The man behind the brand
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Sir Richard Branson enters the club room of New York’s SoHo Grand Hotel at lunchtime, declaring that he has just finished breakfast.
The potted palms, leopard-print cushions and pictures of Peter O’Toole and Sean Connery suit the playboy image the island-owning, hang-gliding, kitesurfing, speedboat-racing (and apparently late-rising) balloonist enjoys, even at the age of 62.
Sir Richard has had an enjoyable few weeks. At the weekend it was reported that Virgin Money is planning a new bid for the branches of Royal Bank of Scotland it had sold to Santander only for the deal to collapse. This came on the back of winning a challenge to the British government’s decision to strip his Virgin Group of the contract to run trains between London and Glasgow. The admission of “unacceptable flaws” in the process that had awarded the tender to FirstGroup cast Sir Richard in his favourite role of underdog. The tender process must now start again, and Sir Richard, ever the opportunist, seizes his chance to argue that Virgin should win this time. “It would be perceived as incredibly unfair if . . . the people who gamed the system by putting in this completely outlandish bid ended up achieving what they wanted to achieve,” he says.
Sir Richard has been playing the challenger for a long time. The entrepreneur who dropped out of school aged 16 to launch Student magazine and sell records by mail order likens his latest scrap to Virgin Atlantic’s campaign against British Airways’ “dirty tricks” in the early 1990s. His battles have earnt the self-described “tie-loathing adventurer” a reputation as a publicity-hungry showman.
As he lists his latest ventures, he does not linger on any for long. He is in the US between visits to Winnipeg, where he relaunched a radio station, and Costa Rica, where the government banned shark finning after lobbying by the Ocean Elders, a conservation group he formed with Queen Noor of Jordan and the CNN founder Ted Turner, among others.
Virgin has established almost 400 companies in four decades. The 100 live ones range from Virgin Active gyms in South Africa to Virgin Mobile Chile, but its founder spends 80 per cent of his time on non-profit ventures. The list of these is long, including the Elders (a humanitarian group including Jimmy Carter and Kofi Annan), The B Team (cofounded with Jochen Zeitz, Puma’s chairman, to use capitalism for social good) and the Global Commission on Drug Policy (which reassesses the war on drugs).
“We’re using our entrepreneurial skills, our profile and our contacts to get things done,” Sir Richard says, using the plural as he talks about himself. His companies are “the Virgin engine” needed to fund such activities, which in turn motivate 60,000 staff and boost the brand that unites its disparate activities.
He spends the time allotted for business “firefighting” and launching new ventures, he says. The current focus is communications and entertainment. Calling on contacts ranging from Sir Julian Horn-Smith, the former Vodafone executive, to an Omani investment group, he is raising almost $100m to expand Virgin Mobile in Latin America, the Middle East and eastern Europe.
The mobile virtual network operator has become “the brand that helps make other things possible” where Virgin is not well known, he says: “We just started flights to Vancouver. It’s usually the other way round. We normally use the airline to get the brand out there.”
Music is also back in Sir Richard’s sights. He sold Virgin Records, the label behind Mike Oldfield and the Sex Pistols, 20 years ago to EMI, but when Universal Music bid for EMI he pitched to get it back. He was unsuccessful but still hopes to work with Universal to “reinvigorate” a label that has been “left to languish”.
The music festivals that have sprung from Virgin Radio’s brand in the UK and US have also encouraged him to look at concert promotion. His first move will reportedly be a series of 50th anniversary concerts for the Rolling Stones. “Rumour has it we’ve landed quite a good catch,” Sir Richard smiles.
Virgin will be entering a market dominated by LiveNation and AEG, but “that’s what Virgin is synonymous with,” Sir Richard says. If it can launch with a big act, “it will indicate that the brand is working”.
Critics accuse Sir Richard of spending too much time chasing new ventures and too little on ensuring that the ones he already has prosper. Project, a much-hyped iPad magazine launched by his 30-year-old daughter Holly, has attracted little buzz.
The Virgin brand’s value is unclear. It does not feature on rankings of the top 100 global brands from Interbrand or Millward Brown Optimor, yet Sir Richard says it has clear commercial power. When radio stations from France to Thailand adopt the Virgin name, “almost if they do nothing they get this enormous boost”, he says.
The brand has a youthful image, and its founder admits that having a frontman approaching retirement age could become a problem. “I may be pushing my son out more as I get a bit older, and my daughter,” he says. “Companies benefit from faces [and] I think Virgin would definitely benefit if Holly or Sam were willing to be more of a face of it.”
Holly works full-time at Virgin. “She’s very eloquent. Whether children will get in the way or not – she just got married – we’ll have to see,” Sir Richard says.
Sam, 27, has completed a film arguing that the war on drugs has failed. “It’s good for them to make their own mark first of all,” Sir Richard says, but he clearly hopes both children will play larger roles in Virgin.
Bloomberg and Forbes estimate that Sir Richard is worth more than $4bn, but he is guarded about Virgin’s finances.
Revenues from Virgin-branded businesses are about £13bn a year, but because many are joint ventures, Virgin receives a smaller cut. About £50m a year, for example, come from brand licences including Virgin Media and Virgin Active.
Sir Richard has a record of selling stakes to fund new projects and putting in limited amounts of capital into joint ventures. Wilbur Ross, the US financier, put up about five times the £50m Virgin Money injected to buy Northern Rock, the British bank. “If we’re raising money for a new venture for space travel, I’ll drop in on the Middle East,” he says. Many companies there and elsewhere want to use the Virgin brand and are generally happy to fund projects, he adds.
Similarly, on a trip to Washington, the day after his New York visit, “we’ve got space for lunch, then we’ll raise $400,000 by way of doing a talk”. Space means Virgin Galactic, which is planning to offer suborbital space flights for $200,000 or more from a New Mexico spaceport. “I’d be very disappointed if we’re not up and away by next year,” he says.
At the same time, Virgin Oceanic is testing its first submarine, with which he hopes to explore the Atlantic’s deepest trenches, seven miles down. This will be his next adventure – “if it passes its pressure test” – he says. “It’s possible next year we might do both – go from the lowest part of the oceans into space.”
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