Business Stripped Bare

by Richard Branson

  Back in the nineties I was becoming acutely aware that our kudos with young people was declining as my own generation was growing older. The kids we once sold records to were buying holidays, pensions, financial services and healthcare. That was OK by us – we sold all these things. But what about their children? Mobile phones – and text messaging – were a booming market. For 16- to 24-year-olds, these things were becoming like an extra limb. From a marketing point of view, therefore, the mobile phone gave us the opportunity to re-establish Virgin in the youth market. We launched first in the UK in 1999.

  We knew we had a great product, and we knew how to get it out there. We got our pay-as-you-go vouchers into places where young people found them easy to buy. We courted WH Smith's, Sainsbury's, Tesco, Texaco and BP petrol stations.

  But we still had to get young people's attention.

  James Kydd, Virgin Mobile's advertising guru, didn't have a generous budget to spend on building the brand. (Mind you, we once asked him to go head-to-head with Coca-Cola, pitting a £4 million budget against Coke's £400 million.) In the mobile battle, the competition was split between four companies – Vodafone, BT Cellnet, One2One and Orange – and so the hill James had to climb was a hill and not, as before, Mount Everest. We reckoned the money stacked against him was in a ratio of about 3:1. James told me that 3:1 was doable. I gave him £4 million for the launch.

  James aimed specifically at our target market. He found good news stories that the tabloid newspapers and other media would report. He used the emerging Internet channels and viral networks to build a buzz and create a lot of fun.

  At the same time, we had to remain in the public's eye as the 'consumer's champion', so we took the other players head-on, challenging Hans Snook, Orange's chief executive, to put his money where his mouth was when he promised to match our tariffs. He didn't. Then Virgin Mobile took some swipes at Charles Dunstone's Carphone Warehouse, urging him to recommend our phones. Charles, a great sailing and skiing buddy of mine, was big enough to laugh it off, but I think our in-the-face campaign caused him some embarrassment at the time.

  Vodafone was middle-aged, BT was in decline, One2One was cheap and Orange – regarded as the gold standard – was leaning too much towards the business market. So, when Virgin Mobile addressed the youth market, it had the field pretty much to itself. It filled the space with the kind of attitude, wit and irreverence we had cultivated since our early days at Virgin Records. We offered a blind-dating service which people loved – we even gave them the option of receiving a phone call half an hour into the date so they could make an excuse and bail out – 'So sorry, I have to go – my dog has died!'

  Our television adverts were a work of genius. The creatives came up with the idea of our 'Devil Makes Work For Idle Thumbs' series, featuring a string of superstars including Busta Rhymes, Wyclef Jean and Kelis. Each star would have to be prepared to have a laugh at their own expense. We wanted them to be funny. They quickly became a cult: and we were back in tune with urban youth.

  The adverts, created by Ben Priest and directed by Bryan Buckley, were sharp and funny and set a cool tone for the business. From early on we knew it was working. A key statistic for us was the acronym ARPU, average revenue per user. This rose and rose until we had the highest ARPU in the prepay industry. By the first quarter of 2003, Virgin signed up more customers than O2, Orange, T-Mobile and Vodafone combined.

  Then in May 2004, as we celebrated our 4,000,000th customer, we signed up 23-year-old Christina Aguilera.

  The advert, shot in Los Angeles, had her make fun of her own relationship with the paparazzi. Christina is waiting in a plush record company office and her thumb idly moves to the button which operates the 'up' and 'down' motion of the chair on which she is sitting. Her rising and falling in the chair is viewed and misconstrued by construction workers on the other side of the street, who think they have stumbled across the celebrity sex scandal of the year. We knew we'd hit the money when real-life paparazzi snuck in to take pictures of her during filming, generating lurid false reports about the advert before it was even cold in the can. Thanks, lads – you all helped raise our profile!

  Publicity is absolutely critical. You have to get your brand out and about, particularly if you're a consumer-oriented brand. You have to be willing to use yourself, as well as your advertising budget, to get your brand on the map. A good PR story is infinitely more effective than a full-page ad, and a damn sight cheaper. I have an absolute rule. If CNN rings me up and wants to do an interview with me, I'll drop everything to do it. Turning down the chance to tell the world about your brand seems just crazy to me, and it astonishes me that the very people who sign off on multimillion-dollar advertising budgets – the CEOs and presidents of huge corporations – are the very same people who hide behind their PAs and turn away all journalists at the door.

  There can be no doubt that Virgin Mobile succeeded by delivering on the promise of a unique brand: a brand that appeals not to any particular demographic, but to an attitude of mind. The Virgin brand is about irreverence and cheek. It values plain speaking. It is not miserly, or mercenary. It has a newcomer's voice – and in a world of constant technical innovation, the voice of a company that's coming fresh to things is a voice people find oddly reassuring. It's a brand that says, 'We're in this together.' I think James Kydd did a brilliant job of realising those values for a new generation. Can it be done again? I think so. There's nothing particularly 'seventies' or 'nineties' about the values I've just listed. The attitude is timeless. It's human. I like to think it's pretty acute, psychologically. But I'll concede that if my son Sam, or daughter Holly, decide to join the business – and I would never want to push them – it would make our job easier, because then we could have younger faces launching the products, rather than their middle-aged dad!

  Before I tell you about Virgin Blue – a recent big adventure for the Virgin brand – now is probably as good a time as any to talk about me. I mean Richard Branson the public celebrity (or mascot, or scapegoat – I've been all three in my time).

  A large part of the Virgin story has been my willingness to be a central character in our publicity. I don't know how many different outfits I've dressed up in during my business life – probably more than Laurence Olivier. I can thank Jackie McQuillan, my director of Media Relations, for a great deal of them. Over the last fifteen years she's dreamed up many costumes and hair-raising stunts for me – from shaving off my beard and donning a wedding dress, to dressing up as an Indian prince and jumping off a building in Mumbai, while playing a drum, to launch our first ever business in India! I believe the public has enjoyed the kind of visual stunts we've pulled over the years. The reason they're enjoyable is that they're very carefully thought through. They have to be witty. They have to make people smile. They have to engage the mind as well as the eyes. They have to work in the telling as well as the witnessing. And they absolutely must convey the qualities of the brand as well as the message. My near-naked appearance in Times Square in July 2002 is a good example: to unveil our partnership with MTV, a division of Viacom, I wore only a cellphone to cover my nether regions. 'I'm here to physically prove that Virgin Mobile USA's national cellphone service has nothing to hide,' I said.

  And as we'll see, Virgin's reputation as a have-a-go company has had one unforeseen but highly valuable consequence: when things go wrong with our oh-so-carefully rehearsed stunts, they still convey the brand!

  But is it constructive to have so much attention and focus on the boss of a business? It can occasionally work against you. As I'll explain later, all that nonsense in the media about my 'sweetheart deal' with the British prime minister Gordon Brown, just because we were on the same plane, did our bid for the troubled Northern Rock bank no favours. But all in all I think the positives outweigh the negatives. My own high-profile adventures have not just highlighted the brand, they've personified it. I've used my success in business to throw myself into some truly wonderful adventures. The speedboating
and the ballooning were great for the brand because they were real challenges, undertaken in a spirit that reflected our brand values. And they were enormous fun. World-record attempts are not everyone's cup of tea, and wouldn't add value to every brand. The trick is to find your own way to personify your own brand values; I think you will feel the advantage.

  In general, the media has been extremely fair to the Virgin brand. We've been able to enliven the news, features and comment pages with some of our challenges – and because we have so many consumer-facing businesses there's always a regular stream of news stories to whet the media's appetite. Our press people ensure that journalists are invited along to every product launch and are kept up to speed with our plans. For any business building a consumer brand, speaking to journalists is part of the deal. I've met a lot of business people who shy away from public attention, but I feel the Virgin Group has had a strong relationship with the media over many years. Besides, I started out as a fledgling journalist with Student; I enjoy the company of editors, journalists, writers and public relations people.

  Having said that, I think it is important for the public relations people to build the profile of individual companies and their leaders within the wider group. Steve Ridgway is the chief executive of Virgin Atlantic Airways and he remains in the background – usually with a smile on his face – when I'm making an announcement or undertaking a media stunt. But Steve is also happy to appear in feature articles and business trade magazines that are relevant to promote the airline. That's the way it should be and I'm pleased that all the chief executives of the Virgin Group companies work hard at promoting the brand.

  I was jet-lagged after a fourteen-hour flight and taken straight off the plane. A whirling helicopter was waiting for me on the tarmac at the private aviation centre. I thought for a moment I might be hitching a quick trip to my hotel, but I was mistaken.

  One of the Virgin team put a harness around me and over my head, strapped me in tight, and clipped me to a wire rope. I was about to get a bumper adrenalin rush which blew away any lingering yawns from the flight.

  My arrival into Australia was bum-tightening. It was the closest I've ever been to flying like a bird. I can assure you it's not the normal route for our Virgin airline passengers arriving at the Kingsford Smith airport and heading to downtown Sydney. I was hauled off the ground, dangling 100 feet underneath the helicopter as we rose higher and higher above the skyline. It was a spectacular way to arrive, like Peter Pan flying over London. Instead of Big Ben and the Houses of Parliament, I could see girls sunbathing on Bondi Beach, and surfers gliding along in the aquamarine waters below. The aerial tour took me over Sydney Harbour Bridge, and I was so close, my shoes nearly scuffed the top of the arch. We went whizzing past the Sydney Opera House, with dozens of people waving up at me, and landed at Custom House Quay, and the waiting pack of media. I was supposed to be telling them about the launch of Virgin Mobile Australia. I took a deep breath.

  Every time I go to Australia it's full on. I've waterskied behind an airship in shark-infested water, been rescued by the Bondi Beach babes, bantered with radio host Rosso, of Merrick and Rosso fame, handed out the choc ices at V Festival – all the normal things that a chairman should get up to, but very rarely does.

  I'm regularly asked what I've learned about doing business down under. Has the experience of setting up Virgin Blue been different in Australia to elsewhere? The answer is yes; it has been different – and highly rewarding too.

  I think Australians warm to the idea of the Virgin brand more than any other nation in the world – and that includes Britain. Even before Virgin Blue took off, the Virgin brand had 94 per cent recognition in the country, perhaps created in some way by my ballooning and powerboating activities and my autobiography, Losing My Virginity, which has sold well in Australia. In 2008, Virgin Blue was listed as one of the top ten brands in the Asia-Pacific region, and one of the top five most trusted brands in Australia.

  I've tried to work out why the Virgin brand should have struck such a chord with the Australian people, and I think it's because having fun is an unofficial national sport there. The outlook of most Australians isn't parochial. Many have been off backpacking around the globe and doing their own thing before settling down. The Aussies don't like unnecessary regulations or petty officiousness, and they are prepared to work their socks off, then go and party like there's no tomorrow.

  I've always tended to think of Virgin as a youthful brand (not a 'youth brand': that's a different, narrower idea). In Australia, though, I don't think Virgin's brand values carry the same connotations about age. I think everyone gets it, straight away, without worrying about whether our offering is for their generation or not.

  Given Virgin's growing maturity, and the ever increasing distance we're putting between our current businesses and memories of our progressive-rock roots, Virgin's welcome in Australia is reassuring. It convinces me that our cross-generational appeal isn't a fluke, and that our offering is pretty much universally welcomed.

  It's been fascinating to see how the Virgin brand interacts with other aspects of the Australian national character. When you compete against Australians, it's hardball, but usually scrupulously fair. They also like the underdog and most of our businesses in Australia fitted that model, even though Virgin, as a group, now employs thousands of people down under. Part of the Australian sporting ethos is to play tough and during any game drive your competitor into the ground as hard as you can and then have a few beers afterwards with your opponent and celebrate – or commiserate – in friendship. 'No hard feelings, mate,' is a widespread Aussie expression after a tussle. That's the Virgin way, too – though we'd never thought of the brand in quite those terms when we started. So it may be that the Virgin Blue experience is adding a further meaning to the Virgin brand.

  The ordinary Australian – and New Zealander – deserves a good deal. They work hard for their pay and hate being ripped off, but for years they knew that Qantas, their national carrier, the now defunct Ansett and Air New Zealand just weren't giving value for money.

  I have always said that I love tackling lazy industries: Qantas and Ansett are good airlines but they had a duopoly ripe for challenge. In August 1999 we announced our intention of setting up an Australian domestic airline. We had A$10 million of capital to invest.

  At the time of writing, in 2008, Virgin Blue has 32 per cent of the air-travel market in Australia, with over 2,200 flights per week to twenty-two domestic destinations. It has expanded into New Zealand as Pacific Blue, it flies in Tonga, Samoa and Fiji as Polynesian Blue, and is planning to fly to the United States as V Australia.

  In under ten years we have built an airline that Australians, New Zealanders and Polynesian islanders really seem to love, and there's an infectious spirit every time I step on board one of our planes.

  Virgin Blue was the brainchild of Australian Brett Godfrey, whose dad worked for Qantas, and Rob Sherrard (who set up Sherrard Aviation and gave Brett his first job as an accountant). They jotted their idea on the back of some beer mats in 1993. Brett had walked around with this stack of cardboard in his back pocket for several years before he approached me. It's strange that some of the best ideas in life emerge after some liquid lubrication!

  Brett first came to my attention when he wrote a brilliant reply to an article that was hostile to our European carrier, Virgin Express. It encapsulated my thoughts exactly, and stuck in my mind for a long time.

  By 1999, Brett was Virgin Express's chief financial officer. We'd gone through three CEOs, and Brett had been acting chief operating officer, so by now he knew all the snags and problems of the airline business up close. He was incredibly hard-working, and had a great way of getting along with people. His force of personality had smoothed over some sticky situations.

  So, one Thursday evening, I phoned Brett to offer him the job as head of Virgin Express, staying on in Brussels. He was polite, but turned me down. He said he wanted to quit because he now had
two young children, Ryan and Nicholas, with his wife, Zahra, and wanted to return to Australia.

  I said: 'If you want to do anything in Australia let me know and we'll see what we can do.'

  'Funny you should say that,' was his reply. And he proceeded to tell me about his plan for a low-cost airline in Australia.

  'Well, why don't you put a plan together? I'll have a look at it,' I said.

  Brett went home that evening, dusted down his proposal, and got one of his colleagues to fly to Oxford next morning to deliver the plan. I read it and phoned him the next evening. Brett's idea had already been rejected by the Virgin executive team in London. But I believed there was value in this case. He told me I was the first person who shared his vision and that he had almost given up on his idea. I asked him to look at five outstanding issues and then get back to me. My questions were about slots, good aeroplanes, terminals, ticketing and staff and pilots. Brett went off to Australia and returned within a week with all the answers nailed down. After speaking with our team I said: 'Screw it, let's do it.'