Richard Branson: In it for fun not just money
virgin.com
virgin.com
He made a lot of REALLY bad business decisions (i.e. decisions which lost him lots of money) in the first 25 or so years running Virgin which is pretty good evidence that this blog post is not just PR.
On an unrelated note, something else I learned from the book is his success was pretty much 100% due to a cousin of his from South Africa showing up in London unannounced and looking for a job - turns out that cousin had a great ear for "what's cool", which resulted in Virgin signing their first successful artist (a studio musician who hung out at one of their studios), whose record sales kept the company afloat for its first 10 years.
Just goes to show you the importance of the right team - as well as being in the right place at the right time...
For example, he started his business selling Virgin records by mail and used pre-orders to limit any real inventory risk. That gave him the cash flow to fund the eventual opening of the Virgin Record Store.
Then later, when he decides to open an airline, he purposefully chooses to lease rather than buy planes. That lowered his initial capital outlay and made the risk of the airline going bust not so bad on his wallet.
I think I also remember that he was really good at setting up his different companies using a holding co structure. I think that allowed him to segment out each business and made it so that the failure of one would not affect the others (esp. re financing).
I also got the idea that he took a lot of small low risk bets. Taking his Virgin brand and simply applying it to pre-existing products (maybe even cola? I cant remember too well). Even the airline was already another airline I believe. So by applying his brand to a wide variety of products he was able to circumvent having to do a ton of R&D or heavy capital investments.
I get the impression from the book that people would call Richard up looking for money, and if it sounded like fun Richard would say "Sure", to which all the other Virgin stake holders say "Are you nuts?". Then Richard moves forward with it one way or another, and its up to the other employees to make it work.
That, at least, sounds like the story behind Virgin Atlantic, as well as a few of his big adventure trips.
Just going by your statement that he "made a lot of REALLY bad business decisions...in the first 25 or so years," it seems like he was at a lot of different places at a lot of different times. This very much increases the probability of eventually being at one of the right places at one of the right times.
Hence, it was being in the right place at the right time once which allowed those future bad decisions to be made.
The branded venture capitalism method they have adopted for new ventures is something to be very envious of. The success stories of Virgin Blue (Australian Budget Airline) and Virgin Mobile are perfect case studies for anyone looking to learn about how to launch a disruptive company in a dilapidated market.
Tom Bower's unauthorized biography is an interesting counter point. Branson is very good at self-promotion, including his own books.
That's more proof to me than anything else, he can't be in control of himself that much that he could fake that consistently. He's done some very dumb stuff knowing full well that it couldn't really hurt him just for the heck of it.
"Most people feel that they can create something that is going to make a difference to other people's lives - that is how they start their businesses."
Reminds of Tim O'reilly post "Work on stuff that matters"
1/sthg that matters to you more than money
2/ create more value than you capture
3/ take the long view
http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-...
I tend to believe that.
Edit: actual quote
>rankly, though, if I've misled people here, I'm not eager to fix that. I'd rather have everyone think starting a startup is grim and hard than have founders go into it expecting it to be fun, and a few months later saying "This is supposed to be fun? Are you kidding?"
The truth is, it wouldn't be fun for most people. A lot of what we try to do in the application process is to weed out the people who wouldn't like it, both for our sake and theirs.
The best way to put it might be that starting a startup is fun the way a survivalist training course would be fun, if you're into that sort of thing. Which is to say, not at all, if you're not.
And then realize that it's very unlikely that failure will really mean dying on the street, someone will back you up. At this point it doesn't seem so difficult :)
Of course, more than likely those same people are now going to down vote me.
God, I sound like my dad now.
EDIT: Also, him saying that money is a detail only helps in the short run. I have the same attitude toward an interesting project I'm about to quit my job for, but I recognize that this "fun", as it were, will be very short lived if I don't have some revenue. So, trying for real and lasting a year is better than selling out, but finding a way to make money off of the "real" thing is necessary if it's going to last.
If you get into business specialising in something you have little to no passion about and you are unsuccessful then chances are you won't have enjoyed the process whereas if you are unsuccessful after attempting something you truly are passionate about then you will more than likely have enjoyed the process regardless.
It reminds me of what my Dad used to tell me 'Do it because it makes you smile, not because it makes you money'.
http://en.wikipedia.org/wiki/Richard_Branson Richard Branson 2.6 Billion
In the same league.
Branson is well known for being a shrewd businessman and only looking to enter markets where he thinks he can compete and be financially successful.
Consider his recent investment into Formua 1 racing. Last year he sponsored Brawn GP for the first few races for a paltry sum of money (because they were desperate). Due to the team being sold off by Honda and they came back from the brink and had the fastest car - he got a ton of free PR and decided not to invest more money because he didn't need to.
This year he has created his own F1 team - Virgin Racing, and to save on costs the team are designing the car purely using CFD, whereas every other team are using windtunnels and building scale models and say you can't use CFD alone. Time will tell which one is proven right
Mast bending over due to the wind, photographer compensating for this by tilting the camera.
Branson's a fascinating character - that cover story Forbes ran a few years back about Branson and other successful people who were all afflicted with dyslexia really helped motivate my younger brother who has a really severe case, so for being a good role model for people like my brother he has my thanks.