Up to this point I had been interested in making money only to ensure Student’s continuing success and to fund the Student Advisory Centre, but it struck me as a very interesting business opportunity. When I heard that, despite the government’s abolition of the Retail Price Maintenance Agreement, none of the shops were offering discounted records, I began to think about setting up a record distribution business. The number of people working on Student had grown to around twenty and we all still lived together in 44 Albion Street and worked in the crypt.
I thought about the high cost of records and the sort of people who bought Student magazine, and wondered whether we could advertise and sell cheap mail-order records through the magazine. As it turned out, the first advertisement for mail-order records appeared in the final edition of Student. Without Nik to manage Student’s distribution, it was floundering, but the offer of cheap records brought in a flood of inquiries and more cash than we had ever seen before.
We decided to come up with another name for the mail-order business: a name that would be eye-catching, that could stand alone and not appeal just to students. We sat around in the church crypt trying to choose a good one.
‘Slipped Disc’ was one of the favourite suggestions. We toyed with it for a while, until one of the girls leant forward:
‘I know,’ she said. ‘What about “Virgin”? We’re complete virgins at business.’
‘And there aren’t many virgins left around here,’ laughed one of the other girls. ‘It would be nice to have one here in name if nothing else.’
‘Great,’ I decided on the spot. ‘It’s Virgin.’
4 ‘I am prepared to try anything once.’
1970–1971
AND SO WE BECAME Virgin. Looking back at the various uses to which we’ve since put the Virgin name, I think we made the right decision. I’m not sure that Slipped Disc Airways, Slipped Disc Brides or Slipped Disc Condoms would have had quite the same appeal.
Our tiny sample of market research proved correct: students spent a good deal of money on records and they didn’t like spending 39 shillings at WH Smith when they found out that they could buy them from Virgin for 35 shillings. We started giving out leaflets about Virgin Mail Order records along Oxford Street and outside concerts, and the daily post increased from a bundle of letters to a sack. One of the best things about mail order for us was that the customers sent their money in first: this provided the capital for us to buy the records. Our bank account at Coutts started to build up a large cash balance.
As Virgin Mail Order grew, I tried to sell Student to another magazine group. IPC Magazines emerged as the only interested buyer, and we had long negotiations which culminated in a meeting where they asked me to stay on as editor. I agreed to do so, but then made the mistake of telling them all about my future plans. Fantasising about the future is one of my favourite pastimes, and I told the meeting that I had all sorts of other plans for Student: I felt that students were given a raw deal by banks, and I wanted to set up a cheap student bank; I wanted to set up a string of great nightclubs and hotels where students could stay; perhaps even offer them good travel, like student trains or even, who knows, a student airline. As I warmed to my theme, I saw that their eyes had glazed over. They thought I was a madman. They decided they did not want to keep such a lunatic on as editor of Student, and in the end they decided they did not even want to buy it. Student died a quiet death, and my plans for the future had to be shelved for the time being.
We switched all our attention to Virgin Mail Order. One look at the huge numbers of orders coming in and the need to organise where to buy the records from and how to send them out to the customers persuaded me that I needed someone to help me. Although we all had great fun at Albion Street, I was increasingly aware that I was the only one who had to worry about paying all the wages. Even though these were small amounts of money, it was difficult to make sufficient profit even to cover that cost. There was only one person I could turn to: Nik. I wanted my old friend back again.
I buried the episode when Nik had tried to throw me out, and offered him 40 per cent of the newly formed Virgin Mail Order Records company if he came to work with me. He agreed immediately. We never negotiated over the 60–40 split. I think we both felt that it was a fair reflection of what we would each put into the business.
Although Nik was not a trained accountant, he was meticulous at counting the pennies. He also led by example: he never spent any money, so why should any of us? He never washed his clothes, so why should anyone else? He scrimped and saved every penny; he always turned lights off when he left a room; he made only rapid phone calls, and he handled our bills with great skill.
‘It’s fine to pay bills late,’ he said, ‘so long as you pay them regularly.’
So we paid our bills on the nail, except that it was always the last nail. Apart from Nik and me, there were no other permanent employees in the crypt. A rotating band of casual workers came in and were paid £20 a week, before drifting on. Throughout 1970 Virgin Mail Order Records thrived.
Then, in January 1971, we were almost ruined by something entirely out of our control: the Post Office workers went on strike. Led by Tom Jackson, the general secretary of the Union of Post Office Workers, the postmen went home and the Post Office taped up the letterboxes. Our mail-order business was set to go bust: people couldn’t send us cheques; we couldn’t send out records. We had to do something.
Nik and I decided that we should open a shop to carry on selling the records. We had to find a shop within a week before we ran out of money. At the time we had no idea about how a shop works. All we knew was that we had to sell records somehow or the company would collapse. We started looking for a site.
In 1971 music retailing was dominated by WH Smith and John Menzies, both of which were dull and formal. The record departments were generally downstairs and they were staffed by people in drab brown or blue uniforms who appeared to have no interest in music. Customers chose their records from the shelves, bought them and left within ten minutes. The shops were unwelcoming; there was little sympathetic service and prices were high. Although rock music was very exciting, none of that feeling of excitement or even vague interest filtered through to the shops that sold the records. The dowdy staff registered no approval or interest if you bought the new Doors album: they just rang it up on the till as if you had bought Mantovani or Perry Como. It was all the same to them. Nor did they seem particularly enthused about putting in a special order for the Van Der Graaf Generator or Incredible String Band record that had been reviewed in Melody Maker that week. None of our friends felt at home in record shops: they were just rather functional places where they had to go to buy their favourite records. Hence the appeal of a cheap mail-order business.
We wanted the Virgin Records shop to be an extension of Student; a place where people could meet and listen to records together; somewhere where they weren’t simply encouraged to dash in, buy the record and leave. We wanted them to stay longer, chat to the staff, and really get into which records they were going to buy. People take music far more seriously than many other things in life. It is part of the way they define themselves, like the cars they drive, the films they watch, and the clothes they wear. Teenagers spend more time listening to music, talking about their favourite bands and choosing records than almost anything else.
Virgin’s first record shop had to incorporate all these aspects of how music fitted into people’s lives. In exploring how to do this, I think we created the conceptual framework of what Virgin later became. We wanted the Virgin Records shop to be an enjoyable place to go at a time when record buyers were given short shrift. We wanted to relate to the customers, not patronise them; and we wanted to be cheaper than the other shops. To achieve all this was a tall order, but we hoped the extra money which went on creating the atmosphere, and the profits we forfeited by selling cheaply, would be more than made up for by people buying more records.
Nik and I spent a morning counting
people walking up and down Oxford Street compared with people walking along Kensington High Street. Eventually we decided that the cheaper end of Oxford Street would be the best site. We knew that we couldn’t rely on people knowing about the Virgin Records shop and making a special trip to buy a record, so we had to be able to attract passers-by into the shop on impulse. At the exact point where we counted the most people walking along the street, we started looking for an empty property. We saw a shoe shop with a stairway leading up to what looked like an empty first floor, so we went upstairs to see what it was like.
‘What are you doing?’ a voice called up to us.
‘We’re looking to set up a shop,’ we said.
‘What kind of shop?’
Nik and I came back down the stairs and found the owner of the shoe shop blocking our way.
‘A record shop,’ we said.
The owner was a large, square Greek called Mr Alachouzos.
‘You’ll never pay the rent,’ he said.
‘No, you’re right,’ I said. ‘We can’t afford any rent. But we’ll attract lots of people past your window and they’ll all buy shoes.’
‘What kind of shoes?’ Mr Alachouzos’s eyes narrowed.
‘Jesus sandals are out,’ Nik said. ‘Do you sell any Doc Martens?’
We agreed that we would fit out the record shop and that we could occupy it for no rent until somebody else came along and wanted it. It was, after all, just an empty space. Within five days we had built shelves, put piles of cushions on the floor, carried a couple of old sofas up the stairs and set up a till. The first Virgin Records shop was ready for business.
The day before opening, we handed out hundreds of leaflets along Oxford Street offering cut-price records. On the first day, a Monday, a queue over a hundred yards long formed outside. I was on the till when the customers started coming through. The first customer bought a record by Tangerine Dream, a German band which we had noticed selling very well through mail order.
‘Funny bloke you’ve got downstairs,’ he said. ‘He kept trying to sell me a pair of Doc Martens as I waited in the queue.’
At the end of the day I took the money to the bank. I found Mr Alachouzos hovering outside the shop.
‘How’s business?’ I asked, trying to make light of the heavy bag of cash I was carrying.
He looked at me and then back at his shop window, which was still piled high with unsold Doc Martens.
‘Fine,’ he said firmly. ‘Couldn’t be better.’
During 1971 Nik was running the Oxford Street record shop; Debbie was running the Student Advisory Centre from Piccadilly, and I was generally looking to do anything I could to expand. We were in the process of changing from Student ideas to Virgin, and in due course we renamed the Student Advisory Centre as a new charity called HELP! It continues to operate to this day, but now under the guise of Virgin Unite, which undertakes a very broad range of charitable activities.
I knew very little about the record industry, but from what I saw at the record shop I could see that it was a wonderfully informal business with no strict rules. It had unlimited potential for growth: a new band could suddenly sweep the nation and be a huge hit, as the sudden crazes for The Bay City Rollers, Culture Club, The Spice Girls or Busted show. The music business is a strange combination of having real and intangible assets: pop bands are brand names in themselves, and at a given stage in their careers their name alone can practically guarantee hit records. But it is also an industry in which the few successful bands are very, very rich, and the bulk of bands remains obscure and impoverished. The rock business is a prime example of the most ruthless kind of capitalism.
As a record retailer, Virgin was immune to the success or failure of an individual band, just so long as there were bands whose records people were keen to buy. But we were restricted to living off our retail margin, which was small, and I saw that the real potential for making money in the record industry lay in the record companies.
For the time being Nik and I concentrated on building up the image of our shop. We continued to work on different ideas to make our customers as welcome as possible. We offered them headphones, sofas and beanbags to sit on, free copies of New Musical Express and Melody Maker to read, and free coffee to drink. We allowed them to stay as long as they liked and make themselves at home.
Word of mouth began to spread, and soon people began to choose to buy records from us rather than from the big chains. It was as if they thought that the same album by Thin Lizzy or Bob Dylan somehow had a greater value if bought at Virgin rather than at Boots. I felt enormous pride whenever I saw people carrying Virgin paper bags along Oxford Street. Our staff began to report that the same people were coming back every couple of weeks. With a loyal customer base, Virgin’s reputation began to grow.
* * *
At the other end of the spectrum from buying records – the recording studios – I heard that conditions were extremely formal. Bands had to check in at an appointed time, bring all their own equipment and set it up, and then leave according to the set timetable, taking all their equipment with them. Since the studios were so overbooked, bands would often have to record straight after breakfast. The idea of The Rolling Stones having to record ‘Brown Sugar’ straight after finishing their bowls of cornflakes struck me as ridiculous. I imagined that the best environment for making records would be a big, comfortable house in the country where a band could come and stay for weeks at a time and record whenever they felt like it, probably in the evening. So during 1971 I started looking for a country house that I could convert into a recording studio.
In one copy of Country Life I saw a fairy-tale castle on sale in Wales for just £2,000. It seemed a bargain. I drove off to see it with Tom Newman, one of the early recruits to the Virgin Mail Order company. He was a singer who had already released a couple of records, but was more interested in setting up a recording studio. When we arrived at the castle we realised that the sales details had inexplicably forgotten to point out that this castle was actually in the middle of a housing estate.
Feeling tired and disappointed, Tom and I turned back and set off on the five-hour drive back to London. Thumbing through Country Life on the way home, I saw an advertisement for another property, the old manor house at Shipton-on-Cherwell, some five miles north of Oxford. We turned off the road, followed the signs to Shipton-on-Cherwell, drove through the village, and then turned down a dead end which led to the Manor. The gates to the Manor were locked, but Tom and I climbed over the wall and found ourselves in the grounds of a beautiful seventeenth-century manor house built with yellow Cotswold stone which glowed in the late-afternoon sunshine. We walked round the outside of the house and both realised that this would be perfect.
When we called the estate agent the next morning, we discovered that the Manor had been on the market for a long time. With over fifteen bedrooms it was too big for a family house but too small to be converted into a hotel. The asking price was £35,000, but he agreed £30,000 for a quick sale. I went in to see Coutts, this time wearing a suit and a pair of black shoes, and asked for a loan. I showed them the sales figures which Virgin Mail Order and the Virgin shop on Oxford Street were achieving. I don’t know how impressed they were by them, but they offered me a mortgage of £20,000. Some years later Coutts told me that, if I ever came in to see them looking remotely smart, they knew I was in trouble.
The Coutts loan was a breakthrough for me: it was the first time a bank had trusted me with a large amount of debt and I could see that I was almost in a position to buy the Manor. Although I had no money myself, my parents had put £2,500 aside for me, Lindi and Vanessa respectively for when we were thirty. I asked them if I could draw on it early and use it to buy the Manor. They both agreed, even though there was a risk that, if the recording studio went bust, the bank would sell the Manor over my head at a knockdown price and the money would be lost. I was still looking at a shortfall of £7,500.
We were talking about the Manor
over Sunday lunch at Shamley Green when my dad suggested that I go and see Auntie Joyce. Auntie Joyce had no children of her own, and had always been devoted to us. Her fiancé had been killed in the war and she had never fallen in love again. She lived in Hampshire and I drove over to see her that afternoon. As always she was both very straightforward and very generous. She had arranged everything.
‘Ricky, I’ve heard about this Manor,’ she told me. ‘And I gather that Coutts have lent you some money.’
‘Yes.’
‘But not quite enough.’
‘No.’
‘Well, I’ll step in with the balance. I want the same interest as Coutts,’ she said. ‘But you can delay paying it to me until you are able to.’
I knew that Auntie Joyce was being extraordinarily kind to me and had probably accepted that she would never see the money again. What I didn’t know was that she had remortgaged her house to raise the £7,500 to pass on to me, and was having to pay interest on it herself. When I started thanking her she brushed me aside.
‘Look,’ she said, ‘I wouldn’t lend you the money if I didn’t want to. What’s money for, anyway? It’s to make things happen. And I’m sure you’ll make things happen with this recording studio just as you won that ten shillings off me when you learnt to swim.’
I promised to myself that, whatever happened, I would repay that money to her, with interest on top.
Losing My Virginity Page 8