o& success" .n the private sector, the new generation o& entrepreneurs emerging &rom Silicon Valley and
elsewhere in the world are -een to encourage new ideas to help them achieve their philanthropic goals"
Some o& their schemes are incredi!ly am!itious" #ou need to !e aware o& these developments, and . hope
that, as well as o&&ering a &ew lessons a!out innovation, this chapter will serve, in passing, as an
introduction to some exciting and &ast9developing areas o& !usiness"
L
Di-e so many leaders and heads o& state, &rom 4lair to =andela, President =i-hail *or!achev was a
persuasive salesman" 'ichard, you are -nown in ussia as a very !rave adventurer, surely you would li-e
to !e a cosmonaut)'
.n the a&termath o& the Soviet Union's implosion, *or!achev was sweeping away all the sym!ols o& the
ine&&icient and discredited communist regime" .n the %remlin, the &ree mar-et was the !u88, with =argaret
3hatcher its &lag9waving hero" And it was 3hatcher who told her new9&ound ussian &riend
that . was worth meeting"
So here we were now, at the Divadia Palace, once the imperial home o& 3sar 0icholas and his wi&e
Alexandra, in #alta on the 4lac- Sea" 3his was the .talianate residence where (hurchill, oosevelt and
Stalin met to redraw the map o& 'urope at the close o& the Second 6orld 6ar" 3he ussians were very
-een to persuade me to help open up this !eauti&ul area &or tourists 5 and earn them much9needed hard
currency"
A &ew days later, . was &lown !y helicopter to Star (ity at 4ai-onur in %a8a-hstan &or a V.P tour" As a
6esterner, it was a privilege to !e allowed into this secret world" +ere were the creators o& the Sputni-
satellite, the Vosto-, Vos-hod and Soyu8 manned missions, the Salyut space station 5 and o& the !allistic
missiles that had once threatened us" 3his was where #uri *agarin !lasted o&& into space in April :;<: to
ma-e history" And now a new !reed o& ussians occupied this place, negotiating with all the entrepreneurial
8eal o& a Palo Alto deal9ma-er"
3hese guys o&&ered me a once9in9a9li&etime opportunity: to sit in a capsule on top o& a ussian roc-et and
!e !lasted into space" 3hey were giving me the chance to !ecome the &irst ever space tourist"
O& course, there was a price tag"
Over GH2 million"
At the time Virgin had a high9level !allooning pro/ect called 'arth 6ings and a Soviet cosmonaut was
coming to /oin our
team" . was very -een to do !usiness with the ussians 5 all good grounding &or the &uture when . planned
to start a low9cost ussian airline 5 !ut the price tag &or this /un-et 5 GH2 millionA 5 was astronomical" .t &elt
immoral to me, the idea o& spending that much money on mysel&"
.t's certainly &ar too much &or one individual to &or- out &or a trip into space" #et that remains the going rate
i& you want to spend your annual vacation at the .nternational Space Station" .t seems a &ortune to pay when
there are other priorities in li&e" .t made me ,uestion the ridiculous economics o& putting people in space 5
and it spar-ed my search &or the !ig9!usiness !rea-through that would ma-e space travel a more realistic
proposition &or many, many more people and !e a!le to get crucial science and technology into or!it at an
a&&orda!le price to really ma-e a di&&erence to li&e here on 'arth"
. passed up my opportunity, !ut others were more than willing to pay the price" Dennis 3ito >who actually
has a scienti&ic !ac-ground wor-ing as an engineer in the @et Propulsion Da!oratory in Pasadena? !ecame
the &irst civilian to go into space in B22:" 3ito was &ollowed !y =ar- Shuttleworth in B22B, *reg Olsen in
B22H, Anousheh Ansari in B22< and (harles Simonyi in B22C" All said the experience surpassed their
wildest expectations" As . write this, 'nglish9!orn ichard *arriott, the son o& an astronaut, is expecting to
&ly into or!it in late B22E" +e will !e only the sixth paying customer" +al& a do8en people in space, at a total
cost o& nearly GB22 million 5 that isn't very good, is it)
3hirty million dollars isn't space tourism" .t's private exploration !y rich individuals su!sidising a ussian
mission" 3he chances o& a tourist going into space are currently one !illion to one" . want to shorten those
odds drastically" . want to see i& ta-ing people into space could !ecome a wor-ing !usiness proposition and
also create a new technological plat&orm &or science, satellites and other human activity in space" 3here is
no dou!t though that tourists need to !e the &irst stepping stone on our /ourney"
Our initial tas- has !een to esta!lish the li-ely demand &or what we have in mind" .n a new &ield, this can
!e hard" 6hat ,uestions should we as-, and how should we interpret the answers we get !ac-)
=ar-et consultancies are a mixed !ag, on the whole" #ou should de&initely see what they have to o&&er,
!ut please, never neglect your own reading and thin-ing" (onsultancies, li-e any group o& experts, are !est
given something to chew on, and the more insight and detail you can provide a!out your needs and
,uestions, the more use&ul the advice you will get !ac-"
. can't deny that, in our hunt &or sound advice, our passage has !een smoothed !y the &act that space has
such huge commercial potential" Apart &rom Virgin *alactic, there are others anxious to !ecome involved in
commercial space: there is @e&& 4e8os, who made !illions selling !oo-s and other goods in cy!erspace with
Ama8on"com7 the Das Vegas hotel magnate o!ert 4igelow, who is now developing a large in&lata!le
space9hotel7 @ohn (armac-, the computer9games creator !ehind hits such as
Doom and Pua-e7 'lon =us-, the &ounder o& PayPal, who has set up SpaceQ, a commercial or!ital
transportation service"
Such is the demand &or high9,uality research in this sector, consultancies have grown up dedicated to
encouraging and shaping its emerging mar-ets" .n B22B, a survey per&ormed !y Oog!y .nternational &or
$utron, one o& the leading space consultancies, !egan to loo- seriously at the mar-et &or space tourism"
3heir reports suggest that &rom B2:: there will !e B,222 tourist astronauts a year, and that !y B2B: as the
cost comes down, there will !e around :1,222 a year, !y which time the potential revenue &rom this
!usiness is G<C< million per annum"
Oog!y arrived at these &igures !y interviewing thousands o& very wealthy individuals" =y vision is to ma-e
the experience o& su!or!ital &light open to many more people" Virgin *alactic only needs two &lights per day
at three di&&erent sites to !rea- through the $utron survey !arrier and, with all things going well, this is a
highly conservative estimate" =y own prediction is that !y B2:; the price o& a trip into su!or!ital space will
drop to a level that will ena!le hundreds o& thousands o& people to experience and en/oy a &light into space"
$or someone in 'urope or America it will !e as simple as a decision o& whether to go on holiday to Australia
or up into space" A &igure o& under G:22,222 is eventually achieva!le" 4ut even i& $utron's survey is correct,
Virgin *alactic will still !e a success&ul !usiness"
Virgin is ideally placed to move into the space industry" 6e
have the expertise and experience o& moving millions o& people around the glo!e, sa&ely and securely" 6hat
the Virgin !rand will do 5 unli-e any other in the commercial space mar-et 5 is esta!lish in the pu!lic mind
that space tourism is &or them: a service industry that's going to !e a lot o& &un, while !eing as sa&e as
people can ma-e it" 3he !rand also helps to give the team glo!al credi!ility as they !uild out the !usiness to
include environmental science wor- in space, satellite payload launching and astronaut training"
.n =arch :;;;, 6ill 6hitehorn registered Virgin *alactic as a company 5 and our hunt &or technology to
get us into space relatively cheaply !egan in earnest"
$or years, however, . had !een -eeping ta!s on anything and everything to do with the vexed !usiness o&
getting o&& the ground and into space" . wanted us to !e &irst in this sector, in the same way that . wanted us
to !e &irst in the !io&uels mar-et" And /ust as we've toyed with some very unli-ely !io&uels over the years,
we've witnessed the launch o& some pretty cra8y prototype spacecra&tA
3his is the unseen part o& !usiness, the part that no!ody ever discusses !ecause, to !e &air, there's not a
lot to discuss" The secret to success in any new sector is watchfulness, usually over a period of
many years& .t's hard to spin waiting and watching into a vi!rant !usiness lesson, !ut i& there's one thing
you ta-e away &rom this chapter, let it !e this: that Virgin's sudden emergence as a leader in cutting9edge
industries was decades in the ma-ing" #ou need a huge amount o& sheer
curiosity to ma-e it in a new sector"
Our search &or a way into space led us into a !rave new world o& exotic materials and untried designs,
!ristling with spin9o&&s and !usiness opportunities7 a thriving community o& small companies and driven
individuals, motivated !y pri8es, supported !y engaged and well9in&ormed philanthropy"
.t was a strange experience" +aving considered mysel& a small entrepreneur all my li&e 5 all evidence,
airlines and the rest o& it, to the contraryA 5 it was di88ying &or me to &ind mysel& loo-ing at !usiness through
the other end o& the telescope" #es, . was loo-ing to set up my own !usiness 5 a small commercial space
company 5 !ut at the same time, . could see that the capital . had to hand could ma-e a real di&&erence in
this sector, encouraging other small !usinesses to develop"
. was now not merely innovating in an existing mar-et7 . and people li-e me were actually helping to
create the mar-et" 3his posed the old ,uestion in a whole new light &or me 5 how could we !est ma-e a
di&&erence)
3he tipping point &or commercial space travel came during the millennium with the announcement o& the
Ansari Q Pri8e !y space entrepreneur Peter Diamandis" 3he Q Pri8e set a simple challenge to contestants:
carry three people :22-m a!ove the 'arth's sur&ace, twice within two wee-s" Peter had come to 'ngland to
pitch the idea to me several times since :;;C, and we thought a Virgin Q Pri8e was a good idea" +owever,
rather than sponsor a pri8e, we wanted to ta-e the
technology &orward ourselves and !uild a !usiness"
6e made the right decision" 6e were playing to our strengths !y developing our own company" 3hat said,
. don't thin- we'd !e sitting here preparing &or the launch o& our &irst spaceship i& it had not !een &or Peter's
idea, his determination, and the huge generosity o& Anousheh and Amir Ansari, who were the ones who
ultimately donated the G:2 million pri8e"
3he Ansari Q Pri8e had twenty9nine entrants, !ut only three serious contenders" O& these, /ust one had
managed to ac,uire serious &unding 5 ;pace;hip9ne"
4urt utan's company, Scaled (omposites 5 !ased in =o/ave, (ali&ornia 5 unveiled the existence o& its
space programme on :E April B22H" 4urt's ;pace;hip9ne was to !e carried into the upper atmosphere !y
a mother ship 5 a lightweight plane called 0hite $night 5 and launched in &light"
On :C Decem!er B22H, we &inally got con&irmation o& what had !ecome an open secret in aviation circles
5 Paul Allen, a reclusive !illionaire with a passion &or science &iction, was 4urt's &inancial !ac-er &or the
;pace;hip9ne pro/ect" 3hat day, ;;D !ro-e through the sound !arrier during its &irst manned test &light"
On B: @une B22F, =i-e =elvill &lew ;;D a!ove :22-m altitude, and this was a signi&icant !rea-through,
dispelling the myth once and &or all that manned space &light was the sole domain o& huge government
programmes"
. calculated that Paul had spent a!out GB< million to achieve winning the G:2 million Q Pri8e" So . wrote to
him in @anuary
B22F proposing a &i&ty9&i&ty /oint venture"
Dear 3aul,
May I congratulate you on the latest Iight& 2rom the footage I saw it looked magniCcent& I
should be delighted to work with you on taking the pro?ect forward and helping turn it into a
serious space6tourism pro?ect& I%m hopeful that with the strength of the Virgin brand and our
team%s marketing skill and your technological skills we can not only get your investment back
but earn enough to take the pro?ect forward into even greater heights& 9ur suggestions are
these< D. that initially we together spend the necessary funds to create a three6man craft
-along similar lines to the test craft. but with large windows& 0e spend these funds to make it
safe but don%t apply -at this stage at least. for 2'' certiCcation& This craft should be ready to
take passengers in DJ months& 0e put aside KD88 million each over three years to achieve
this& L. 0e start marketing in a ma?or way to coincide with the last Iight before the M 3riBe
Iight& 0e o(er D,888 trips at KL88,888 per trip& This would result in KL88,888,888 and should
be suNcient to get our total investments back plus have a fund left over to take the pro?ect to
the ne)t stage -possibly a si)6seat craft at more a(ordable fares.&
. suggested the name Virgin *alactic Airways and thought we could start ta-ing deposits in the summer" .
said: '6e have a team which . !elieve can manage this well"'
6hile running an actual airline in space didn't appeal to Paul, he loved the idea o& developing a six9seater
commercial space plane" 6ill 6hitehorn and Alex 3ai, a &ormer Virgin Atlantic captain, &lew to Seattle to
meet Paul's advisers" @on Peachey, Virgin's investment director and a *alactic !oard mem!er, went with
them" Peachey was the moneyman, with strict instructions to -eep 6ill's and Alex's enthusiasm under
controlA
3he &irst deal didn't wor- &or Paul's company, !ut we resumed discussions a little while later and this time
things progressed well" 4oth sides were conscious that the Ansari Q Pri8e was looming, and we needed to
complete the deal ,uic-ly i& the new company was to get the !ene&it o& the pu!licity" 'ventually Virgin
negotiated with Paul Allen to !uy the rights to use his technology 5 /ust three wee-s !e&ore the Q Pri8eA .t
was a terri&ic deal &or us !ecause the Virgin *alactic !randing would now !e on ;pace;hip9ne during the
ceremony in the =o/ave in Octo!er" 3his would give us worldwide exposure 5 and it would deliver a
message that we were now a serious player"
3he last wee- o& Septem!er B22F is one . will always cherish" 6e launched our :B1mph Pendolino tilting
service in the U%" 6e gained plaudits &rom the President o& 0igeria &or the launch o& Virgin 0igeria" And .
was on the plat&orm at the oyal Aeronautical Society in Dondon with 4urt to announce the launch o& Virgin
*alactic" 6e signed a historic GB:"1 million deal &or the use o& the technology with Paul Allen's company,
and announced that we had developed a G:22
million investment plan to develop a prototype commercial six9seater spaceship at 4urt's &actory in =o/ave"
4urt utan is an engineering genius, years ahead o& his time" Do you remem!er Voyager, a plane that
loo-ed li-e a &lying catamaran and &lew around the world on a single tan- o& &uel in :;E<) 3hat was 4urt's
design" .t was the largest all9composite aeroplane ever !uilt, and the &ather o& much o& Scaled (omposites'
later wor- and o& ;pace;hipTwo" 3hat plane was woven &rom glass, graphite and aramid, and !onded
with epoxies and resins" Once heated in an autoclave, the compound !ecame immensely strong and &ar
lighter than pressed aluminium"
;pace;hip9ne was constructed &rom e,ually exotic materials" .n &act, there was very little a!out its
design, &a!ric, execution and &light !ehaviour that wasn%t exotic" 3a-e the engine: a revolutionary roc-et9
motor design that will !e used in ;pace;hipTwo, and one without which commercial space tourism simply
wouldn't !e possi!le &or us"
.t was 4urt's uni,ue ta-e on an old idea, o& course: a dual9propellant system with a li,uid oxidiser and a
solid &uel" 3he solid &uel lines the case o& the roc-et" 3he li,uid oxidi8er is in/ected at the head o& the motor
and then ignited" 3he sur&ace o& the solid &uel reacts, com!usts and turns to gas" And !ecause the
propellants are separated they cannot mix in the event o& a lea-" (onse,uently, they cannot explode" =ost
serious systems &ailures on roc-ets over the years have !een &atal" 0ot so here: 4urt's spaceships are very
&ailure9tolerant"
And they're cheap" Once all the engineering and design has !een done, cran-ing them out on a
production line is a relatively simple !usiness" 3he solid &uel is ru!!er" Once the igniter motor starts the
ru!!er !urning, nitrous oxide is added under pressure, producing a &lame" 3he gas expands through the
no88le and provides instant thrust"
3he roc-et motor will give us /ust enough push to tip the cra&t into su!or!it" A&ter this the motor shuts
down, and the spaceship coasts into space &or a &ew minutes" .t reaches the top o& its arc and then starts to
&all !ac- down again" @ust li-e tossing your -eys in the air, once they reach the top, they start to come
down"
And another lovely thing a!out this engine" .t's green" 6ell green compared to any other &orm o& roc-etry
&rom the ground" $ly into space with Virgin *alactic and we'll !e releasing less (OB than the e,uivalent o& a
person &lying &rom Dondon to 0ew #or- and !ac- on an upper9class tic-et" 0ASA's Space Shuttle has the
same environmental output as the population o& 0ew #or- over the average wee-endA
=i-e =elvill, a long9time &riend and associate o& 4urt, was the pilot as ;pace;hip9ne, tethered to its
mother ship 0hite $night, too- o&& &rom =o/ave Airport's (ivilian Aerospace 3est (enter on B; Septem!er
B22F" .t was a sha-y ride, which re,uired !rilliant s-ills &rom the pilot" ;;D reached its apogee o& HHC,<22
&eet, or :2H-m" 3his was space"
On F Octo!er B22F, ;;D, with test pilot 4rian 4innie at the
controls, was launched &rom its mother ship and soared into su!or!it, reaching H<C,FFB &eet a!ove the
'arth" $or 4innie, it was a &light and a day to remem!er &or the rest o& his li&e" +e had !ecome an astronaut"
$or 4urt utan, it was the culmination o& his li&e's wor-" ;;D had won the Ansari Q Pri8e"
At Virgin, we !elieved the success o& this tiny spacecra&t revealed commercial possi!ilities, and so we
decided to license the technology o& ;;D and its mother ship, 0hite $night"
On BC @uly B221, at Osh-osh, 6isconsin, 4urt and . announced the signing o& an agreement to &orm a
new !usiness" .t was agreed that the new company would own all the designs o & ;;L and the 0hite
$night Two launch systems that were !eing developed at Scaled (omposites" 3he new !usiness, the
Spaceship (ompany, would !e /ointly owned !y Virgin and Scaled" 4urt's company would underta-e all the
research, development, testing and certi&ication o& the two cra&t, with 4urt heading up the technical
development team"
. !elieve Virgin's wor- with Paul Allen and with Scaled (omposites is a great example o& capital and
inventiveness wor-ing together" $rom day one, we have, every one o& us, !een singing &rom the same song
sheet" Our sym!iosis is nigh on per&ect" 4urt's genius is !eing challenged and stretched and will !e well
rewarded, even as our investment o& capital produces a &antastic return" . thin- 5 setting aside the huge
&inancial ris-s involved in doing anything new 5 the relative
ease o& doing !usiness in this sector is due partly to the environment7 the enthusiasm is tremendous" . also
thin- it has to do with the &act that Virgin considers everyone involved, regardless o& their capitalisation, as
an entrepreneur" 6e're all, in our own way, moving into un-nown territory, and so we're all sharing the same
experience"
3he commercial success o& 0hite $night Two and ;;L will open doors &or our !usiness" A single shuttle
mission can carry BH,222-g into or!it at a cost o& around GF12 million" 6e are wor-ing towards the day
when 0hite $night Two will !e a!le to ta-e :B,122-g o& payload to 12,222&t, and then !last it into low
'arth or!it" 3his will give it the highest drop capa!ility in the world, and opens up a whole array o&
commercial possi!ilities &or localised weather satellites, car!on9emission measurement and cheaper 8ero9
gravity training &or tomorrow's astronauts" .n the &uture, ;pace;hipTwo and its successors may !e a!le to
ta-e payloads &urther out into space" 6hile Virgin *alactic must concentrate on its original plan, these are
all options &or our !usiness to grow its revenues and technology !ase"
6hile . want to ta-e nothing at all away &rom the importance o& pri8es, .'m glad that in this instance, we
chose to develop a company, rather than sponsor a cup" . thin- this emerging mar-et !ene&its &rom Virgin's
spirit o& !randed mar-et capitalism" Virgin !rings the pu!lic on !oard, it !rings serious capital into play, and
it -eeps the &ield inclined towards small entrepreneurial ideas" 6e stand to ma-e money !y doing good,
and in !usiness, things don't get much !etter" And !elieve me, cheap access to space matters enormously i&
human-ind is to have any hope o& solving its pro!lems here on 'arth"
ven the most rareCed and e)otic6sounding business environment works to familiar
principles" Once our systems are proven, and our &irst space travellers are tal-ing enthusiastically a!out
their experiences, . !elieve the &loodgates will open" A ma/or reduction in costs will come when the
insurance industry sees how sa&e space travel is !ecoming" =ore venture capitalists will sense that there is
a !uc- or two to !e made7 their &unds will, in turn, support &urther expansion" 6e might even see some
commercial space companies listed on the 0ew #or- Stoc- 'xchange or in Dondon"
$ran-ly, space 5 outer space 5 is there &or the ta-ing" 3he ris-s o& &ailure are high and you will need to
churn ideas at high speed to attract &unding" On the other hand, there are plenty o& ideas to explore"
=aterials science and !iotechnology are !oth throwing up possi!ilities &aster than !usinesses can &ind
applications &or them, so an appetite &or learning is vital i& you are to ta-e advantage o& new opportunities in
these areas" 3hat, in turn, re,uires you to ta-e a real interest in people, and what they're up to, and how you
might !e a!le to help" #ou are not going to stri-e gold in this sector on your own"
eality shows a!out !usiness are !ecoming much more popular" Dragons% Den, in particular, ma-es
excellent viewing, not least !ecause it &ocuses on the more exciting side o&
!usiness 5 coming up with, assessing and testing new ideas" 3he !usiness panel is comprised o&
success&ul millionaires, and while the programme ma-es some to-en gestures towards how scary these
people are, . thin- it's pretty clear to everyone that they're a courteous, lively !unch who !ring a sense o&
adventure to their wor-" Some contestants are well prepared and have wor-ed out their pitches7 others are
thrown to the Dragons, go!!led up and spat out" 4ut it's a wonder&ully positive show: it's ama8ing the
num!er o& interesting ideas and schemes that people come up with"
At a meeting in Downing Street a while ago, . was as-ed !y some emerging ussian !usiness leaders i& .
could help with some in&ormal education a!out the practical aspects o& capitalism" . scri!!led on a !it o&
paper: 'Russian Dragons% Den< Must #aunch'" As . wal-ed along Downing Street a&ter the meeting, a
Times newspaper photographer a!out sixty to seventy &eet away snapped the !it o& paper and then !lew it
up" 3his ended up headlined '4A0SO0 3O (O0S.D' DAU0(+.0* DA*O0S' D'0 .0 USS.A'" . still
thin- it's a good idea 5 !ut .'m sure the 44(, who commission the show, are on to it"
'verywhere . go, .'m deluged with !usiness ideas" A &ew years ago . would sit with a pile o& !usiness
ideas in &ront o& me and wor- my way through them" $or example, there was a charming o&&er &rom a
Spanish gentleman, written in per&ect 'nglish" +e told me that he would li-e to wor- with me to create Virgin
6hite 5 a washing powder" +e rec-oned this
would !e a wonder&ul product and, o& course, he might have !een right"
Some o& the proposals we get are !rilliantly thought9out, down to the last detail, and o&&er us a good share
o& the mar-et" Others are simply handwritten scri!!les, o&ten mar-ed 'Private and (on&idential', saying
!asically, 'Dear =r 4ranson" . have had this idea &or a great product which you might li-e to launch 5 it is
Virgin 3omato Soup in a tin can" . thin- it would !e a very popular product" . loo- &orward to hearing &rom
you"' 6hat can you say a!out that) 3hat =r +ein8 and =r (amp!ell already have per&ectly good products)
. never li-e to !e rude" .'ve loo-ed !ac- and discovered that we've had a!out a hundred proposals to set up
5 yes 5 Virgin 6hite" So you might thin- your idea is original, !ut there are other people out there who might
have !een there !e&ore you"
. never want to !lunt anyone's passion or enthusiasm !ut over the last thirty9&ive years we have run the
rule over almost every single idea you can thin- o&" 6e are !om!arded with ideas: some hal& !a-ed 5 li-e
Virgin 4eans 5 some plain crusty 5 li-e Virgin 4readstic-s 5 and, among them, some real ringing successes
5 such as Virgin =o!ile"
.'ve come to thin- o& our search &or ideas as 'Showgirls to Stem (ells'" .ndeed, we have always loo-ed at
sex and health as !eing pretty &undamental parts o& the Virgin !rand"
3he ageing o& the '!a!y !oomer' generation in a num!er o& wealthier nations means that people can no
longer expect their
own national wel&are systems to prop them up in terms o& pensions and healthcare" .n the U%, the 0ational
+ealth Service can only come under increasing strain" .n the &uture, there's going to !e a need &or
supplementary and supportive health services, which might deliver the extras and the non9li&e9threatening
services that would give people a !etter ,uality o& li&e" 3his isn't a political view, or even a !usiness pitch" .t's
star- reality" 3he 0+S can no longer !e expected to do everything" 3here are too many o& us, and it is
simply unreasona!le to expect a single organisation 5 however visionary 5 to adopt every single new
procedure, however expensive, however rare&ied, and roll it out to everyone" .t's /ust not doa!le"
3his, anyway, is the !ig picture" Virgin's supportive role is ,uite modest !ut, we hope, targeted in a way
that will support and sustain current pu!lic services" 6e want to o&&er non9urgent complementary services
that com!ine physiotherapy, dentistry, optometry, diagnostic testing and scans" *iven the surge in the
num!er o& &it and active people in their &orties, &i&ties and sixties with a lot o& disposa!le income who want to
travel and see the world, it seems cra8y not to o&&er them the opportunity to invest in their own well9!eing" .t
is an evolutionary step &or us, too 5 to consider the healthcare o& the &irst Virgin generationA
.n addition, and with the awareness that there are many regulatory issues and ethical ones to loo- into,
we are exploring the highly contentious &ield o& stem cell research"
Stem cells could open up !rea-throughs in treatment in years to come" As . /otted in my note!oo-: ' ;tem
cells are the essence of life& They have potential to develop into any other cells& 4iven the
right conditions they can create not ?ust a heart * a heart for you&'
6e've researched the harvesting o& stem cells &rom the !lood stem cells o& human um!ilical cords" 6e've
set up a Virgin cell !an- storing stem cells &or &orthcoming generations, and we've invested in a genetic
testing service which might !e a!le to predict certain conditions and diseases" .'ve spo-en to several
scientists at the cutting edge o& this &ield, including the head o& a company called Via(ell, a clinical9stage
!iotechnology company whose ra&t o& experimental cellular medicines might one day !eat cancer,
neurological diseases, dia!etes and muscular dystrophy" =y view is that di&&icult ethical ,uestions are there
to !e answered 5 again and again, i& necessary, as the years go !y and morals and &ashions change 5 and
that anything that can save lives in the &uture is certainly worth studying"
Virgin 5 li-e all the !est entrepreneurial !usinesses 5 is really loo-ing &or something &resh" .& you thin-
we're going to ma-e millions together launching a washing powder, tomato soup or even three9legged
women's tights >yes, we've had that: you tuc- the spare leg into your underwear and use it i& you ladder one
o& the other legs? then perhaps you need a di&&erent entrepreneur"
3he other thing you'll need 5 in spades 5 is luc-" 3he !usiness9school gurus tend to underplay this
commodity, presuma!ly
!ecause the power o& chance undermines every other !usiness rule they teach you" 4ut trust me on this:
luck is essential" 3here aren't many chie& executives who admit to simply !eing in the right place at the
right time" #et the !usiness world is littered with the !ro-en careers o& those who were in the right place at
the wrong time and screwed up" (ertainly Virgin =o!ile 5 the &astest growing company in history to reach a
!illion9dollar turnover 5 was propelled !y a huge slice o& good &ortune"
4ut then, chance &avours the prepared mind" *ary Player, the South A&rican gol&ing master, used to say
that the more he practised, the luc-ier he !ecame" #es, the ru! o& the green >or should that !e the red)?
played a signi&icant part in Virgin =o!ile's success" 4ut never &orget we doggedly stuc- with our interest in
mo!ile phones, and were constantly searching &or the gap in the mar-et" 6hen a gaping canyon revealed
itsel&, we were ready"
ight now, the world could do with some luc-" (limate change will !e a serious !usiness challenge &or our
li&etimes and well !eyond" (ompanies are already starting to ma-e ma/or changes, !ut things aren't
progressing nearly &ast enough" 6e need advanced control technologies and clean energy alternatives to
start delivering much sooner than we ever anticipated 5 and we haven't even developed a &raction o& what
we need: ultra9e&&icient water heaters, improved re&rigeration and &ree8ers, advanced !uilding materials,
heating, ventilation, insulation, cooling, rainwater harvesting " " "
Some terri&ic products have already emerged" Smart windows that adapt and maintain com&orta!le
temperatures" Super9e&&icient D'D lighting" 'nergy9saving improvements in !uilding design" Sensor
technology to help us use scarce resources more wisely" 'ven a new !reed o& super9smart ro!ots" >4ill
*ates tells me this technology is as exciting as the nascent personal9computer industry was in the mid9
:;C2s"? According to a ;cientiCc 'merican report in B22E, !y B211 a G:,222 personal computer will have
as much processing power as all human !rain power com!ined" 4y then we could pro!a!ly do with the
help"
3hen there are next9generation hy!rid cars >the latest !eing encouraged !y Peter Diamandis, the &ounder
o& the Q Pri8e and now the Automotive Q Pri8e? that emit less pollution" 3here are colonies o& wind &arms,
on9 and o&&shore, sea !arrages and solar panels" 3here are technologies emerging to capture car!on &rom
power stations" Para!olic mirrors, deployed in A&rica's deserts, provide green electricity" 3here are huge
investment programmes loo-ing at !io&uels such as cellulosic9!ased !utanol that don't eat away at our vital
&ood supplies" And many o& these excellent schemes have !een evaluated !y Virgin's .nvestment Advisory
(ommittee"
.n !usiness, as in li&e, you can't a&&ord to !e a&raid o& doing the wrong thing" 3his !oo- is littered with
accounts o& my and my colleagues' successes and mista-es" Virgin $uel's &irst !io&uel investment was in
manu&acturing plants that ma-e ethanol &rom corn" *iven what's happening to world &ood
investment at the moment, we can all agree that that was going to !e a non9starterA 4ut as we saw, &rom
that not9so9good idea, good ideas have grown" emem!er: success in !usiness never comes &rom inaction"
+ave . !een luc-y in !usiness) #ou !et" 4ut most people, most o& the time, have the same amount o& luc-"
.t's what you do with it that counts"
Innovation is what you get when you capitalise on luck, when you get up from behind your
desk and go and see where ideas and people lead you&
'.t's idyllic here 5 would you mind passing me the sun!loc-)' . as-ed my wi&e, as we !oth lay sprawled out
on our sunloungers" @oan and . were having a romantic anniversary !rea- in the =aldives, and the .ndian
Ocean was a shimmering mirror o& tur,uoise" .t was wonder&ully warm, with a gentle sea !ree8e, and the
only sound was the lapping o& the waves on the pure white lagoon sand"
'3here you go" #ou'll smell gorgeous with this one on,' she laughed as she handed me the !ottle"
.t was a &actor H2 organic coconut9!ased lotion and my arms, legs and tummy glistened a&ter . applied it"
@oan was right, . had ac,uired the aroma o& a molten -ing9si8e 4ounty !ar"
=y novel wasn't very exciting 5 so . replaced my sunglasses to read the ingredients on the !ottle instead"
.'m always on the loo-out &or ideas and almost anything can -ic-9start your thin-ing" . !egan contemplating
the irony o& our glo!e" +ere was one o& the most !eauti&ul places in the world 5 and over E2
per cent o& it is less that one metre a!ove mean sea level" *lo!al warming and rising sea levels meant
catastrophe &or this piece o& heaven on 'arth" 6as there a solution) Perhaps part o& the answer lay in the
!ottle . was holding " " "
ising population com!ined with climate change are the main challenges &acing our world 5 and aviation
contri!utes a!out B per cent to industrial glo!al warming >agriculture is the main culprit?" On B: Septem!er
B22<, . stood next to the &ormer US president 4ill (linton, and pledged to commit all the pro&its the Virgin
*roup made &rom our transport !usiness over the next ten years to com!ating glo!al warming" At the
(linton *lo!al .nitiative in 0ew #or-, . said: 'Our generation has inherited an incredi!ly !eauti&ul world &rom
our parents and they &rom their parents" 6e must not !e the generation responsi!le &or irreversi!ly
damaging the environment"'
On (04('s 3ower #unch programme, . repeated my pledge" 'O!viously we are in the transportation
!usiness and we do our &air share o& spewing out (O
B
" " " 6e are pledging that any money that comes !ac-
to the group in the &orm o& dividends, share sales or &lotation, that :22 per cent will !e invested in tac-ling
glo!al warming" 6e expect over the next ten years to put aside around three !illion dollars"'
=y note!oo-s &or the wee-s &ollowing my announcement are spiderwe!!ed with &igures and arrows and
exclamation mar-s as . tried to understand the economics o& the &uel de!ate"
Dess than a wee- later, on BC Septem!er, Virgin Atlantic
unveiled an initiative to reduce car!on emissions &rom aviation !y up to B1 per cent" Our airlines use around
C22 million gallons o& &uel a year" . wanted to cut !ac- on this consumption and &loated a &ew ideas" At the
time, . -new these were am!itious targets" 6hat i& our planes were towed to the runway !e&ore the engines
were started) 6e proposed starting grids &or planes at airports, and a method o& landing planes called the
'continuous descent' approach, which meant a saving in &uels" 6e also pointed the &inger at 'urope's air
tra&&ic control system, which is punishing the environment !y -eeping planes on holding patterns in the s-y"
>3here are thirty9&ive separate tra&&ic9control organisations in 'urope7 there's a single one &or the whole o&
the USA? Virgin Atlantic was wor-ing to pull together the airlines to ma-e commercial &lying more
environmentally &riendly, and !y B22E, many o& the world's airlines 5 now &aced with growing criticism over
their contri!ution to glo!al warming 5 had !egun to adopt these procedures to save vital aviation &uel"
O& course, we could all stop &lying tomorrow" 4ut that's not only an unrealistic idea, it's politically and
economically disastrous &or millions o& the world's poor" .& you stop people going to A&rica, say, you will only
increase the hardship o& the people there" =any A&rican nations have !een !uilding up worthwhile and
pro&ita!le tourism ventures" #ou only need to loo- at %enya in B22C, and how tourism dried up a&ter the
disputed presidential election results and the massive loss o& /o!s that &ollowed, to recognise the industry's
importance, and the desta!ilising e&&ect the loss o& tourism can have on a nation"
3he glo!al economy now depends on aviation and tourism, two o& the world's most important industries"
3hey have grown exponentially over the last &orty years and have -ic-9started the economies o& many
developing nations" . can't see how we're going to stop this and return to the Stone Age" People love to
travel" .t !roadens the mind and increases international cooperation and understanding" .ronically, eco9
tourism is o&ten the !est way to protect sensitive environments such as rain&orests"
Slowly the aviation industry is wa-ing up to a harsh reality: the status ,uo is no longer sustaina!le" 3he
air&rame9ma-ers 5 and indeed the engine9ma-ers 5 must -eep searching &or ,uieter and cleaner engines"
3he other issue &or all airlines remains the sustained high price o& oil 5 indeed all o& our Virgin airlines have
&elt the pinch as &uel costs have risen" Virgin's &uel !ill went up !y several hundred million dollars !etween
B22F and B22<" (utting !ac- our consumption o& &ossil &uels isn't a lasting solution, however" At !est, it
merely postpones the coming crisis"
6hat is the solution)
3he -ey to saving our environment is to create a new !reed o& cleaner energy sources and &uels that do
not damage the atmosphere, do not lead to de&orestation, and do not eat up vital &ood stoc-s that the
world's growing population will need to eat" 3he recent !ac-lash against !io&uels has lumped all -inds o&
energy and &uel initiatives together, without considering the individual arguments" 4ut not all drugs are !ad
5 compare aspirin with heroin 5 and the same argument applies to renewa!les generally" 6hile . -now they
pro!a!ly won't provide the overall answer, . !elieve we have so &ar not even !egun to &ind out what !io&uels
might !e a!le to deliver"
4urn any organic matter 5 and that includes coal and oil 5 and you release car!on dioxide 5 (O
B
5 into
the atmosphere" (oal and oil are what happens to vegetation when it's compressed in the earth over
millions o& years" .& we used living vegetation 5 sugar cane, willow trees, peanuts, corn, coconuts 5 instead
o& these '&ossil &uels', then we wouldn't !e loading the car!on o& previous ages on top o& the car!on already
in our environment" 3here's a phrase . li-e which sums up this view: 'Don't dig up the dead"'
Synthetic &uels have !een around since the :;:2s, when &uel alcohols &irst went into mass commercial
production" 4e&ore Prohi!ition in the US, cars were run on the stu&& 5 !ut since ethanol is a type o& alcohol,
the practice was eventually outlawed &or &ear that people would drin- it"
Vinod %hosla, the man who &ounded Sun =icrosystems and one o& the most in&luential investors in
(ali&ornia 5 indeed, the United States 5 !elieves that ethanol is li-ely to !e the &uture &uel o& cars, and a &ar
more practical option than hard9to9handle hydrogen" +owever, ethanol 5 which would otherwise !e a
suita!le alternative &or traditional aviation &uel 5 &ree8es in temperatures a!ove :1,222 &eet"
$or nearly a century, the unsuita!ility o& ethanol seems to
have put the dampers on research into alternative aviation &uels" 6hen . &irst started to loo- into this area, .
was astonished at the lac- o& progress or interest in this &ield" +ad no one seriously thought o& putting
!io&uel into a plane)
Apparently not: when . &irst mentioned in B22< that we were loo-ing &or a /et engine &uel that was clean,
we were laughed at and moc-ed !y environmentalists and engine manu&acturers ali-e" People said it was
a!solutely impossi!le" .t's worth remem!ering that as recently as the :;12s, some airline people
5 including the American aviator (harles Dind!ergh, then wor-ing &or PanAm 5 didn't thin- the /et engine
had a &uture in commercial aviation" Step changes, driven !y !usiness imperatives, do happen 5 !ut they
need a catalyst"
Our &irst port o& call was olls9oyce, the world's leading /et9engine ma-ers, !ased in Der!y" 6e tried to
get them interested in !io&uel development, !ut they were pursuing a di&&erent path, improving the e&&iciency
o& their engines" =ore than that, they told us that the &uel we wanted to develop was 'impossi!le'" So we
went to *' Aviation, one o& their rivals, and ma-ers o& /et engines &or 4oeing and Air!us airplanes" 3hey did
want to help us" And with them on !oard, we got 4oeing (ommercial Airplanes interested too" At last, the
-ey players were engaging in the hunt &or clean &uels"
=any o& my notes &rom around this time are highly technical, as . tried to wrap my head around molecular
structures, en8yme activity, the chemical &ormation o& algae " " " 3he really di88ying part, though, was trying
to get to grips with the sheer
scale o& the &uel economy" Our transport needs &or the next two decades are still li-ely to !e met !y li,uid
&uels to drive the internal com!ustion engines in our cars, !oats and generators" $or any alternative li,uid
&uels to !e a via!le option, we need massive amounts o& &eedstoc- 5 the raw material to ma-e the energy 5
and it has to !e cheaper than 5 or at least compara!le to 5 traditional &uels"
Our studies &ound that cellulosic !iomass meets !oth these re,uirements, as does waste &rom agriculture,
municipal sewage and animals" 3his is where new !usinesses must emerge, and investors such as the
Virgin *reen $und and Vinod %hosla are spending !illions o& dollars on this !et" .t is not simply the
&eedstoc- !ut its collection, transportation and processing which needs to !e tac-led so that the end product
is competitive with gasoline" 3his !rings lots o& opportunity 5 and many !lind alleys" .'m going to ta-e you
down a &ew unli-ely avenues now to give you an idea o& the scale and complexity o& the !io&uel sector, its
sheer pace and the e&&ort that's !eing invested"
.ne&&icient corn ethanol started the !all rolling in the United States, aided !y massive government su!sidy,
while the 4ra8ilian experience has long since proven the via!ility o& sugar cane" 4ra8il has over thirty9&ive
years' experience o& using it as a &uel, and in B22E, its cars consumed more ethanol than &ossil &uels" 3he
primary &eedstoc-s &or the production o& renewa!le &uel are sugar &rom sugarcane, and starch &rom corn,
the source o& most US9!ased ethanol" (orn ethanol has !ecome
a ma/or concern !ecause o& its impact on &ood production" .n Asia, tapioca, potatoes and other starches can
also !e used" 4ut . cannot now see the !ene&it in growing &ood and using it &or energy when people around
the world are starving and !asic &ood prices are rising elsewhere"
So . !ecame interested in the discussion regarding the tonnage per acre o& plants with no &ood value"
Prairie grass, willows, corn stal-s and wheat straw all can !e used to manu&acture cellulosic ethanol" .
spo-e to @ohn anieri, vice president o& !io&uels at the chemical giant Dupont" . was interested in how the
!ig players were tac-ling this" @ohn's a very sound guy, and he gave me some excellent advice and
in&ormation" +e told me a!out Dupont's strategy to !ring !io!utanol and cellulosic ethanol technologies to
mar-et" 3his led to discussion with .an $erguson at 3ate M Dyle, the sugar giant" 6e !egan to thin- that the
Dominican epu!lic might !e a suita!le place &or a sugar re&inery and then considered a prairie9grass plant
in Douisiana" Our research also led the Virgin *reen $und to ma-e an investment in *evo, a world9class
!io&uels company that converts !iomass into !utanol" .t was important to invest in the development o& many
clean energy solutions, not /ust one"
6e tal-ed to .ogen, which was already turning some o& the (anadian prairie's vast cellulosic waste into
ethanol and had a F29million9gallon plant ma-ing ':2 !io&uel &or cars" 6e spo-e to (argill, one o& the
world's largest &ood and agricultural companies" 6e went to 4ra8il to loo- &or /oint venture partners"
6e even played with coconuts"
0ow, coconuts will never solve a glo!al energy crisis" 4ut they have a &ew things going &or them" $or a
start, they thrive on sandy !each areas in the tropics, where other plants don't grow well" 3he mar-et &or
copra 5 coconut &lesh 5 has !een &alling worldwide, and so has the price, leading to declining incomes in
regions heavily dependent on copra production, so it would !e great to &ind another use &or this important
crop" 3he low return &or the harsh wor- involved with the cutting and drying o& copra has pushed many rural
&armers into other cash crops, leaving unharvested coconuts lying on the !eaches" .t may !e that the
harvesting o& coconuts on a large scale can !ring much needed income to these areas"
(oconut oil in engines is not new" .t was used in the Philippines during the Second 6orld 6ar when
diesel was in short supply" 3oday, on the islands o& Vanuatu in the Paci&ic Ocean, an Australian
entrepreneur, 3ony Deamer, has succeeded in using coconut oil in &uel &or motor vehicles" Potentially, this
enterprise could help to revitalise the mar-et &or copra and have wide9ranging environmental !ene&its as
well" 3ony, together with a local coconut9oil producer, has !een negotiating with the government &or a
reduction o& duty on coconut oil9!ased mixtures" .n Vanuatu, the local electricity company U0'D(O has
!een using diesel !lended with coconut oil to run a large >and now pleasantly per&umed? &our9megawatt
generator"
. did some !asic sums and ,uic-ly con&irmed what we all
suspected, that the sheer la!our o& !rea-ing into the things and scooping out the &lesh made coconuts an
unli-ely player on the world !io&uel scene" (oconut oil was, however, an excellent local solution"
.n general, . thin- that the de!ate a!out !io&uels gets too easily hung9up on this or that single 'solution', its
merits and demerits" 6e don't have to &ind a single !io&uel that will do everything &or everyone" 6hat we can
and should develop is a suite o& solutions that wor- well in di&&erent places, &or di&&erent purposes, and at
di&&erent scales" .t should, &or example, !e possi!le to cut dramatically the human car!on &ootprint !y
introducing !io9ethanol &or cars and !uses" $lying will re,uire a ma/or !rea-through, however"
3hat's why it was important to us that we prove, in principle, that we could &ly a commercial airliner on
!io&uels" 3o demonstrate this principle, it didn't strictly matter what !io&uel we used, or whether or not it
could !e scaled up" .t /ust had to -eep a 4oeing in the s-y" On Sunday BF $e!ruary B22E, we &lew :osmic
4irl, a Virgin Atlantic 4oeing CFC5C22, on a test &light &rom Dondon to Amsterdam" A CFC has &our engines,
and in one o& the engines, &or the &irst time, we used, not &ossil &uel, !ut a mixture o& coconut oil and oil &rom
a related &ruit, the 4ra8ilian !a!assu nut" 0o modi&ications were made to either the aircra&t or its engines to
ena!le the &light to ta-e place"
3he demonstration &light, piloted !y (aptain *eo&& Andreasen, Virgin Atlantic's chie& 4oeing pilot, too- o&&
&rom +eathrow at ::"H2 a"m" and arrived in Amsterdam at :H"H2
local time" .t was a ,uiet, intense a&&air: during the &light, technical advisers on !oard monitored readings
and recording data &or analysis" 3he &light was a success: we had shown that it was possi!le to &ly a plane
at H1,222 &eet on cleaner &uels" 0ow the challenge was to develop a !io&uel that would scale up, and that
wouldn't eat into the &ood supply"
3hat wor- continues" .mperium enewa!les, who manu&actured our experimental &uel, have since opened
one o& the world's largest !iodiesel re&ineries at *rays +ar!or, 6ashington State, in the United States" .t's
capa!le o& producing up to :22 million gallons o& !io&uel per year" 3he company has &ormed a su!sidiary in
+awaii to develop another !iodiesel production &acility, which will li-ewise provide :22 million gallons o&
!iodiesel &uel a year, using locally produced &eedstoc-, including coconuts"
=eanwhile @ohn Pla8a, president and ('O o& .mperium, is overseeing the development o& a 'second
generation' !io9/et &uel, harvesting algae which can !e grown in &resh or sea water" . thin- that, &or us, this
approach promises a great deal"
Some people have as-ed why don't . give straight to charity the pro&its . have pledged to clean
technologies and renewa!le energy" 4ut that won't do the tric-" 3here is a time &or giving in a charita!le way,
!ut where there are !usiness opportunities to !e had, one is much !etter o&& harnessing the might o& the
commercial sector to one's cause" *iven our rapidly rising population and the conse,uent environmental
pressure, our solutions have to !e technological as well as social" .'m not
saying: let the mar-et dictate everything, and all will !e well" Puite the opposite 5 .'m saying: let's use our
position in the mar-et &or the greater good and prove there is money in greener technologies" 3hat's what
Virgin *reen $und is trying to do"
4usiness has a duty to continue to push the !oundaries" .n the next ten years, we'll all head into un-nown
territory" 3here will !e a vast increase in our demand &or energy 5 yet . !elieve we may well have passed
the point o& 'pea- oil', and that it is now starting to run short relative to demand" (ar!on &uel prices loo- set
to remain high, and alternative &uels are urgently needed" .t is not !eyond the wit o& man or woman to come
up with an answer" And i& we go into this &or the right reasons, in a concerted way to tac-le climate change,
we will, on the way, de&initely create some very exciting and success&ul new !usinesses and technologies
&or the &uture"
=ost o& them will !e small !usinesses" .& the complex and o&ten overheated de!ates a!out climate
change have taught us anything over the years, they've taught us that local solutions and small initiatives
punch well a!ove their weight, while !road9!rush initiatives get horri!ly !ogged down in their own
complexity, and very o&ten have unintended and sometimes damaging conse,uences" . say this as a glo!al
!usinessman, wor-ing at a glo!al scale on glo!al pro!lems"
4ig initiatives 5 li-e Virgin $uel's pro/ect to develop a clean aviation &uel 5 depend on small initiatives 5
li-e the coconut9oil9powered cars on Vanuatu 5 &or their development" 0o one
is going to solve glo!al warming !y edict, and at Virgin, we never &orget that, in !usiness, small is !eauti&ul"
6
7ntre,rene(rs and Leadershi,
1olding on and #etting 4o
In !!4 I did a ,rogramme called 4he +ebel 3illionaire for ;o8 4elevision, where I was nice to
,eo,le and then had to whittle them down to a winner. It only got seven million viewers b(t it
really hel,ed o(r brand in 5merica.
.n one episode, . told a participant we were going to !e the &irst to go over the Victoria $alls in a !arrel"
Annie 3aylor was the &irst person to con,uer the 0iagara $alls in (anada, riding the :C29&oot drop in an
airtight wooden !arrel in Octo!er :;2:" Since then many other daredevils have copied her achievement"
4ut the Victoria $alls in A&rica 5 at H<2 &eet 5 is more than twice as high, and much more dangerous, with
/agged roc-s at the !ottom" . as-ed one o& the contestants, Sam +eshmati, i& he was ready &or the
challenge o& going over the &alls with me, in a !arrel . said had !een specially created !y 0ASA"
6ere we going to do this thing)
4ravely, Sam nodded" 6e got into the !arrel" A large crane lowered us into the &ast9&lowing river, a &ew
metres away &rom the drop" A two9minute countdown !egan" .t seemed an eternity, $ive" $our" 3hree"
3wo " " "
A split second !e&ore we were due to plummet, . shouted: 'StopA +old on /ust one moment, . want to show
you
something"'
So we got out" And . showed young Sam the !ottom o& the &alls" . pointed at the roc-s !elow"
'Sam,' . admonished him, 'you were ten seconds &rom certain death" #ou shouldn't !lindly accept a
leader's advice" #ou've got to ,uestion leaders on occasions"'
$ast &orward three years" .'m in Das Vegas announcing the new route to San $rancisco with Virgin America"
Someone has had this idea &or a pu!licity stunt: they're going to drop me on a wire, dressed in !lac- tie,
&rom the $antasy 3ower at the top o& Palms (asino, into the midst o& the coc-tail party ta-ing place on the
ground !elow"
0ow, .'ve a!seiled many times !e&ore, so this stunt is actually something . should &eel relatively
com&orta!le with, even though .'ve never !e&ore !een dropped o&& the side o& a !uilding at :22mph" 4ut it's
an Octo!er day, and it's windy" .'m loo-ing at all the harnesses and wiring used in the ;pider6Man
movies " " " and there's something a!out all this that's ma-ing me &eel uncom&orta!le" And as . stand there
on top o& the tower, minutes !e&ore the leap, . -now what it is: I%m far too close to the building& So . say
to the technical team: '.'m sorry, . need to go to my room"'
'veryone thin-s .'m chic-ening out" 4ut . /ust need to think& $our hundred &eet" A windy day" And .'m
!eing dropped almost within touching distance o& the !uilding " " "
3here's a -noc- on my hotel9room door" .t's our Virgin
America pu!licity people"
'6ould you mind /ust coming up to the roo& to do the press anyway, ichard)'
. -now .'m !eing suc-ered, !ut . can't get the words out to re&use" =y legs carry me upstairs and there is
the stunt team !oss, assuring me that the wind has died down a little" .t doesn't &eel li-e the wind has died
down at all" .ndeed, it &eels a damned sight windier to me" 4ut these people are pro&essionals, right) And
every!ody is counting on me to do this thing, right) And . don't want to disappoint people, right) And
suddenly .'m hurling mysel& o&& the top o& the !uilding" . hurtle down, and on the way down . hit the casino"
3wice"
. reach the !ottom, utterly da8ed and very sore" +ave . !ro-en my !ac-) . /ust hang there li-e a rag doll
while &ree airline tic-ets 5 part o& our stunt 5 rain down unnoticed on the appalled guests now crowded
around me"
Sam, you can consider yoursel& &ully paid !ac- &or that /o-e we had at your expense" =y !ac-side hurts"
=y trousers are ripped to shreds" 3he press get some pictures o& me loo-ing rather grey and dishevelled" .
should have listened to my own advice"
True leadership must include the ability to distinguish between real and apparent danger&
3his is as true in !usiness as it is in ice clim!ing, !allooning, mountaineering or power!oat racing" #ou
need to understand the challenges to your enterprise and &ace up to them" ',ually,
you have to resist the temptation to overreact at the &irst sign o& trou!le"
Since .'ve !een littering this !oo- with tales o& our own successes, mista-es and lessons, . hope you'll
&orgive me i& 5 &or once 5 . illustrate this last point !y giving you an account o& someone else's mista-e"
On :F $e!ruary B22C, the com!ined company o& 03D, 3elewest and Virgin =o!ile relaunched as Virgin
=edia, creating the largest Virgin company in the world" $or the &irst time consumers could get everything
they needed &rom one company 5 we were the U%'s only ,uad play o& 3V, !road!and, phone and mo!ile,
o&&ering the most advanced 3V9on9demand service availa!le, VR, our high9spec personal video recorder and
really &ast !road!and .nternet access"
Overnight, Virgin =edia had !ecome the U%'s most popular !road!and provider, the largest mo!ile virtual
networ- operator and the second largest provider o& pay 3V and home phone" 6e were ta-ing on the
=urdoch empire"
upert =urdoch has wielded more power over a longer period o& time than any other !usinessman on the
planet" 3he Australian, !orn in =el!ourne, !uilt a newspaper empire in his homeland, expanded into 4ritain
in :;<E, and snapped up Dow @ones in the USA in B22C" +is satellite television empire straddles the glo!e,
and his newspapers are hugely in&luential" upert =urdoch is someone to !e &eared and admired in e,ual
measure"
upert is now in his late seventies, and while he still has immense energy, it is his two sons, Dachlan and
@ames, who are poised to ta-e his place at the helm" .n 0ovem!er B22< @ames, the chie& executive o&
4ritish S-y 4roadcasting, heard that Virgin =edia were planning to ac,uire a ma/ority sta-e in .3V, 4ritain's
&irst and largest commercial 3V station"
Deeply worried that the com!ination o& Virgin =edia and .3V might give S-y a very serious run &or its
money he tried to stop us" +ow) +e !ought :C"; per cent o& .3V's shares 5 at a cost to S-y's shareholders
o& I;F2 million"
At the time, he was generally praised !y the press &or pulling o&& this deal 5 !ut it turned out to !e perhaps
the !iggest mista-e o& his otherwise stellar career"
3he media world 5 and the politicians 5 -new that his move was anti9competitive, and he had only done it
to stop us getting .3V" 3o that extent, he may have succeeded" @ames =urdoch's intervention had, &or the
time !eing, &rustrated our plans to ta-e over .3V"
3he intervention led to a war o& words !etween us, legal action and a decision !y S-y to withdraw
content, such as #ost and LO, &rom our Virgin =edia service, at signi&icant cost to itsel& in terms o& lost
advertising income"
Soon a&ter 4S-y4 !ought the sta-e, Virgin =edia complained to the O&&ice o& $air 3rading, arguing that
competition in the U% 3V mar-et had !een impacted" 3he Secretary o& State re&erred the ac,uisition o& a
:C"; per cent
sta-e to the (ompetition (ommission"
@ames =urdoch !ought .3V's shares at I:"H1 each, overpaying in the mar-et to secure them &rom two
large institutional investors, who promptly then went !ac- into the mar-et and repurchased positions at
a!out I:":2A
On B; @anuary B22E, the (ompetition (ommission ruled that S-y must cut its sta-e in .3V &rom :C"; per
cent to !elow C"1 per cent" 4S-y4, having paid :H1p a share, could now !e &orced to sell !elow 12p" And
.3V's share price continued to &all" .n @uly B22E, the .3V shares were worth only F2p each"
So what's the cost to 4S-y4 o& that share purchase) At a share price o& F2p it would !e in excess o& G:"H
!illion" @ames's mista-e was to overreact to what Virgin was doing" +e could see that Virgin =edia was
going to !e a threat to the =urdoch media empire and that we would do well" Virgin =edia's aim was to give
S-y a run &or their money" 4ut . don't thin- it would have damaged S-y in any dramatic way 5 certainly not
nearly as much as he's lost trying to stop us"
Once you've !een a!le to assess the level o& danger in any given situation, you must !e a!le to honestly
gauge your own strengths and wea-nesses as leader" #ou need to !e a!le to recognise what you can do as
an individual 5 and how you inspire and motivate other individuals to cooperate willingly to get the /o! done"
+ow to achieve this) 6ell, &or starters, this is something that should 5 no, must 5 !e written into every
!usiness plan: This
company will have lots and lots of parties and social get6togethers& Parties are a way o&
galvanising teams and allowing people to let their hair down" 3hey have to !e inclusive and encouraging,
and then they are an excellent way o& !ringing everyone together and &orging a great !usiness culture"
. used to invite everyone in the Virgin !usiness to a party at my home in Ox&ordshire 5 !ut un&ortunately it
!ecame too !ig" At the last one we held 5 over three days 5 we had nearly <2,222 people" 6e put on
&airground rides, sideshows, ham!urgers and hot dogs, and roc- !ands 5 all paid &or !y the Virgin *roup" .
stood at the entrance and made sure . shoo- everyone's hand" =y hand was swollen and rather pain&ul
a&ter two days o& this, !ut it was worthwhile" 3oday we have smaller gatherings, and . aim to get to as many
o& them as possi!le"
3he Virgin 4lue party, meanwhile, has !ecome a glittering, red9carpet event 5 raising thousands &or
charity in Australia" 3he event is organised, set up and served !y Virgin 4lue people" .t's headed !y @ane
3ewson, who esta!lished (omic elie& in the U% and lots o& other charity pro/ects, and who has !een
wor-ing in Australia with A!original people" . donate a wee-'s holiday in 0ec-er .sland in the 4ritish Virgin
.slands as a ma/or auction pri8e, and one tric- . use is to get the runner9up, who has !id perhaps AGE2,222,
and the winner, who's paid AG;2,222, !oth to pay AGE1,222 and !oth go to 0ec-er together" .t's &orged
some great &riendships" 6e also raise AG:22,222 !y letting someone name one o& our aircra&t, and all that
costs is the paint /o!" .t's easy money &or charity and
&antastic &or sta&& morale"
. thin- governments should ma-e parties completely tax9deducti!le, with the proviso that every time
there's a -nees9up, shindig, disco or rave, the proceeds go to charity" 3hat's the deal" .t should !e much
more than /ust a &un night &or every!ody" A night when every!ody gets merry is good, !ut it's even !etter i&
you can com!ine it with something that ma-es a di&&erence to others" =usic events, &ashion shows, sports
contests, anything that gets people together and is en/oya!le can !e rolled out across every !usiness 5 /ust
don't let anyone use the charity's money to pay &or the drin-sA
A poor leader can ma-e li&e hell &or so many people" Deadership is not a!out a person sitting at the top o&
the tree, ma-ing all the decisions and expecting everyone to do as they're told" 3hat's hardly leadership: it's
more li-e dictatorship"
. have huge admiration &or the 4ritish version o& the 3V show The 'pprentice, in which people compete
&or a single /o! with Alan Sugar" 3he camerawor- is slic-, the editing is clever, the music is great" 3he power
o& television is immense, and i& it's capa!le o& inspiring people to treat !usiness with excitement and
enthusiasm, that can only !e a positive thing" $ran-ly, anything that can !e done to inspire young people to
give it a go has to !e worthwhile"
4ut . have one issue, and that's with the way Alan has to say, with a &rown, at the end o& each episode:
'#ou're &iredA' .t's in
his contract !ecause it ma-es good television" And it's co!!lers" 3he whole competition is structured around
the &ear o& !eing &ired" 6hile this does ma-e it interesting &or the viewer, it is not, in my opinion, how
!usinesses should !e run"
6here The 'pprentice is success&ul is in its wider portrayal o& the modern !usiness world" 3here are
&ew /o!s &or li&e any more" As individuals we need to !e positive and sell ourselves" =ost o& those ta-ing
part in the show will have a !etter grasp o& this than is apparent on camera" 3hey -now that &ailure is not
something to &ear" 3hey -now there are other options, other places to wor-"
So here it is important to stress that there is a fundamental di(erence between an entrepreneur
and a manager" 3hey are o&ten contrasting people and it's crucial to realise this" Although .'m sure there
are entrepreneurs who could ma-e good managers, my advice would !e: don't try to do !oth"
'ntrepreneurs have the dynamism to get something started" 3hey view the world di&&erently &rom other
people" 3hey create opportunity that others don't necessarily see and have the guts to give it a go" #et an
entrepreneur is not necessarily good at the nuts and !olts o& running a !usiness" . admit that this is not my
true &orte 5 and recognising this wea-ness is essential &or the entrepreneur" 3he annals o& !usiness are
littered with stories o& the driving &orce trying to run the !usiness on a day9to9day level 5 and &ailing
dread&ully"
*ood managers are worth their weight in gold" People with
the acute psychological -now9how to smoothly organise and handle the pressures o& an ongoing !usiness
venture are the glue that !inds the !usiness world" =y note!oo-s are &ull o& contacts and names o& people
who have !een recommended or whom we see- out to come and !e Virgin !usiness managers" (herish
them, and give them a proper sta-e in the !usiness, !ecause they deserve a !ig share o& any success"
Once the entrepreneur has the company up and running, they o&ten need to pass the !aton on to the
manager" 3he creator's /o! is to &ind someone with expertise who understands the vision and is prepared to
&ollow the path"
3he entrepreneur's /o! is e&&ectively to put themselves out o& a /o! each time the new company is up and
running" 3hen they can step aside and &ree themselves up to !e entrepreneurial in a di&&erent !usiness" .t is
generally as-ing &or trou!le &or an entrepreneur to stic- around &or too long, trying to cover !oth roles"
.n a small !usiness, you can !e !oth the entrepreneur and the manager while you are getting it going" 4ut
you need to -now and understand everything a!out that !usiness" And . really mean everything" 'n
emerging entrepreneur should sign every che@ue& 'xamine every invoice, and you'll soon appreciate
where your money is going" 'ven in a !ig !usiness li-e the Virgin *roup, . sit down now and again and sign
every single che,ue that goes out, and . as- my managing directors to do the same" $or a month" Sign
everything &or a month every six months and suddenly you're as-ing: '6hat on earth is this &or)'
#ou'll !e a!le to cut out unnecessary expenditure ,uite dramatically when you do that"
As a small9!usiness person, you must immerse yoursel& :22 per cent in everything and learn a!out the
ins and outs o& every single department" As you get !igger, you will !e a!le to delegate, and when people
come to you with their pro!lems, they'll !e surprised how -nowledgea!le you are and how much practical
advice you can o&&er" 3he reason you're -nowledgea!le is !ecause in the early days o& the !usiness, you
learned all a!out it" 3his is how !usiness leadership is achieved" 3here are no short cuts" emem!er my
earlier description o& 4rett *od&rey at Virgin 4lue who insists that all o& their senior managers spend time
doing the di&&erent manual /o!s li-e luggage loading" >. needed a physical a&ter my stintA?
And as the !usiness gets !igger, you will have to decide i& you're a manager or an entrepreneur" .& you're
a manager you can stay with that !usiness and help it grow" .& you're an entrepreneur, you need to &ind a
manager" 3hen you should move on, en/oy yoursel& and then set up your next enterprise"
0othing in !usiness is ,uite li-e the early, &renetic days o& an am!itious start9up pro/ect" 3here's always an
ama8ing !u88 a!out this -ind o& thing" .t's high9octane and high9ris- and it !uilds a tremendous spirit and
camaraderie which ta-es everyone through some very trying times" .'ve seldom seen people wor- harder
than in the initial stages o& a new venture" Once a !usiness matures and is esta!lished, it can !ecome more
challenging to retain that excitement" 6hat we do at Virgin is
not let !usinesses get too mature" .& you can -eep the !usinesses relatively small, people will -now each
other within the organisation and &eel li-e part o& a team"
.t's then down to the leadership o& that organisation to -eep ma-ing sure that people are challenged and
motivated" @ac- 6elch, a great !usiness leader, who trans&ormed *' into one o& the world's leading
corporate powerhouses, was constantly evolving tools and methods in search o& continuing growth" +e
encouraged managers to start each day as i& it was the &irst day in the /o!" +e said that managers were
o&ten a&raid o& change 5 and they must em!race it" . agree with @ac- on that"
6e never let people sit on their laurels, and we -eep on trying to improve things" 3he minute Virgin
Atlantic was voted '3he airline with the !est !usiness9class seats in the world' in the U% Airline awards, our
designer was already !eginning to wor- on the next seats in order to !eat our own expectations rather than
our competitors'" #ou must either stay ahead o& other people, or stay ahead o& yoursel&, all the time" .& you
really put your mind to it you are normally going to &ind a !etter way" #ou have to -eep on ,uestioning the
way people do things"
Doo-ing !ac- over the personal note!oo-s . have -ept &or more than thirty9&ive years, . don't thin- there has
ever !een a letter &rom my o&&ice which criticises the sta&& or an individual" 0ow and again .'ve disagreed
with something and suggested changes in !ehaviour" 4ut the Virgin *roup has always tried to loo- &or the
!est in people" 3hat way, you get the !est !ac-"
A plant needs to !e watered to &lourish and people need encouragement so that they can &lourish" .& this
sounds precious, so what) .t's true" 6hen someone says something nice a!out any o& our Virgin ventures, .
&eel great" .'m &lattered" 6hen someone has a go, it -noc-s me !ac-" 6e've developed a thic-er s-in over
the years, !ut . hope we haven't lost the sensitivity to do things properly" .& witless criticism can de&late me,
a&ter thirty9odd years o& !usiness success, then what a &ool .'d !e to go around tic-ing o&& other people"
People say !usiness is a cut9throat a&&air" (ertainly it's a tough game 5 we tal- a!out 'the competition' &or a
reason" And, yes, sometimes people play dirty" 4ut nothing in my years with Virgin has eroded my ha!it o&
saying than- you to people or praising them" . was !rought up in 'ngland !y parents who praised and
encouraged me a lot" 6hy would . !ehave di&&erently to others)
ight across our !usiness we have a philosophy o& encouragement" Our people are very rarely criticised"
.& someone ma-es a howling mista-e, usually they don't need to !e told" 3hey -now"
One o& my wea-nesses is that . &ind it very hard to tell someone that their services are no longer re,uired
in the !usiness" .t's an unpleasant o!ligation, and one you a!solutely must not shir-" .& you're a small
company, it is vital to do it personally" #ou really have to see the person &ace to &ace rather than get
someone else to do it" . thin-, generally, a personal explanation o& the situation is appreciated, and it
helps the individual you're letting go to move on"
O& course, i& you actually en?oyed &iring people, there'd !e something wrong with you" @ac- 6elch made
a point o& continually weeding out the people at the !ottom" Alan Sugar and Donald 3rump aren't a&raid to
&ire people either, though . dou!t they go a!out it ,uite the way The 'pprentice would have us !elieve"
3here's a machismo a!out the way some managers tal- a!out hiring and &iring that . &ind downright
repugnant" A senior person at Apple rather proudly says in his speeches a!out &iring people that '.'d rather
have a hole than an asshole"' =y philosophy is very di&&erent" . thin- that you should only &ire some!ody as
an act o& last resort"
.& someone has !ro-en a serious rule and damaged the !rand, part company" Otherwise, stop and thin-"
.ndeed, these days you have to" 3here are a lot o& legal and employment issues to ta-e into consideration
!e&ore you even go down that route" 3his can !e &rustrating, !ut to !e honest . don't thin- it's the nightmare
that some managers ma-e it out to !e" People respond to their surroundings" .& someone is messing things
up royally, o&&er them a role that might !e more suita!le, or a /o! in another area o& the !usiness" #ou'd !e
ama8ed how ,uic-ly people change &or the !etter, given the right circumstances, and how willing they are to
learn &rom costly mista-es when o&&ered a second chance" .& you've over9promoted someone and it hasn't
wor-ed out 5 which happens 5 then o&&er them their old /o! !ac- rather than &iring them" .t's your &ault &or
over9promoting them" 0ot theirs"
A lot o& companies these days call themselves '&amilies'" Usually, this is /ust an em!arrassing !it o& pu!lic
relations &lannel" . thin- companies can !e li-e &amilies, that it's a good approach to !usiness, and that
Virgin's created !etter corporate &amilies than most" 6e've done it !y accepting the &act that we have to
thin- !eyond the !ottom line" $amilies &orgive each other" $amilies wor- around pro!lems" $amilies re,uire
e&&ort, and patience" #ou have to !e prepared to ta-e the rough with the smooth" #ou have to put up with
your trou!lesome si!lings" 3hey're your &amily: you can't /ust throw them out on the street"
3he higher up you go in a company, the more perilous your /o! position is i& you don't per&orm" .n &oot!all,
dropping out o& the Premiership 5 or &ailing to get into the (hampions Deague 5 can !e disastrous" 3he
!oard o& directors, or the clu! chairman, must hit upon a &ormula &or success, and the !uc- has to stop with
the coach" Sac-ing the coach is easy" 3he hard part is ma-ing sure you're getting someone !etter than the
person you're dropping" .n &oot!all, that doesn't always seem to !e the case"
. o&ten read a!out chie& executives, managing directors and large company !osses who are told to resign
&rom their high9pro&ile companies !y investors !ecause they have made a hash due to poor !usiness
decisions" .n the United States, &or example, we've had Angelo =o8ilo, the ('O o& (ountrywide $inancial,
(itigroup's !oss (huc- Prince and =errill Dynch's Stan O'0eal all departing with G:229million9plus
compensation pac-ages despite their !usinesses !eing caught in the su!9prime
mortgage meltdown"
3oo many top executives are given massive payouts and allowed to wal- away, leaving others to sort
things out" . thin- the opposite should happen" .n most cases, leaders should stay on until any pro!lems are
sorted out 5 or a solution &ound 5 and then they can go and with a &raction o& the money they would earn i&
success&ul"
Decent leadership is about e)plaining clearly and unemotionally why a decision has been
taken& 3his applies /ust as much to a large company when there are lots o& /o!s at sta-e" $or a !usiness to
survive under extreme pressure it must ta-e decisive action" And when there are a lot o& redundancies, that
can hurt the pride and sel&9esteem o& a lot o& hard9wor-ing individuals"
A&ter the terrorist attac-s on 0ew #or- (ity, 6ashington and United $light ;H on Septem!er ::, B22:, our
'(ouncil o& 6ar' met each day to loo- at the un&olding situation" . see &rom my note!oo-s that my &irst phone
calls 5 o& many hundreds made within those vital hours 5 were to our !an-ers, to let them -now o& the cash
position7 and to the U% government, see-ing their support and encouraging a common approach" 6e also
had to tal- candidly to other airlines to get a proper picture o& events, so we needed temporary anti9trust
immunity 5 we didn't want to !e accused o& wor-ing in consort" . called the 0ew #or- mayor, to pass on my
condolences"
3ransatlantic air travel stopped and . pleaded with Stephen
4yers, the 3ransport Secretary, not to let the position o& 4ritain's airlines !e wea-ened when the US
government was supporting its own national carriers" 6e didn't get the same cushion o& support as the
American airlines 5 and we couldn't and didn't hide in (hapter :: administration" .& Virgin Atlantic hadn't
responded decisively to the 3win 3owers attac-, then we would certainly have gone out o& !usiness" 6e
!egan renegotiating our !an- lending and our aeroplane contracts and we did everything necessary to cut
our costs" 6e had to reduce our US capacity !y a third, and so we !egan loo-ing at other international
routes instead, such as launching into 0igeria, (hina and .ndia" 3hen we had to relay the !ad news:
reluctantly, we were letting :,B22 Virgin Atlantic people go" .t was the &irst mass redundancy in Virgin's
history" 6e o&&ered our people part9time wor-, /o! sharing and unpaid leave" 6e also tried to &ind them wor-
in other parts o& the !usiness" Our managers made tough decisions that hurt many people, !ut we promised
to get them !ac- on !oard as soon as conditions improved 5 and, than-&ully, most returned"
Dealing with Virgin Atlantic's &light engineers was particularly di&&icult &or us" A !reed o& aviators with a
passion &or &lying, they had considera!le s-ill, and were tremendously loyal and committed to our company"
And here we were, putting them out o& a /o!"
.& your rival airlines introduce planes that re,uire only two people in the coc-pit 5 that's the captain and
&irst o&&icer 5 rather than three, as was still the case with Virgin Atlantic
when we had the &light engineer on !oard, then you're &aced with a serious !usiness issue"
3he relia!ility o& a new generation o& planes and the increasing sophistication o& &ly9!y9wire systems
meant that airlines could reduce the num!er o& &light crew in each coc-pit and, in the process, save a great
deal o& cash" Un&ortunately, the &light engineers were the victims o& progress and o!solescence in the airline
industry" 3here was no longer any need &or them, and we had to tell many o& our engineers that they had to
go" .t happens sometimes" .t's horri!le" And there is no way around it" .& we hadn't done this, we wouldn't
have !een competitive"
Over the years in the Virgin *roup our diversi&ication has !een a !onus" 6e've !een a!le to move people
around our various companies, o&&ering di&&erent /o!s until things improved again" 4ut this wasn't easy with
our &light engineers" 3hey had extremely specialised s-ills and we didn't thin- that converting them to
commercial pilots would wor- &or us" Our captains and &irst o&&icers were normally highly experienced pilots
who had spent up to ten years on short9haul &lying"
Since we were saving cash !y laying these people o&&, they deserved the lion's share o& the savings in
their redundancy pay" .t was &ar more than the legal minimum and . thin- most o& them appreciated the
gesture" .t was a decent pac-age" 3he engineers thought it &air and 5 /ust as important 5 so too did their
colleagues who were staying on with the company"
=any elements o& leadership can !e prepared in advance,
planned and rehearsed" #ou don't have to !e 6inston (hurchill to !e a good leader"
3hat said, . thin- there is such a thing as natural leadership" .t ta-es a certain generosity o& spirit to trust
people, and to /udge their merits and limitations &airly" .t ta-es not a little !ravery to !ear !ad news to
people" Optimism, openness to possi!ilities and sheer sel&9con&idence 5 some people have more o& these
,ualities than others"
So, in addition to the practical steps you can ta-e, . thin- there is a huge amount to !e gained in &ollowing
the examples o& great natural leaders" #ou can certainly read a!out them7 !ut you should also !e as-ing
who among your circle is a leader you can learn &rom" . am hugely privileged to have met some great
natural leaders in my time" Some are internationally &amous7 many are not" 3o descri!e all the help,
in&luence and mentorship .'ve !een sustained !y over the years would ma-e another !oo-, so &or now, let
me /ust tell you a!out one important &igure in my li&e: 0elson =andela"
6hen people thin- o& 'ichard 4ranson', they tend to thin- &irst o& all a!out Virgin's involvement in the music
industry" .t's a piece o& our heritage we're extremely proud o&" 6hen . cast my mind !ac- to what shaped me
most as a !usinessman, however, . &ind mysel& remem!ering an even earlier phase o& my career7 and .
recall my !rie&, &ortunate and illuminating adventures in /ournalism"
6hat, a&ter all, could !e !etter &or a young man searching &or
answers in li&e, than to go around interviewing people) . was never going to !e a great /ournalist, !ut one
s-ill . did have was !eing a!le to -eep my mouth shut" . let the people . was interviewing do the tal-ing" .
was also ,uite unem!arrassed when it came to as-ing what, in hindsight, seem naive and o!vious
,uestions" 4oth are s-ills .'ve carried into !usiness, and they have served me incredi!ly well" 3he a!ility to
listen, and the willingness to stic- your nec- out and as- the o!vious ,uestion, are criminally underrated
!usiness essentials"
. was !rought up in the mid9:;<2s and this was generally a caring and compassionate time, when a lot o&
young people !ecame socially aware and !egan to understand how the world treated minorities, what their
rights should !e, and how a &airer deal might change things" $rom the other side o& the Atlantic, . &ollowed
with &ascination the struggles o& !lac- Americans against racism, discrimination and economic ine,uality"
.n =arch :;<E, . was proud to !e marching to the US em!assy in *rosvenor S,uare in Dondon in protest
at US involvement in the Vietnam 6ar" . strode side !y side with le&t9wing &ire!rand 3ari, Ali and actress
Vanessa edgrave, and . remem!er the &ear when the police on horse!ac- charged us with truncheons and
tear gas" . was also invigorated !y the thought that young people were doing something direct and positive"
And through the prism o& ;tudent maga8ine, . 5 a privileged 'nglish pu!lic school!oy 5 heard &or the &irst
time a!out the horror o& A&rica" . learned a little a!out oppression, and disease, and &amine" ;tudent
campaigned against the
horri&ic 4ia&ran 6ar in 0igeria, and we used harrowing photographs !y Don =c(ullin, the cele!rated
photo/ournalist whose ;unday Times images would go on to de&ine the con&lict in Vietnam and (am!odia"
6e helped !ring to the pu!lic's attention the plight o& millions o& children dying o& starvation who were
caught up in the civil war"
3he autumn issue o& ;tudent in :;<E was awash with anger: the !lac- American ghettos were exploding
with violence7 rioting students were throwing co!!lestones at the police on the streets o& Paris7 ussian
tan-s had crushed the Prague Spring in (8echoslova-ia7 Vietnam was withering under a rain o& !om!s"
3here was so much to cover" . remem!er we had *yles 4randreth writing on America, and a report &rom
Vietnam !y a &resh9&aced seventeen9year9old @ulian =anyon 5 now a veteran .30 &oreign correspondent 5
in which he interviewed a 0orth Vietnamese doctor a!out the death o& Vietcong soldiers through dysentery"
4ut it was the interview . conducted with the American !lac- militant writer @ames 4aldwin which shoc-ed
me to the core" .& you are har!ouring any dou!t in your mind a!out the value o& naive ,uestions, read this"
Doo- what he made o& my stum!ling ,uestionnaire" . would never have elicited such &ire had . !een less
direct"
0hat kind of education did +ames /aldwin have?
%'t school I was trained in /ible techni@ues& I received my education in the street&%
0ere there good schools in 'merica?
%1ow can there be? They are built by the white state, run by white powers and designed to
keep the nigger in his place&%
:an the white man give you freedom or must the black man take it for himself?
%The white man can%t even give it to himself& Aour record has not been very encouraging& I
D9=%T M3:T A9> T9 4IV M '=AT1I=4& I am going to take what I need * not necessarily
from you, this is your myth * but I intend to live my life& I am not interested in what white
people do& 0hite people are not that important& 0hat one is Cghting against is not white
people, but the power standing between a person and his life& It is as simple as that& It is not a
race war, it is a war between poverty and privilege, freedom and imprisonment&%
. was trans&ixed !y what 4aldwin was saying to me 5 his vitriolic yet restrained anger at what he saw as
the ine,uality o& li&e"
.n The 2ire =e)t Time, written in :;<H, he had predicted that in ten years' time we would see the end o&
white supremacy" . as-ed him i& he still !elieved this"
4aldwin replied: '. didn't say it in ,uite that way" . said that this was a prophecy 5 and the prophet may well
!e right" . am telling you that 6estern societies are visi!ly in trou!le and are visi!ly crum!ling"'
'Under pressure &rom the !lac- man)'
'Under the weight o& their own lies"'
3his was strong, urgent stu&& &or a white, teenage editor" .t was an anger that . could not understand,
!ecause . had nothing to measure it against" . wanted to help change the world, !ut what did . -now a!out
the world)
$red Du!e, a !lac- A&rican, !orn in @ohannes!urg, a social wor-er married with two children, /oined the
A&rican 0ational (ongress in :;11" $rom :;<F to :;<C he served &our prison sentences &or sa!otage, in
Dadysmith in 0atal, Deeuw-op in 3ransvaal, on o!!en .sland and in *roenpunt in the Orange $ree State"
+e le&t &or 'ngland in @uly :;<E, and !ecame a !an- cler- in Dondon" +e told ;tudent that the poverty,
homelessness and malnutrition in his homeland all stemmed &rom one pro!lem: South A&rica's vicious and
un/ust apartheid society" Some time later . heard a!out the !lac- activist Steve 4i-o, and then . encountered
the name o& 0elson =andela" +is parents called him 0elson !ecause it sounded 'white', and they thought
he would get on !etter in a whites9only society" +e was viewed as a dangerous extremist !y some in 4ritain
!ut . !egan to -now the truth a!out this incredi!le man"
6hen . &irst got to -now =adi!a 5 as he is a&&ectionately -nown in A&rica 5 . was always in awe and
slightly nervous meeting him" 3hen when he smiled, his warmth and impish humour simply radiated into
your heart: 'ichard, it is a great honour to meet you"' . soon learned that he says that to everyone on &irst
meeting themA +ere is a man who has su&&ered so much !ecause o& his colour and what he !elieves in"
+e was a victim o& apartheid in/ustice, handed a li&e sentence at &orty9six" +is prison num!er was F<<K<F,
which stood &or the F<<th prisoner admitted to the dread&ul o!!en .sland /ail in :;<F" +is cell was six &eet
s,uare, the walls two &eet thic-" 6hen he lay down his head touched one end and his &eet the other" +is &irst
months in /ail were spent with &ellow political prisoners crushing roc-s into gravel using a &our9pound
hammer" .t was achingly strenuous and constantly pain&ul" . have seen his cell 5 it must have !een hell on
'arth"
+e says in his auto!iography, #ong 0alk to 2reedom, that 'o!!en .sland was without ,uestion the
hardest, most iron9&isted outpost o& the South A&rican penal system" .t was a hardship station not only &or the
prisoners !ut &or the prison sta&&" 3he warders, white and overwhelmingly A&ri-aans9spea-ing, demanded a
master5servant relationship" 3hey ordered us to call them !aas, which we re&used to do" 3he racial divide
on o!!en .sland was a!solute: there were no !lac- warders, and no white prisoners"'
#et . have never witnessed one scintilla o& anger or indignation &rom the man"
+is spirit is !est captured, . thin-, in the address he gave, not long a&ter !eing elected president, at the
unveiling o& a statue o& Steve 4i-o" '6hile Steve 4i-o espoused, inspired and promoted !lac- pride, he
never made !lac-ness a &etish " " "
accepting one's !lac-ness is a critical starting point: an important &oundation &or engaging in struggle"
3oday, it must !e a &oundation &or reconstruction and development, &or a
common human e&&ort to end war, poverty, ignorance and disease"'
+ere are the characteristics o& great leadership, contained in a hand&ul o& sentences" 3he concern &or
people is here7 so too the easy intelligence =andela !rings to the /udging o& individual merits" 3here's
authority in these words, !ut they're not hectoring or !om!astic: they create &or us a clear, simple vision o&
what has to !e achieved"
3he unveiling o& 4i-o's statue, sculpted in !ron8e !y 0aomi @aco!son, too- place on :B Septem!er :;;C"
Peter *a!riel and . were on hand 5 the only white &aces in a crowd o& around :22,222" . urged Peter to sing
the song that had done so much to -eep 4i-o's name alive" 3hat rendition o& '4i-o', !ac-ed !y 0elson
=andela and a crowd o& :22,222, is something . will treasure to my grave" $rom the moment =andela came
up to sha-e my hand and than- me &or my support, . wanted to do something meaning&ul &or South A&rica, to
help it recover &rom its terri!le wounds" . wasn't a songwriter 5 and . didn't have to wait long &or the call"
3here is one characteristic o& =andela's leadership that isn't apparent &rom his speech, !ut it is typical o&
most o& the great leaders .'ve met: they are all inveterate salesmenA =andela is an entrepreneur through
and through" +e a!solutely will not stop" 6henever we were together, =adi!a seldom missed an
opportunity to pull a &ew strings &or his country" +e was in Dondon one time, having lunch with @oan, +olly,
Sam and me and a &ew close &riends, and a&terwards . wrote in my
note!oo-" '=o lunch or dinner ever goes by without him asking a favour for someone in need<
1e came to my house with his new wife, 4raca Machel, and his daughter, 5That was a
delightful lunch, Richard, =ow last week I saw /ill 4ates and he gave G78 million in dollars&5
4ulp,'
. am proud to say that 0elson =andela has !ecome a close &riend" As we pass his ninetieth !irthday, he
has remained an inspiration to me as a human !eing and . have many cherished memories o& time spent in
his company" . thin- it's worth explaining how the &ormer South A&rican president's astonishing acumen &or
!usiness, coupled with his sense o& duty, helped his country" $or =adi!a -new that the 'long wal- to
&reedom' &or his !lac- !rothers and sisters meant em!racing a positive economic &uture" 6hile he
recognised it would ta-e many years 5 even a generation 5 to reverse the ine,ualities o& racial
discrimination, he had &ew ,ualms a!out see-ing my involvement 5 and that o& other !usiness leaders 5 i&
he !elieved it would !ring /o!s and wealth to South A&rica"
One occasion was in Septem!er B22:, /ust days a&ter the 6orld 3rade (enter atrocities in 0ew #or-"
3ourism and !usiness travel had dried up overnight, the whole airline industry was in meltdown, and . was
sitting in the !ath thin-ing how the Virgin *roup could deal with the immense disruption to Virgin Atlantic
when he phoned" =adi!a's voice was li-e an anaesthetic !alm: calm and reassuring"
'ichard, you said that you wanted to help South A&rica,' he said"
'#es, =adi!a" #ou -now .'m willing to help,' . replied"
'6ell, we have a pro!lem " " "'
One o& South A&rica's !iggest health clu!s, the +ealth and ac,uet chain, had collapsed" .t meant the loss
o& 1,222 /o!s" 'Do you thin- you could do something with it) Do you thin- you can save the people)'
. didn't really -now i& this was a via!le !usiness, !ut . went with my gut instinct, and my desire to support a
man . revered" Also, . trusted =adi!a: in another li&e he would have made an astute corporate &inancierA
. rang $ran- eed, the Virgin Active chie& executive, and =atthew 4uc-nall, his &inance director, who ran
/ust three large clu!s in the U%" 6ould they !e prepared to ta-e on an ailing South A&rican !usiness nearly
eight times their si8e) 3here was a palpa!le gulp &rom =atthew 5 !ut he then said they'd /ump at the
chance" 4rilliantA 6ithin hours we were a!le to put a rescue pac-age together 5 re!randing the whole
!usiness Virgin Active" . called =adi!a !ac- to say we were de&initely on !oard"
4ut money was tight &or us and we needed to raise &unding, so we approached the U% private e,uity
company 4ridgepoint (apital who agreed to ta-e a 11 per cent sta-e in a deal worth I::2 million, leaving
Virgin with H< per cent, and $ran-, =atthew and the team around E per cent" 6hen *ordon =c(allum
heard a!out the speed o& the transaction he said: 'At this pace, we should rename the company Virgin
+yperactive"'
Our strategy involved -eeping on as many people as we could, and retaining +ealth and ac,uet's
;22,222 customers, although we had to change the arrangements &or many health9clu! users" 3hey had
!een given &ree li&etime mem!ership, in return &or signing up with a !ig up&ront &ee 5 &ine until the new
mem!erships dried upA 6e /udged, correctly as it turned out, that nearly all o& the mem!ers would agree to
start paying a monthly su!scription provided we gave them a &irst9class health9clu! experience and &ixed the
dilapidated gyms that had !een starved o& investment"
3he rescue gave us a &antastic &ootprint in South A&rica &rom which we have continued to expand" 4y
Octo!er B221, Virgin Active was in a !etter &inancial position 5 having dou!led in si8e and expanded into
.taly and Spain 5 and we were a!le to !uy !ac- 4ridgepoint (apital's 11 per cent share &or I:HF"1 million"
L
6hen 0elson =andela was president o& South A&rica he -new his diplomatic position" South A&rica's re9
emergence as a nation was reliant on (hina's increasing strength and its investment as an economic
superpower" +e didn't want to o&&end (hina" And he never ever did"
Once &ree &rom the !urden o& presidency, o& course, =adi!a was his own man again"
.n 0ovem!er B22F, . was in @ohannes!urg at the (.DA (ity (ampus, the &irst &ree campus &or !lac-
students &rom
townships and rural areas who cannot a&&ord education" . was with %elly +olmes, the dou!le gold9medal
Olympic runner, the singer 'stelle, and the team &rom Virgin Unite &or the launch o& an initiative called
6omen on the =ove, which &ocuses on empowering young women across South A&rica" A&ter the ceremony
. stayed on to listen to the Dalai Dama, the exiled 3i!etan leader, who had !een invited to spea- at (.DA" .t
was his third time in South A&rica and he spo-e with verve, compassion and gentle humour" +e smiled as he
welcomed people &rom all religions, the non9religious, and !lac-, white and !rown ali-e" . was enthralled
listening to this deeply spiritual man appealing &or peace and /ustice"
+e said: '.& you wish to experience peace 5 provide peace &or another" .& you wish to -now that you are
sa&e, cause others to -now that they are sa&e" .& you wish to understand seemingly incomprehensi!le things,
help another !etter understand" .& you wish to heal your sadness or anger, see- to heal the sadness or
anger o& another" 3hose others are watching &or you now" 3hey are loo-ing to you &or guidance, &or help, &or
courage, &or strength, &or understanding and &or assurance at this hour" =ost o& all, they are loo-ing &or your
love"'
3here was nothing the Dalai Dama said that day that could possi!ly have incited the (hinese authorities"
+e simply asserted that the gap !etween rich and poor was morally wrong"
. had !een with =adi!a at his home the previous a&ternoon, and . as-ed him why he had never met the
Dalai Dama" +e
&rowned and told me it had !een too political" 3he South A&ricans didn't want to upset (hina over their
activities in 3i!et" 4ut . thought it would !e good to get these two wonder&ul elders together 5 and that
political expediency should not !ar them &rom meeting"
'#ou're no longer president, =adi!a,' . said" '+e can visit you as a private individual" +e's staying only a
&ew !loc-s away &rom here"'
=andela smiled and loo-ed across at Oelda le *range, his assistant and adviser" . could tell that he was
persuaded" Dater the next day, Oelda invited me to /oin them &or the get9together . had suggested 5 !ut .
&ound mysel& declining this extraordinary invitation" . &elt it should !e a special occasion !etween two
inspirational people, and that no one else should !e present" 3hat night, a&ter the meeting, we got the
&ollowing message &rom 6endee, who wor-s &or the Dalai Dama: 'On !ehal& o& the entire delegation, than-
you &or setting up what may !e the &irst and last meeting o& these two giant spirits " " "
3he meeting lasted an hour in deep discussion"'
3here are many things in my li&e that have given me satis&action" 4ut the union o& two iconic &igures in
@ohannes!urg will !e a moment . will cherish &or as long as . live" And that meeting !egan to strengthen the
idea Peter *a!riel and . had had: to !ring together a group o& wise glo!al elders " " "
=ecker Island, +anuary L88O
Dear Madiba,
'n idea * yes, I%m sorry * another idea& 9ut of the most wonderful day * the OHHHO concert Ein
=ovember L88P * a declaration of war on 'ids in ;outh 'fricaF * 3eter 4abriel and I were
inspired to write to you&
's well you know, in an 'frican village there are elders who the rest of the village look up to&
0e believe that the 4lobal Village needs to e@ually tap into our elders& Aou told us then that it
had been easier for you to gain the trust of the generals negotiating in Rwanda, as they said
talking to you was like talking to a father& 0e would like to set up a small body of the most
respected %lders% in the world and as you are accepted as the most respected person of all
today, we would ask that you become the father Cgure to this organisation and the Crst lder&
'instein once said: '+ow . wish that somewhere existed an island &or those who are wise and o& goodwill"'
. said it would !e wonder&ul i& the 'lders could meet somewhere li-e my own 0ec-er .sland two or three
times a year to discuss how they could help tac-le the pressing issues o& the world"
0e would suggest that the lders are initially chosen by yourself, and then in the future
chosen by the world community, giving them added legitimacy on the world stage& =one of
them would be current politicians& The :ouncil of lders would comprise DL men and women&
2our of these could stand down every three years& The new four
could be voted in from a shortlist selected by the lders through channels like the Internet,
television, post and email& They would represent a broad spectrum of the world%s people&
Peter and . said that the &irst worldwide vote would encourage people to thin- glo!ally, to &eel part o&
events and engage with a world !eyond their !orders, culture and religion" As the United 0ations represents
the governments o& the world, the 'lders would represent the hopes, aspirations, &ears and dreams o& the
people"
The lders would have at their disposal a %4rowing Tree% * an army of people worldwide who
have retired, or who have the time, who are willing to give their time and e)pertise to help
tackle the problems of the world& 0hether setting up an 9pen >niversity for 'frica or India,
tackling conIicts, diseases or poverty& They would also help mentoring programmes& They
would be a huge educational resource&
3he aim &rom the start was &or the 'lders to !e a group o& glo!al advisers and not to instruct people to do
things" 3hey were to !e individuals, and not simply representatives o& a country or state" 3hey were to !e
!eyond party politics and &ree to spea- what they saw as the truth"
I appreciate that you would have diNculty Cnding much time yourself but it would give
enormous credibility to the future of the lders if you were to give it your blessing and be its
founding father&
I would pledge myself to Cnd the time and resources to help organise it behind the scenes
and to make sure it becomes a force for good in the world and hopefully continues for many
years to come&
$ind regards,
Richard
0elson =andela loved the idea" .t appealed to his entrepreneurial instincts" +e agreed to !ecome its
&ounding 'lder, along with his wi&e *raca, and they issued invitations to the eleven people in the world he
&elt had the greatest moral authority"
.'ll never &orget wal-ing out o& =adi!a's home with @ean Oelwang a&ter he and *raca had made the &inal
selection o& 'lders" . had a wonder&ul &eeling that this was the start o& one o& the most hope&ul and inspiring
ventures in my li&e" . also &elt so !lessed to !e a!le to spend time with two true glo!al leaders" *raca and
=adi!a share the extraordinary a!ility to lead with humility, honesty and an un&ailing &ocus on those whose
voices are not yet !eing heard" =adi!a &re,uently reminds us that i& something is not going to ma-e a
di&&erence at village level, then we shouldn't !e doing it"
6ith Virgin Unite's support, we then went on a /ourney o& creation, reaching out to people all over the
world to shape initiative and !uild support" 6e had two glorious wee-s during which Arch!ishop 3utu and
ex9President (arter helped Peter and me to host a range o& di&&erent groups on 0ec-er 5 &rom
scientists, to philosophers, to entrepreneurs, to &ront9line leaders" As with the development o& any !usiness
idea, there were moments when we thought: what are we doing), and then that magni&icent moment when
it all clic-ed into place and we -new that this was going to !e something that really could ma-e a huge
di&&erence in the world" 6e also wove in some &un 5 impossi!le not to do with the chee-y arch!ishop there
to -eep us all on our toes" One o& my &ondest memories &rom this time is o& Peter and me teaching him to
swim in the !eauti&ul waters surrounding 0ec-er"
. will never &orget the speech =adi!a gave to everyone when we &irst !rought the initial group o& 'lders
together at Ulusa!a:
#et us call them 4lobal lders, not because of their age, but because of their individual and
collective wisdom& This group derives its strength not from political, economic or military
power, but from the independence and integrity of those who are here& They do not have
careers to build, elections to win, constituencies to please& They can talk to anyone they
please, and are free to follow paths they deem right, even if hugely unpopular& I know that as
a group, you will support courage where there is fear, foster agreement where there is conIict
and inspire hope where there is despair&
A&ter this gathering the 'lders decided they wanted to announce their existence to the world on =adi!a's
upcoming !irthday on :E @uly B22C" 3he team at Virgin Unite went into overdrive preparing &or the launch
and wor-ing with me to
raise the &unds we needed &or the &irst &ew years 5 all in a little over &ive wee-sA During this time, we had the
opportunity to connect with an ama8ingly hum!le and sincere group o& entrepreneurs and organisations
who helped &ound the 'lders" 3heir spirit in coming together !ehind this dream and the a!sence o& any
individual agendas truly captured the essence o& the 'lders" 3hey have not only !ecome partners in this
initiative, !ut .'m also sure they will !ecome li&elong &riends"
As . write this, the other 'lders are =adi!a's wi&e, *raca =achel, a renowned advocate &or women's and
children's rights7 the Anglican arch!ishop Desmond 3utu, who was a tireless campaigner against apartheid
in South A&rica7 %o&i Annan, Secretary *eneral o& the United 0ations &rom :;;C until B22<7 'la 4hatt,
&ounder o& .ndia's Sel&9'mployed 6omen's Association7 Da-hdar 4rahimi, the Algerian9!orn &ormer
am!assador who !egan li&e in his country's li!eration struggle and then !ecame a mediator in many =iddle
'astern con&licts7 *ro +arlem 4rundtland, the &ormer prime minister o& 0orway, who has made a signi&icant
impact on glo!al society through her commission on the environment and sustaina!le development7 the
sociologist $ernando (ardoso, the &ormer president o& 4ra8il, who has &ought hard &or human rights in
South America7 @immy (arter, who !ro-ered the historic (amp David peace accords when he was
president o& the US7 =ary o!inson, &ormer president o& .reland and a distinguished United 0ations +igh
(ommissioner &or +uman ights &rom :;;C until B22B7 =uhammad #unus, the 4angladeshi economist and
0o!el Peace Pri8e winner, and
&ounder o& the wonder&ul *rameen 4an-7 and Aung San Suu %yi, a &earless and outspo-en critic o& the
military /unta which dominates her 4urmese homeland"
3he 'lders are, in essence, a group o& immensely in&luential world &igures acting li-e entrepreneurs who
use their moral courage, wisdom and independent leadership to help tac-le huge intracti!le pro!lems" 3he
!eauty o& the 'lders is that they are at a time in their careers where they have no other agenda !ut that o&
humanity"
Once, whole empires were operated out o& small rooms !y a hand&ul o& oligarchs" 3hose days are
e&&ectively over, than- goodness, and certainly it's not anyone's plan to give the 'lders political powerA 4ut
what we do hope and intend is that the 'lders can !ring their in&luence to !ear on the world stage, ,uic-ly
and responsively, providing the peoples o& this planet with a voice and a conscience"
So over these &ew pages, as . explain to you how the 'lders wor-, . hope to convince you that
entrepreneurism is not something you ever grow out ofQ nor is it something uni@uely Ctted ?ust
to sole traders, or small companies, or even to modular enterprises like the Virgin 4roup&
ntrepreneurism is * if this doesn%t sound too pompous * a universal business virtue" . mean
that it can !e applied to pro!lems, challenges and opportunities regardless of scale"
3he 'lders have !een assem!led in much the same way that a Virgin company is created" 6e have
&acilitated their
organisation, and have provided them with the means to wor- together" 6e've made sure there is a
motivated administrative team" And we are ensuring that the 'lders' name and !rand is protected" .t is
important that the group develops a recognised single identity, to sustain it through &re,uent changes o&
mem!ership and a constantly evolving roster o& activities"
Peter *a!riel and . &elt it was essential that we stepped !ac- &rom this 5 that the 'lders had complete
independence and that their articles o& association enshrined that complete independence" 3he 'lders are
!eholden to no!ody 5 and that includes the &ounders and any o& the people &unding them"
3he twelve 'lders are people with tremendous personal integrity" 3hey are generally all over sixty years o&
age, and !eyond ego" 3heir mission statement says that the 'lders' role is to wor- to resolve glo!al issues
and alleviate human su&&ering" .t has ta-en a huge amount o& wor- to get the mission statement and the
structure properly sorted"
As mentioned, we've !rought together a wonder&ul group o& entrepreneurial &ounders whose generous
contri!utions ensure that the &irst three years' operating costs o& the 'lders are paid &or, so that they can go
on missions to places li-e Dar&ur and %enya" 3he 'lders are not paid &or their wor-" 3hey are a!le to tap
into some o& the leading con&lict and dispute9resolution pro&essionals &rom around the glo!e" 3he
international stature o& the 'lders means that i& they call on someone &or specialised help in a pro/ect, then
they will get an immediate response" Pro&essional mediators will !e a!le to do the groundwor-
!e&ore the 'lders go into any area"
. hope that in :22 years' time 5 i& it is run correctly 5 the 'lders' group will still !e in existence, and that
people who have excelled in their lives, !e they politicians, diplomats, humanitarians or !usiness &igures,
can !e part o& it" 6hen these good and worthy people get into the last &i&teen years o& their active lives, then
the 'lders can as- them to /oin in tac-ling glo!al pro!lems"
Does this extraordinary9sounding organisation motivate you to create and &acilitate something similar in
your own industry) . do hope so" A&ter all, the idea &or the 'lders came in the &irst place &rom my nigh on
&orty years o& !usiness experience and Peter's experience starting up glo!al organisations such as 6itness"
'very industry has its revered &igures, people that companies and entrepreneurs go to &or advice and sound
/udgement" =any o& the great and good in !usiness are living longer these days, they're living healthier
lives, and more o&ten than not their appetite &or !usiness is un,uenched" .magine how much mentorship,
sound advice and even practical assistance is out there, waiting to !e tapped" .magine i& your industry were
supported !y a networ- o& revered !usiness &igures li-e Sir 4rian Pitman"
. concede this isn't so much !usiness advice as a call to arms 5 !ut i& these pages have inspired you to
consider the good o& your industry as a whole, and how your organisation can contri!ute to the e&&ective and
responsi!le conduct o& that industry, so much the !etter" 3he great and good in your
!usiness sector are a resource you should ta-e seriously" $inding a way to harness that resource to !est
support and encourage your industry will add value to your !rand 5 and what you learn will have a direct
and positive e&&ect on your !usiness"
L
3o !e a serious entrepreneur, you have to !e prepared to step o&& the precipice" #es, it's dangerous" 3here
can !e times, having /umped, when you &ind yoursel& in &ree &all without a parachute" 3here is a real
prospect that some !usiness ventures will go smashing into the ground" .t has certainly !een very close at
times throughout my own !usiness li&e" 3hen you reach out and gra! a ledge with your &ingertips 5 and you
claw your way !ac- to sa&ety"
Di&e has !ecome too cosy &or many, who have their lives mapped out !y parents and teachers" .t's all a
!it, well, comfortable: o&& you go to university to study a course" Dand a good /o!, get a mortgage, &ind a
nice girl&riend, !oy&riend, partner" .t's a solid li&e 5 a good li&e in many ways 5 !ut when was the last time you
too- a ris-)
=any people reading this !oo- will !e a&&luent" .& you don't &eel a&&luent right now, ta-e a minute and thin-:
the very &act that you could a&&ord this !oo-, or a&&ord the time to ta-e it out o& the li!rary 5 the very &act that
you are a!le to read at all 5 mar-s you out as one o& world history's richest and most privileged people"
3here's not that many o& us, and we haven't
!een a&&luent &or very long, and so we're not very good at it yet" A&&luence ma-es us la8y" .t ma-es us
complacent" .t smothers us in cotton wool" .& your /o!'s well paid, who can !lame you i& you're not willing to
ta-e a ris- and, say, set up your own company)
3he vast ma/ority are very happy with this arrangement, and good &or them" 4ut i& you want
swash!uc-ling action in your li&e, !ecome an entrepreneur and give it a go" Dearn the art o& trying to set up
your own !usiness" 6hich is the same as saying, learn the art o& ma-ing mista-es and learning lessons"
4ecause i& you want to !e an entrepreneur and you don%t ma-e a &ew errors along the way, you certainly
aren't going to learn anything or achieve very much"
People have a &ear o& &ailure, and while this is per&ectly reasona!le, it's also very odd" 4ecause it seems
to me that it's through ma-ing mista-es that we learn how to do things" 6atch a musician practise
sometime" 6atch a !a!y &igure out how to wal-" Disten to a toddler spea-" S-ills li-e wal-ing and tal-ing and
playing music emerge gradually, steadily, &rom a !li88ard o& >o&ten pretty &unny? mista-es" . thin- this is true
o& everything * that learning is a!out ma-ing mista-es and learning &rom them" And that is the
&undamental reason that &lying has !ecome so sa&e in the twenty9&irst century7 so sa&e in &act that sitting on
a CFC to 0ew #or- is sa&er than watching 3V at home"
0ow, . grant you that you may hit a limit, !eyond which you
can%t learn &rom your mista-es" Don't expect a chart9topping al!um &rom me any time soon, or a recital at
(arnegie +all, or a se,uence o& sonnets, or any o& the !illion and one other things .'m never going to !e
great at" 4ut that's not failure" 3hat's &inding out what you're good at" 3he world is much, much !igger than
you, and no amount o& worldly success is going to change that &act"
2ailure is not giving things a go in the &irst place" People who &ail are those who don't have a go and don't
ma-e an e&&ort" $ailures can't !e !othered" 3here are &ew people who've tried something and &allen who
didn't get enormous satis&action &rom trying, and .'ve learned more &rom people who have tried and &altered
than &rom the &ew charmed people &or whom success came easy"
.n my home country, the 4ritish education system has a lot to do with our &ear o& &ailure" . thin- it
concentrates exclusively on academic achievement and downplays the other contri!utions people can
ma-e to society" .'ve huge admiration &or scientists and engineers7 whereas they are given due respect in
*ermany, the United States and @apan, in 4ritish society they tend to get a raw deal"
As someone who never went to university, perhaps .'ve a radical view o& education" . am committed to
excellence and expertise in !usiness !ut . !elieve we need to show young people the value o& wealth
creation too" . thin- some university degrees could !e &inished more ,uic-ly 5 .'ve never understood why
some courses have only two or three lectures per wee-,
and why students are le&t to their own devices much o& the time without much direction &rom tutors, lecturers
and pro&essors, who now spend most o& their energy, it seems to me, chasing &unding grants" 4ut one thing
is apparent to me: we still need a good deal more entrepreneurial thin-ing in our universities and colleges"
One o& my greatest entrepreneurial heroes was Sir $reddie Da-er" $reddie, who died in $e!ruary B22<,
aged eighty9three, lived his li&e to the limits" +e was a tremendous person: a man o& magic and mirth" +e lit
up a room and he was the ultimate salesman" An ex9colleague and close &riend, David 3ait, said he could
sell a glass o& water to a drowning man" $reddie was a huge inspiration and supporter o& Virgin Atlantic and
he was the god&ather o& cheap international air travel"
3he &irst S-ytrain &lights too- o&& &rom *atwic- to 0ew #or- in Septem!er :;CC" Although $reddie's airline
was no9&rills, the tic-et prices were un!elieva!le" .t was only I1; single to get to America 5 a third o& the
price o& any o& the other carriers" +e made I: million pro&it in the &irst year 5 and . was one o& his regular
customers as we expanded our Virgin ecords !usiness in America"
S-ytrain were carrying one in seven transatlantic passengers 5 and $reddie was -nighted in :;CE" 3hen
in :;EB, the company went into receivership with de!ts o& IB<F million" +e had !orrowed heavily to !uy
&i&teen new planes /ust as the pound plunged in value against the dollar, !ut worse than that, the ma/or
airlines had conspired against him, o&&ering cheaper &ares
to undercut him" 3he airlines also threatened the air&rame manu&acturers, telling them not to sell to $reddie"
+is airline collapsed 5 with passengers still in the air"
.n :;EH, the li,uidators 3ouche oss started an anti9trust action in the United States, claiming G: !illion
&rom ten ma/or airlines 5 including 4ritish Airways, PanAm, 36A, and Du&thansa 5 who had got together to
plot $reddie's down&all" 3he de&endants settled out o& court, negotiating a reported IH1 million payment to
$reddie's creditors 5 while he reluctantly accepted I< million in compensation and retired to the 4ahamas"
3hree days !e&ore the collapse, in typical style, he said: '.'m &lying high 5 . couldn't !e more con&ident
a!out the &uture"' And David 3ait recalls sitting next to $reddie as they &lew out o& *atwic- airport on an Air
$lorida &light ten days a&ter the collapse" 4elow, /ammed in wing tip to wing tip in the Da-er hangar, sat
$reddie's li&e's wor-, a &orlorn cluster o& grounded D(9:2s still em!la8oned with the S-ytrain logo" 4ut
$reddie turned to his distraught partner and said: 'Don't worry, mate, it'll all wor- out /ust &ine"'
+is company was !ust" #et &our9times married $reddie still -new that there was much more to li&e" +e
en/oyed reminiscing with me over a Pusser's rum and orange on his yacht in the 4ahamas, and he relished
a pint and a laugh with his &riends"
.t was on another Air $lorida &light that he met an o&&9duty 'astern Airlines stewardess called @ac,ueline
+arvey" .t was
love at &irst sight 5 or &irst &light 5 and @ac,uie made $reddie's last twenty years a lot more &un, erasing any
memories o& his airline's &ailure"
.t was his !usiness sayings that were so memora!le &or me"
'Only a &ool never changes his mind"'
'Don't !ring me your pro!lems 5 !ring me the solutions"'
And his most &amous one: 'Sue the !astards"' Ditigation lawyers the world over still cele!rate that oneA 4ut
it was a!out the !est advice . got when . had to ta-e on 4ritish Airways a&ter their dirty tric-s campaign
against Virgin Atlantic in the late :;E2s"
$reddie was never a&raid o& &ailure" +e succeeded in li&e 5 and always gave it a go" 3hat's why we named
one o& our planes the ;pirit of ;ir 2reddie"
"
Social +es,onsibility
+ust /usiness
6ver the years, we)ve watched billions of dollars go into develo,ment aid and emergency
relief. =et, (nbelievably, we still have well over 16,!!! ,eo,le dying every day from
,reventable and treatable diseases like 5ids and 43, half the ,lanet still lives on less than >
,er day, one billion ,eo,le have no access to drinking water, and the list goes on and on. 4he
fact that these ,roblems ,ersist is not d(e to lack of hard work and commitment from the
social and environmental sectors? nevertheless, witho(t normal market forces and b(sinesses
ens(ring that the best ideas can be f(lly realised and comm(nicated, what we end (, with is a
market of good intentions.
3hrough my travels over the last couple o& decades, .'ve started to realise that the only way we are going
to drive the scale o& the change we need in the world is i& we pull together some very unli-ely partnerships
with !usinesses, charities, governments, 0*Os and entrepreneurial people on to the &ront lines" =ore o&ten
than not, the people most a&&ected -now the answers 5 we /ust need to listen to them" 0one o& us can do it
alone7 we all have to put aside our di&&erences and revolutionise the way we wor- together to ensure that we
leave this world in good shape &or at least the 'next seven generations', as is the philosophy o& the
indigenous people we are wor-ing with in (anada"
.n this last chapter, . want to tell you a!out Virgin's adventures in the territory where !usiness and ma-ing
the world a !it o& a !etter place meet" 3his has always !een important to me and really !egan when . was
eighteen and opened up the Student Advisory (entre on Porto!ello oad, helping young people with sexual
health" $orty years later, it has changed shape a !it, !ut it's still there, and still in the same place o&&ering
counselling services"
6hen Aids &irst started to !ecome a ma/or issue in the mid9eighties we launched =ates condoms,
com!ining our !usiness and creative s-ills to get young people to wear a condom while still en/oying sex
>well they certainly weren't going to !e stoppedA?" 6e decided that this was so important that we would
ma-e it a social !usiness and all pro&its would !e ploughed !ac- into extending the sa&e9sex message" 3he
team did a great /o!" 6e even got the 44( to run an advertising campaign &or the &irst time in their history,
which signi&icantly raised awareness o& the importance o& sa&e sex across the U% 5 all in a chee-y Virgin
way" +ere in the (ari!!ean, the slogan goes: '0o glove 5 no love'"
Several years ago, . realised that i& Virgin really wanted to ma-e a di&&erence with some o& the tougher
issues &acing humanity, we had to start pulling together everything we were doing" . -new that the only way
this would wor- was i& we put social responsi!ility at the core o& what Virgin is" So we spent months tal-ing
with sta&&, customers and &ront9line organisations all over the world, and out o& this we !uilt a
company philosophy o& 'doing what is !est &or people and the planet' and created Virgin Unite" Virgin Unite
has now !ecome the entrepreneurial &oundation o& the group, wor-ing with our !usinesses and partners to
develop new approaches to tac-le the tough issues" .t's really a!out ideas and people 5 &inding the !est o&
!oth and then helping them to scale up" Our &undamental !elie& is that doing good is great &or !usiness" .t's
not a!out the 'golden charita!le che,ue' !ut, rather, it's a!out ma-ing sure that we leverage everything we
have across our !usinesses 5 especially the wonder&ul entrepreneurial spirit o& our people 5 to drive
change"
There is such a thing as enlightened self6interest, and we should encourage it& It is possible
to turn a proCt while making the world a better place& And, inasmuch as there can ever !e answers
to the pro!lems o& the world, capitalism 5 generously and humanely de&ined and hum!ly wor-ing with
others who understand the issues and solutions 5 can create some o& those answers" =ore a!out Virgin's
ventures in this area later, !ut &irst . want to tell you a!out some o& the people who have inspired me"
6e've had many impressive and in&luential people come and stay with us on 0ec-er .sland" 4ut the visit o&
4ill and =elinda *ates at 'aster in B22: provided me with plenty o& inspiration &or what . should !e doing in
a philanthropic way"
.t ta-es a !it o& time to get to -now 4ill *ates" +e's cere!ral and intense a!out all he does" 3his intensity
made &or an excellent game o& tennis which ended in an honoura!le draw"
During his visit he spo-e to me a great deal a!out the 4ill and =elinda *ates $oundation, which in B22E
had assets o& GHC"< !illion, ma-ing it the world's largest charity and a &orce &or immense good in trou!led
parts o& the world" .n B22<, the &oundation handed out G:"1F !illion in grants in three areas: glo!al health,
glo!al education and programmes in America, including the creation o& &orty9three new high schools in 0ew
#or- (ity"
. wrote in my note!oo-: '1e%s very involved with it& =ot ?ust giving way billions but reading up
about 'frican diseases and seriously trying to help with 'idsRmalariaRtuberculosis and
educating people to use condoms"'
At that time, the 4ill and =elinda *ates $oundation had /ust overta-en, in the value o& its trust &und, the
6ellcome 3rust 5 one o& the U%'s long9esta!lished charities, which has &unded research into human and
animal health since :;H< and was spending I<12 million a year" Since then, the $oundation has grown
dramatically and is now, !y &ar, the largest charita!le &oundation in the world, alleviating poverty, disease
and ignorance around the glo!e" 4ill and =elinda have done such a !rilliant /o! as 'venture philanthropists'
that 6arren 4u&&ett, who pipped *ates in B22E as the world's richest man, handed over much o& his
su!stantial wealth &or them to loo- a&ter"
=y wi&e @oan didn't -now what to ma-e o& 4ill at &irst, though she warmed to him and en/oyed spending
time with his wi&e, =elinda" =elinda was then in her late thirties, a charming and intelligent woman" She had
amassed a huge
amount o& -nowledge a!out malaria9carrying mos,uitoes, tu!erculosis, Aids and rotavirus, a severe &orm o&
diarrhoea that -ills more than 122,222 in&ants a year" '&&ectively she was giving 4ill a running personal
tutorial on some o& the -ey issues in glo!al health" 6hile 4ill was interested in the actual micro!iological
science o& vaccine research and &inding a scienti&ic solution, =elinda wanted to alleviate as much su&&ering
as possi!le now"
. went sailing with 4ill 5 discovering to my surprise that he used to race sailing !oats 5 and he told me
a!out the =icroso&t Q!ox, which he was a!out to launch on to the mar-et to ta-e on the Sony PlayStation"
'.t's the !iggest thing .'ve ever done,' he said" 4ut he was thought&ul, and . sensed that his mission in li&e
was changing" +e had achieved so much with =icroso&t, !uilding it to !ecome one o& the most power&ul
!usinesses on the planet" .n little more than twenty years he had changed the &ace o& the modern world"
0ow he was turning his &ormida!le !rain to solving some o& the apparently intracta!le pro!lems &acing our
'arth" +e told me he went to see 0elson =andela" '. said: J=ost people thin- you're a saint" 3ell me the
truth" Did you hate the people who put you in prison)J'
'#es, . did,' was the answer to 4ill's ,uestion" '$or twelve years . lived o&& those people and . hated them"
3hen . realised they couldn't ta-e my mind or my heart away"'
4ill was astounded and said meeting =andela was a seminal point in his li&e: '+e taught me a!out living"'
3hat must have !een ,uite a moment: the richest human in the world tal-s to the most revered human
and ac,uires a new purpose and a challenge in his li&e" . thin- it may eventually go into the history !oo-s as
a turning point 5 the start o& something !ig"
.n @anuary B22E, 4ill *ates was a guest at the 6orld 'conomic $orum in Davos, in Swit8erland" +e said:
'6e have to &ind a way to ma-e the aspects o& capitalism that serve wealthier people serve poorer people
as well"' +e has called this idea 'creative capitalism', saying that !y harnessing the !asic &actor that drives
capitalism 5 sel&9interest 5 creative capitalism can enhance the interests o& the giver and the recipient"
. agree" . thin- capitalism is a proven system: it wor-s" 4ut it has got a lot o& &aults" 4reathta-ing wealth
goes to relatively &ew people" 3his would not matter so much, were it not &or the &act that the very poorest in
society are destitute, lac-ing even the !asic amenities &or survival" 3his !eing the case, an enormous
responsi!ility &alls on a success&ul !usiness leader" Deaders need to reinvest their wealth !y creating new
/o!s or !y tac-ling the social pro!lems o& the world >ideally, !oth 5 which is what ma-es =uhammad
#unus's microcredit movement so exciting?"
+istory has thrown up no via!le alternative to the &ree exchange o& capital, goods and services, and the
enterprise o& law9a!iding people" 4ut capitalism as an ideology needs wor- and re&orm" (apitalism has to
!e more than the survival o& the
&ittest"
=y own &airly unexceptional view is that capitalism should pay &ar more attention to people and to the
resources o& this planet" . call it '*aia capitalism' &or short, and as a tri!ute to the wor- o& Pro&essor @ames
Doveloc-, who has spent a li&etime tracing the li&e9sustaining connections !etween the living and non9living
parts o& the 'arth" +uman !ehaviour and human capital have to wor- with our planet"
=ore generally, entrepreneurs and wealth creators around the world must !e a positive &orce &or good"
3here is nothing un!usiness9li-e a!out sharing the !ene&its o& your industry with happy, &ul&illed people and
a planet that is going to !e there in all its glory &or our children and grandchildren"
.n :;;C, while proposing a lottery scheme in @ohannes!urg, . called upon the world's !usiness community
to run their companies more ethically 5 and, to get the !all rolling, to adopt a 8ero9tolerance approach to
!ri!ery" Perhaps the most unethical and dangerous a!use o& a company's &inancial muscle around the world
is the use o& !ri!es to secure contracts" .& company directors !ri!e politicians they start a rot at the very top"
Police, customs o&&icers, tax o&&icials and the /udiciary will then start saying to themselves: i& our !osses are
accepting !ri!es, why shouldn't we)
.n my speech, . -ept my de&inition o& ethics simple" 4usiness ethics interest me, and ethical ,uestions are
less complex than some academics on !usiness courses ma-e out" . said we should
all pledge to do nothing that we'd regret reading a!out in the press" .n the developed world, we're extremely
&ortunate in having a &ree press" 4eing mis,uoted or misinterpreted can !e &rustrating, and a !ad /ournalist
can do a lot o& damage, !ut set against the !ig picture, these are really /ust inconveniences" A &ree press is
a society's conscience" #ou may, &or instance, !e trying to discourage a competitor" A scheme is sitting on
your des- that would undou!tedly wor-" 4ut it rides close to the wind" 3hese things can get complicated, so
you can't rely entirely on gut instinct" .& the pu!lic and the media got to read this document, what would they
do) 6ould they shrug, or laugh at your chee- 5 or would you and your company !e vili&ied)
As we wor- to improve and re&orm capitalism, . thin- this connection !etween &ree commerce and &ree
expression will !ecome ever more evident" And whilst having a &ree press is a wonder&ul chec-, ideally it will
!e needed less and less as a conscience as we all start putting the well9!eing o& people and the
environment at the core o& our !usiness"
.n @une :;;;, 0elson =andela invited me to his leaving party and to the inauguration o& his successor,
3ha!o =!e-i" At the !an,uet, my neigh!our, a doctor, told me a!out her hospital 5 which receives more
patients than any other in the world 5 and . agreed to visit"
3he next morning . went to Soweto" A&ter the previous evening's pomp and glamour, . was !rought !ac-
down to earth with an incredi!le !ump" 3he hospital was worse than she had
descri!ed" 3he accident and emergency section was li-e a Vietnam 6ar movie" 3he ,ueue &or medicines
stretched &or hal& a mile" . have a deep respect &or South A&rica and . wanted to help so much" 3his was a
country with &a!ulous potential and people who were so warm and &riendly" #et a staggering B2 per cent o&
&emale South A&ricans coming into antenatal clinics now had +.V, she told me, and medicines were /ust not
going to the people who needed them" 6e had already done some wor- with +.VKAids in the U% and . was
now determined to do everything in my power to stop this unnecessary human su&&ering in South A&rica"
$or some years, Virgin had !een investing in companies to help drive the South A&rican economy" Virgin
Unite had also started to loo- at creating opportunities &or young South A&ricans" One o& my &avourite
examples o& this is the 4ranson School o& 'ntrepreneurship at the (.DA (ity (ampus" 3his too- o&& when
(.DA's charismatic leader, 3addy 4lecher, literally chased @ean and me down the street to sell me on the
idea o& &orming a partnership to assist &inancially disadvantaged young people to start up their own
!usinesses" As . write this, . have /ust spent my !irthday with some students at the school" 3heir energy and
positive spirit always inspires and hum!les me" One a&ter the other, they got up and tal-ed a!out their small
!usinesses, which !egan as part o& the 4ranson School and now gave economic &reedom not only to these
young people, !ut also to their &amilies and communities" 3his was the !est !irthday gi&t . could have as-ed
&orA . wrote down the &ollowing ,uote &rom one o& them in my note!oo-:
9ne thing that I like about the /ranson ;chool is that it%s a place where you feel like when
you%re there you get inspired
* there%s that inspiration that is drawn from the /ranson ;chool& Aou%re always e)cited& The
moment you get there, you forget your problems, and you ?ust focus on growing your
business& To all the beautiful Virgin people, I would like to wish you guys all the best, and I
need to tell you something& 3lease keep on supporting the /ranson ;chool& 0e love you&
Thank you&
'ven with this incredi!le next generation o& South A&ricans starting to !uild a positive &uture, . could see
that Aids was sapping the country's a!ility to &unction properly" A vi!rant and dynamic economy needs
healthy people to maintain the &a!ric o& society &or those who are ill, in&irm and disa!led, !ut there is a
tipping point !eyond which the levels o& disease and death are so de!ilitating that any -ind o& enterprise is
impossi!le" 3his was the situation that . could &oresee arising in South A&rica" And . wasn't doing nearly
enough a!out it yet"
$or me it was the story o& Donald =a-hu!ele, one o& the waiters at our Virgin game reserve, Ulusa!a, that
gave the tragedy o& Aids a human &ace" Donald was a poet and musician, a wonder&ul character who wrote
elo,uently a!out the local land and its people 5 and a!out his illness" +is own testament was deeply
hum!ling" +e said: '.'m a songwriter who writes a!out +.V and Aids " " " Det us wor- together as one, to !e
proud o& ourselves and have the same purpose in order to de&eat the enemy" 3his is not a disease !ut it is a
war that is in
A&rica, aiming to destroy our continent"'
Donald died o& Aids9induced tu!erculosis" 6hen he passed away . pledged that no other Virgin employee
would die unnecessarily" . thought it was wrong that any o& the hundreds o& &oreign companies operating in
A&rica should allow their people to die o& Aids, and the same should apply to local companies"
At Ulusa!a, we &irst had to show that we had no inhi!itions a!out +.V" 0elson =andela had told me a!out
a time when he had visited some Aids orphans who lived in a hut" .nstead o& throwing the &ood over a &ence,
he ventured in and spent some time with the girls" As he wal-ed !ac- to the car, his driver was so scared o&
catching something &rom him that he /umped out o& the car and ran away" +e said that Princess Diana had
done more than anyone !y cuddling a young child with +.V 5 this simple act had !een a huge positive step
&orward in A&rica"
So @oan and . invited a wonder&ul doctor and extraordinary social entrepreneur, +ugo 3empleman, to
come and see us" 6e then gathered all our sta&& at the game reserve and too- an +.VKAids test in &ront o&
them" 6e tried to encourage as many people as possi!le to come &orward and also ta-e the test 5 and most
o& them did" A&terwards, we invited some young people with +.V to spea- to all o& us a!out how
antiretroviral drugs had saved their lives"
.n B221, Virgin Unite wor-ed with a partner to &und two &ilms, created !y A&ricans and translated into
multiple
languages, to show how the +.VKAids drugs wor-ed and how the human immune system wor-ed" .n one o&
our A&rican !usinesses we &ound that BF per cent o& our sta&& had +.V, which meant nearly a ,uarter would
die within six or seven years without drug treatment" . was shoc-ed 5 yet we were typical o& so many other
!usinesses wor-ing across A&rica"
. said our organisation would supply any!ody wor-ing &or us with &ree antiretroviral drugs" And then we
rolled out the 2S (hallenge across the whole o& our Virgin !usiness: that no sta&& should ever die &rom Aids,
that no one else would !ecome +.V positive, that no +.V9positive pregnant mothers would pass on +.V to
their !a!y and that we would have 8ero tolerance towards any type o& discrimination against people who
were +.V positive" 3he 2S (hallenge is not only helping to stop needless su&&ering, !ut also ma-es
a!solute sense &or our !usiness to ensure we -eep our people happy and healthy"
. went on a tour o& local pro/ects &ighting the spread o& +.V and Aids" 6e as-ed to spend time visiting as
many clinics as possi!le to see &irst hand the medical crisis 5 . was already well ac,uainted with the &acts
and &igures o& the situation, !ut . was -een to gain a !etter impression o& the scale o& the epidemic"
3he images o& that tour are still too harrowing &or words" .n clinic a&ter clinic, the vision o& hell was clear &or
all to see" 3he sight o& row upon row o& near s-eletons, !oth men and women, o&ten with their !a!ies and
children !y the !ed, was utterly appalling" And the waiting rooms were &ull o& people waiting
to get into !eds where people had died /ust hours !e&ore" 3hese were not hospitals" 3hey were places
where people went to die" And yet we -new that this pro!lem could !e tac-led" 6e even -new how"
. wrote in my note!oo-: '' pregnant mother with 1IV or 'ids giving birth to her child is likely to
give that child 1IV& 2or as little as Cfty >; cents the mother can be given medicine si) weeks
prior to birth, and the baby can have an in?ection si) weeks after birth, and nearly D88 per
cent of such children lead a normal life, free of 1IV"' #et very &ew pregnant women in South A&rica
had access to these li&esaving drugs"
All this trou!led me deeply" As . returned regularly to South A&rica to !uild up our companies, it seemed as
i& the +.VKAids epidemic was getting worse" Since the &irst case in :;EB, millions had died and the
prevalence in South A&rica was higher than anywhere else in the world" 4y B22<, the incidence rate in South
A&rica was up to around B; per cent &or &emales coming into antenatal clinics"
3hose who -now they have +.V must !e given hope" 3hey can't !e consigned to a living death and told
that their li&e will !e extinguished in a horri!le way in &ive years 5 seven i& they're luc-y" Antiretroviral drugs
are a li&esaver" 4e&ore our 8ero tolerance campaign had started, one o& our employees at Ulusa!a had !een
reduced almost to a s-eleton 5 he was !arely a day away &rom death 5 when we managed to o!tain the
right drugs &or him" A month later, he was !ac- to normal weight"
3hree months later, he was !ac- at wor-" .& antiretroviral drugs are used properly, a person can live a &ull
li&e" 3he drugs also cut dramatically the chance o& that person spreading the disease" 6e decided to use
our !usiness s-ills to partner with some great organisations and come up with ways to help stop this health
emergency" One o& my thoughts was to help !uild clinics that can sustain themselves over time and start to
administer drugs and ensure that condoms are distri!uted" Virgin Unite teamed up with +ugo 3empleman,
plus 4rian 4rin- &rom Anglo American plc, the South A&rican government and the US President's 'mergency
Programme &or Aids elie& to set up the 4hu!e8i (ommunity +ealth (are (entre in =pumalanga 5 a
!rilliant example o& the -ind o& pu!lic and private partnership that really wor-s, where local health o&&icials
and the !usiness community are wor-ing hand in glove to &ight Aids more e&&ectively"
+ugo's idea was to create a one9stop9shop &or primary health care, to include a pharmacy, Q9ray and
o!stetrics &acilities, an +.VKAids patient care clinic, and a la!oratory" +ugo had not only !uilt such a centre7
he had helped create an entire economic in&rastructure with !asic utilities such as water, electricity, roads
and even a !a-ery, a car wash and a nappy9manu&acturing &actoryA 4hu!e8i was a great opportunity &or
+ugo to develop and extend his ideas"
.n B22<, . returned to open the 4hu!e8i centre" .n the interim, thousands more people had su&&ered and
died &rom Aids and thousands more had !ecome in&ected with +.V" O& course, .
wasn't alone in my concern" 3here were do8ens and do8ens o& worthy and learned organisations and donor
countries wor-ing to eradicate Aids" .n &act, the num!er o& organisations actually helping out was crippling
some o& the e&&ectiveness on the &ront lines" 6e spo-e to one doctor who said that F2 per cent o& his time
and his sta&&'s time was spent on managing over a hundred di&&erent &unders" 6ith this in mind, . wor-ed
with Virgin Unite to loo- at how we could set up a '6ar oom' &or su!9Saharan A&rica to help !etter
coordinate and mo!ilise resources in the &ight against diseases"
During my trip in B22<, a&ter some incredi!ly emotional visits to hospices and still angry at mysel& &or
letting Donald die, . decided that . could no longer !e silent a!out the issue" =uch to the dismay o& the
Virgin Unite team, who were worried that this would slow down or shut down our a!ility to progress with
some o& the pro/ects, . went on national 3V stating that . &elt the leader o& South A&rica and his health
minister were guilty o& genocide and should !e tried &or crimes against humanity"
3he next morning 5 BC Octo!er B22< 5 the 2inancial Mail reported: '4ritish !illionaire ichard 4ranson
has slammed President 3ha!o =!e-i and health minister =anto 3sha!alala9=simang &or presiding over Ja
government TthatU is e&&ectively -illing its own peopleJ"'
. stared at the report" +ere . was, a supposedly non9political industry &igure, commenting on -ey political
&igures in a country where . was doing !usiness" $rom a purely commercial perspective, it certainly wasn't
wise" 4ut . &elt, and still &eel,
it%s more important to do what you believe to be right in life, and i& this contradicts your !usiness
interests, so !e it" 4usiness can't !e allowed to &loat a!ove ordinary morality"
4ut this wasn't a!out me" 3his was a!out a country and a people and, yes, a leadership that . loved" .
wanted the A0( to !e remem!ered &or the good wor- it had done &or the country, not &or turning a !lind eye
and e&&ectively -illing a large percentage o& the population !y re&using to accept that +.V and Aids are
lin-ed"
. immediately received a letter &rom President =!e-i and, much to his credit, he did not condemn me &or
spea-ing out, !ut instead engaged in a dialogue a!out what he &elt needed to !e done" +e also o&&ered an
honest perspective on his views o& the issues that South A&rica was &acing, &rom +.V to the lac- o& /o!
opportunities" A&ter several open and &ran- communications, we !oth had the guts to put our di&&erences
aside and agree to partner up on !uilding the war room to tac-le disese in su!9Saharan A&rica" 3his was the
&irst step on a /ourney that we hope will ma-e a great di&&erence" As . write this, . have /ust /oined Priya 4ery
and @ean Oelwang &rom Virgin Unite &or a wee- o& meetings with the A0( government, some ama8ing
South A&rican entrepreneurs and many other health partners to prepare &or the launch o& the war room"
3he war room will !ecome a memorial to Donald =a-hu!ele and all the countless others who have died
o& disease in A&rica" .t is also another example where!y entrepreneurial s-ills
coupled with health expertise and -nowledge &rom the &ront lines will together !uild a power&ul &orce &or
change"
One day in April B22<, . received a copy o& the star&ish para!le 5 &rom Star&ish, a charity that &ocuses on the
Aids orphan crisis in South A&rica"
A girl wal-s along a !each, throwing star&ish !ac- into the sea, when she meets an old man" 3he man
as-s the girl why she is throwing star&ish into the ocean" She says: '3he sun is up and the tide is going out,
i& . don't throw them !ac- they will all die"' 3he old man says, '4ut there's a whole !each and it runs on &or
miles" #ou can't possi!ly ma-e a di&&erence"' 3he girl pic-s up a star&ish and throws it !ac- in the sea" '.t
made a di&&erence to that one"'
6hat can you do to ma-e a di&&erence) And why should you do it)
.& the account o& some o& our wor- in A&rica has leapt rather di88yingly &rom small9scale innovations to !ig9
policy manoeuvres and !ac- again, it did so &or the very good reason that the scale o& one's social
investments doesn%t matter"
6hat matters is that you operate as a &orce &or good at every scale availa!le to you" An Aids policy rolled
out across the sta&& o& your !usiness is as important as an Aids policy rolled out across the entire Virgin
*roup, or across an entire nation" 3he important thing is to have the idea, and realise it, however modestly"
3his includes loo-ing at your &uture investment strategy to try
to &ind !usiness opportunities that will also help tac-le tough issues"
Over the last &ive years Virgin Unite has grown into a plat&orm to help all o& us across the Virgin *roup
drive change" .t !rings everyone together with a common &ocus to try to do our !est &or people and the
planet" Virgin Unite is ma-ing sure that it's not /ust me trying to do my !it, !ut instead the whole Virgin
community wor-s to do whatever we can 5 small or large 5 to ma-e a di&&erence"
3hese di&&erences come in all shapes, depending on the !usiness" 6ith Virgin Atlantic, in their ,uest to
!ecome the most sustaina!le airline possi!le, they are loo-ing at various aspects o& the operation to see
how they can reduce their impact on the environment" One thing .'m particularly excited a!out is the !io&uels
test they success&ully completed a &ew months ago" $inding an alternative environmentally &riendly &uel
source will !e one o& the !iggest contri!utions we could ever ma-e as an airline"
Dan Schulman and his team at Virgin =o!ile USA have wor-ed with Virgin Unite, their sta&&, customers
and young people in the US to come up with ways they can use their core assets to ma-e a di&&erence &or
the :"1 million homeless teenagers in the US" .t's still shoc-ing that in such wealthy countries we are
allowing teenagers to live on the streets" Virgin =o!ile have used their text messaging communication
channels, we!site, lo!!ying voices and anything else they can &ind to help !uild awareness o& the issue and
to raise money"
3hey teamed up with singerKsongwriter @ewel and Virgin Unite to lo!!y the US government who have now
made 0ovem!er '3een +omeless =onth'" 3his has !een a great initiative not only &or our partners, such as
Stand Up &or %ids, and the young people they serve, !ut also &or the !usiness" .t has truly !uilt a community
among our customers, sta&& and homeless teenagers, who have come together to drive change and learn
&rom one another"
Sometimes the !usinesses &ocus on their own programmes and other times they come together as a
group to ma-e greater impact" $or example, one initiative we recently launched is &inding and supporting
the !est grassroots ideas that have environmental !ene&its and also help to create local /o!s, &rom
employing A!original people in Australia to practise their ancient land9!urning techni,ues which minimise
car!on output and protect !iodiversity, to wor-ing in %enya on an ecolodge that will help the *reen 4elt
=ovement sustain their re&oresting pro/ects" 6e hope that these smaller pro/ects will scale up over the
coming years, using the &ight against climate change and the need to protect our natural resources as an
opportunity also to &ight poverty in the world"
*ood small solutions are li-e gold dust as it's o&ten possi!le to scale them up, or replicate them many&old,
so that they ac,uire glo!al in&luence" =uhammad #unus's *rameen 4an- is a classic example"
So don't let relative scale put you o&& your goals" Think realistically and creatively about what you
can achieve" #ou
can do this whether you're a corporate manager or a sole trader
5 and what you learn !y way o& entrepreneurship will directly !ene&it you in your !usiness"
.& there is one line that could sum up all the varied and curious lessons .'ve learned in !usiness, it's this:
scale doesn%t matter * people do" 3his thin-ing is re&lected in some o& my current wor-: creating small
entrepreneurial 'war rooms' to tac-le !ig issues" So let me show you, &inally, how .'m wor-ing with Virgin
Unite and other partners to set up a war room to help deal with the !iggest, most elusive, most pressing and
most a!stract pro!lem o& all: climate change"
eading comic !oo-s, when . was growing up, one o& my recurring nightmares was the invasion o& aliens
&rom =ars" .t was terri&ying stu&&: everywhere . loo-ed, !ug9eyed monsters were 8apping humans with their
ray guns" 3he sci9&i &ilms o& the :;12s such as The Day the arth ;tood ;till and The 0ar of the
0orlds regularly showed our planet under attac-" .t was a horri&ying prospect" 3he solution was invaria!ly
that all the world's nations had to !ury their di&&erences and get together to ward o&& a common enemy"
3he e,uivalent o& that alien invasion is already here" .t's impossi!le to see, it's odourless, and it's
everywhere" Our war is against car!on" 0ot an alien menace, a&ter all, !ut 5 irony o& ironies 5 one o& the
!uilding !loc-s o& li&e"
On the (elsius scale, 8ero is the &ree8ing point and :22 degrees the !oiling point o& water" $or the last
:2,222 years,
the average sur&ace temperature o& the 'arth has !een around :FV(" 3he hottest recorded temperature has
!een 1EV( at 'l A8i8ia in the Sahara Desert in :;BB" 3he year B22C was the warmest on record"
4ut i& the average sur&ace temperature rises !y 1V( 5 and scientists now say it will unless we wean
ourselves o&& this !usiness o& !urning &uels that release (OB into the atmosphere
5 then our planet !ecomes a hostile and arid place" 6e are now at :F"1V( 5 moving to :;V( will !e
disastrous" So we must act now"
'arlier this year, . was clearing out some possessions o& the previous owner on =os,uito .sland, which is
!eing developed as a low9car!on ecotourist destination in the (ari!!ean, and stum!led on some old picture
!oo-s written !y @ac,ues9#ves (ousteau" (ousteau, who invented the a,ualung, warned a!out the
destruction o& the sea" .n the :;C2s, he &ilmed a polluted section o& the =editerranean devoid o& li&e, and
these shoc-ing images led to immediate environmental action"
.n his &irst !oo-, 0indow in the ;ea, pu!lished in :;CH, (ousteau posed the ,uestion: 6hat happens i&
our oceans die)
If the oceans of the arth should die * that is, if life in the oceans were suddenly, somehow to
come to an end * it would be the Cnal as well as the greatest catastrophe in the troublous
story of men and the other animals and plants with whom man shares this planet&
0ith no life in the seas the carbon dio)ide content in the
atmosphere would set forth on an ine)orable climb& 0hen this :9
L
level passed a certain point
the %greenhouse e(ect% would come into operation< heat radiating outwards from arth to
space would be trapped beneath the stratosphere, shooting up sea6level temperatures& 't
both =orth and ;outh 3oles the icecaps would melt and oceans would rise perhaps D88 feet in
a small number of years&
3he calamity we are &acing is not un-nown, not un&oreseen, not even surprising" (ousteau wrote his
prophetic warning thirty9&ive years ago"
'very !usiness around the world must now radically change its thin-ing" .n every aspect o& its operation, it
must do much more to reduce the amount o& car!on dioxide it releases into the air" And this won't !e easy,
since the endeavours o& humans in agriculture and !usiness, responding to the demands o& consumers and
customers, have !een partly responsi!le &or creating the pro!lem in the &irst place"
As mentioned, all o& our !usinesses are loo-ing at how they can reinvent the way they operate to try to
minimise the impact they have on the environment" 3his issue has personally captured my imagination and
set me o&& on a /ourney to discover new approaches"
$irst, . had to muster the &acts" 3hen . could loo- at the mar-etplace, and come up with a scheme" 4ut .
also needed an expert sounding !oard 5 which . &ound in !oth Pro&essor @ames Doveloc-, a man who is the
environmental e,uivalent o&
0elson =andela, and 3im $lannery, an ecologist whose !oo- The 0eather Makers is the !est guide to
our current situation that . have read"
Scientists have !een a!le to drill a deep hole into the Antarctic ice caps to collect core samples which
they have examined" 3he ice samples contain air !u!!les" $rom the amount o& car!on dioxide in the air
trapped inside these icy time capsules, they can tell how temperatures have risen over the years" 3he
invention o& the steam engine and the arrival o& the .ndustrial evolution in the :CE2s in 4ritain !egan this
cycle o& the age9old process" 4ut even more in&luential were the medical and social advances that gi&ted us
clean water, sanitation, a !etter diet and inoculations against common diseases" Suddenly, there were more
o& us" 3he population o& the world exploded, and continues to explode, and virtually everyone on the planet
is consuming many times more energy than their parents ever did and we are now in 'de&icit &inancing' o& the
planet 5 the ecological e,uivalent o& su!9prime lending"
4e&ore :E22 there were a!out BE2 parts per million >ppm? o& (O
B
in the atmosphere" Since then industry
has !urnt, smelted and &orged, and humans have &armed, coo-ed and heated themselves with huge
,uantities o& car!on" Still, &or generations, there was e,uili!rium as vegetation used atmospheric car!on
dioxide to grow" 4ut now we are overdrawn in the car!on !an- and heading towards a 0orthern oc- or
4ear Stearns situation very soon"
3he economic prosperity o& the modern world has !een !uilt
on two deadly !ut energy9rich hydrocar!ons: coal and oil" Over many millennia, most o& 'arth's car!on has
!een loc-ed away in the ground"
Dead plants and animals, !uried in the ground and compressed, !ecame &ossil &uels" .& human activity
were to extract all o& this car!on &rom the ground and !urn it, the car!on released would com!ine with
oxygen to produce car!on dioxide, and then we wouldn't have to worry a!out glo!al warming any more:
we'd already !e dead &rom asphyxiation" 3here wouldn't !e enough oxygen le&t &or us to !reathe"
.n @uly B221, the Stern eview on climate change was announced !y *ordon 4rown, then the U%'s
(hancellor o& 'xche,uer" Sir 0icholas Stern, who was &ormer chie& economist at the 6orld 4an-, wanted to
assess the economic !ene&its o& moving to a low9car!on economy, and the potential &or adapting to climate
change" 3he review was pu!lished in Octo!er B22< and . &ound it an impressive addition to the de!ate" +e
reported that the atmospheric concentration o& greenhouse gases were already up &rom BE2ppm during the
.ndustrial evolution to FH2ppm" 3his is set to rise to 112ppm !y B2H1, !ringing at least a CC per cent
chance that the average glo!al temperature will increase !y more than two degrees" A rise o& two degrees
is the maximum that scientists !elieve we can tolerate, !e&ore our current climate su&&ers a runaway
collapse"
=ost alarming was Stern's warning that with no action on
emissions, the world's temperature could go up !y more than &ive degrees !y the end o& the twenty9&irst
century" 3his -ind o& rise would send human li&e on 'arth into un-nown territory" +e pointed out that even a
three9 or &our9degree rise would cause a serious decline in crop yields, and sea level rises that would
threaten Dondon, 0ew #or-, Shanghai, +ong %ong and (airo" .t would also mean the collapse o& the
Ama8on rain&orest and the possi!le shutting down o& the *ul& Stream 5 the ocean current delivering
temperate climates to much o& 'urope"
Stern calculated that the overall costs and ris-s o& climate change would !e the e,uivalent o& losing at
least 1 per cent o& glo!al *DP" 4ut i& a wider range o& ris-s was ta-en into account, such as the spread o&
disease, then this could rise to B2 per cent or more" On purely technical grounds, this is a ris- to !usiness
that now has to !e ta-en seriously 5 and &actored into every part o& commercial thin-ing"
.n order to sta!ilise atmospheric gases at around 122 to 112ppm, glo!al emissions at B22< levels would
have to !e reduced !y E2 per cent" 3he challenge is that emissions must pea-, then &all !y : to H per cent a
year &or the &oreseea!le &uture" Among Stern's proposals there were &our sets o& measures that were o&
particular interest to the Virgin *roup: reducing demand &or goods and services that produced a great deal
o& emissions7 an increased e&&iciency in any engines when we did use car!on7 swi&ter action on non9energy
emissions, such as the !urning and clearing o& tropical &orest land7 and
switching to low9car!on technologies &or power, heat and transport"
Some glo!al !usinesses are ma-ing an e&&ort to tac-le the issue, !ut piecemeal e&&orts are not going to !e
enough" Our war against car!on dioxide needs to !e expanded !y government and !y !usiness into every
product, every application and every design" 6e also need to do something to extract as much existing
car!on dioxide as possi!le &rom the atmosphere" 3hat was the challenge that drew my immediate attention"
Steve +oward, the ('O o& the (limate (hange *roup, !elieves we have a &ew years to ma-e a massive
glo!al di&&erence 5 or human li&e as we -now it could cease to exist within a couple o& hundred" . am an
optimist and . !elieve that !usiness can 5 and will 5 &ind the solutions to this massive pro!lem" 4ut &or our
children's sa-e, we have to em!race this challenge, every day, &rom now on"
Perhaps . too- nature too much &or granted" . was !rought up in stunning 'nglish countryside, surrounded
!y wildli&e, !irds and trees" A love o& the natural environment has !een a !ig part o& my li&e" 4ut it was a visit
to my Dondon home !y a &ormer US presidential candidate that was the tipping point &or my view o& how that
love should in&orm the way !usinesses are run"
3he &ormer US vice president, Al *ore, came to visit me in +olland Par-" . had never met him !e&ore" +e
as-ed to see me
!ecause he was loo-ing &or a !usiness leader who was recognised on a glo!al !asis" .t seemed that . &itted
the !ill" +e thought . could ma-e a gesture that might !ring other !usiness leaders along too" +e spent two
hours giving me, 6ill 6hitehorn and @ean Oelwang a guided tour o& the issues surrounding climate change
5 a presentation that was later to reach many millions as his Oscar9winning documentary, 'n
Inconvenient Truth"
Prior to Al *ore's visit, . had read a !oo- called The ;keptical nvironmentalist, which was
dangerously convenient reading &or someone in !usinessA .t argued that glo!al warming could even !e a
positive thing that would stop the world heading &or the next ice age" 4ut as a result o& meeting Al *ore, .
went !ac- to other scientists and other thin-ers" . rediscovered the wor- o& (rispin 3ic-ell and @ames
Doveloc-" And !y the end o& my reading, . had reached an inconvenient truth o& my own: that . had to do
something rather than !e passive"
$inally . was handed a !oo- that stopped me in my trac-s" .t was 3im $lannery's The 0eather Makers"
3im's thesis was &ascinating 5 and alarming" .t put &lesh on the !ones o& the concept o& glo!al warming" .t
gave concrete examples o& what was happening and why" . devoured its many !eauti&ully written stories"
One in particular stic-s in my mind: how the American pioneers cut and !urnt the great eastern &orests and
!urnt and gra8ed the western plains and deserts" 'ventually, the vegetation grew !ac- 5 which is why most
o& America's &orests
are less than sixty years old and regrowing vigorously in the process, a!sor!ing hal& a !illion tonnes o& (O
B
a year" 3his has helped cool the planet" Once this vegetation matures, however, it will stop extracting as
much (O
B
, /ust when we need its assistance most"
3im's !oo- was a gem, and . noticed that he returned again and again to the wor- o& @ames Doveloc-" 3im
was greatly in&luenced !y Doveloc-'s !oo- 4aia, which tal-ed persuasively a!out the 'arth as a single,
living entity"
. had to meet @ames Doveloc- and &ind out what he thought" One o& the privileges o& my li&e is that . get to
meet many !rilliant people" @im is an independent thin-er, inventor and scientist" .n his late eighties, he is
sharp and lucid" An honorary pro&essor at Ox&ord University, he has won many medals and accolades &or
his original environmental thin-ing"
As a young mathematician and scientist, @ames Doveloc- regularly visited the @et Propulsion Da!oratories
in Pasadena" 3he la!oratory was closely connected with 0ASA and the American space programme, and
undertoo- wor- &or unmanned space missions" @im's inventions have gone into several o& the interplanetary
pro!es 0ASA has launched over the years to explore other planets" @im also wor-ed on a remote9controlled
micro!iological la!oratory, which was to !e dispatched in a roc-et to =ars to test whether the planet could
sustain !acteria, &ungi and other microorganisms" .t was then that @im !egan to pose the !asic ,uestion:
6hat is li&e 5 and how can we recognise it)
6or-ing with his acclaimed colleague Dian +itchcoc-, he !egan to study the potential &or li&e on =ars"
And as they wor-ed, the scientists naturally turned !ac-, &or comparison, to 'arth 5 its !iosphere and
atmosphere" 3hey came to the conclusion that the only &easi!le explanation o& our planet's atmosphere was
that it was !eing manipulated on a daily !asis &rom the sur&ace" 3he constant &lux o& all the di&&erent gases in
the 'arth's atmosphere was itsel& proo& o& living activity"
@im's emerging theory was that the world and its atmosphere were one living and !reathing system" .t was
a radical view &or its time and re/ected !y the scienti&ic consensus" +owever, (arl Sagan, the editor o& the
astronomy /ournal Icarus, was intrigued enough to pu!lish @im's views"
6hen, in :;<1, the US government a!andoned the =artian exploration pro/ect that @im had !een wor-ing
on, he went to wor- &or Shell esearch, to consider the e&&ects o& air pollution and its glo!al conse,uences"
3his was in :;<<, and three years !e&ore the &oundation o& $riends o& the 'arth" @im warned a!out the
!uild9up o& particles which were then depleting the o8one layer 5 a thin s-in o& gas which protects us &rom
the sun's radiation" One o& his many inventions was the electron capture device which was essential &or
detecting and measuring the atmospheric concentration o& chloro&luorocar!ons >or ($(s? 5 the chemicals
responsi!le &or !rea-ing down the o8one layer"
.t was his &riend, the writer 6illiam *olding, author o& the #ord of the 2lies, who gave him the name"
*olding suggested
'*aia' a&ter the *ree- goddess o& the 'arth" >.t's &rom her that we get the root o& words li-e geography and
geology"? @im put &orward his '*aia hypothesis' at a scienti&ic meeting a!out the origins o& li&e on 'arth at
Princeton, 0ew @ersey, in :;<E" *aia is @im's shorthand &or the complex interactions !etween the 'arth's
!iosphere, atmosphere, oceans, roc-s and soils" 'arth, in his view, is e&&ectively a sel&9regulating
mechanism 5 a machine &or li&e"
6hen . &irst spo-e to @im he told me that in the :;C2s, he had no clear idea how that machine wor-ed, !ut
as a scientist he -new that the 'arth was di&&erent &rom our nearest neigh!ours in our solar system, and he
was &ascinated !y how the 'arth, unli-e =ars and Venus, constantly managed to ma-e itsel& a &it and
healthy place to live"
@im Doveloc- has !ecome a great &riend, and he has shared with me his wor- on his long9overdue &ollow9
up !oo- 5 a solilo,uy &or his !eloved *aia" 'ven in his advancing years, his &reedom o& thought and mind is
astounding" .'m not an academic and . struggle with some o& the detailed scienti&ic technical stu&&, !ut @im's
descriptions are poignant, !eauti&ul and understanda!le"
@im -nows he isn't going to live &or ever, and that his ideas will disappear unless we capture them now" So
he has !een sending me a host o& ideas in the hope that . can turn at least some o& them into !usinesses"
+e tal-s a!out dropping pipes into the ocean, a!out !urying algae at sea, a!out putting extra sulphur into
the atmosphere" +e is not a cran-, or a lone voice
in the wilderness" +e is an internationally cele!rated and revered &igure and his ideas have a lot o& currency"
6hat is lac-ing, however, is the sort o& serious, heavily &unded research necessary to show which o& his
ideas are most worth pursuing"
.n April B22<, almost in the same post as the letter &rom the charity Star&ish, . &ound a letter &rom &ormer US
president 4ill (linton, inviting me to the (linton *lo!al .nitiative, to !e held in 0ew #or- that Septem!er" .
&ully respect the wor- that 4ill is doing to tac-le social and environmental issues, so a &ew days later .
agreed to participate" 4ill also phoned me and as-ed i& there was any gesture that . would !e willing to
ma-e"
. was sitting in the !ath when it occurred to me: why not /ust divert all the pro&its made !y the Virgin *roup
&rom our car!on9creating !usinesses 5 such as the airlines and trains 5 and invest it in developing the
cleaner technologies o& the &uture) .'d also loo- at !usiness research on wind power and solar power and
anything that could replace the &ossil &uels" 6hen . !rie&ed him !e&orehand, 4ill was excited" +e wanted to
ma-e it the centrepiece o& the meeting in Septem!er" . said . would li-e Al *ore, 4ill's &ormer vice president,
to !e there as well" . said that without Al visiting me . wouldn't have come up with the idea in the &irst place"
4ill (linton's introduction went li-e this:
'.'ve had the privilege in my increasingly long li&e to -now a lot o& ama8ing people and ichard 4ranson is
one o& the most interesting, creative, genuinely committed people . have ever -nown"'
. gulped with em!arrassment when . heard a!out this" 3han-s, 4ill 5 !ut then you expected me to speak)
+appily &or me, . wasn't in the hall" An aide shouted up to him: '+e's not here yet" +e's on his way"' As
ever, . had missed my cue" . was in the loo"
4ill coolly segued into the next item" 6ell, . made it 5 eventually" And . outlined my plans &or the Virgin
*roup" '6hat we've decided to do is to put any proceeds received !y the Virgin *roup &rom our
transportation !usinesses into tac-ling environmental issues, and hope&ully it will !e something li-e GH
!illion over a num!er o& years " " " Di-e Al *ore, . don't !elieve it is too late" . thin- we do have a hand&ul, two
hand&uls o& years to get the !all rolling, to address the pro!lem" And i& we can develop alternative &uels, i&
people can ta-e ris-s on developing en8ymes, i& we can try to get cellulose ethanol, then replace the dirty
&uels that we're using at the moment, then . thin- we've got a great &uture"'
Al stepped up" 'ichard,' he said, '. have one ,uestion" . didn't hear it on the list, and . want to ma-e sure"
Are the expected pro&its &rom the roc-et ships also going into this)' . nodded and said: '4y the way, they are
environmentally &riendly roc-et shipsA'
3he con&erence was well received, and my announcement did what Al *ore wanted" 3hat a !usiness
leader in the transport industry admitted there were pro!lems with glo!al warming and that something had
to !e done a!out it made the headlines"
And this would ma-e it more di&&icult &or the oil and coal companies to continue to deny their responsi!ilities"
4ut . decided . needed to help ma-e a &urther step 5 and this time, a pri8e made the !est sense" 6e set up
a pri8e to encourage every inventive thin-er to try to come up with a way o& extracting car!on dioxide out o&
the 'arth's atmosphere" .& that could !e achieved, the temperature o& our planet could !e regulated !y
man-ind, extracting car!on dioxide &rom the atmosphere when it gets too hot"
On ; $e!ruary B22C, we announced the Virgin 'arth (hallenge" 3o win the GB1 million pri8e, participants
will have to demonstrate a prova!le, commercially via!le design which will result in the removal or
displacement o& a signi&icant amount o& environmental greenhouse gases &rom the atmosphere" 3he
challenge will run &or ten years"
Al *ore agreed to !e a /udge7 so too did 3im $lannery and @ames Doveloc-" . also as-ed two other
distinguished people to /oin the panel 5 Sir (rispin 3ic-ell, the director o& the Policy $oresight Programme at
the @ames =artin .nstitute &or Science and (ivilisation at Ox&ord University, and Dr @ames +ansen,
pro&essor at the (olum!ia University 'arth .nstitute and head o& the 0ASA *oddard .nstitute &or Space
Studies in 0ew #or- (ity" 3his was a heavyweight group o& assessors"
3he /udges will decide whether a scheme has the potential to ma-e a signi&icant di&&erence to glo!al
warming, and whether the pri8e should !e awarded to one winner or shared !etween two or three" 6e
&ound that setting more prescriptive targets
was pointless, !ecause there are so many ways to address the greenhouse gas pro!lem" 3his point was
very well put !y @ames Doveloc-, who was as sharp as ever when commenting on our early suggestions:
I was surprised to read in the outline of the Virgin arth :hallenge that the re@uirement for
the priBewinner was the removal of at least one billion tonnes of :9
L
per year& This seems
small compared with the near P8 billion tonnes we add yearly& In fact, H&P billion humans
breathe out yearly nearly two billion tonnes of :9
L
* trying to restore the arth by removing
one or even two billion tonnes a year is a bit like trying to bail out a leaky rowing boat with a
teaspoon & & &
+e said we should -eep in mind that a !illion tonnes o& car!on could !e ta-en out o& the atmosphere i& we
synthesised our &ood, which would release huge areas o& &armland to revert to natural vegetation"
Is it too late to make the conditions harder and at the same time more general? It would be a
shame to have to turn down a good proposal for a method for making tasty and nutritious
food by biochemical synthesis directly from air and water&
. -new . had to get @im more involved, and 6ill 6hitehorn o&&ered to go and see him" eturning &rom a
climate change meeting in $rance with &ormer president @ac,ues (hirac, he agreed to complete the line9up
o& /udges &or the pri8e" '.t's a grand idea,' he wrote, 'and who -nows, it might /ust promote
the discovery o& an answer" 6e have all spent &ar too long sleepwal-ing towards extinction and need an
incentive"'
. thin- that all !usiness people need to have sceptical scienti&ic &riends who can challenge, prod and
stimulate" @im was certainly doing this &or me"
A success&ul application &or the Virgin 'arth (hallenge could very well ta-e into account the 'arth's sel&9
regulating a!ility" .n Septem!er B22C, @im and his colleague (hris apley wrote to the science /ournal
=ature: '3he removal o& 122 gigatonnes o& car!on dioxide &rom the air !y human endeavour is !eyond our
current technological capa!ility" .& we can't Jheal the planetJ directly, we may !e a!le to help the planet heal
itsel&"'
One way to do this would !e to lower vertical pipes into the ocean" 6ave power could ena!le a simple
pump to drive cold, nutrient9rich waters up &rom the depths to the relatively !arren ocean sur&ace" 3his
would promote the growth o& algae, which would consume (OB and produce dimethyl sulphide, the
chemical that turns humid air into clouds"
@im mentioned this example to me !ecause he was attending a meeting in 6ashington the &ollowing wee-
and wanted to discuss the idea with scientists and engineers there" +e recently wrote to me with a new
idea:
More and more I think our best chance of reversing global heating lies in the burial of charcoal
on land and in the ocean& If most farm waste were turned into charcoal yearly on the farms
and then ploughed in, this alone would do
much more than anything otherwise proposed& More than this, the preparation of charcoal
yields a modest amount of biofuel and the total could be @uite large& It would take longer to
establish the same scheme with ocean farms but if we really intend to do something this is
the way to go&
.t's an ingenious notion 5 and might even !ecome a success&ul !usiness proposition"
6ithin the &irst year, the Virgin 'arth (hallenge attracted more than H,222 notes o& interest 5 and this was
very exciting" 4ut one thing !egan to dawn on me: pri8es do ta-e time to produce results" Peter Diamandis
came up with the Q Pri8e concept &or commercial space &light in :;;F and over the course o& several years
had presented it to numerous people &or &unding 5 including Virgin 5 !ut it wasn't won !y 4urt utan and
Paul Allen until ten years later" As &ighters in the war against glo!al warming, we were all too well aware that
time was one thing in very short supply"
A pri8e o& GB1 million was an incentive &or departments at a lot o& universities 5 !ut . !egan to as- what i&
there was a !ounty ten or even twenty times this si8e) Perhaps this would attract the ma/or industries to
divert signi&icant research and development into the pro/ect" A pri8e o& this magnitude would do a great deal
to stimulate the large corporates with their massive MD spending power"
6ith this in mind, early in B22E, . accepted an invitation to address the U0's two9day wor-shop on climate
change, where
. was made U0 (iti8en o& the #ear !y the Secretary *eneral 4an %i9moon &or my wor- on climate change"
As the owner o& several airlines, even . can see the irony in thatA
. already had a lot o& sympathy &or the views o& @e&&rey Sachs, outlined in his !oo-, :ommon 0ealth<
conomics for a :rowded 3lanet, when he stated: '6hen it comes to pro!lem9solving on a glo!al scale,
we remain weighed down !y cynicism, de&eatism and outdated institutions" A world o& untrammelled mar-et
&orces and competing nation states o&&ers no automatic solutions to these challenges" 3he -ey will lie in
developing new sustaina!le technologies and ensuring that they rapidly reach all those who need them"'
So . arrived in 0ew #or- with @ac-ie =cPuillan and @ean Oelwang, determined to ma-e a pu!lic plea &or
the creation o& an 'nvironmental 6ar oom" . intended opening with a (ousteau ,uotation: '3here are no
!oundaries in the real Planet 'arth" 0o United States, no ussia, no (hina, no 3aiwan" ivers &low
unimpeded across the swathes o& continents" 3he persistent tides, the pulse o& the sea do not discriminate7
they push against all the varied shores on 'arth"'
3he president o& the U0 *eneral Assem!ly, Srg/an %erim, the &ormer =inister o& $oreign A&&airs &or
=acedonia, chaired the session" As . remem!er it, this went under the !anner 'Addressing (limate (hange:
3he United 0ations and the 6orld at 6or-'" Srg/an was a gracious host" Among the other participants were
the Secretary9*eneral and =ichael 4loom!erg, the mayor o& 0ew #or-" Also with me at the
con&erence was the actress Daryl +annah, a perceptive campaigner on climate change issues"
On :: $e!ruary, Srg/an introduced the session: '. am very much encouraged in that the climate is
changing 5 in terms o& the political climate at least 5 and that people have replaced ignorance with
awareness" Awareness is now our ally !ut that's not enough" 6e are not tal-ing a!out long9term planning
and the world o& tomorrow" 6e're tal-ing a!out the emergencies o& today"'
+e explained that the United 0ations was tal-ing a!out partnerships and that a negotiation process was
going on among mem!er nations on setting up targets on greenhouse gases" 4ut he said that only
partnerships that included the !usiness world, the media, the non9governmental organisations, and
academics >such as those who made a contri!ution with the .P((, which was awarded the 0o!el Peace
Pri8e in B22C and helped politicians understand the magnitude o& the pro!lem? would wor-" +e stressed
that the U0 could not do it all !y itsel&" 3he chairman said that when he was preparing &or his role as
president o& the *eneral Assem!ly he had read a!out climate change 5 and he ac-nowledged the creation
o& the Virgin 'arth (hallenge" '.t is not !y chance that they are here7 they inspired me,' he said" '. invited
them " " " this is why we are here together"'
. started in a som!re tone" At the last minute . dispensed with the poetic (ousteau intro and went straight
&or the /ugular" '3here are some eminent scientists who already !elieve that we
have gone through the tipping point, that there is nothing man-ind can now do to stop the 'arth heating up
!y &ive degrees, with all the dire conse,uences that will come with that"'
. then cited @im Doveloc-, saying that he went &urther than the U0 report and he predicted we would lose
all the &loating ice in the summer months in the Arctic Ocean within ten years and that the &ive9degree rise is
li-ely within &orty years, rather than the eighty years that had !een predicted !y the United 0ations"
+owever, unli-e the U0 report, he !elieves that the world will then sta!ilise at this &ive9degree rise and that
there will !e survivors" 4ut much o& the lush, com&orta!le world that we now en/oy will !e gone" .t will erode
into a largely &eatureless desert" 3he loss o& li&e is li-ely to !e gigantic, and we will !e in a world where not
nearly enough &ood is grown, or enough &resh water is availa!le, to support a large population"
'6hether you !elieve we have gone through the tipping point or not, most scientists are in agreement that
we are extremely close to it and it doesn't loo- particularly good" +istory has taught us that in times o& peril,
when all seems lost, !ringing together the minds o& the greatest to wor- together with one common goal 5
survival 5 is the most e&&ective way to prevail" .'m convinced a winning strategy can !e devised" 3he great
minds are out there 5 !ut they are &ighting in isolation"
'6e all need to play a role to !ring all the scientists, engineers and inventors worldwide together to come
up with innovative, radical approaches to the issue, including &inding a way to
extract car!on out o& the 'arth's atmosphere" .& such a !rea-through could !e made, man-ind would !e
a!le to regulate the 'arth's temperature" 4y extracting car!on when it's getting too hot 5 and !y adding
car!on when it's too cold" 6e have certainly sorted how to add car!on 5 we /ust need to sort out how to
extract it" 4ut it cannot !e !eyond the wit o& man to crac- this pro!lem"'
3hen . made a strong o&&er o& partnership to anyone out there really concerned a!out this" 'Virgin has put
up a GB1 million pri8e to encourage scientists and inventors to put their mind to it" 3oday we'd li-e to urge
the twenty wealthiest governments to match us in this endeavour so we can ma-e this the largest scienti&ic
pri8e in history 5 a hal&9a9!illion9dollar pri8e"' Surely, this would get some tractionA .'m still waiting &or a call"
. &eel that with enough determination the world can pull together to &ight this common enemy" . !elieve that
man's ingenuity 5 driven in many cases !y !usiness acumen 5 can get on top o& these catastrophic issues"
And so . have !egun to thin- o& the way dar- times &ocus great minds to a common goal" 3his is exactly
what we need now: everyone has to wor- together and &ind the !est solution" 6hen 4ritain was &aced with
the prospect o& war in 'urope in the late :;H2s, the oyal Air $orce's Operational e,uirements 4ranch
determined the speci&ication &or a monoplane design to ta-e on the 0a8is" 3hey had two pro/ects competing
against each other" eginald =itchell's Spit&ire and the +aw-er +urricane, designed !y (amm, had to !e
a!le to hit an all9metal !om!er B<< times to
lethally damage it" 3he designers had to meet this challenge !y &iring :,222 rounds a minute" 4oth
succeeded" 3here are countless examples o& new technologies emerging to overcome the odds in wartime
5 &rom the invention o& cannons power&ul enough to !om!ard castle walls, to the !irth o& modern computing
among the 'nigma code !rea-ers at 4letchley Par- in 'ngland, a team led !y Alan 3uring" So why not
create a peacetime war room to &ight the new common enemy 5 runaway climate change)
3he 'nvironmental 6ar oom will !e a uni,ue com!ination o& entrepreneurial muscle, the !est possi!le
data and the power to mo!ilise resources and inspire innovation" epresentatives &rom !ig !usiness and
&inance will wor- alongside representatives &rom 'green' organisations with whom they may previously have
!een at odds" .t will !e a collection o& '!est o& class' thin-ing, !rought together &or the good o& all 5 and it will
!e truly glo!al" 3he plan is to have a small, indepedent team that wor-s closely with partners to ensure we
don't duplicate, !ut instead connect the dots on what is already happening, provide relia!le in&ormation and
help speed up the solutions"
3he war room will identi&y all the !est >and in some cases radical? ideas, map who is doing what, trac-
and prioritise the impact o& existing solutions on car!on reduction and the conservation o& ecological
systems" .t will provide analyses o& all the data collected, and identi&y and prioritise the !est options"
Deadership is paramount here" During the ,uestions and
answers at the U0 con&erence, the /ournalists were intrigued to &ind out who would lead our troops into
!attle 5 and . was as-ed several times a!out Al *ore" . de&lected the ,uestions !ecause we were still
considering who we should appoint 5 . ac-nowledged he would !e a great person to lead us in such a
!attle, !ut . wasn't sure how he might ta-e it" 6e need a 6inston (hurchill or a $ran-lin D" oosevelt &igure
5 someone with the respect, stature and voice to assert their authority"
So /ust as Virgin Unite is now in the process o& setting up a war room to tac-le disease in su!9Saharan
A&rica, they are also in the process o& creating a war room to tac-le car!on"
Should we &ail to &ind a technological solution then we must start to prepare the world &or the
conse,uences o& a &ive9degree rise in temperature and loo- at ways o& mitigating the worst e&&ects" 3he war
room must &ind radical ideas and win the glo!al community's !ac-ing, as happened when ($( gases were
!anned worldwide to deal with the hole in the o8one layer"
At the session in 0ew #or-, . introduced one idea as an example" '.t is now widely accepted that rising sea
levels, as a result o& glo!al warming, will destroy hundreds o& thousands o& homes in coastal towns all over
the world and displace millions o& the world's population" 4ut what i& today we start planning to create
massive inland la-es in A&rica, Asia, Australia, 0orth (anada and South America, using &resh water &rom
rivers that would otherwise have gone into the sea) 3hese inland seas can
!e created as sea levels start to rise with the aim o& -eeping sea levels as they are at present" 3hey will also
5 as water 5 have an added !ene&it in helping to cool the 'arth down" 3hey will help create more rain in
desert regions, which in turn will create more trees 5 which in turn will a!sor! more car!on"'
3he 'nvironmental 6ar oom would !e a!le to place a cost on such large ideas, negotiating
compensation 'costs' with individual countries" 4ut . stressed that the United 0ations would need to wor- in
partnership with the war room to ensure implementation happens" . had prepared a ,uote &rom Sir 6inston
(hurchill, who created his &amous 6ar oom in Dondon, during the Second 6orld 6ar" 'One ought never to
turn one's !ac- on a threatened danger and try to run away &rom it" .& you do that, you will dou!le the
danger" 4ut i& you meet it promptly and without &linching, you will reduce the danger !y hal&" 0ever run away
&rom anything" 0everA'
.n =arch B22E, at the suggestion o& ichard Strom!ac-, a &ormer pro&essional hoc-ey player who struc-
gold as a clean9technology entrepreneur, we decided to have a small gathering o& people who were
addressing the issue to see how we might !e a!le to /oin &orces" ichard, the chie& executive o& 'cology
(oatings, the (limate *roup and Virgin Unite invited a group o& li-e9minded !usiness people and &ormer
political &igures to the event to consider &urther opportunities" Darry Page, &rom *oogle, venture capitalist
Vinod %hosla, 'lon =us-, the creator o& PayPal, @immy 6ales, the creator o& 6i-ipedia, and 3ony 4lair 5
the &ormer 4ritish prime minister, now wor-ing
as a =iddle 'ast peace envoy 5 were among those attending"
.n America, the 'clean tech' !usiness !oom has already !egun, not only in Silicon Valley and the rest o&
(ali&ornia, !ut also in and around 4oston, around Al!u,uer,ue, 0ew =exico, and near Austin, 3exas"
Already energy investments are the third largest component o& all US venture capital &unds, and !y &ar the
&astest growing segment" 3he num!er o& companies and individuals to watch in this sector is now large, with
companies li-e Odersun, Solyndra, (lipper 6indpower and 'nphase 'nergy moving very &ast"
Shai Agassi, the &ormer president o& SAP's product and technology group, is out on his own now as the
&ounder o& 4etter Place o& Palo Alto7 he has !een trying to create the in&rastructure to operate a countrywide
&leet o& electric vehicles in .srael"
'lon =us-, the creator o& PayPal and now a space entrepreneur, tal-ed a!out his 3esla =otors, a Silicon
Valley company that ma-es electric sports cars retailing &or G:22,222" >Darry has ordered one, !ut .'m
holding o&& &or the moment as . rarely even use a car now"? +unt ams!ottom, chie& executive o& the
synthetic &uel technology company entech, tal-ed a!out his plans to ma-e !io&uels &or aeroplanes, while
6illiam =cDonough showed us designs &or a !uilding in A!u Dha!i with solar panels !uilt into the windows,
and a 6al9=art distri!ution centre with an energy9&riendly grass roo&"
3hen 3ony 4lair said something that chimed with me 5 and
made me more determined than ever to pursue the war room" +e said governments are too !usy &ire&ighting
to truly ma-e a di&&erence" '.t is &rightening with the day9to9day hustle and !ustle o& government how little
time is spent on the ma/or issues such as car!on,' he told us" $or example, the U%'s environment minister
would come in &or a meeting with him &or perhaps two hours a month i& he was luc-y" 3he (a!inet would
wor- out some short9term pro/ect and say: 'O%, let's do this or that"'
.& this is typical, then there is a truly desperate need &or the 'nvironmental 6ar oom 5 and . see the
green entrepreneurial community playing a central role in its operations"
3o run a !usiness ethically, you have to consider the e(ect of your operations on others" #ou would
never tolerate !ri!ery7 !y the same to-en, you must not tolerate casual damage to the environment"
.t too- me a while to realise this" . was hal& a&raid to loo- the pro!lem o& climate change in the eye" .t
daunted me" . thought it was too !ig &or me 5 too !ig &or anyone" And so . tried to persuade mysel& that it
didn't exist"
#ike one that, on a lonesome road Doth walk in fear and dread, 'nd having once turned round
walks on, 'nd turns no more his headQ /ecause he knows, a frightful Cend Doth close behind
him tread&
4ut unli-e the outloo- o& (oleridge's Ancient =ariner, !usiness is a!out &acing up to realities" eal
pro!lems 5 even
ones as gigantic as climate change 5 are never as &rightening as the spectres in our minds" 6e can do
something a!out glo!al warming" 6e /ust have to lose our &ear o& it" 6e have !een &ro8en in horror and
denial &or too long" 6e have to act"
0o one is as-ing you to save the planet" +ust dream up and work on a couple of good ideas" 0o
one expects you to &ind a glo!al solution to everything" +ust make a di(erence where you can" Docal
solutions have a value in themselves, and some can !e scaled up, so it doesn't matter how modest your
!udget, you can and will ma-e a di&&erence"
3hat's the good news"
0ow comes the &rightening !it"
.& you don't do this, then you will almost certainly go out o& !usiness, i& not next year, then in &ive years'
time, or ten or twenty" 3he climate is changing and the population is roc-eting" As a conse,uence the price
o& everything is &luctuating" 3he insurance mar-et is in chaos" Unpredicta!le, unexpected shortages are
distur!ing production" (hanging weather patterns are imperilling whole populations and disrupting the
economies o& entire nations" And it's going to get a lot worse !e&ore it gets !etter"
#ou'll recall that when . was descri!ing our development o& !io&uels and spacecra&t, . said that there was
no such thing as an overnight success in a new mar-et: that Virgin's early emergence in these sectors was
the conse,uence o& years o& reading and research"
3he sector we might as well call 'responses to climate change' is not a sector we can choose whether or
not to do !usiness in" .t's a sector that now em!races all o& us, whether we li-e it or not" 4ig or small, we
have to do !usiness in this area !ecause our &ailure to do so will ruin us"
.& you're not ahead o& the game, i& you're not researching the solutions to pro!lems that may a&&ect your
!usiness a decade &rom now, then you run the serious ris- that you will haemorrhage and &ail"
4ut why loo- at this through the gloomy end o& the telescope) 3he reverse is e,ually true: ma-e a
success o& yoursel& in this sector, and you will &ind yoursel& turning something that advantages everyone into
a handsome pro&it &or your company"
6ith that pro&it, you can then dream up and experiment with !igger and !igger scale solutions"
Addressing climate change is good !usiness7 and . guarantee that once you !ite the !ullet and start wor- in
this sector, you won't want to stop"
+.VKAids and climate change are issues that . have a personal passion &or and that ma-e sense &or the
Virgin *roup to get !ehind" 6e are wor-ing on other social and environmental investments, !ut the one
thing all o& our e&&orts in this area have in common is that they leverage Virgin's !iggest asset 5 the
entrepreneurial spirit o& our people" 3his spirit, coupled with the right partners and great ideas, can truly help
us ma-e a di&&erence, help communities thrive and help our planet"
.& we want a world that we can !e proud to leave to the next
seven generations, every !usiness needs to loo- at how they can drive change in every aspect o& their
operations" One last point: don%t forget to listen 5 as some o& the !est ideas will come &rom your sta&&,
customers and people on the &ront linesA
.& you ever &ancy /oining us as a partner in any o& our endeavours to ma-e the world a !etter place, please
contact us at Virgin Unite: www"virginunite"com"
7,ilog(e
;uccess
If I hadn)t badly damaged my knee as a teenager I wo(ld likely have been a s,ortsman. If I
hadn)t been dysle8ic I wo(ldn)t have left school at si8teen and created a maga@ine, which
means I wo(ldn)t have ended (, r(nning ;tudent, which means %irgin +ecords wo(ld never
have been born, which means . . .
3here are di&&erent paths that you can ta-e in this li&e, and choosing the correct path is supremely
important" And as i& that weren't pressure enough, it's no good choosing not to choose, !ecause that
approach to li&e a!solutely guarantees &ailure"
. don't thin- there is enough attention and help given to young people in li&e to set them in the right
direction" All young people deserve wise counsel" 3hey need someone who can show them a &uture" 3hey
need to !e a!le to wor- out what they can do with their lives, how they can en/oy their lives, how they can
pay &or it and how they can ta-e responsi!ility &or their actions"
. thin- it's a shame that we teach children everything about the world, !ut we don't teach them how to
ta-e part in the world, how to realise an idea, how to measure the conse,uences o& their actions, how to
ta-e a -noc-, or how to share their success" 6hat -ind o& world have we !uilt, that people can use the
phrase 'it's /ust !usiness' without challenge or contradiction)
'ntrepreneurship is !usiness's !eating heart" 'ntrepreneurship isn't a!out capital7 it's a!out ideas" A great
deal o& entrepreneurship can !e taught, and we desperately need to teach it, as we con&ront the huge glo!al
challenges o& the twenty9&irst century"
'ntrepreneurship is also a!out excellence 5 not excellence measured in awards, or other people's
approval, !ut the sort one achieves &or onesel&, !y exploring what the world has to o&&er" . wrote to someone
recently who, li-e me, is dyslexic" . said that it is important to loo- &or one's strengths 5 to try to excel at
what you're good at"
0hat you%re bad at actually doesn%t interest people, and it certainly shouldn%t interest you"
+owever accomplished you !ecome in li&e, the things you are !ad at will always outnum!er the things
you're good at" ;o don%t let your limits knock your self6conCdence" Put them to one side and push
yoursel& towards your strengths"
3his, . thin-, is sound advice &or the young" $or those o& you who've le&t youth !ehind, my advice would
!e: reread the paragraph a!ove, adding exclamation mar-s a&ter every sentence"
4ecause, in !usiness, you always have a choice, and you always have an o!ligation to choose" 6ith the
right attitude, !usiness will -eep your mind eternally young, !ecause !usiness is always changing, changes
always !ring opportunities, and you can never hide &rom the changes that are round the corner"
.n entrepreneurial !usiness, a conservative mindset will hamstring you, de&ensiveness will wea-en you
and a &ailure to &ace &acts will -ill you" 'ntrepreneurial !usiness &avours the open mind" .t &avours people
whose optimism drives them to prepare &or many possi!le &utures, pretty much purely &or the /oy o& doing
so" .t &avours people with a humane and engaged view o& the world7 people who can imagine themselves
into the s-in o& their customers, their wor-ers and the people who are a&&ected !y their operations" 4usiness
&avours people who, when they see a pro!lem or an in/ustice, try to do something a!out it" .t &avours
pragmatists over per&ectionists, adventurers over &antasists"
Done well and in the right spirit, !usiness will also !ring you success 5 whatever that is"
.ndeed, how do you measure who's truly success&ul) =y list o& the world's most success&ul people
includes Sir $reddie Da-er 5 hardly an o!vious choice, to go !y the headlines, the rich lists and all the other
paraphernalia o& !usiness cele!rity" So let's strip this particular !usiness !are once and &or all: when we tal-
a!out success, what are we really tal-ing a!out)
Are we tal-ing a!out money) As a measure o& success, money's a crude one at !est" People are always
in,uisitive a!out how wealthy other people are" .t's a &ascinating su!/ect and one that produces endless
reams o& copy and discussion" 4ut the reality is that wealth is li-e a running stream o& water" During some
seasons the &low o& money is a torrent and you're inundated with cash" 3he next moment, you've put money
in to
develop a !usiness and your cash &low dries up overnight leaving a !arren river!ed"
So even the more well9researched rich lists have to ta-e a !it o& a potshot when arriving at their &igures"
3here have !een times . was almost !an-rupt, and . was very glad to see my name in the ;unday Times
ich Dist, !ecause . thought it would assuage the !an- manager" >3he &igures were o&ten wildly o&& the mar-
!oth ways 5 !ut . wasn't complaining"? .n the last &ew years things have gone well &or the Virgin *roup" .n
B22E, it had a reach o& nearly I:B !illion"
And me) .'m rich" 3here 5 . said it" .t's ,uite an American thing to tal- a!out wealth" .n 4ritain we're still
sort o& slightly em!arrassed a!out it, and . thin- that's a good thing" 6hen . go to a party . see people, not
!an- statements, and .'d li-e to thin- that when people get chatting to me they &eel the same" 3o !e
per&ectly honest . hated the word '!illionaire' going into the title o& that show . did &or $ox" .t was a great title,
!ut it wasn't my style at all" =oney's only interesting &or what it lets you do" On paper, i& . was to sell up my
shareholdings in the companies tomorrow, . would have considera!le wealth" 4ut where would !e the &un in
that)
.& money's a poor guide to success in li&e, cele!rity is worse" 3he media li-es to personalise and simpli&y
matters 5 and that's understanda!le" .t's much easier to tal- a!out Steve @o!s at Apple, 4ill *ates at
=icroso&t or ichard 4ranson at Virgin, !ut that doesn't really ac-nowledge that there's a legion o& senior
people doing signi&icant /o!s and ma-ing ma/or
decisions every day" 'veryone wants to ma-e !usiness 'simple' and that's one o& my constant goals, !ut in
reality there are certain complexities a!out running a media company, a space9tourism !usiness or an
airline" And the &inancial implications o& running a glo!al !usiness across many /urisdictions re,uire a
su!stantial level o& expert -nowledge in accountancy, taxation and legal a&&airs, not &orgetting the .3,
mar-eting and + &unctions too" .'ve never met a ('O who had all o& those s-ills" O& course, the &igurehead
at the top does ma-e signi&icant strategic decisions !ut this is !ased on the wor- and capa!ilities o& other
people within the !usiness" 6e all still have the same num!er o& hours in the wor-ing wee-" .n success&ul
!usinesses, wor-ing hard is never con&ined to one or two people 5 you'll usually &ind a strong wor- ethic
runs right through the company"
.& neither money nor cele!rity really encapsulate what success is a!out, what a!out personal power) .'ve
!een as-ed what happens i& ichard 4ranson's own !alloon !ursts: isn't the Virgin *roup &ar too reliant on
one individual) . have /o-ingly replied that during our spell running Virgin ecords, we always &ound that
when a ma/or roc-9music artist died the records sales went through the roo&"
. have spent over thirty9&ive years !uilding the Virgin !rand, and i& . do get run over tomorrow, . thin- it will
live on without me, /ust as *oogle will live on without its &ounders, and =icroso&t will live on without 4ill
*ates" $or me, the ma/or /o! has !een done" A lot o& people wor-ed exceptionally
hard in the early years to !uild the !rand" 6ith or without me, Virgin will !e around &or many years to come"
.s this power) .n a sense, . suppose it is" 4ut the idea that . somehow 'control' the !rand is a !it sinister
and silly" . gave !irth to the !rand" .'ve nurtured and . continue to nurture it" . !rought it into !eing, and .
champion it" 3hin-ing a!out it is one o& the things that gets me up in the morning" 4ut you can't really control
ideas"
3he other thing that gets me up in the morning is the idea o& ma-ing a di&&erence" .t's why .'ve never
wanted to run a !ig company, and it's why . get huge en/oyment out o& creating and tending to lots o&
smaller ones" >. have to !e care&ul o& my terms here, !ecause airlines are hardly small companiesA 4ut .
hope !y now that you -now what .'m getting at"? Virgin, !y remem!ering what it is to !e a small
entrepreneur, has made large amounts o& positive di&&erence in many diverse !usiness areas"
. thin- that the more you're actively and practically engaged, the more success&ul you will &eel" Actually,
that might even !e my de&inition o& success" ight now, . &ind mysel& doing more and more to help
sa&eguard our &uture on this planet" Does that ma-e me success&ul) .t certainly ma-es me happy"
. hope you've &ound the thin-ing and the stories in this !oo- use&ul" . thin- you can see that my de&inition
o& success in !usiness has nothing to do with pro&its solely &or their own sa-e" 3his is very important"
;uccess for me is whether you
have created something that you can be really proud of" Pro&its are necessary to invest in the next
pro/ect 5 and pay the !ills, repay investors and reward all the hard wor- 5 !ut that's all" 0o!ody should !e
remem!ered &or how much money they have made in li&e" 6hether you die with a !illion dollars in your
!an- account or GB2 under your pillow is actually not that interesting" 3hat's not what you've achieved in li&e"
6hat matters is whether you've created something special 5 and whether you've made a real di&&erence to
other people's lives" 'ntrepreneurs, scientists and artists who died as paupers are o&ten the heroes"
Success&ul people aren't in possession o& secrets -nown only to themselves" Don't o!sess over people
who appear to you to !e 'winners', !ut listen instead to the wisdom o& people who've led enriching lives 5
people, &or instance, who've &ound time &or &riends and &amily" 4e generous in your interpretation o& what
success loo-s li-e" 3he !est and most meaning&ul lives don't always end happily" =y &riend =adi!a spent
twenty9seven years o& his li&e in prison" .& he had died there, would his li&e hold no lessons &or us)
.n !usiness, as in li&e, all that matters is that you do something positive" 3han-s &or reading 5 and en/oy
your li&e" #ou only get one"
I; A
.& you can -eep your head when all a!out you Are losing theirs and !laming it
on you,
.& you can trust yoursel& when all men dou!t you, 4ut ma-e allowance &or their
dou!ting too7
.& you can wait and not !e tired !y waiting, Or !eing lied a!out, don't deal
in lies,
Or !eing hated, don't give way to hating,
And yet don't loo- too good, nor tal- too wise:
.& you can dream 5 and not ma-e dreams your master7 .& you can thin- 5 and not ma-e
thoughts your aim7 .& you can meet with 3riumph and Disaster
And treat those two impostors /ust the same7 .& you can !ear to hear the truth
you've spo-en 3wisted !y -naves to ma-e a trap &or &ools,
Or watch the things you gave your li&e to, !ro-en, And stoop and !uild 'em up with
worn9out tools: .& you can ma-e one heap o& all your winnings And ris- it on one turn
o& pitch9and9toss,
And lose, and start again at your !eginnings
And never !reathe a word a!out your loss7
.& you can &orce your heart and nerve and sinew 3o serve your turn long a&ter they
are gone, And so hold on when there is nothing in you 'xcept the 6ill which says to
them: '+old onA' .& you can tal- with crowds and -eep your virtue,
Or wal- with %ings 5 nor lose the common touch, .& neither &oes nor loving &riends
can hurt you,
.& all men count with you, !ut none too much7 .& you can &ill the un&orgiving
minute
6ith sixty seconds' worth o& distance run, #ours is the 'arth and everything that's
in it, And 5 which is more 5 you'll !e a =an, my sonA
Rudyard $ipling
&o,yright 5cknowledgements
'very reasona!le e&&ort has !een made to contact copyright holders o& material reproduced in this !oo-" .&
any have inadvertently !een overloo-ed, the pu!lishers would !e glad to hear &rom them and ma-e good in
&uture editions any errors or omissions !rought to their attention" $or permission to reprint copyright material
the author and pu!lishers grate&ully ac-nowledge the &ollowing:
Puotation !y Sir 4rian Pitman &rom 'J0o -illingJ to !e made in oc- deal', < $e!ruary B22E, reprinted
courtesy o& the
2inancial Times
'xtract &rom :ommon 0ealth< conomics for a :rowded 3lanet !y @e&&rey Sachs pu!lished !y
Penguin 4oo-s B22E, copyright W @e&&rey Sachs B22E, reproduced !y permission o& Penguin 4oo-s Dtd
'xtract &rom #ong 0alk to 2reedom !y 0elson =andela, copyright W :;;F, :;;1 !y 0elson olihlahla
=andela" 4y permission o& Dittle, 4rown and (ompany
Puotations !y +er! %elleher ta-en &rom =uts< ;outhwest 'irlines% :raBy Recipe for /usiness and
3ersonal ;uccess
Austin, 3exas 4ard Press, :;;< cloth edition" 4roadway >andom +ouse?, 0ew #or- :;;E trade paper!ac-
edition
Puotations !y Alan Davison and Stanley Simmons in articles in Music 0eek reprinted courtesy o& Music
0eek, copyright (=Pi
Puotation &rom the ;anta /arbara Independent interview with =uhammad #unus courtesy o& the ;anta
/arbara Independent
Puotation !y =atthew Parris &rom article pu!lished in The Times B1 Octo!er B22H, copyright W The
Times reprinted courtesy o& The TimesK0. Syndication
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