Finding My Virginity: The New Autobiography

by Richard Branson

  “Higher! Higher!” I shouted.

  I’m going to hit the bridge. I was sure of it. What a way to go, I thought, zooming across the sky in a harness before . . . SPLAT! A face-first collision with one of Australia’s most iconic constructions, like Wile E. Coyote in a Loony Tunes cartoon.

  At what felt like the last possible second, the helicopter veered upward and I narrowly avoided becoming a permanent addition to the side of the bridge. I barely had time to catch my breath as we zipped across it, low enough for me to see the astonished expressions of the bridge walkers looking up. Finally, we landed on top of a giant cage structure next to Sydney Opera House. I was bursting with adrenaline, pumped up after everything I’d just been through. Inside the cage people were dressed in the colors of all of our rivals—there were lots in Australia’s highly competitive mobile market. They were wearing handcuffs to signify the long contracts they were locked into by the likes of Vodafone and Telstra, and singing, “Set us free! Set us free!” I set off some explosive bolts, the cage collapsed and the “customers” were freed.

  “I thought I was a goner for a minute there,” I told Jean afterward.

  “I’m very glad you weren’t,” she said reassuringly. “We hadn’t managed to get you insured!”

  —

  Virgin Mobile became the fastest-growing mobile start-up in UK history. We acquired our millionth customer in 2001, an impressive number for a company that had started from scratch as a punt only a couple of years earlier.

  But I was eager to capitalize further. On 21 February 2001, I traveled to Cannes for the 3GSM World Congress, where I announced Virgin Mobile as the world’s first global mobile virtual network operator. Within the next few years we would launch new, independent mobile companies in ten countries in five continents. With our UK partners T-Mobile, we launched a new service in Northern Ireland. We negotiated a $1 billion joint-venture agreement with Singtel to set up mobile phone operations throughout Asia, the first being Singapore in 2001.

  We had plans for Virgin Mobile South Africa, Canada and France to add to the UK and Australia, but the market I was desperate to get the Virgin brand into was one of the most challenging to break: the United States. We approached Sprint and a deal looked likely to go ahead, but they got cold feet at the last minute as the market shrank after 9/11. I phoned Bill Esray, Sprint’s CEO, who was opposed to the deal. Our pledge to invest heavily ourselves—to the tune of $187 million over the next few years—showed we were serious. My arguments that the deal was cheap for Sprint, could transform their stuffy image and open up a new, youthful audience were all met with radio silence.

  “Look, you need a brand like Virgin,” I ended up telling him. “Right now, you’re the phone company of choice for young Republicans.”

  Somehow that did the trick. Bill relented, and in October 2001 we announced a new joint venture with Sprint to offer pay-as-you-go Virgin mobiles in the US. Dan Schulman came on board as CEO and we began preparing our US launch strategy.

  Nine months later, once again I was dangling high above the ground, this time from a crane in Times Square. As reporters and tourists gathered below, I ripped off my clothes and threw them into the crowd, a (large!) strategically placed mobile phone covering my privates as I was flanked by six strapping cast members of the new Broadway musical The Full Monty.

  “That was fun. But I preferred the UK launch,” I told Dan afterward. “My support act there was all-female rather than all-male!”

  The message was the same, though. Greater transparency and simplicity for customers. What you see is what you get. With the help of some irreverent ads, the business began to grow rapidly. Before we knew it, Virgin Mobile USA had broken the record as the fastest company ever to generate over a billion dollars in revenue, within three and a half years of launch. We sold the business to Sprint in December 2009 for £294 million; it continues to grow and remains the largest Virgin Mobile business worldwide.

  CHAPTER 3

  Building a Business from the Back of a Beer Mat

  The best ideas don’t always need to have detailed financial projections and complicated business proposals behind them. Sometimes they come fully formed on the back of a beer mat. One such idea was the spark that led to the fastest-growing Virgin company of all time: Virgin Blue.

  The beer mats in question had been scribbled on by Brett Godfrey, who at the time was the chief financial officer for Virgin Express, our European carrier. I’ve always loved finding talent from within the Virgin family and encouraging people to challenge themselves in new companies within the Group—Brett was a great example. I’d first spotted his potential when he wrote an excellent note to a group of new starters. I began following his progress closely, and saw how he dealt with people in a personable manner and got the best out of them. He was someone who understood the little details of the airline industry that make all the difference; he knew management had to be accessible and visible, so would often get out and about, even rolling his sleeves up with the baggage handlers to heave bags and hear their issues from the frontline. So when the Virgin Express CEO position came up, I thought he was the man to fill the role.

  When I called him up from Oxford one Thursday night to offer him the job, however, he turned me down flat.

  “I really appreciate the offer,” he explained, “but I’ve got two young kids now, and my wife and I have decided to move back to Australia.”

  I was disappointed, but accepted his reasoning. “I always respect a person who puts family first,” I told him. Wishing him all the best, I added: “If you want to do anything in Australia, let me know and we’ll see what we can do.”

  There was a pause. “Funny you should say that,” he replied. “I’ve had an idea for a few years now that I’d love you to hear.”

  I always like someone ready to seize their chance. “OK,” I said. “What is it?”

  “Hold on,” I heard a muffled sound on the phone as Brett scrambled around for his notes. “I’ve got the idea on the back of some beer mats . . .”

  Brett began telling me his plan for a low-cost airline in Australia. As the son of a Qantas employee, he knew the ins and outs of the Australian aviation market. He described how he’d sat down for a few pints with another airline expert, Rob Sherrard, who had launched Sherrard Aviation and also given Brett his first job as an accountant. They talked about the rise of low-cost carriers in Europe and the US, and pondered how this model could be translated to the Australian market. At the time, the public were being ripped off thanks to a lack of competition. Qantas was not being challenged by Ansett and had no incentive to improve their service or lower their prices. As flying is the only way to get around most of Australia’s vast landscape, Qantas knew they had a captive audience. Brett and Rob’s beer-mat proposal was to find a way to set them free.

  “Well, why don’t you put a more detailed plan together? I’m happy to have a look at it,” I said.

  Brett’s plan was delivered to my door the next morning. I’ve always liked people who move fast, too.

  —

  If I had to pick any single nation that really understands and breathes the Virgin way of living, it would be Australia. I have always loved visiting the country and spent lots of time down under in my early years, traveling around with my family, playing sports on the beach and in the ocean. I fell in love with the culture, the climate and the people.

  When we were looking to expand Virgin Atlantic, one of the first destinations on my hit list was Sydney. I began a campaign to get the government to change their single-designation policy, which was allowing British Airways a monopoly on the route from London to Sydney. The authorities were also determined to protect their traditional home-grown airline, Qantas, whether or not it meant less choice and poorer service for Australians and fewer tourism dollars. I tried again and again, but got nowhere fast—there was no appetite for change, and certainly not for helpin
g a scruffy Englishman from the music business.

  At one particularly fruitless meeting with Senator Gareth Evans in May 1988, he made it clear in no uncertain terms that there was not going to be a change of policy. I left the room angry but undeterred, and immediately sent a note to the press explaining what had happened. It ended: “If Virgin Atlantic was allowed to fly it would stimulate demand on this route, benefiting tourism, small businesses and visiting relatives. Competition must be in everyone’s interest. Fortunately, though, I’m only 37 and—as long as I don’t go down in a balloon—time is on my side!” Well, I did go down in quite a few more balloons, but am still here to tell the tale.

  What we really needed was to start a new airline altogether, which was why Brett’s idea was so enticing. Looking through his proposal the following day, it was apparent that the numbers added up, the vision was clear and Brett’s enthusiasm was infectious. Who says accountants can’t be imaginative? Perhaps those few pints helped to get the creative juices flowing! Australia’s duopolistic aviation market was exactly the kind Virgin was designed to disrupt. I asked Brett to fly to Australia to look at the areas I still had some concerns about, in particular ticketing, pilots, terminals, slots, quality planes and staff. Before the week was out he was back, having answered all my questions.

  While I was more than satisfied, the Virgin board still needed persuading. They had previously rejected the idea, with Brett telling me he had been close to abandoning the whole concept before I showed interest. This made me even more determined to see it through, but I found myself fighting the same lack of enthusiasm that Brett had faced from Virgin’s executives.

  “Look at the upsides,” I said in a board meeting. “Then look at the downsides. The potential is massive; there is risk, but it is manageable.”

  One of my main arguments was the element of surprise. None of the Australian airlines would expect a business like ours to compete with them. We were still establishing our brand on the global stage. Nobody would see us coming. After a big battle, I finally convinced them. I met up with Brett in person to tell him the good news. Shaking his hand, I grinned at him.

  “Screw it,” I said. “Let’s do it.”

  —

  “If you’ve got purple hair and you’re working in a butcher’s shop and you can still smile after a tough day, you’re the kind of cabin crew we’re looking for . . .”

  Our advertising campaign for airline staff was unusual in many ways. Firstly, rather than focusing on the more obvious location of Sydney for recruitment, we set our sights on the Sunshine Coast. Alongside Perth, Brisbane was the fastest-growing market in the country, the beaches were a huge attraction and Queensland’s government was extremely keen to market a new airline and boost its region’s tourism.

  Rather than going for experience we wanted to recruit people who wouldn’t usually apply for airline jobs. Virgin has always focused on finding the best possible people, and I was determined to set our new airline apart by having the finest staff in the world. We didn’t want people who had been working at airlines for years—we needed fresh faces with new ideas. A typical Virgin airline employee is the sort of person who will joke with passengers and smile, not just nod their head and say, “yes sir, no sir, three bags full sir.” I shared a story about one occasion when we had a short delay before a Virgin flight and people had to queue up at the gate. One of the passengers jumped the queue and marched up to the desk. Our team member very politely asked him to get back into the queue. He turned on her and said, “Don’t you know who I am?” So she picked up the intercom and announced: “I have a young man at gate 23, who seems to be lost—he doesn’t know who he is.” The other passengers roared with laughter. “Fuck you!” shouted the self-important man. She kept a straight face and replied: “I’m afraid you’re going to have to get in line for that, too, sir!”

  The recruitment campaign was a runaway success, and 12,000 people wanting to relocate to Queensland had sent in their CVs.

  Our budget to launch the airline was just A$10 million. That might sound like a lot of money but, to put it in context, JetBlue, a low-cost airline in the US, had needed US$120 million to get off the ground. I was eager for us to use the internet like no airline before us—within six months, 92 percent of bookings were online. This is normal now, but back in 2000 high street stores and holiday brochures reigned. We were appealing to younger consumers, and reducing our costs, too, as transaction fees were far cheaper online. We might have been operating on a tiny budget, but we made up the difference with our enthusiasm, initiative and humor. We decided to call it Virgin Blue, a cheeky wordplay on the fact that Aussies call redheads “bluey.” It appealed to my sense of humor to name our red planes Blue: it also meant I could convince Brett and Rob to dress up as the Blues Brothers for our inaugural flight from Brisbane to Sydney on 31 August 2000.

  As the launch date approached, we caused quite a stir by announcing our prices. For a one-way flight from Brisbane to Sydney our fares were more than A$50 cheaper than Qantas’s. Their stock price plummeted by A$2 billion. I called Brett excitedly, conscious that delays can ground airlines before they ever take off.

  “Are we on target for launch?” I asked. “Let’s do everything we can to get in the air on time and make the most of this.”

  Brett remained confident and we stepped up our plans to start flying. With customers rolling in, the team grew from twelve staff in March to 350 in August. With a month to go before liftoff, I was getting calls from management about rising costs. The accountants worried we wouldn’t be able to pay our staff, but I was ignoring them, pushing for more investment and urging Brett to plan faster expansion. While Brett was scrabbling to keep the payroll flowing, I signed off on a A$600 million long-term investment to order ten new Boeing 737s. I was eager to take advantage of the splash we were making, especially with the eyes of the world on Australia for the Sydney Olympics.

  I dialed into a board meeting to back Brett up. “Before anyone says anything,” I began, “I know we’re over budget, and I promise you it will be worth it.” Some of those in the room sounded unsure, but I continued to press our case. “There is no point trying this half-heartedly—we have to really go for it, or give up. Are we giving up?”

  On one side of the coin, what we were doing seemed a massive risk. Did I know all the ins and outs of the airline business in Australia? Certainly not. While we had built up a wealth of experience with Virgin Atlantic, this was a whole new market with its own intricacies, complications and absurdities. But at the same time I believed Virgin could succeed in Australia because everybody already knew about us there: Virgin had an incredible 94 percent brand recognition in the country before we even launched the airline. Beyond the brand recognition, there was massive overlap in our values and outlook to build on as well: it may be a cliché to suggest Australians know how to have fun and we do, too, but it’s true. They work hard, play hard and don’t take themselves too seriously, all of which rang plenty of bells.

  We knew there was an appetite for us to get up in the air, though, and we were determined to satisfy it. We also knew that our rivals weren’t ready for us. From the outset we had caught them off guard, and began making inroads on their market share. My instinct was proved right: our customers loved our approach, our staff were incredibly enthusiastic and it was the most successful start to a business we’d ever had. In less than a year, we’d welcomed our millionth passenger on board.

  —

  It didn’t take long, however, for our Australian rivals to fight back and then attempt to take us out of business. Qantas introduced a new low-cost service to counter our growth, undercutting our fares at a loss and increasing capacity on routes we were doing well on. Putting more seats on a route than there are passengers means both companies will lose money—there will simply be too many empty seats to cover costs. As a business tactic, it’s something of a power play: bigger players can suck in thes
e losses, accept a short-term hit and try to bankrupt their rivals. Then it’s back to business as usual, robbing flyers of the benefits of innovation and competition.

  As for Ansett, they were struggling badly. As well as the disruption our entrance into the market had caused, they were desperately trying to replace an aging fleet and modernize their service. Passengers were deserting in droves, and we were there to pick them up. At the same time we were expanding, too, moving smoothly into the New Zealand market with flights from Christchurch to Brisbane on our new Pacific Blue service. Air New Zealand, who part-owned Ansett, needed to respond. Rather than try to undercut like Qantas, their strategy was to take us off the table in a different way.

  In June 2001, just ten months after our inaugural flight, their CEO Gary Toomey began floating the idea of buying Virgin Blue. After an initial meeting, he took Brett to dinner at a Chinese restaurant in the Crown Casino in Melbourne. Out of the blue, he made an offer for our airline: $70 million.

  “You mean seventy million US dollars?” asked Brett.

  “Yes, I think we can do that,” Gary replied.

  It was an astonishing offer. Our little company, which still had only five jets and an estimated market share of about 4 percent, had grown from a A$10 million investment to a A$120 million valuation in under a year.

  Brett excused himself and called me from the restaurant payphone with the news. I was back in Holland Park going through my post when he phoned.

  “Seventy million dollars?” I sat upright in my chair. “Seventy, not seventeen?”

  “Seventy,” Brett confirmed. “And US dollars. Not Australian.”

  I thought for a few seconds. “Turn it down,” I said. “It’s an unbelievable offer—nobody really expected us to make a penny. But it could still be undervaluing us.”

  The Virgin Group board were less certain. They were understandably keen to see such a quick and large return on our investment. The unknown question was precisely what Ansett were thinking—were they running scared? At a management meeting, Brett told his team he thought Ansett would disappear within three years. Everybody laughed. But then, while our profits kept rising, Ansett began making greater redundancies and suffering from more Qantas flights squeezing their routes. Two months after we’d turned down that initial offer, they informally came back to the table, this time suggesting a joint venture. Now Qantas CEO Geoff Dixon joined the party: he told the press his airline was considering acquiring Virgin Blue—something we dismissed outright. We were there to compete with the behemoth, not join it.