Finding My Virginity: The New Autobiography

by Richard Branson

  There is another side to South Africa. At the same time as developing the Ulusaba resort, I was also spending more time in South Africa working with our foundation Virgin Unite, specifically tackling the escalating HIV/AIDS crisis there. I traveled across the country to see the situation up close, and was horrified by what I found. There were huge advertisements for funeral services along every road. Inside the hospices were rows of beds filled with people dying from HIV/AIDS. More terminally ill people lay slumped in corridors, waiting for others to die before they could fit into beds. The scale of the problem was utterly catastrophic.

  The most infuriating thing about this misery was that much of it was entirely preventable. Raising awareness of ways to prevent HIV spreading and ending discrimination against people who were HIV positive should be possible. We created videos, made by Africans and translated into several languages, to show how the HIV/AIDS drugs worked to help the human immune system. We urged the African National Congress, which had been so inspirational in helping to build a new South Africa, to accept that HIV and AIDS were linked, and start helping to solve the problem. In 2003 we also helped to organize a wonderful concert in Cape Town with Nelson Mandela, using the number he wore during his eighteen years of imprisonment, 46664, as a rallying call for the HIV/AIDS movement.

  When Joan and I first visited Ulusaba, it was the landscape and rich variety of wildlife which had struck us. This time, we returned again with a very different focus: the people who lived there and the staff who worked for us. We launched the Bhubezi Community Health Center, where more than 100,000 people from Ulusaba’s surrounding community could get free treatment and testing for HIV, AIDS and other issues. At the same time, across the Virgin Group, we created a 0 percent challenge, pledging that no one else who works for us should ever die from AIDS. Gathering all the staff together at Ulusaba, Joan and I kick-started the project by being tested for HIV in front of them. It was a different sort of launch from the ones I was normally involved in, but one of those that I was most proud of.

  —

  “Excuse me, sir? Do you enjoy visiting the gym?”

  Never afraid to roll up my sleeves and get stuck into a bit of selling myself, I walked the floors of a Johannesburg shopping center. The center was pristine and shiny, and populated by people like the local businessman I’d just accosted.

  “Yes, I do,” the man said, doing that double shake of the head of recognition, as he realized who I was.

  “Have you heard about the new gym that we’re opening near here next month?”

  “I have.” The businessman paused. I watched a smile flicker across his lips. “But I won’t be joining your gym until you release your special last-minute deal.”

  “There won’t be a special last-minute deal,” I assured him, shaking his hand. “I hope to see you at Virgin Active next month.”

  The day after my bathtub chat with Nelson Mandela, Matthew, Frank and I flew to Johannesburg to see firsthand what the Health & Racquet Club chain was like, and whether my promise to Madiba was going to be a potential opportunity or a financial black hole.

  Over the next five days, the three of us visited nearly all of the seventy-six clubs in the chain. To my relief, I liked what we saw. Yes, they were starved of investment and running into disrepair, but the clubs were also spacious, the staff were helpful and there was plenty of potential for growth. I could see there was a real chance of saving most of the jobs and turning our little health club business into an international force in one fell swoop.

  We put together a rescue package, which would see all Health & Racquet clubs rebranded as Virgin Active. I called Madiba to tell him the good news and explained how the team which ran our health clubs in the UK would look after operations in South Africa, too.

  “Oh, you have health clubs already?” he asked me.

  I had assumed Mandela knew we ran gyms, but he had simply gone with his instinct when he called me.

  In March 2001 we acquired all seventy-six Health & Racquet clubs in South Africa for R319.6 million (£24.5m), paying £11.6m in equity and raising the rest from financial partners Nedbank. There were lots of challenges as we expanded rapidly, but the most difficult part was accurately measuring how many people were using the gyms. The previous business model had seen members pay large fees up front for lifetime membership. This was fine in the short term, with healthy cash flow being used to fund expansion into new properties, which in turn bring new membership fees. However, when you have lots of gyms open and can’t expand anymore, the costs keep rising and the profits start dropping. When the music stops, you need somewhere to sit down.

  We announced we would cancel all membership contracts and operate using our UK model. This meant no long-term contracts and great value monthly fees. The initial reaction, however, was not good. The South African public had such an emotional connection to Health & Racquet that it would take us a long time to shake off that legacy. I spent a lot of early 2001 in South Africa, giving away free Virgin Atlantic flights and building up support in the country, which fortunately already had plenty of trust in the Virgin brand.

  We set ourselves an ambitious target of 300,000 Virgin Active South Africa members by the end of the first year. As the weeks until our relaunch ticked away, this looked increasingly untenable. The weekend before we were due to take over, we had only signed up 50,000 members. By the end of that weekend, we had 80,000. It was enough to keep us ticking over, and, as we fixed problems in underperforming gyms and reinvested in new features, numbers continued to grow, albeit slowly.

  For the opening of the Melrose Arch club in Johannesburg, an occasion I’ll never forget, we were joined by Nelson Mandela. As he arrived, I noticed that he was hobbling slightly.

  “Are you OK?” I asked.

  “It’s my knees,” he explained. “They sometimes hurt from being in prison on Robben Island. The many, many hours breaking rocks.”

  Not that they stopped him dancing with delight alongside our staff in the gym minutes later. It was an inspiring sight to watch him wandering through the club and seeing how his mere presence lit up people’s lives. If it hadn’t been for Madiba’s call, these people wouldn’t have jobs. This was just a tiny example of the hope and help he gave to South Africa and the world. He was a genuine entrepreneur as well as a monumental leader. Once the launch had finished, he sat down with our family for a meal and was already on the lookout for another way to support his wonderful charities.

  “That was a delightful lunch,” he thanked me, with a glint of mischief in his eye. “Now, last week I saw Bill Gates and he gave us $50 million . . .” Ouch!

  CHAPTER 7

  “What do you call a Virgin employee with a tie? The defendant”

  I have never liked wearing a suit. In the early 2000s, I had to dress formally for two very different reasons—and for two different types of court.

  The reason for the first occasion arrived in a very official-looking letter, which was delivered to me on Necker. It was the sort of letter that had summons written all over it, but when I opened it, it wasn’t the kind I was expecting. Instead, I read that the Queen was inviting me to become a Knight of the British Empire. Nobody was more surprised than I was.

  Being included in the New Year’s Day Honors List for services to entrepreneurship felt all the more remarkable for my involvement in what had happened in 1977 on Queen Elizabeth II’s Silver Jubilee. Back then, I had signed the Sex Pistols—the notorious punk band who had been dropped by EMI and A&M in a matter of months—to Virgin Records. It had been smart business all round: for the Sex Pistols, Virgin was the only label able to handle their outrageous behavior without having shareholders to shock; for Virgin, it helped to reinvent our image away from the “Earls Court hippies” that others in the music business had branded us.

  By the time we signed the Sex Pistols in May 1977, the band had already achieved notoriety by swearing live on na
tional television in front of shocked audiences. But their first single for Virgin was even more provocative: “God Save the Queen” was the anti-Jubilee anthem, released to coincide with the national celebrations. With its lyrics about “a fascist regime” and “she ain’t no human being,” the record was banned by the BBC and kept off the top of the charts by the powers that be—but everyone knew it was really number one.

  To celebrate, we threw a boat party along the Thames. As the boat reached the House of Commons, the band blasted out “God Save the Queen.” At which point the police, who had been following the boat, piled on board and in the melee that followed arrested the Pistols’ manager, Malcolm McLaren, as he shouted “Fascist pigs” at them. Given all of that, and my role as a thorn in the side of the establishment, it had never crossed my mind that twenty-three years later I might be knighted.

  It had also never occurred to me that I might one day need to wear a morning suit. Rather than rocking the boat again, I thought I’d better look the part for Buckingham Palace. To begin with, it didn’t go well. Joan came into our bedroom in Holland Park and had to stifle her giggles at my wonky collar and my failed attempts at looking smart. But with her help, I was soon looking half-decent.

  Even so, it was a strange feeling, going to Buckingham Palace with all the full pomp and splendor of the investiture ceremony. It took place in the State Ballroom, the largest room in the Palace, thirty-six meters long and feeling almost as high, and opulent, decorated in white and gold: the sort of room that makes you feel as though you’re stepping into a fairy tale. In the ceremony itself, those receiving awards wait in a side room to be called forward, one by one, by the Lord Chamberlain. As the National Anthem and then a series of military tunes are played, each award is given. And for the knight, there is a knighting stool—made of crimson velvet and gold thread. You kneel forward on one knee, bow your head and are then touched on each shoulder with the knighting sword.

  As I stood in that side chamber, waiting for the Lord Chamberlain to call me forward, I felt quite nervous. Would her Highness remember my involvement with “God Save the Queen?” I suddenly became worried that when I bowed my head to be knighted with her sword on my shoulder, she might take her revenge and lop off my head! As my name was called and I walked through the grand doors into the ballroom, it was difficult to take it all in. Looking across at the audience of invited guests, I felt a mixture of pride and bemusement that I had ended up here.

  Thankfully for my nerves, it was Prince Charles who did the honors rather than the Queen. He couldn’t have been nicer, and the subject of punk rock didn’t come up once. I left the palace with my head still on my shoulders. Together with my family we headed to a party I had put on for the other honors recipients. As I arrived, a reporter asked me how it felt to be a Knight of the Realm.

  “It feels great,” I told him. “It’s going to feel odd sleeping with a Lady, though.”

  Noting Joan’s less than impressed reaction, I was reminded of the old adage that behind every great man is a great woman . . . rolling her eyes.

  —

  The second time I had to dress formally was in slightly less pleasant circumstances: it was to settle an ongoing dispute between Virgin Mobile and T-Mobile.

  I dislike going to court almost as much as I dislike wearing suits. Back when I was starting out, I’d scribbled the words “we don’t need lawyers” in my notebook, and underlined them for good measure. Court cases can keep me up at night with worry and there have been numerous occasions over the years where we’ve had to go and defend ourselves, from linguistic arguments through to libel trials.

  My first experience was back in 1970 when I was arrested under the 1899 Indecent Advertisements Act for using the words “venereal disease” in our Student Advisory Center leaflets, to encourage young people to get sexual health check-ups. After a day in the dock, we were given a nominal fine of £7, but as a result the outmoded law was eventually changed. Next was the infamous Sex Pistols case in 1977, when we were taken to court for displaying the band’s album title, Never Mind the Bollocks, in our Nottingham record store window. We won that case when a professor of linguistics testified for us that “bollocks” was a nickname for priests—before revealing he was a priest himself!

  Virgin Atlantic’s Dirty Tricks battle with British Airways ended with us winning the biggest libel settlement in British history in 1993, which we distributed equally to all our staff. It became known as the BA Christmas Bonus. Five years later, we won £100,000 damages in a libel suit against the CEO of lottery company GTECH. We’ve got a clean record of winning all our important cases. But I learned over the years how time-consuming and unpleasant the process is, even if you do end up on top. I was in no mood for another day in court—and not just because I hate wearing a tie. But the situation with T-Mobile was so serious, there was no other option.

  The shame was that Virgin Mobile was actually doing really well. By 2003, Virgin Mobile UK was turning over more than £1 million a day. As such, we were already looking into floating the business on the Stock Exchange. Our partners, T-Mobile, were very happy with the way things were going—or so I thought. It all changed with the arrival of a new T-Mobile UK managing director, Harris Jones, from America. Mr. Jones took a very different view of the situation: he saw our relative inexperience in the mobile market as an opportunity, and decided to try to snatch our 50 percent share in a company now worth more than $1 billion. He claimed he was upset that T-Mobile had to pay us a marketing fee worth around £4.56 a month for every Virgin Mobile customer. The deal was written as plain as day in our contract. But this didn’t stop T-Mobile calling in their high-powered lawyers and threatening us with court if we didn’t change the agreement. I thought it was disgraceful, and we immediately took legal advice. Our team felt we were on very strong ground and we began working out our response.

  However, we were in an acutely difficult position, because, as we didn’t own our own infrastructure or masts, we relied on T-Mobile to provide service for our 2.4 million customers. I started spending many hours a day on the phone going over technicalities. Attempts to resolve the situation took place in a Leicester Square office. It was somewhat ironically called The Communications Building, but there was very little real communicating going on. Meetings became incredibly tense, with representatives from both sides speaking statements pre-approved by lawyers into microphones hanging from the ceiling.

  We began to suspect T-Mobile were leaking details to the press, but it was impossible to discuss this at board meetings because T-Mobile were on the board! As rumors of a legal battle spread, Gordon McCallum from our head office joked to me: “What do you call a Virgin employee with a tie? The defendant.”

  As was typical at the time, Virgin Group’s cash flow was running low, with money disappearing fast into Virgin Atlantic among others. We could ill afford an expensive legal battle. T-Mobile asked us outright to cut the marketing fee payments. We debated whether it was worth conceding substantial amounts of money for the sake of saving the relationship. In the end, we decided on principle to stand firm.

  “We’re in the right here. I’m not being bullied by them,” I told the team.

  Once we gave them our response, T-Mobile attempted to break our partnership by activating a so-called “no-fault” termination clause. If successful, it would have given them all our shares worth over half a billion pounds, for just £1. A date in court became inevitable.

  —

  On the morning of the High Court case, I felt even more nervous than I had been at Buckingham Palace—and equally ill at ease in my suit and tie. Although our lawyers felt our case was a good one, you can never be certain how a judge will rule and interpret the law. I knew that if we lost, the position of the whole Virgin Group would have been on shaky ground. The stakes were that high.

  Inside the courtroom, the wait for the ruling from Mr. Justice Cooke was excruciating. As he cleared his
throat to deliver the verdict, I willed him to make what I thought was the right decision. As it turned out, his conclusions were better than I could have hoped and worse than T-Mobile dared believe possible. The judge not only saw our side of the story, he was actually appalled by T-Mobile’s behavior.

  “In my judgment,” he said, “their behavior was not acceptable commercial conduct . . . T-Mobile took the view that its commercial interests took precedence over the rights and wrongs of the situation . . . That, in my judgment, is a course of conduct which is deserving of moral condemnation.”

  As I breathed a huge sigh of relief, the good news continued. Instead of T-Mobile being given our shares for £1, as they had demanded, the judge ordered them to give us all of their shares—worth £500 million—for £1. What’s more, they were made to pay the costs of both sides, as well as the damages. A bad day for T-Mobile just got worse. By taking us to court, they had ended up losing well over half a billion pounds.

  The following day I had a telephone call from the head of T-Mobile’s owners, Deutsche Telekom. He was really charming, genuinely mortified by what had happened and invited me over to their headquarters in Bonn so he could apologize in person. He told me he was going to fire Harris Jones and that he accepted the court’s judgment.

  “I hope we can enter into another commercial deal going forward,” he said.

  I was impressed and admired his pragmatism: even though he had lost half a billion, he wanted to at least rescue something from it. I came away feeling that we could continue working with T-Mobile. A new managing director, Brian McBride, took over from Mr. Jones at T-Mobile in the UK. He was keen to move on, and we soon negotiated a new commercial arrangement. Virgin Group took over 100 percent ownership of the company and T-Mobile secured a long-term distribution deal. Virgin Group got complete control of Virgin Mobile, while T-Mobile received improved network compensation and would earn up to £100 million if we decided to float the business in the next two and a half years. T-Mobile would continue to provide network coverage for Virgin Mobile for at least ten years, but non-exclusively, so we now had the option of bringing in other telecoms partners, too. As you can imagine, all parties checked that new contract extremely thoroughly!