Virgin Money may appear to have been an incongruous departure for Virgin, the rock’n’roll company: it was a lateral leap in the same way as it had been from records to airline. But it was still all about service, value for money and offering a simple product. The vision I have for Virgin does not run along the orthodox lines of building up a company with a vast head office and a pyramid of command from a central board of directors. I am not saying that such a structure is wrong – far from it. It makes for formidable companies from Coca-Cola to Pearson to Microsoft. It is just that my mind doesn’t work like that. I am too informal, too restless, and I like to move on.
People have always asked me what the limits to Virgin are, and whether we haven’t stretched the brand name beyond its natural tolerance. With monotonous regularity, they point out that there is no other company in the world that puts its name to such a wide variety of companies and products. They are absolutely right, and it remains something of which I am proud.
It doesn’t stop me thinking about the question nonetheless, and the answer isn’t easily explicable. I have always lived my life by thriving on opportunity and adventure. Some of the best ideas come out of the blue, and you have to keep an open mind to see their virtue. Just as an American lawyer called me to suggest setting up an airline in 1984, a Swedish ballooning fanatic asked me to fly across the Atlantic with him in 1987. The proposals come in thick and fast and I have no idea what the next one will be. I do, however, know that, if I listen carefully enough, the good ideas somehow all fit into the framework that Virgin has become. By nature I am curious about life, and this extends to my business. That curiosity has led me down many unexpected paths and introduced me to many extraordinary people. Virgin is a collection of such people and its success rests on them.
The more diffuse the company becomes, however, the more frequently I am asked about my vision for Virgin’s future. I tend either to avoid this question or to answer it at great length, safe in the knowledge that I will give a different version the next time I am asked. My vision for Virgin has never been rigid and changes constantly, like the company itself. I have always lived my life by making lists: lists of people to call, lists of ideas, lists of companies to set up, lists of people who can make things happen. Each day I work through these lists, and it is that sequence of calls that propels me forward. Back in the early 1970s I spent my time juggling different banks and suppliers and creditors in order to play one off against the other and stay solvent. I’m still living the same way, but I’m now juggling bigger deals instead of banks. Once again, it is only a matter of scale.
As anyone in my office knows when I’ve misplaced it, my most essential possession is a standard-sized school notebook, which can be bought at any stationery shop on any high street across the country. I carry this everywhere and write down all the comments that are made to me by Virgin staff and anyone else I meet. I make notes of all telephone conversations and all meetings, and I draft out letters and lists of telephone calls to make.
Over the years I have worked my way through a bookcase of them, and the discipline of writing everything down ensures that I have to listen to people carefully. Flicking back through these notebooks now, I see some ideas that escaped me: I was asked to invest in a board game called Trivial Pursuit and a wind-up radio. But, when I turned down the offer to become an underwriting name at Lloyds Insurance, my guardian angel must have been looking after me.
Whenever I’m on a flight or a train or in a record store, I walk around and ask the people I meet for their ideas on how to improve the service. I write them down and, when I get home, I look through what I’ve written. If there’s a good idea, I pick up the phone and implement it. My staff were maddened to hear that I had met a man on the airport bus who suggested that we offer onboard massages – and please could they organise it? They tease me and call it ‘Richard’s Straw Poll of One’, but, time and again, the extra services that Virgin offers have been suggested to us by customers. I don’t mind where the ideas come from as long as they make a difference.
I also insist that we continually ask our staff for any suggestions they might have, and I try my hand at their jobs. When I tried pushing a trolley down the aisle of a jumbo, I found I crashed into everyone. When I talked to the crew about this, they suggested that we introduce a more waitress-style service and keep the trolleys to a minimum. As it turned out, by getting rid of trolleys altogether in Upper Class, we were able to use up some of the aisle space to provide the longest and largest seats in the air.
My vision for Virgin was ultimately summed up by Peter Gabriel, who once said to me, ‘It’s outrageous! Virgin is becoming everything. You wake up in the morning to Virgin Radio; you put on your Virgin jeans; you go to the Virgin Megastore; you drink Virgin Cola; you fly to America on Virgin Atlantic. Soon you’ll be offering Virgin births, Virgin marriages, Virgin funerals. I think you should rename Virgin the “In and Out Company”. Virgin will be there at the beginning and there at the end.’
As ever, Peter, who is an astute businessman as well as a gifted musician, was very close to the truth. He had no idea at the time that we had two hundred people down in Eastbourne working on a range of Virgin cosmetics, another team designing a range of Virgin clothes, or that we were just about to bid for two British Rail franchises that would make us the largest train operator in Britain. I doubt that we’ll ever go into Virgin funerals, but Virgin Births has a certain ring to it. If there’s a good business plan, limited downside, good people and a good product, we’ll go for it.
In some ways it all boils down to convention. As you might have noticed, I do not set much store by such so-called wisdom. Conventionally, you concentrate on what you are doing and never stray beyond fairly narrow boundaries when running a company. Not only do I find that restrictive, I also think that it’s dangerous. If you only run record shops and refuse to embrace change, when something new like the Internet or MP3 is launched you will lose your sales to the person who makes use of the new medium. Even in the heady days of 1999 I felt it was far better to set up your own Internet operation to which your record shops lost business than lose it to somebody else’s Internet operation. Various outside advisers did try to get us to launch an Internet site, bizarrely suggesting that we do this without using our name. ‘This is the age of Currant Bun, Handbag and Jamjar,’ they said. They just didn’t understand brands.
This partly explains the jigsaw of companies we have. As well as protecting each other, they have symbiotic relationships. When Virgin Atlantic starts a flight to South Africa, I find that we can launch Virgin Radio and Virgin Cola there. In the same way, we can use our experience in the airline industry to make buying train tickets easier and cheaper. We can draw on our experience of entertaining people on planes to entertain people on trains.
Despite employing around 40,000 people, Virgin is not a big group – it’s a big brand made up of lots of small companies. Our priorities are the opposite of our large competitors’. Convention dictates that a company should look after its shareholders first, its customers next, and last of all worry about its employees. Virgin does the opposite. For us, our employees matter most. It just seems common sense to me that, if you start off with a happy, well-motivated workforce, you’re much more likely to have happy customers. And in due course the resulting profits will make your shareholders happy.
Convention also dictates that ‘big is beautiful’, but every time one of our ventures gets too big we divide it up into smaller units. I go to the deputy managing director, the deputy sales director and the deputy marketing director and say, ‘Congratulations. You’re now the MD, the sales director and the marketing director of a new company.’ Each time we’ve done this, the people involved haven’t had much more work to do, but necessarily they have a greater incentive to perform and a greater zest for their work. The results for us have been terrific. By the time we sold Virgin Music in 1992, we had as many as fifty subsidiary record companies, and not one of them had more than
sixty employees.
But there is little point in looking back, except to note that, since then, Ken Berry consolidated and made Virgin Music the most profitable jewel in EMI’s crown, before moving on early in 2002. For us, we were now free to start again with V2 Records, using the same techniques and skills. Our first signing may not have made quite the same impact as Mike Oldfield, but The Stereophonics were still named Best Newcomers in the Brit Awards for 1998, and have gone on to great things since.
The Virgin way has been to develop many different ventures and grow organically. For most of our companies, we have started from scratch rather than merely buying them ready-made. We want each of the Virgin subsidiaries to be an efficient, manageable size. When it comes to setting up new companies, one of my advantages is that I don’t have a highly complicated view of business. When I think about which services I want to offer on Virgin Atlantic, I try to imagine whether my family and I would like to buy them for ourselves. Quite often it’s as simple as that.
Of course life becomes more complicated when you move away from organic growth. In recent years Virgin has bought companies to add to the ones that we have set up. The purchase of MGM Cinemas was the first big acquisition we made, and we also bought two substantial British Rail train franchises. While we were able to fix the cinema chain relatively quickly, before selling it to the French company UCI, the trains are a much longer-term prospect. In some ways we became a victim of our own success in that the train passengers expected that, as soon as Virgin had taken over the running of the trains, miraculous change would take place. Unfortunately, the logistics of the task were against us: our two train companies had 3,500 employees and we needed to build a completely new fleet of trains and at the same time negotiate with Railtrack over how they could upgrade the tracks and signalling.
Despite a difficult time in the railway industry as a whole, we’re confident that Virgin Rail will come to be seen as one of the best things Virgin ever did with its brand.
30 Diversity and adversity
1998–2005
AN ENORMOUS AMOUNT has happened in the last decade. This book opens with my first attempt to fly around the world in a balloon, a trip that ended up in the deserts of Algeria. It was my last ballooning trip, at the end of 1998, however, which finally knocked some sense into me. I realised that it was perhaps time to put to better use everything I’d learned during my personal adventures. However, it had been a magnificent trip.
When we were about to set off, someone suggested to me that I keep a diary, and I’ve dusted that down to use here. Rather than cut it, I’m going to let you see it as I wrote it, so that you can get a sense of what it’s like to be adrift, thousands of feet above the surface of the Earth, with just the wind to power you.
Day 1, 18 December 1998
This is a daily diary for Theo, my godson, who saw us lift off today from Marrakech, for Lochie, India, Woody, for all my special nephews and nieces, and for my children Holly and Sam.
The delightful Moroccans welcomed us like brothers. Holly and Joan arrived at the airport. The balloon looked like a magnificent mosque and the sun was rising up over the Atlas Mountains. Strangely, I wasn’t enormously nervous on this occasion: we’d had such a good team planning this. We’d been through so much heartache in the past that I really felt that this time we had a good chance. The only serious problem was that last night the Americans and British had started bombing Iraq. And we are due to fly along the Iraqi border in thirty hours’ time – some fifty miles from it.
We have Bob Rice, the best weatherman (meteorologist) in the world. He believes he can help us find the winds to carry us right along the border without crossing into it. I’ve promised him that we will stuff him instead of the turkey this Xmas if he gets it wrong. That is if we are not already stuffed ourselves.
Almost all of my closest friends and family, except Sam, who had to be at school, had flown in to see us off, after having just travelled all the way with us to the Caribbean the day before to go on holiday. The moment we arrived there, I was told to go all the way back because we had found the perfect weather. Weather so perfect that, if nothing goes too wrong, we could be back on my grandfather’s birthday – Boxing Day.
We arrived to a wonderful welcome of musicians, camels, jugglers and even flying carpets. Alex Ritchie’s children, Alistair and Duncan, my daughter Holly and Per’s daughter Jenny were together to press the button to launch us into the air. We put on our parachutes. We said our goodbyes – to my mum and dad, my brother-in-law, my daughter and my friends. Tears were in their eyes.
Countdown – 10–9–8–7–6–5–4–3–2–1 – then lift-off!
We gently climbed 2,000 feet. The door was still open. Everyone was clapping and cheering. Then suddenly we started to sink: we had hit a weather inversion. We burned hard to warm the helium. We burst through the inversion. I realised we had overburned.
We were shooting up and the bottom of the balloon was smouldering – 1,700 feet a minute, 1,800 feet, 1,900 feet – until at last we were slowing, but the liquid burners had burned holes in the bottom of the hot-air balloon. Fortunately for us they were right at the bottom. It was the helium balloon that was the critical one. We could fly on: ugly holes, but nothing to stop us.
It’s wonderful. We are flying up with the birds and we are on our way. Everything seems to be working: we are up to flight altitude and the capsule has pressurised and the balloon has not burst. We are on our way at the beginning of a magnificent adventure, and there below us are the beautiful Atlas Mountains covered in snow.
Day 2, 19 December 1998
For hours we had a magnificent flight watching the massive range of the Atlas Mountains that stretches across the whole of the north of Africa, from Morocco across Algeria, Libya and almost, I believe, to Egypt. We bade farewell to the Moroccans after about seven hours of flying and then headed out over Algeria.
Algeria has become a very sad country due to a terrible civil war that is going on. We were plunged into that two years ago when our balloon failed at night and we had to land. But tonight we’re flying along the Atlas Mountains, over the rugged desert where Alex and I had once had to throw everything we had out of our balloon to stop a rapid descent – we even threw out an envelope full of dollars! Alex saved our lives on that occasion by climbing out on the roof and releasing fuel tanks just before we hit the deck.
This time everything seemed to be going well.
Almost too well! When it began to get dark and the helium above us cooled, we turned on the burners. Instead of plunging, as we had on our last attempt around the world, the heat stopped any descent and the flames lit up the Arabian skies around us. We had to be careful not to fly higher than we had during the day or the heat would vent the helium and shorten the time we had in the sky. So we took it in turns to fly during the night.
Then, very tired, we suddenly had a major spanner thrown in the works. A message from Libya came through saying they had withdrawn our right to fly over their country. It was night-time, pitch black, and we could never land before crossing their border. Steve, Per and I debated what we could do about it. If we had gone very low we might have been able to crawl around the south of Libya, but that would mean abandoning our dreams. In the end we decided to slow up the balloon by dropping lower to give us time to try to persuade Colonel Qaddafi, who rules Libya, that ours is a sporting mission undertaken in the interests of peace. The King of Jordan had been a great help to us previously, and I had also been honoured in the past to know Nelson Mandela – and I knew he knew Colonel Qaddafi quite well. So my wonderful secretary Sue opened up my office in the early hours of the morning and got hold of their telephone numbers.
Our next concern was the realisation that they would all be asleep. The King of Jordan is unwell with cancer, and Nelson Mandela is not a young man, so I decided to write one of the most important letters in my life to Colonel Qaddafi.
Excellency
I am making this personal and direct
appeal to you from the ICO Global Challenger Balloon in which the general post and telecommunications company of Libya has a significant investment.
A mutual friend of ours, his Royal Highness King Hussein of Jordan, spoke to you about my plans to try to circumnavigate the globe in a balloon. You graciously granted us permission to cross your country.
Early today we took off from Morocco in the certain knowledge that we had permission to overfly your country. We would not have done so had we not had the permission and goodwill of both Algeria and Libya. We are currently over Algeria and we will cross your border in the early hours of this morning.
Libyan overflight clearance permit OVG11@01001 was graciously extended on 20 July 1998 to us for this flight. Your Air Traffic Control personnel have just informed us that this permission has been rescinded. We obviously understand that they have every right to do this, but I’m afraid that it is impossible to land a balloon at night due to the icing that forms on the helium valve. We are unable to vent the helium to descend.
Because of this emergency condition, we simply do not know how to avoid crossing your airspace. We hope that you will grant us emergency permission under these circumstances via your air-traffic control services.
Losing My Virginity: How I Survived, Had Fun, and Made a Fortune Doing Business My Way Page 37
