Finding My Virginity: The New Autobiography

by Richard Branson

  Did I really want to challenge the government? I trust my senior team absolutely, but when an issue really digs deep under my skin I won’t let it go. I was sure we were being screwed over, and I didn’t want to give up without a fight. I felt responsible for all of our team, who could well lose their jobs if we bowed out. At the same time, I knew there was a danger of looking like a bad loser if we continued to argue our case. Reputation is everything, and I had to weigh the risk of looking petty against the hope of changing the government’s mind.

  But the way our staff reacted out on the platforms, in offices, streets and homes convinced me to carry on. A groundswell of outrage was growing. Ross McKillop, a regular customer of both Virgin Trains and FirstGroup, set up an independent online petition calling for the government to reconsider their decision. The e-petition got 180,000 signatures in a matter of days, forcing the government to raise the issue in Parliament. Meanwhile, the tide was turning in the press, whose tune was changing from amusement at our predicament to bemusement about the decision. Prominent customers like Lord Alan Sugar, Piers Morgan, Jamie Oliver, Eddie Izzard, Rio Ferdinand, Stephen Fry, Dermot O’Leary, Mo Farah and even some MPs took to social media urging their followers to sign the petition. “Something dodgy about Virgin Trains losing their franchise?” questioned Stephen Fry. It all helped and soon we had the most signed e-petition in UK history.

  Then Justine Greening was replaced by Patrick McLoughlin as Secretary of State for Transport. I wondered what had really been going on behind closed doors. In each meeting we would ask for details of what was happening and be met with pairs of eyes staring down at their shoes. There were rumors in the press that there was an “anyone but Branson” agenda among some of the DfT staff, and the bids really hadn’t been judged on their merits. After fifteen years of working together to transform the railway, I still felt like the outsider, the wild card who didn’t belong. Usually I am comfortable with that billing, but I was damned if my persona was going to bring a good business and a lot of great people down. Had they really reverted back to the original “that fucker isn’t getting his logo on my trains” bias?

  Throughout all of this, Brian Souter, Martin Griffiths and their team at Stagecoach were tremendously supportive. We’d experienced many ups and downs, but after two decades in business together we had a lot of mutual trust, and they backed our judgment. With the deadline looming for the decision to get rubber-stamped, I gathered the team at Sam and Holly’s home in Kidlington. Patrick, Josh, Peter, our comms director Nick Fox and Tony Collins were sitting in the living room, crowded around the coffee table looking at an old Alice in Wonderland chess set. I wondered if somebody at the DfT had gone down the rabbit hole when making their decision, and whether they thought it was me behaving like the Mad Hatter.

  I went around the table, asking each person for his view. We started a logical discussion, but there was understandably some disagreement; frustration was bubbling to the surface, and we had to act fast. Both our chairman and chief executive thought we should throw in the towel and retire gracefully from the dispute. They argued the risk to the brand was too great. Did the public really just think I was crying about losing my train set? The atmosphere was getting increasingly tense.

  At this point, Joan appeared from the kitchen with a tray in hand. “Boys, I think you all need a little break. Why don’t you have a cup of tea and a KitKat?”

  Sure enough, there were chocolate bars and tea on the tray and we sat back to gather our thoughts for a moment. I got up and kissed Joan.

  “You always know the right thing to do in an emergency,” I told her.

  I felt calmer, and turned to Tony, who had been quiet all through the meeting. “What do you think?” I asked him. “You know this company better than anyone.”

  He paused for a moment. “I really think there is a smoking gun in the DfT,” he said. “The more we look at the numbers, the more it looks like FirstGroup are taking the mickey.” Patrick, who led the battle with the government, agreed, too.

  I leaned back, put down my cup of tea and knew I had made up my mind. “It’s not a smoking gun. It’s a fucking nuclear arsenal!” I hadn’t felt this angry about something since BA’s Dirty Tricks. “We’ve come this far,” I told the room, “I believe we’re right, and our job’s not finished. Screw it, let’s do it.”

  I rarely overrule my two top executives, but ultimately, as shareholder, the buck stops with me. On this occasion I made a judgment call and told the lawyers to proceed with the judicial review.

  —

  A few weeks later, I was pacing the corridors of Virgin Trains’ backroom office deep inside Euston Station, as I prepped to give evidence to the Commons Transport Committee. Graphs and figures were swimming before my eyes. There is so much jargon within the rail industry that I was worried about mistaking one acronym for another, or mixing up some figures. I usually consider my dyslexia an advantage in business, but when I was questioning the government’s sums it would not do to get my own muddled up.

  There was a crowd outside Parliament as we arrived at Westminster, but I was too nervous about my speech to take much notice. I sat outside the chamber, sweating despite the chilly autumnal weather, furiously scribbling some last-minute edits in the margins of my notes. “Our bid is the best for the railways and for the country,” I wrote along the top of my paper, and underlined it. As I was called to appear, I took a deep breath and walked in to see a square table filled with suits. I couldn’t help feeling that the majority of people staring back at me thought we were behaving out of turn. But after thanking the committee for hearing us out, I frankly outlined our views.

  “Good afternoon, Madam Chair,” I began. “I’d like to give a brief summary of our position. Virgin Trains believes if this decision is allowed to stand, it will be bad for the country and passengers on the West Coast Main Line, and bad for passengers on other franchises. A successful West Coast franchise is vital for this country. A bad decision is bad for the UK. Based on an analysis of the two bids, we believe Virgin will offer more and—just as importantly—that it is deliverable and more financially robust. For instance, we plan £800 million of investments with new trains; improved stations and more routes on offer sooner.”

  I described our frustrations with the bidding process, but how this instance was of a different magnitude. “Sadly, the mechanism which the DfT uses to assess the bids doesn’t allow FirstGroup’s bid to be judged directly against the other bids or against realistic targets. This is the fourth time that we have lost a competitive tender—twice on the East Coast and once on Cross-Country. But this is the first time we have chosen to contest it and we have not taken the decision lightly.

  “Since National Express handed back the keys after the East Coast collapse,” I continued, “we have been in talks with the DfT about how to improve the process and prevent this being repeated. We have met three successive Secretaries of State for Transport—all to no avail. But there is an opportunity now to ensure no repeat of these fiascos. And we are convinced it needs more than a pause in the West Coast process—that is just a sticking plaster. The entire franchising process and structure is so fundamentally flawed that we recommend that the current rules and regulations for franchising are completely reviewed and the West Coast franchise competition is delayed until this has been completed. There is simply too much at stake for rail passengers and the taxpayer to make the wrong decision here with the wrong structure. My partners at Stagecoach and I are happy to run the current franchise on a not-for-profit basis until such a process has been completed. We are confident with better franchise rules the government would receive better bids for this and for other franchises.”

  It was a long statement and the reaction was polite but short.

  “Thank you, Mr. Branson,” said the committee chairwoman. When the hearing finished, I left none the wiser about what they would decide to do. But I felt a little better knowing
we had done all we could.

  Over the coming days there were no new developments, and the date for our court appearance, in the first week of October, crept ever closer. I was in New York on 1 October for some speaking engagements with Virgin Unite, when my assistant Helen walked into my hotel room.

  “Patrick McLoughlin’s secretary has just been on the phone,” she told me. “He wants to speak to you at 7 p.m.—midnight in the UK.”

  I canceled my plans and brought Josh and Nick, who were in the city, too, over to my hotel. At 7 p.m. on the dot the phone rang.

  “Richard, I want to start by apologizing on behalf of the Department,” said the minister. “We’ve discovered significant technical flaws in the way the franchise process was conducted. There have been deeply regrettable and completely unacceptable mistakes made by my Department in the way it managed the process. Because of this, we are canceling the competition to run trains on the West Coast Main Line.”

  I tried desperately hard to stop myself from whooping down the phone at him.

  “I understand,” I said, keeping my best poker face on while Nick, Josh and Greg Rose looked on.

  “We are no longer contesting the judicial review sought by Virgin Trains Ltd in the High Court,” the minister continued. “I will be making an announcement shortly, but I wanted to tell you first.”

  As I hung up, I turned to the expectant faces in the hotel room, puffed out my cheeks and summoned a frown. “Well . . . that’s that. At least we tried.” I couldn’t hold my smile in any longer. “We won! They’re canceling the competition!” It was such a relief to know we had been right, that we wouldn’t be letting our staff down and that the public would know the truth.

  We presumed we would continue to run the line while the DfT sorted itself out, but we didn’t know how long for or on what terms. I flew to the UK to see the staff—I wanted to thank them in person for their unwavering support. We eventually signed a management agreement to begin on 9 December 2012, which has now been extended into 2018. The new franchise deal boosted payments to the taxpayer by 58 percent, guaranteeing more than £430 million will be paid to the government. As I made the announcement at Euston, representatives from the DfT watched on from the platform—they even brought a cake. It was a remarkable turnaround from what just months earlier had been a toxic relationship.

  The franchise is firmly back on track, and in July 2015 we reached 400 million customer journeys on the West Coast Main Line. I felt extremely proud when we were named Best Rail Operator at the 2014 and 2015 Business Travel Awards—both years we wouldn’t have been running the franchise if we hadn’t contested the DfT’s decision. All of which just goes to show: you should never give up on something you believe in.

  CHAPTER 20

  Becoming a Banker

  One of the iconic images of the 2007–8 financial crisis in the UK was the majestic old clock ticking away at Northern Rock’s headquarters in Newcastle while people queued around the block to take out their savings during the run on the banks. It was fitting, then, that a few years later, in January 2012, I was hanging out of the window next to the famous clock to celebrate Virgin Money’s purchase of the company. However, it nearly all went horribly wrong. Eager for the press below to get a great photo, I hung a long way out of the window. I leaned out a touch too far and felt myself slipping forward. For a split second I thought I was going to fall out from the top story of the building, before, thankfully, somebody behind yanked on my shirt and pulled me back in. It was a moment where everything could have gone wrong but ended up OK in the end—a bit like the story of Virgin’s purchase of Northern Rock itself.

  —

  Throughout 2007, it had become increasingly clear that the global economy was in trouble. Sensing what was coming, I had sold all my personal shareholdings in the stock market for cash. By August, the banking sector was in crisis. Then, in September, I was sitting on Necker watching the BBC’s Robert Peston standing outside Northern Rock’s iconic branch in Newcastle, explaining how the bank was on the verge of collapse. One commentator said: “What this bank needs is someone like Richard Branson to sort it out.”

  Now there’s an idea, I thought.

  Ten years earlier, in October 1997, I found myself dressed up in a bowler hat and pinstripe suit, cutting a red ribbon and introducing the world to Virgin Money. I was officially a banker.

  How the hell had that happened? One of the main reasons was Rowan Gormley, who had suggested Virgin get into financial services in his very first meeting.

  “Why on earth would we do that?” I asked.

  “Simple really. Nobody trusts banks. Everyone trusts Virgin.”

  The other main reason was Jayne-Anne Gadhia, who ran our bank from day one. After building our Virgin One accounts up to 70,000 customers and £3.75 billion in mortgages, we sold our 25 percent stake to our partners RBS for £45 million. Sadly, Jayne-Anne and many of her team had to move to RBS as part of the deal (Virgin Money continued with our other products under Rowan’s leadership). By 2007, we were providing all sorts of products from a price comparison site to credit cards, savings and investments. We had taken 100 percent ownership of the company in April 2004, buying the remaining 50 percent stake for £90 million from AMP/HHG. Entering the mortgage market had been next on our list. Here I was delighted to be able to call again on Jayne-Anne. Over at RBS, she had become increasingly disillusioned with the irresponsible behavior of Sir Fred Goodwin and co. Then she remembered a long-standing offer I had made for her to return. When she called and explained the situation, I kept her waiting for about a millisecond before offering her and all her team their jobs back. Jayne-Anne and eighty-two of her staff returned to the fold within the week. She had the bit between her teeth, and a plan to build a new One account to take on the mortgage market. I called her up from Necker Island simply to say, “Welcome home.”

  While I was watching Robert Peston on the BBC news, Jayne-Anne was back in Edinburgh, getting a facial at the Stobo Castle health spa. Beneath the slices of cucumber resting on her eyes, similar thoughts about Northern Rock were going through her head. Cucumber off, she sent an email to Gordon McCallum and Stephen Murphy, outlining how we could help the people suffering in the crisis, and build our business at the same time. “Whatever happens,” she wrote, “I think we should do some research into who people would trust with financial services now. I bet the answer will be Richard Branson. I know that all this sounds pretty batty, but on the other hand—discontinuities in the system make it right for change—and I think we could do something.”

  Stephen Murphy and Gordon McCallum were initially less convinced: “batty” was one of their milder words for her ideas. But after speaking to Peter Norris, who had run Barings Bank, we began looking into it seriously. By 13 September 2007 it was clear to everyone just how bad the situation was: the first run on a bank in the UK since Queen Victoria sat on the throne. But while the news concentrated on the back of the long, snaking queues, I had my eye on the front. The staff of Northern Rock, working round the clock, displayed superb professionalism in a desperate situation. I was impressed, and thought they deserved a brighter future.

  I began top-secret talks to gather investors and form an equity consortium—“dialing for dollars” as the team affectionately called it. On 12 October, I headed to the Stock Exchange with Jayne-Anne and Nick Fox to submit our bid. We offered to put £1.25 billion of new cash into the bank, on top of Virgin Money as a business. It was a good deal for existing shareholders, who could recoup their investment on excellent terms in the future, and for the public, too. We would repay the taxpayer in full before taking any profit. We estimated Virgin Money would lose £300 million by early 2009, break even in 2010 and grow the following year.

  If those sound like big sums, they were: this was the biggest risk the Virgin Group had ever taken. In a business that I was still very new to, this worried me. Could the brand stretch this far?
Would we ever really be accepted by the banking establishment? If I was younger, I wouldn’t have given it a second thought. But now I gave myself space to think it over. Having weighed up the downside, I decided to press on. After protracted negotiations, on 26 November Northern Rock named our consortium as its preferred bidder. When the Bank of England and the FSA both declared us their preferred bidder, too, the signs looked good that the deal would go through.

  —

  Nothing, however, is straightforward in banking, particularly when politics comes into play. In January 2008, Gordon Brown, then British Prime Minister, asked me to join him on a trade mission to China with some representatives of leading British businesses. Virgin was looking to expand more in the Far East and I was happy to go. There were forty journalists on the trip, and they quickly framed it as “Branson and Brown’s sweetheart deal.” Before I had a chance to change clothes in my Beijing hotel room, there were cartoons in newspapers showing Gordon and me in each other’s pockets. In fact Gordon and I spoke a grand total of one sentence to each other on the flight, but the idea stuck.

  While I rushed over to the Great Hall of the People on Tiananmen Square to deliver a speech, back in the UK Liberal Democrat Deputy Leader Vince Cable was standing up in the House of Commons and using parliamentary privilege to say that I was not a fit person to run a bank. Whether I was fit or not, the idea that I was going to actively run the bank on a day-to-day basis was frankly ridiculous. I had no intention of doing so, which was why I had assembled an outstanding team of banking professionals to manage Virgin Money. Regardless, Mr. Cable claimed I was “nationalizing the risk and privatizing the profit.”