The name Richard Branson normally evokes feelings of admiration and awe when one considers his more-than-modest origins and the heights to which he has risen. His flair for doing things with style and elan makes him a maverick and he gives the impression of a person who takes chances in a flamboyant manner and almost always succeeds. Staging stunts for free publicity has become a habit, and this often evokes a feeling of confidence in his customers and investors. That?s his persona.
And if this is the impression you have of him, it is understandable because, as Tom Bower says in the remarkable book, Branson Behind the Mask, you are made to think so, thanks to the hype he has created around his name and brand. Branson?s story is one of creating an image and maintaining it dexterously through the media, taking the brand name Virgin along with him.
In fact, what Branson has actually done better than anyone else is sell the brand Virgin across various businesses that range from music, aviation and banking to Formula One racing. The reason why the Virgin brand scores over others is that Branson has tended to convince the world that it is cool and hip, even though most of his other ventures?with the exception of music and, to a very limited extent, aviation?have bombed badly. But the Branson model has been perfected through the Virgin brand. In fact, the two reinforce one another. The common trail is that a partner pays Branson for a brand, which the partner thinks will sell, and the losses are invariably borne by the partner. That, in short, has been the Branson strategy.
He has done what people like to hear about. A person who likes breaking rules, passing on the blame to others when ventures fail and who takes chances even when the result is known, is almost always a darling with the media. Branson spoke of fair pricing and used it as a lever to enter many fields. But prices never really came down once he was in. He always claimed that he brought down prices.
In every business he ventured into, Branson played victim of an uncompetitive monopoly. As a corollary, he argued that in public interest, the incumbents should step aside and facilitate his success. Branson has spoken about Virgin being like a family to him where every employee matters, but has never shied away from laying off workers.
He has always reveled in the agony of others, a clear case of schadenfreude. His ultimate boast, which never quite worked out though, was to send people into space. Tickets were sold for this too, even though the aircraft is not yet ready and the rocket failed twice when the trials were on. The project has been deferred for now.
While the story of how a school dropout became a billionaire is now legendary, Bower describes the way Branson does business in a way that clearly tells us how his mind works. Branson speaks of ethical transparency, but runs his flagship airline through 11 companies. Let us see how: Virgin Atlantic Airways (Great Britain, or GB) is owned by Virgin Travel Group (GB), which is owned by Virgin Atlantic (GB). Virgin Atlantic is owned by Bluebottle Investments (UK) (GB), which is owned by Bluebottle UK (GB). Bluebottle UK is owned by Classboss (GB), which is owned by Virgin Wings (GB). Virgin Wings is owned by Bluebottle USA Mobile (British Virgin Islands, or BVI), which is owned by Virgin Group Investments (BVI), which is, finally, owned by Virgin Group Holdings (BVI). This, surely, is a mouthful for anyone. But tax laws have been tackled quite eloquently through this route.
Bower takes us through the many ventures of Branson, starting with his leaving school and producing a magazine called Student. From there, he ventured into music to start Virgin Records and promoted singers like Boy George and Sex Pistols. Next was Virgin Atlantic, another gamble that got him fame, and stunts like taking an around-the-world trip in a balloon. In between, he played cameo roles in movies like Casino Royale and Superman. He made a windfall by selling Virgin Music to EMI and escaped paying tax by routing it to Channel Islands.
Interestingly, when he wanted to make his airline operate from the US, he got close to Bill Clinton, Al Gore and Arnold Schwarzenegger, and started supporting the green cause. More adroitly, he promised $3 billion of his profits in the next 10 years for the cause. This never had to be paid, as the company was making losses anyway. But the toehold was established. He promised a reward of $25 million to anyone who would lower the level of greenhouse gases in the environment to support Gore?s cause. All this, ultimately, got Schwarzenegger to actually give Virgin $15 million for setting shop in San Francisco rather than Los Angeles.
Branson has had his share of controversies, like teaming with British Airways (BA) to jointly indulge in unfair practices. But he got away and BA had to pay for it. His other forays into mobile telephony and credit cards were also remarkable, as also his attempt to buy Northern Rock Bank at the time of the financial crisis. In fact, he linked his air tickets to Virgin One, which was an Internet bank started by him.
One way to hit the headlines, which Branson relentlessly pursued, was to make unsubstantiated claims. People believed him when he said he had 5,00,000 subscribers for Virgin Mobile. Further, he also made claims of talking to Gordon Brown on a flight to strike a deal on Northern Rock. But once the latter denied such a conversation, Branson turned around and said he would never discuss such a subject on a flight with the media present. Similarly, Branson would declare that his engines would use 20% biofuel when it was actually 5%.
The author is quite critical of Branson?s management style. At some stage, the author believes that because of lack of knowledge, Branson passed on power down the line. But as a rule, his approach was not about collaboration. He encouraged rivalry within his staff, feeding them with suspicions about one another.
A remarkable thing about Branson, according to the author, is that failed businesses never deterred him. This is probably a lesson for any entrepreneur. Cruise holidays, comics, megastores, etc, are all examples of his failed ventures. He hated criticism and losing, and whenever there was defeat looming, he knew he had to approach the regulator.
Reading the book, one does tend to lose a bit of awe for Branson. In fact, if all that has been stated is true, one would start doubting the exploits of all businessmen because all of them use the media to sell their brand. A positive takeaway from the Branson narrative is the positivity he exudes. The book is bold and takes on the brand of Branson with flourish and without any bias. There are a lot of positives too. Branson?s five secrets of success sound honest: enjoy what you do, create something that stands out, create something that everybody who works for you is proud of, be a good leader and be visible. The last one he surely is. But it would require an individual to take a final call on Branson?s methods, which, though devious, keep him going.
Madan Sabnavis is chief economist, CARE Ratings