Richard Branson: Like a Virgin

My first retail business grew out of my constantly being chased out of record shops when my only crime was trying to spend my precious pocket money. We opened the very first Virgin Records shop in London, determined to create an environment where kids (our customers) would want to hang out.

Back then teenagers would spend hours over a single espresso in the pre-Starbucks genre coffee bar. This inspired us at Virgin Records to throw a few beanbags around the place, crank up the volume and transform the music-buying experience into a fun trip. It’s interesting that the big bookselling chains took another thirty years to catch on to the same notion!

The trick is always to look at your business or brand from the outside in. Instead of looking strictly through the prism of the latest quarterly financials, attempt to see yourself as your customers see you.

Start simply: call your own customer service line. Just finding the number can be interesting. See how long you hold for, and if you’re subjecting your customers to some kind of electronic hell, redesign the system – pronto!

My close associates know that saying, ‘Oh, come on, Richard, that will never work!’ is like waving the proverbial red rag in front of a bull. Knowing this, they have no doubt used reverse psychology a few times to get me to buy into some crazy notions. But the fact that something has never been done doesn’t necessarily mean it can’t be done. Often it simply means that no one has been crazy enough to try it – usually for fear of failure.

Around the Virgin companies there really is no such thing as a dumb idea – at least not until we have examined it to see if, with some tweaking, it might be workable. Getting ahead of the curve can require improvising with short-term alternatives that fall well short of that nearly perfect nine. For example, at Virgin Atlantic in the mid-1980s, rather than wait for seat-back video screen technology to be perfected, we went out and bought hundreds of Sony Video Walkmans. Remember those? We loaded up on the latest movies on DVDs, handed them out to our fliers and, bingo, we were the first airline with personal movies.

Our approach had its flaws. The batteries frequently expired before the movie finished, but that was no reason not to be the first to market. Within a year or so, when seat-back technology got to an acceptable level, we were the first airline to feature personal screens at every seat. No one remembered the early hiccups.

Getting the jump on trends requires taking risks and having the confidence to go with your gut. For instance, when we announced that our first Virgin Megastore in the United States would open in New York’s Times Square, even New Yorkers thought we’d gone mad.

‘Richard,’ I remember an American friend saying, ‘you’re going to lose your shirt. No one in their right mind ever goes there.’ There was that red rag – again!

By the conventional wisdom, he was of course absolutely correct. Compared to the more fashionable locations available, Times Square didn’t rate even a four. But we had a good vibe about the place, and its less-than-salubrious reputation also meant that the price was compelling. At the risk of making a very public and embarrassing mistake, we went for it.

When it finally opened, our big, beautiful Virgin Megastore was unlike any music store New York had ever seen. It immediately became the talk of the town and, like its sister store on Champs Elysee, Paris one of the city’s biggest tourist attractions. It was exactly the kind of retail catalyst the whole Times Square neighbourhood desperately needed and Times Square quickly went from ‘sleazy’ to ‘fashionable’ as others opened up.

If we’d taken the safe approach and waited for the area to reinvent itself, we would never have become the centrepiece of the busiest two acres in Manhattan.

Being in Times Square boosted our brand awareness far beyond the store itself. The giant Virgin logo, flashing 24/7 above the storefront, became an impossible-to-miss backdrop to countless movies and TV shows – not to mention millions of tourist photos.

It was a big risk, but one with an even bigger return.

Don’t be afraid to take calculated risks. Sometimes they turn out to be less dangerous than the sure thing. Come to terms with the fact that the perfect 10 simply doesn’t exist, and, when you hit the nine mark, don’t stand back and admire your handiwork. Start work on the next generation to make it still better.

There again, thinking back to the movie 10 , maybe Bo Derek proves there is an exception to every rule!

There is no better way to learn how to succeed in business than to learn from mistakes – yours or someone else’s. I often come across case studies looking into how and why certain companies smashed records, busted budgets and succeeded beyond all imagination. Those studies have their uses, of course, but it’s the stories of businesses that didn’t turn out so well that especially interest me. I learn much more from them.

One of the reasons Virgin’s enterprises have been successful over the years is that we empower our staff to make mistakes – and then learn from them. Since our management structure is totally decentralised, our teams are challenged to run the businesses as if they were the owners. I have found that this creates a high level of loyalty, devotion and innovation. When things do go wrong, the team members feel such ownership of the enterprise that they usually roll up their sleeves and turn it around.

This ability to bounce back after a setback is probably the single most important trait an entrepreneurial venture can possess. If innovation is at the heart of your business, obstacles come with the territory. How you react to and navigate those hurdles will make the difference between failure and success.

I’ve been lucky enough to be at the helm of many successful companies, but I’m the first to admit that I’ve also directed a few that failed. You may have heard of Virgin Cola, a company we formed in the 1990s to take on the world’s most iconic brands, Coca-Cola and Pepsi. We attempted to shake up the market in true Virgin fashion, but it didn’t quite work. Its initial success was so overwhelming that we woke up the two giants of the industry and they did everything they could to squash us.

We certainly didn’t lack for enthusiasm, but unlike our battle with BA, we did not have a product that was massively better than theirs. Taking on two such Goliaths, both of which proved to be anything but complacent, was a tremendous lesson for all of us. But still, one of my fondest memories is of our publicising Virgin Cola’s attack on Coke by driving into Times Square in a huge army tank with smoke billowing from it and taking aim at the Coca-Cola billboard!

A more recent example involves Virgin Money (our financial services arm) in Australia, where we introduced our first Virgin-branded credit card in 2003. The Australian banking industry is monopolised by four major concerns: ANZ Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation. Altogether, they handle 80 per cent of all the country’s banking transactions. Though we entered the market for the right reasons, had a terrific product, and were a great success with the public, we had entered into a bad deal with the partner bank that issued our card, which eventually led to the business’s demise.

Many customers were sad to lose the brand on their card. As a matter of fact, when I’m in Australia I still meet people who carry their old Virgin cards in their wallets!

Which brings me to the next stage: bouncing back. Nearly three years after the failure of the original Virgin credit card, we returned to Sydney to relaunch a range of card products and to start the Virgin Saver online savings account. The difference this time: we have the right people and the right partner (Citibank) for achieving long-term success.