Branson, Richard

(1950-)
Virgin Group

Overview

Richard Branson is the self-made British billionaire who began Virgin Records and Virgin Atlantic Airways, among a host of other enterprises. He chairs the Virgin Group, which is the umbrella over Virgin Interactive, Virgin Megastores, Virgin Cola, and other divisions. Branson is also noted for the adventurous spirit he brings to both his work and his personal life. He has embarked on record-setting boat trips and hot air balloon escapades to boost publicity as well as for his own enjoyment. Due to his entrepreneurial spirit and enormous wealth, he is known as the "Bill Gates of Britain."

Personal Life

Richard Branson was born July 18, 1950 in Surrey, a London suburb, to Ted and Eve Branson. Branson's father, like his grandfather and great-grandfather, was a lawyer, and his mother was a former ballet instructor, glider pilot, and flight attendant. This combination undoubtedly made an impression on her young son, who would grow up to head a music label and airline, and develop a love of hot air ballooning and sky diving. Branson's parents encouraged him to set high goals for himslf; in fact, his mother used to tell her friends that her son would become prime minister of England some day. As a boy, Branson was an avid athlete who often put more time into sports than studies.

Bored with school, Branson set his sights on business as an adolescent, growing Christmas trees and breeding birds. His father, however, wanted him to study for college entrance exams and sent him to an exclusive boarding school. At age 15, Branson introduced Student, a liberal current events and culture magazine that he edited and published while attending Stowe. Before long, luminaries such as Jean-Paul Sartre, Alice Walker, and Robert Graves were submitting writings, and Branson landed interviews with famous figures such as actress Vanessa Redgrave, writer James Baldwin, and psychoanalyst R. D. Laing. When Branson dropped out of school at age 16 to devote himself to the periodical, his headmaster reportedly told him, "Branson, I predict that you will either go to prison or become a millionaire."

Branson's first marriage in 1972 to American Kristen Tomassi ended in divorce. He later met Joan Templeman, with whom he had a son, Sam, and a daughter, Holly, they married in 1989. Though he affects a swashbuckling persona and flirtatious attitude, Branson is reportedly a devoted family man. In fact, one British poll named him, after Mother Theresa, the person most suitable to rewrite the Ten Commandments.

Branson has a home in the Holland Park section of London and a country home in Oxfordshire, where he entertains the likes of Margaret Thatcher, Mick Jagger, and Boy George. In 1968, Branson founded the Help Advisory Centre, which gives counseling on birth control and sexually transmitted diseases. He is also involved in a number of other causes, including Parents Against Tobacco and AIDS education. In the late 1980s, Prime Minister Margaret Thatcher named him chair of UK 2000, an environmental group.

Career Details

Though Branson began his career as a free-wheeling liberal journalist with Student,, his hippie days were numbered. "I never had any interest in being a businessman," Branson commented in Business Week. "I started out wanting to edit this magazine. But the business side became all-important, and I realized that if I didn't get all that sorted out, I wouldn't be able to be an editor." To help raise funds, he began selling advertising. Operating without an office or a phone, he would use a pay phone and convince operators that the slot took his coins but did not provide a connection. This way, he saved money and connected to potential clients without them hearing change clinking into the phone.

Though Student got off to a good start, ad revenues were lagging by the late 1960s. Inspired by the enormous success of a record ad that had run in the magazine, Branson started a mail-order music company to keep his magazine afloat. He and friend Nik Powell thus began Virgin Records in 1970. The discount record firm was the first such business in England and was an immediate hit. Branson decided to shut down the magazine and concentrate on his new business. When a postal strike threatened Virgin's mail-order profits, Branson and Powell opened their first record shop on Oxford Street in London.

As Virgin Records became profitable, Branson and Powell were fined about $90,000 for tax evasion. Branson spent a night in jail, and his parents mortgaged their home to post his bail. "One night in jail teaches you that sleeping well at night is the only thing that matters," Branson remarked to Echo Montgomery Garrett in Success. "Every single decision since has been made completely by the book." To pay the fines, Branson and Powell expanded their chain of stores.

In 1971, Branson began working with his cousin, Simon Draper, to organize Virgin's own record label. With Branson supplying the business know-how and Draper handling the artistic decisions, they built a studio in 1971 and in 1973, recorded the first original album on the label. Mike Oldfield's 49-minute song "Tubular Bells" was a hit in Britain, selling over 7 million copies. The haunting instrumental effort was later used in the film The Exorcist, bringing instant acclaim to the fledgling firm that would later become the sixth largest record label in the world.

Virgin Records shot further into the limelight in 1977 when it signed the rowdy British punk rock band the Sex Pistols, dropped from two other labels due to their outlandish behavior and radical music. The risk paid off, gaining Virgin a reputation for signing up-andcoming acts. After a brief dry spell, in 1982 Virgin signed The Culture Club, with its eccentric lead singer Boy George, who became a pop icon for the 1980s. The band sold millions, and Virgin continued to sign groups with an unmistakable "Eighties" sound, including the Human League and UB40.

In 1984, businessman Randolph Fields approached Branson to ask for help starting up a new airline. Fields proposed an all-business class operation flying from London to New York and offered Branson a 75 percent stake in return for financing. Eager to branch out from the music business, Branson ignored his advisers' initial objections and went ahead with the deal.

Branson opened Virgin Atlantic Airways in June of 1984, flying passengers from London's Gatwick Airport to Newark, New Jersey, for the discount ticket price of $189—far below competitors' prices of $579. Virgin even offered such frills as champagne, live bands, and seat-back video screens. To gain attention for his new venture and establish a thrilling image for the airline, Branson began performing publicity stunts.

Chronology: Richard Branson

1950: Born.

1965: Began publishing Student magazine.

1970: Cofounded Virgin Records mail-order business.

1971: Virgin Records built first studio.

1973: Virgin Records produced first original album.

1977: Virgin Records signed alternative rock-band the Sex Pistols.

1984: Founded Virgin Atlantic Airways.

1986: Broke transatlantic speed record for powerboats.

1987: Made first transatlantic hot air balloon voyage, with Per Lindstrand.

1991: Became first, with Per Lindstrand, to cross Pacific Ocean in a hot air balloon.

1992: Sold Virgin Records to Thorn EMI for $1 billion.

1997: Virgin entered ventures with CBS, Kinko's, and Royal Bank of Scotland.

In 1985, Branson tried to break the transatlantic powerboat speed record but crashed and sank just 150 miles from his destination. The next year, he set out again and broke the world's record in the summer of 1986 with a time of three days, eight hours, and 31 minutes. In 1987, he almost died when he pulled the wrong ripcord while skydiving. Also that year he embarked on the first transatlantic hot-air balloon ride with Swedish aeronaut Per Lindstrand. Though they made it across the ocean, they crashed, landing in a group of Royal Navy seamen who came to their aid. In 1991 the pair were the first to cross the Pacific by hot air balloon. They landed about 1,800 miles from their intended touch-down and were stranded in the Northwest Territories of Canada on a frozen lake for about six hours.

Meanwhile, Branson's Virgin Records in the 1980s grew by four times its size in four years. In 1987, Branson decided to expand Virgin into the United States. He sold the stock for an immediate profit but then took a loss when the market crashed in October of 1987. He pulled back and made the company private again, but in March of 1992 sold the division to Thorn EMI for about $1 billion, making him one of the richest men in the world at this time.

Meanwhile, in 1983, Branson had launched Virgin Vision, a film and video distributor. This company later evolved into Virgin Communications. Branson formed Virgin Airship & Balloon in 1987 and began opening Virgin Megastores the following year. Also in 1988, he opened Virgin Hotels, continued to build recording studios, and added a new music division, Virgin Classics. In 1991 Virgin Publishing was formed, combining W. H. Allen, Allison & Busby, and Virgin Books.

Mergers and joint ventures with firms around the globe abounded. In 1994 Virgin Retail Group formed Virgin Cola, Ltd. to produce and sell food and beverages under the Virgin brand name. That same year, Virgin Trading Company, in cooperation with William Grant & Sons, entered an agreement to market Virgin Vodka in Britain. Virgin Atlantic in 1995 partnered with Malaysia Airlines to fly from London to Kuala Lumpur and Australia. In March of 1995, the conglomerate introduced Virgin Personal Financial Service as a joint venture with Norwich Union to sell low-cost financial services; that same year, Virgin went in with a few others to buy MGM Cinemas.

In 1997, Virgin formed several important partnerships. In July, Virgin entered an agreement with Kinko's, the copy shop and office services business, to open stores in Britain and France. Also in September, Virgin Century Television partnered with CBS, and Virgin bought 55 percent of the London Broncos rugby team, with Branson becoming chairman of the team. In October, Virgin joined with The Royal Bank of Scotland to launch Virgin One, a banking service that offered combined savings and borrowing.

In late November of 1997, Virgin Group was responsible for producing the commemorative album Diana, Princess of Wales Tribute, which raised over $100 million for charities after the princess's death. Virgin also has holdings in bridal shops, radio, railroads, interactive video games, and modeling.

Social and Economic Impact

With the start-up of Virgin Records, Branson was simply trying to get into a business that he knew could turn a profit. Little did he know that a few decades later he would be one of the richest and most influential men in the world, with a hand in an array of global businesses. Thanks in part to his willingness to take a risk on new bands, he helped popularize punk rock and new wave music and made his company into a global conglomerate. When Julie Baumgold in Esquire asked how he built such an empire, he replied, "I immerse myself in getting the business set up and am very involved the first three or four months, get good people to run it and give them a stake in the company and a lot of freedom, and then step back and move on to the next."

As of 1998, Virgin and its various divisions employed about 15,000 people in 22 countries. Though the stock is not public, estimates claim that Branson is probably worth almost $3 billion. Though his holdings are gigantic and varied, Branson prefers to operate each as its own small company. He told Echo Montgomery Garrett in Success, "Once people start not knowing the people in the building, and it starts to become impersonal, it's time to break up a company."

Indeed, Branson's unconventional management style emphasizes his employees. He socializes with them, asks them to call him by his first name, and encourages them to have fun at their jobs. "If you can motivate your people," he explained to Manfred F. R. Kets de Vries in Across the Board, "you can get through bad times and you can enjoy the good times together. If you fail to motivate your people, your company is doomed not to perform well." Branson enjoys promoting and recognizing good people—on one occasion, for example, he rewarded the organizational skills of a cleaning woman by promoting her to management.

Virgin Atlantic Airways, Branson's crown jewel, was flying almost a quarter of all passengers between London and New York by 1995. Virgin's personalized service and abundance of amenities set it apart from other airlines. "America's airlines are too big," Branson told David Sheff in Playboy. "They get worse as they get bigger . . . . They have these sprawling routes, and they have become impersonal, and, for the passengers, depressing." He takes pride in not making customers wait in long lines, and enjoys offering free limousine service to business class travelers.

Branson, worth about $3 billion, is one of the biggest businessmen in Britain, and his Virgin brand is getting more and more ubiquitous. An article in the Sunday Telegraphnoted that a person could "board a Virgin Atlantic flight in New York, relax on board with a Virgin V2 CD and a glass of Virgin cola, land in Britain, take a Virgin Railways train, bump into a supermodel form Branson's agency, Storm (possibly even Kate Moss or Elle McPherson), catch a movie with her at a Virgin Cinema, send her off to the one-stop wedding shop Virgin Bride to book a Virgin travel honeymoon . . ." the list continues. Needless to say, Branson has indeed left his mark on British business, and since the 1980's, with his spiraling number of mergers and joint ventures, has had a large hand in world economy as well.

Sources of Information

Contact at: Virgin Group
120 Campden Hill Rd.
London W8 7AR England
URL: http://www.virgin.com/

Bibliography

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