‘There’s still water in the fuel,’ Eckie said. ‘But we can filter it out as we go. We’re going to have to do it every few hours.’
I hauled myself back upstairs and found Chay of all people throwing up over the side. I pulled him by the shoulder.
‘Steve’s going to stay,’ I shouted in his ear. ‘We can go on.’
‘It’s over, Richard,’ Chay shouted at me. ‘It’s fucking well over. This boat’s knackered.’
‘We’ve got to go on,’ I yelled.
For a moment we stood there, eyeball to eyeball, clutching on to each other like two old drunks. We had flecks of vomit in our beards; our eyes were red and bloodshot from the salt and the fumes; our faces were drained of colour; and our hands were raw and bleeding. With another lurch of the sea, we staggered against each other, utterly exhausted. We hated this boat; we hated this trip; we hated the sea; we hated the weather; and – right now – we certainly hated each other.
‘We’ve got to go on and do it,’ I repeated like a madman. ‘We’ve just got to do it. It’s the only way. What are you suggesting? That we get towed home?’
‘God, you’re worse than me,’ Chay said. ‘All right. We’ll give it one last shot.’
I hugged him and we both fell against the railings.
‘Right!’ Chay yelled to the crew. ‘We’re casting off.’
We all summoned up our strength again and went into action. We cast off from the refuelling boat and, with fine-tuning from Eckie and Steve, the engines roared back into life. They were coughing and spluttering and liable to cut out, but at least they worked and we didn’t have to get out the oars. We waved up at the Esso boat, and headed off into a grey light. We felt better now that we were away from the oil fumes, but we were all exhausted. I felt as if my stomach had been punched over and over again by a prize fighter. Everyone was now in his own world, fighting to get through each hour. I just kept repeating to myself that we had to get on. As well as fighting the weather and the fuel, we were all immersed in fighting our own will not to collapse.
Every four hours the fuel filters were so clogged up that they needed replacing. We stopped the engines; Steve and Eckie replaced the filters, and on we went. As hour by hour passed, it became clear that we were not going to have enough filters to make the last refuelling stop. The filters would run out and the engines would break down. We would be marooned at sea. I was in touch with a passing Nimrod (as one is!) who had taken us under its wing. These planes spend hour after hour flying over the Atlantic searching for submarines, and we were a welcome diversion. The pilot suggested that another Nimrod could come out and drop a load of filters, but they would need to get clearance from the top. I radioed Tim Powell, who was running the control centre from the Oxford Street Megastore.
‘Tim, we need help. We need some fuel filters dropped. The Nimrod has offered to do it, but they need to get clearance – right from the top.’
Within an hour, Tim had spoken to the right people at Downing Street, and an RAF Nimrod had picked up the filters from Southampton and was flying to meet us.
We didn’t hear the plane coming. It just swooped low overhead, coming straight out of the grey cloud behind us. It was huge, and although there was no sun the plane seemed to drain all the light and cast us in shadow. The Nimrod roared over us, with a rumble which shook the boat, and dropped a small drum attached to a buoy in our path. We all danced and whooped with joy. Chay cut back the engines and aimed for the little red marker. Steve picked it up with a long hook, and we hauled it on board: it was a steel drum packed with filters. On top of the filters were some chocolate bars and a little handwritten note which said: ‘Good luck!’
We radioed up to the pilot and thanked him.
‘I’ve got a TV crew on board,’ he said. ‘The whole country’s on the edge of their seat. God speed.’
We reached the third Esso ship and, with another set of full tanks and some Irish stew for us, our first hot meal in two days, we approached the last leg of the crossing with rising determination. We calculated that we had to travel at an average speed of 39 or 40 knots for the final twelve hours if we were to break the record. With our engines in the state they were, it was going to be extremely close. We battled through more heavy weather, unable to go faster than 30 knots for three hours, then the sun came out and the sea calmed. Steve and Eckie replaced the filters for the last time, and we opened the throttles and went flat out across the sea, hurtling over the waves towards the Scilly Isles.
When we passed the point where we had sunk on the previous attempt we all cheered and suddenly knew that we could do it. Five miles out from the Scillies, we were met by a posse of helicopters and then hundreds of boats of all kinds who welcomed us home. We zoomed past Bishop Rock Lighthouse at 7.30p.m. Eckie and Steve staggered up from the engine room. They were the heroes who had endured three days of pounding in a hot cramped engine room, standing ankle deep in oil while they fought to keep the engines going. Dag Pike switched off his navigational system and we all threw our arms round each other. We had done it. Our total journey had lasted 3 days, 8 hours and 31 minutes: in a voyage of over 3,000 miles, we had beaten the Blue Riband record by a mere 2 hours and 9 minutes.
16 The world’s biggest balloon
1986–1987
‘AFTER THE BIG BANG, how about a little pop?’
By 1986 everyone was heading for the City. Everyone who had bought shares in British Telecom had doubled their money.
I will never forget going into the City to see the lines of people queuing up to buy Virgin shares. We had already had over 70,000 postal applicants to buy Virgin shares, but these people had left it until the last day, 13 November 1986. I walked up and down the queue thanking people for their confidence, and a number of their replies stuck in my mind:
‘We’re not going on holiday this year; we’re putting our savings into Virgin.’
‘Go on, Richard, prove us right.’
‘We’re banking on you, Richard.’
At one point I noticed that the press photographers were taking pictures of my feet. I couldn’t understand it. Then I looked down and noticed with a shock that, in the rush to get dressed, I had put on shoes that didn’t match.
The flotation of Virgin attracted more applications from the public than any other stock-market debut issue, apart from the massive government privatisations. Over 100,000 private individuals applied for our shares, and the Post Office drafted in twenty extra staff to cope with the mail sacks. That day we heard that The Human League had gone to number one in America. Beneath our euphoria, we were worried to hear that only a small number of City institutions had applied for shares. It was the first sign of the difficulty we were going to have in our dealings with the City.
By 1986 Virgin had become one of Britain’s largest private companies, with some 4,000 employees. For the year ended July 1986, Virgin had sales of £189 million, compared with £119 million for the previous year, an increase of around 60 per cent. Our pre-tax profits were £19 million, up from £15 million. Although we were a large company, we had very little flexibility to expand: all we could do was either use up the cash we had earned, or ask our bankers for a bigger overdraft. I watched a number of other private companies sell their shares on the stock market: Body Shop, TSB, Sock Shop, Our Price, Reuters, Atlantic Computers … There was practically a new company every week, and the stock exchange had to set up a queuing system so that, in between the massive privatisations of British Telecom, British Airways and BP, there was an orderly procession.
When we arrived back from the Atlantic crossing, the entire country seemed to have enjoyed the challenge. Mrs Thatcher expressed an interest in seeing the boat, and I offered her a ride up the River Thames. We managed to win approval to break the five-mile-an-hour speed limit on the Thames, and Tower Bridge opened her gates as Atlantic Challenger came whizzing through. We picked up Mrs Thatcher and, together with Bob Geldof and Sting, we did a lap of honour up to the Houses of Parliament and b
ack, as other boats on the river blared their horns and the fire brigade pumped great plumes of water into the air in salute. Mrs Thatcher, the ‘Iron Lady’, stood on the deck beside me and faced into the keen wind.
‘I must admit,’ she said, as we accelerated up the river, ‘I do enjoy going fast. I love powerful boats.’
I looked across at her. She was indeed enjoying herself. Her profile cut through the wind like a bowsprit, and not a single strand of hair had blown out of place.
Although we had raised £30 million from the stock-market flotation, I soon began to feel that we had made the wrong decision. A few weeks after our flotation in November, our investment banker at Morgan Grenfell, Roger Seelig, was investigated by the Department of Trade and Industry over his role in Guinness’s takeover of Distillers, which he had orchestrated in January. Roger resigned from Morgan Grenfell and, although the case against him was eventually abandoned, his career was ruined. Without being able to use Roger as a touchstone, I began to lose faith in the City and the onerous demands they made of us.
Firstly, the City had insisted that Virgin appoint some nonexecutive directors. Sir Phil Harris was recommended. He was a self-made man who had made a fortune from selling carpets. We also appointed Cob Stenham, who had been finance director of Unilever and was a well-respected banker. I found it difficult to comply with all the formality the City insisted we adopt. I was used to chatting with Simon and Ken about which bands to sign, and then letting them get on with it. Virgin board meetings had always been highly informal affairs. We met on Duende, or at my house in Oxford Gardens, or while we were on a weekend together. I found our business was not one that could be boxed into a rigid timetable of meetings. We had to make decisions quickly, off the cuff: if we had to wait four weeks for the next board meeting before authorising Simon to sign UB40, then we would probably lose them altogether.
I also had a number of disagreements with Don, notably about dividends. I was extremely reluctant to follow British tradition and pay out a large dividend. I preferred the American or Japanese tradition whereby a company concentrates on reinvesting its profits to build itself and increase share value. To me, a large dividend meant a loss of cash which would be better employed within Virgin than by paying it away. It seemed to me that our outside shareholders had entrusted their money to Virgin in order for us to make it grow, not for us to hand 5 per cent of it back on a plate – which would be taxed as income and so immediately lose 40 per cent of its value.
This may sound like a petty argument, but it illustrates the general loss of control I experienced. Most people think that 50 per cent of a public company is the key to controlling it. While this is true in theory, to a large extent you lose control just by having to appoint nonexecutive directors and generally giving up your time to satisfy the City. Previously, I had always felt confident about any decision we made, but now Virgin was a publicly quoted company, I began to lose faith in myself. I felt uneasy about making the rapid decisions I have always made, and wondered whether every decision should be formally ratified and minuted at a board meeting. In many ways 1987, our year of being a public company, was Virgin’s least creative. We spent at least 50 per cent of our time heading off to the City to explain what we were doing to fund managers, financial advisers and City PR firms, rather than just getting on and doing it.
I also felt very responsible to the people who had invested in Virgin shares. Phil Collins, Mike Oldfield and Bryan Ferry had bought shares; Peter and Ceris, my neighbours and close friends at Mill End, had invested some of their life-savings in Virgin; and my family, my cousins, and many people who had come across me in various walks of life, had all bought shares. Trevor Abbott had borrowed £250,000 from me to buy Virgin shares, and, although he knew the figures even better than I, I still felt responsible in case the shares fell in value.
I would not have minded if the City analysts had been correct in their assessment that Virgin was doing badly, or that the management was incompetent. What began to infuriate me was that – no matter how often Simon, Ken or I tried to explain that over 30 per cent of our income came from royalties from the back catalogue, and even if we failed to release another record we would still enjoy a stream of earnings; or that 40 per cent of our earnings in France came from French singers rather than Boy George or Phil Collins, giving us a steady local income – the City continually oversimplified how Virgin worked. The analysts still assumed that Virgin was wholly dependent upon me and Boy George. Simon and Ken started taking recordings to the City analysts’ meetings and playing them UB40, The Human League and Simple Minds, but they remained unimpressed. Virgin shares, which had started trading at 140 pence, soon slipped down to 120 pence. The faith which the people in the queue had placed in me, and the faith which the Virgin artists and staff placed in me by spending their own money on buying Virgin shares, began to overwhelm me.
As 1987 progressed, the Virgin share price recovered to around 140 pence but never took off. We began to use the money we had raised from the flotation to make two investments: the first was to establish a proper Virgin subsidiary in America; the second was to start stalking Thorn EMI with a view to launching a takeover bid for the company. Virgin Records America Inc. was not a cheap investment. We had learnt the hard way before and this time we invested heavily. During 1987 we managed to release four top-twenty singles and one gold album in America. Although Virgin America lost us money in 1987, it was a long-term investment and we felt sure that eventually we would make far more money from having our own record company there than from licensing our best artists to American companies.
The second challenge, stalking Thorn EMI, had to be done with care. We felt that the EMI record label was managed in a rather sleepy way and that their incredible back catalogue, which included The Beatles, could be run far more profitably. The Thorn EMI Group as a whole was valued at around £750 million, three times the size of Virgin. Eventually I thought that the best thing to do was go round and have a chat with Sir Colin Southgate, the managing director of Thorn EMI, and ask him in a friendly way whether he would like to sell us EMI Music.
‘Shall we come along?’ Simon and Ken asked.
‘It might be a bit overbearing,’ I said. ‘I’ll slip in and see him face to face, and then if he’s keen we can all meet him.’
I called Sir Colin and arranged a meeting at his office in Manchester Square. I was shown up to the top floor of the office building, and ushered into a room. It fell silent. I was confronted by at least twenty unsmiling faces. They lined one side of the table, their pinstriped suits shoulder to shoulder, forming an unbreachable wall. Sir Colin shook my hand and peered over my shoulder to see whether there was anyone else.
‘It’s just me,’ I said. ‘Where shall I sit?’
One side of the long, gleaming mahogany table was empty. There were ten or fifteen memo pads and sharpened pencils laid out on it. I sat down and looked across at the sea of faces.
‘Well, let me introduce you,’ Sir Colin began. He rattled off the names of bankers, lawyers, accountants and management consultants.
‘I’m Richard Branson,’ I introduced myself with a nervous laugh. ‘And the reason I’m here is that I just wondered whether you would like to … might like to …’ I paused. The necks opposite all craned towards me. ‘Might like to sell your EMI subsidiary,’ I said. ‘It seems to me that Thorn EMI is such a big group and that EMI Music might not be your top priority. You have so much else going on. That’s all.’
There was a hushed silence.
‘We’re quite happy with EMI,’ Sir Colin said. ‘We are taking all steps to run it as a leading member of the Thorn EMI Group.’
‘Oh well,’ I said. ‘I thought it was worth a try.’
And with that I stood up and left the room.
I went straight round to see Simon and Ken at Vernon Yard.
‘They’re serious,’ I said. ‘They’re on an emergency footing. They thought I was going to bid for them. They practically had t
heir bayonets fixed. If Sir Colin’s so worried that he brought all his heavies along, then they clearly are vulnerable and I think we should have a crack at them.’
Simon and Ken agreed with me. Trevor arranged for us to go and see Samuel Montagu, another investment bank. Samuel Montagu introduced us to Mountleigh, a property group, and suggested that we could make a joint bid. Since Sir Colin would not sell EMI separately to us, we could bid for the whole Group with Mountleigh and then split it up: in a nutshell, Mountleigh would take the national chain of television-rental shops and we would take EMI Music.
We knew that our first year’s profits as a public company were on course to more than double, at over £30 million (despite the cost of setting up in the States), and so we planned to release these results in October at the same time as announcing our bid for Thorn EMI.
During the course of the summer, Trevor arranged a £100 million loan with the Bank of Nova Scotia and we slowly began buying shares in Thorn EMI, paying about £7 a share as we built up a stake which we could use as a launch pad for the bid. As the stock market soared higher through the summer months and some rumours began to circulate that Thorn EMI was vulnerable to a bid, I began to worry that if we left it until October we might be too late. There was not much I could do about it, because I was determined to set off on a challenge which many people thought would be the end of me. A challenge as daunting and as daring as anything in the world of business. Per Lindstrand and I were planning to fly across the Atlantic Ocean in a hot-air balloon. Until I returned safe and sound, nobody was going to take the idea of Virgin bidding for Thorn EMI too seriously.
It all dated from a telephone call I had received on my first day back at the office after the Atlantic Challenger crossing.
‘It’s someone called Per Lindstrand,’ Penni said. ‘He says that he’s got an incredible proposal.’
I picked up the phone.
‘If you thought that crossing the Atlantic by boat was impressive,’ said a stilted, Swedish voice, ‘think again. I am planning to build the world’s largest hot-air balloon, and I’m planning to fly it in the jet stream at 30,000 feet. I believe that it can cross the Atlantic.’
Losing My Virginity: How I Survived, Had Fun, and Made a Fortune Doing Business My Way Page 21
