Risky business
Doing business is a serious matter. It comes with a certain pattern of behaviors, conducts, and rules. If you have not been taught this explicitly, you might have reached the same conclusion by observing the environment.
Turns out, Richard Branson, came to the business world to have fun. The founder of The Virgin Group and owner of a $4 billion net worth, knows how to bring his adventurous characteristics to serious business, like an airline.
At 14 years old, Branson, alongside Jonny Gems, found a student magazine that needed capital to be published and printed. The focus was on selling ad space, and the young entrepreneur convinced National Westminster Bank to fund the magazine, after saying that Lloyds Bank did too. He realized that the best way to get a company on board was to affirm their biggest competitor was in. He got Pepsi and Cola-Cola, and interviewed Mick Jagger and John Lennon.
After this adventure, Branson saw the opportunity of selling records by mail, with lower prices than big retail stores. Virgin Mail Order was born, and an ad was published in the last edition of the Student magazine, which did lead to a lot of orders. The problem came when the Post Office went on strike, and the whole system was suspended.
This apparent failure made Branson continue the reinvention. He decided to open a record store. But not like the other ones. He wanted a place where people felt excited and welcomed to share ideas about music. For his first store, he managed to get an empty first floor without paying the rent. He convinced the owner that having his record store on the first floor would make a lot of people go through his shoe shop. In one year, they expanded to 14 stores around England.
At 21 years old, Branson decided to expand the music business. He opened a recording studio and a music label — Virgin Records. Branson did what is called vertical integration. His company was able to perform every aspect of releasing a record: signing artists, having a place to record, publishing, promoting and selling within their own retail stores. Bingo.
The way Branson does business takes me back to the life of Derek Sivers, the founder of CD Baby. He refused numerous opportunities to grow his company, because he enjoyed the way it was, and every small business he started was based on having fun and helping people.
“Most people don’t know why they’re doing what they’re doing. They imitate others, go with the flow, and follow paths without making their own.”
In 1978, Branson decided to fly to the Virgin Islands with his future wife, Joan. He knew that by showing his interest in buying an island (Necker Island), he and his wife would be treated as lords. And they did. Branson ended up offering 150,000 for an Island that was selling for 3 million pounds, which got them kicked out of the villa. Later, he found the owner of the Island needed to make a quick sale, and Branson got it for 180,000 pounds.
But the biggest achievement from this trip was not buying the Island. It was, instead, what later became Virgin Airways. When the flight back to Puerto Rico was canceled, Branson rented a plane and sold out $39 tickets, right there in the airport, by announcing the flight with a blackboard. Call it entrepreneurial thinking.
“I can honestly say that I have never gone into any business purely to make money. If that is the sole motive then I believe you are better off not doing it. A business has to be involving, it has to be fun, and it has to exercise your creative instincts.”
In 1984, Branson was ready. But aviation was a risky business, and he knew it. To mitigate the risk, Branson spent 2 months negotiating the lease of one airplane, that would be returned one year late if the business didn't go as expected.
“It is only by being bold that you get anywhere. If you are a risk-taker, then the art is to protect the downside.”
― Richard Branson
If aviation wasn't already risky enough, one year after starting the airlines, Branson decided to break a record speed on crossing the Atlantic Ocean, which was also a great opportunity to promote the business. After three days, the catamaran was hit by a storm. This wasn't a single event, and two years later, Chay and Branson tried it again, still falling. They eventually did set a new world record.
But because breaking records isn't enough, in 1990, Branson was responsible to transport 40,000 blankets, medical supplies and rice to 150,000 refugees that were in Jordan. On his way back, Branson and a volunteer, negotiated with Saddam Hussein to release hostages in exchange for medical supplies.
In the meantime, Branson and Per Lindstrand tried to cross the Pacific with a hot-air balloon, almost dying in the process, but still breaking the speed record. And you call aviation business a risky one...
Risky business is doing business without having fun.