Richard Branson - Business Stripped Bare

‘Well, we have a problem…’

One of South Africa’s biggest health clubs, the Health and Racquet chain, had collapsed. It meant the loss of 5,000 jobs. ‘Do you think you could do something with it? Do you think you can save the people?’

I didn’t really know if this was a viable business, but I went with my gut instinct, and my desire to support a man I revered. Also, I trusted Madiba: in another life he would have made an astute corporate financier!

I rang Frank Reed, the Virgin Active chief executive, and Matthew Bucknall, his finance director, who ran just three large clubs in the UK. Would they be prepared to take on an ailing South African business nearly eight times their size? There was a palpable gulp from Matthew — but he then said they’d jump at the chance. Brilliant! Within hours we were able to put a rescue package together — rebranding the whole business Virgin Active. I called Madiba back to say we were definitely on board.

But money was tight for us and we needed to raise funding, so we approached the UK private equity company Bridgepoint Capital who agreed to take a 55 per cent stake in a deal worth £110 million, leaving Virgin with 36 per cent, and Frank, Matthew and the team around 8 per cent. When Gordon McCallum heard about the speed of the transaction he said: ‘At this pace, we should rename the company Virgin Hyperactive.’

Our strategy involved keeping on as many people as we could, and retaining Health and Racquet’s 900,000 customers, although we had to change the arrangements for many health-club users. They had been given free lifetime membership, in return for signing up with a big upfront fee — fine until the new memberships dried up! We judged, correctly as it turned out, that nearly all of the members would agree to start paying a monthly subscription provided we gave them a first-class health-club experience and fixed the dilapidated gyms that had been starved of investment.

The rescue gave us a fantastic footprint in South Africa from which we have continued to expand. By October 2005, Virgin Active was in a better financial position — having doubled in size and expanded into Italy and Spain — and we were able to buy back Bridgepoint Capital’s 55 per cent share for £134.5 million.

When Nelson Mandela was president of South Africa he knew his diplomatic position. South Africa’s re-emergence as a nation was reliant on China’s increasing strength and its investment as an economic superpower. He didn’t want to offend China. And he never ever did.

Once free from the burden of presidency, of course, Madiba was his own man again.

In November 2004, I was in Johannesburg at the CIDA City Campus, the first free campus for black students from townships and rural areas who cannot afford education. I was with Kelly Holmes, the double gold-medal Olympic runner, the singer Estelle, and the team from Virgin Unite for the launch of an initiative called Women on the Move, which focuses on empowering young women across South Africa. After the ceremony I stayed on to listen to the Dalai Lama, the exiled Tibetan leader, who had been invited to speak at CIDA. It was his third time in South Africa and he spoke with verve, compassion and gentle humour. He smiled as he welcomed people from all religions, the non-religious, and black, white and brown alike. I was enthralled listening to this deeply spiritual man appealing for peace and justice.

He said: ‘If you wish to experience peace — provide peace for another. If you wish to know that you are safe, cause others to know that they are safe. If you wish to understand seemingly incomprehensible things, help another better understand. If you wish to heal your sadness or anger, seek to heal the sadness or anger of another. Those others are watching for you now. They are looking to you for guidance, for help, for courage, for strength, for understanding and for assurance at this hour. Most of all, they are looking for your love.’

There was nothing the Dalai Lama said that day that could possibly have incited the Chinese authorities. He simply asserted that the gap between rich and poor was morally wrong.

I had been with Madiba at his home the previous afternoon, and I asked him why he had never met the Dalai Lama. He frowned and told me it had been too political. The South Africans didn’t want to upset China over their activities in Tibet. But I thought it would be good to get these two wonderful elders together — and that political expediency should not bar them from meeting.

‘You’re no longer president, Madiba,’ I said. ‘He can visit you as a private individual. He’s staying only a few blocks away from here.’

Mandela smiled and looked across at Zelda le Grange, his assistant and adviser. I could tell that he was persuaded. Later the next day, Zelda invited me to join them for the get-together I had suggested — but I found myself declining this extraordinary invitation. I felt it should be a special occasion between two inspirational people, and that no one else should be present. That night, after the meeting, we got the following message from Wendee, who works for the Dalai Lama: ‘On behalf of the entire delegation, thank you for setting up what may be the first and last meeting of these two giant spirits… The meeting lasted an hour in deep discussion.’

There are many things in my life that have given me satisfaction. But the union of two iconic figures in Johannesburg will be a moment I will cherish for as long as I live. And that meeting began to strengthen the idea Peter Gabriel and I had had: to bring together a group of wise global elders…

Necker Island, January 2004

Dear Madiba,

An idea — yes, I’m sorry — another idea. Out of the most wonderful day — the 46664 concert [in November 2003 — a declaration of war on Aids in South Africa] — Peter Gabriel and I were inspired to write to you.

As well you know, in an African village there are elders who the rest of the village look up to. We believe that the Global Village needs to equally tap into our elders. You 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. We would like to set up a small body of the most respected ‘Elders’ in the world and as you are accepted as the most respected person of all today, we would ask that you become the father figure to this organisation and the first Elder.

Einstein once said: ‘How I wish that somewhere existed an island for those who are wise and of goodwill.’ I said it would be wonderful if the Elders could meet somewhere like my own Necker Island two or three times a year to discuss how they could help tackle the pressing issues of the world.

We would suggest that the Elders are initially chosen by yourself, and then in the future chosen by the world community, giving them added legitimacy on the world stage. None of them would be current politicians. The Council of Elders would comprise 12 men and women. Four of these could stand down every three years. The new four could be voted in from a shortlist selected by the Elders through channels like the Internet, television, post and email. They would represent a broad spectrum of the world’s people.

Peter and I said that the first worldwide vote would encourage people to think globally, to feel part of events and engage with a world beyond their borders, culture and religion. As the United Nations represents the governments of the world, the Elders would represent the hopes, aspirations, fears and dreams of the people.

The Elders would have at their disposal a ‘Growing Tree’ — an army of people worldwide who have retired, or who have the time, who are willing to give their time and expertise to help tackle the problems of the world. Whether setting up an Open University for Africa or India, tackling conflicts, diseases or poverty. They would also help mentoring programmes. They would be a huge educational resource.