The Virgin Story
Richard Branson was a talented individual from his childhood. People looked at him as a role model and looked up to his huge success in business and life. Virgin Group was his creation and it is one of the most well known companies today. Many people would think that Richard was a scholar in school, but he wasn’t. Ironically, Richard was terrible at school and this was partly because of his dyslexic condition. Richard didn’t like school, but what he did like was business.
Richard’s first business plan
When Richard was 11, he wrote his first business plan. He decided to plant trees and wait a few years until they had fully grown in order to sell them. Unfortunately, the business had failed due to rabbits that ate the seeds. Richard was very intuitive and one of the reasons was that his family was always there to support his endeavors. Most families would not have allowed their 11-year old son to plant trees on their own land, but Richard’s did and they encouraged Richard to follow his passion. Without his family’s support, he would not be where he is today.
Richard left Stow High School at the age of 15, and started a magazine called ‘Student’. Before he left, his principal told him that either he would go to prison or he would become a multi-millionaire. The principal definitely saw something in the boy. Student magazine was Richard’s first successful business venture and the magazine’s goal was intended on bringing out students views on global issues. Student sold 100,000 copies and it was a huge success. This initial success provided Branson with the drive to explore music and this led him to start Virgin Records.
Richard always wanted to expand and reinvest profits into starting new businesses. This was his motto and this is what made his company unconventional. This led the company to expand into the airline industry and Richard started Virgin Atlantic. Starting an airline business was a huge risk since Virgin Atlantic had only one licensed plane and was at risk of facing competition from much bigger airline companies such as British Airways. Richard’s friends and employees thought he was taking too big of a risk by expanding into the airline industry when he had so much to lose. Richard was, however, unmoved by skeptics, and was keen on entering the airline industry.
Richard would face heated competition from British Airways [BA], a national airline acting as a monopolistic player in the UK. BA started, what is now known as a ‘dirty tricks’ campaign against Virgin Atlantic in order to throw Branson’s airline out of business. Richard protested, but BA argued that his protests against it were a publicity stunt. Branson sued BA for libel.
BA settled out of court when its lawyers discovered the lengths to which the company went to try to kill off Virgin, and BA was forced to pay substantial damages. The period was a very stressful time for Richard and his team many a times felt like throwing in the towel and giving up on finding any success at all as an airline. They even had to sell off Virgin Records to EMI (another recording company) in order to keep the airline afloat. But all in all, with the Virgin team’s risk, hard work and perseverance to stand off BA’s initial opposition towards them proved beneficial in the end. The initial vision proved right, and today Virgin Atlantic is one of the premier airlines that provide flights across the Atlantic!
Richard set out on a number of hot-air balloon rides across the Pacific and Atlantic oceans. He states:
“I am prepared to try anything once,” Richard says when asked why he’s risking his life in a hot-air balloon, when he can inevitably fly in the comfort of his own airline flight.
In six of his hot-air balloon adventures he had put his life on the line when the balloon gave way and sent him and his partner hurling into the cold waters. These breathtaking balloon rides made Richard a public icon and it helped the Virgin Group make a name for itself.
Today, Virgin Group operates over 400 companies. Richard was able to create this
company from scratch, because of his drive to work and think differently from the rest. He never doubted himself and kept his mind focused on the goal that he set for himself. “My biggest motivation? Just to keep challenging myself. I see life almost like one long university education that I never had – every day I’m learning something new,” quotes Richard. From balloon rides to running Virgin, Richard never gave up and strived to be the best that he could be. Richard Branson’s net worth is $4.3 billion and he utilizes this money wisely to expand the Virgin name, or donate to the poor. Richard Branson is not smart; rather he is an innovative genius.
Virgin Group is a business empire comprising over 400 companies. Richard has amassed this empire over many years, starting in 1972 with Virgin Records, and growing to diversify into many types of businesses. This is a lot of work for one man to undertake, so Richard has upheld himself to a vertical organizational structure with many layers of management working under him to manage each of the companies. More than the Virgin’s management structure, is the corporate structure which helps keep the group financially strong:
- Richard owns few of his large companies, such as Virgin Atlantic [airlines] Virgin Money, Virgin Media and Virgin Trains. Shareholders jointly own most of these companies.
- In many cases, and this is one of the primary ways that Branson manages his business, is licensing. Virgin Group licenses to other companies that have purchased a subsidiary unit from it, and as a license holder of the Virgin brand Richard receives annual and triannual fees that can amount to hundreds of millions over time.
Richard usually does this through owning a minority stake of the business that is listed on any major stock exchange, and then going on to earn money through licensing the Virgin name to the company.
For instance, Virgin Media is listed on the NASDAQ and Richard owns a part of the company’s stock, which is run by CEO Neil Berkett. So, Richard barely has to participate in managing the company and is not part of the board, but receives lots of income through licensing the Virgin name.
According to Richard, “branded revenue from companies that bear the Virgin name” topped £13bn last year. Branson himself is estimated to be worth more than £3bn!
By forging partnerships with cash-rich allies, Branson has established new businesses without depleting the group’s reserves and spending little to establish new ventures in sectors such as mobile telecoms. Example of businesses jointly owned by Virgin are:
- Virgin Trains, which is 49%, owned transport group Stagecoach.
- Virgin Active is 49% owned by private equity firm CDC.