I’m currently in the middle of reading Sir Richard Branson‘s autobiography, Losing My Virginity. The book is both fun to read and extremely educational, if you know what you’re looking for. Although I haven’t yet finished the book (I’m just over half-way through), I thought I’d go ahead and post these lessons learned. Any entrepreneur and anyone wishing to be one (to be someone in the “B” quadrant) should read this book, maybe a few times over. I highly recommend it.
Note: Losing My Virginity is an updated version to Branson’s autobiography, Screw It, Let’s Do It. You can read the first chapter his autobiography at the Virgin website.
- Don’t ever go into a business purely for money. If that’s the sole purpose you’re better off not doing it. A business should be involving, it has to be fun, an it has to exercise your creative instincts.
- Image. Is. Everything. When starting to expand the Virgin Records stores, Branson had one rule: No Andy Williams. In this vein, Virgin also didn’t stock Garry Glitter or any other “Glam Rock” stars, or mass market teenyboppers such as the Osmonds or Sweet, even though they were storming the charts. “If we stuck to our image, we would keep our integrity and build up more customers.” This was advice given to him by his cousin, music advisor Simon Drapers.
- May all your stab wounds be in the front, and never in the back.
- Don’t tell yourself you can’t afford something. Ask yourself how you can. While in the Virgin Islands, Branson found an island he wanted to buy, Necker Island. Asking price: Â£3,000,000. His offer: Â£175,000, considerably less than the asking price. He found the man who was selling the island and found out that he was selling it to finance his new Â£200,000 home. (This was the 70’s, ok?) After talking to Branson — and being desperate enough for long enough — he decided to sell the island for Â£180,000. Another situation involved the Rolling Stones. Virgin wanted to sign the Stones but was told that they were too small and couldn’t afford the band’s asking price of $3,000,000. After digging around for a while and looking for investors — to the point of jeopardizing the company — Branson was able to offer $4,000,000. He didn’t get the Stones (EMI won the bidding at $5,000,000), but he did what he had to do to get them. Lesson: Don’t tell yourself “I can’t afford it,” but ask yourself “What can I do to afford it?”
- Don’t count your chickens before they’re hatched. Virgin Records was trying to sign a band, 10cc. The deal was in place, bar the signature, even to the point where Branson was calling about the cutting process for the new album. The next day, when they were supposed to officially signed, Branson was told that 10cc signed with another label. Oops.
- Develop a mastermind group. Branson, as great a businessman as he is, needed help to build Virgin. Over the years he slowly built up a core team of people who had proven time and time again that they knew what they were doing and those folks became the cornerstones of the Virgin empire.
- You can either play it safe and survive, or you can be willing to risk everything in order to be successful. If you want to be great, only the later will do.
- Once you’re firmly established in what you do, try vertical expansion. When Branson started out, he started with Virgin Records. From there, he realized that bands were getting a raw deal in the recording biz so he created the Manor studios. From there he realized that a music label could offer a better income stream so he developed Virgin Music, the musicians of which would record in the Manor — for a small fee — and whose music would be sold in Virgin Record stores. The growth continued until Virgin had developed what software companies would refer to as “end to end solutions.” If you’re good at your work have you ever thought about becoming a supplier for others who do what you do? And who supplies the suppliers? Think about it.
- Vertical expansion is good, but doesn’t always work. Vertical expansion is why Virgin went from record store to studio to record label to magazines, etc. But sometimes it backfires on you, sort of like when Branson had the idea of manufacturing CDs within the actual store. The cost was higher than if they just let someone who specialized in manufacturing CDs do it for them, transportation costs and all. To add insult to injury, the process was not as big a tourist attraction as Branson envisioned. Eventually his advisors were able to convince him that the money and space would be better spent on inventory.
- If you find a need, don’t be afraid of filling it. Branson and a number of passengers were left stranded in the Virgin Islands after their flights to Puerto Rico got cancelled. He found out that he could charter a plane for $2,000 and could make a profit if he filled it for $39 a seat. He quickly chartered the plane, drew up a sign on a board that said “Virgin Airlines, Flights to Puerto Rico for $39” and was able to make his money back, plus a profit. Oh yeah, and he pretty much created Virgin Airlines right there on the spot.
- Failure is integral to succeeding. At various points through the book Branson points out how close he came to losing it all: his company, his empire, his name, and even his life. Yet, every single time, without fail (no pun intended), he kept doing what he knew was the right thing. For a long time he couldn’t sign a good band under the Virgin Record. It was Mike Oldfield and everyone else, or the Sex Pistols and everybody else. During that time he made just enough not to go bankrupt, and a couple of times not even that. But he kept going because he believed in what he was doing. He also believed that it was all or nothing. He either was a great success or was a great failure. In either case, he wanted to be great.
- Never ever ever ever surrender. When Branson was first forming Virgin Atlantic Airways, on the maiden flight (the one before passengers are allowed onboard, where an airline/plane must get certification), a freak accident involving a flock of birds and a jet engine turbine cost him Â£600,000. If he bought the engine he would be him Â£300,000 over his overdraft limit with his bank, and the Virgin companies would be bankrupt in days. If he didn’t, Virgin Atlantic would never fly. He decided to spend the money. He had Â£6,000,000 in place to come in from MGM after they bought the distribution rights to one of his films and had projected profit earnings of Â£32,000,000 within the next two years (so this wasn’t a “gut” decision, but a well thought out one), but this was money not on hand, and therefore money the bank didn’t count. After spending the money the bank told him that they’d bounce his checks. Within one day, Branson was able to get the money needed to pay off his overdraft and within a couple of days he found another bank to fund Virgin, this one giving him a Â£30,000,000 overdraft ceiling. Virgin survived, profited and Virgin Atlantic flew (and is still flying today).
- If you fail once, get up, adjust your strategy and try again. This is a lesson that’s displayed over and over again with Branson, especially in his adventurous expeditions. If you live, you can try again. And never be afraid to try almost anything, at least once.
- Everybody screws up. When Branson got funding for a trans-Atlantic trip in a catamaran, he decided to thank his sponsors in a celebratory lunch:
“I want to thank you all very much,” I said sincerely. “It’s going to be a great trip, and we’re really going to advertise BP as much as we can.” I thought that I heard a collective intake of breath, but I plowed on regardless. “We’re going to plaster BP on the map. Nobody will ever confuse you with that old rival of yours…” Then, looking at the wall opposite me and noticing the huge Esso logo, I realized my mistake. The Esso top executives looked at me with horror as if I were a ghost. I fell down to the floor and crawled under the table. “I am sorry,” I croaked, and started to spit and polish their shoes. Remarkably, Esso, as good as their word, went ahead and sponsored the trip.
- If you own a brand, do whatever you have to to get the brand into people’s heads. I’ll say it again, if you own a brand, do whatever you have to to get the brand into people’s heads.
- Your name and reputation are everything. During the 1987 stock market crash, Virgin decided to buy back all their stock and privatize their company again. Their stock value had gone from Â£1.40 to 70p. Although the company could have bought the shares back at that price, Branson decided that the people which had put their faith — and savings — in his company shouldn’t lose all their investment. He decided to buy back the shares at the opening price of Â£1.40. Your name and reputation are everything. Without those you are nothing — or worse.
- Take a long view. After taking the company public, the biggest problem Virgin PLC had was that investors were looking for short term gains (dividend payments). Instead, Branson had always found himself focusing on the long view. This was one of the things that exited him when he was expanding to Japan; the Japanese focused almost exclusively on capital growth. “It reminds me of the Chinese leader Deng Xiaopnhing’s remark in the 1980’s,” noted Branson. “When he was asked what he thought the implications were of the French Revolution in 1789, he replied, ‘Too early to tell.'”
In retrospect, Branson reminds me a lot — as in “more than just passing similarities — to a number of people I’ve worked with in the past. All of these have been entrepreneurs. Those I’ve been friends with I’ve learned a lot from. Those I’ve worked under I usually ended up sick of. I honestly feel now that I understand those folks a bit better (even if I still don’t like them).
I’ll add to this list (or create another post) as I finish the book.