Business Stripped Bare

the advertising I had no regular money to fund the printing and paper costs. It was edge-of-the-seat stuff at first but it had begun to wear me down.

IPC were not only offering me a lot of money; they wanted me to stay on as editor. Student wouldn’t, strictly speaking, be my magazine any more, but I would get to keep a job I still enjoyed doing.

So I decided to accept, and I went along to lunch at IPC in Holborn, just off Fleet Street. They had all the directors around the table. And once we had shaken hands on the deal, I started to talk about my vision. I told the directors I wanted to set up Student holidays, a Student travel agency, Student record shops, Student health clubs — even a Student airline? I could see eyebrows being raised. After the lunch I got a call thanking me for coming — but the directors had changed their minds about the investment, cancelling the plan to buy my magazine. They were far too courteous to say so, but the writing was on the wall: they thought I was mad.

Many years later Patricia was good enough to write me a delightful letter telling me just how much they had been kicking themselves over the years as they watched Virgin stir up sector after sector, almost exactly as their young would-be magazine editor had predicted.

I suspect they were right in not dealing with me. IPC were and are in the publishing business. They are publishers. They know who they are, and they didn’t need some kid, however promising, telling them all the other things they could be. The last thing they wanted was a wasp in the room, batting itself against their windows and getting more and more frustrated, and that, surely, is what I would have become.

Most businesses concentrate on one thing, and for the best of reasons: because their founders and leaders care about one thing, above all others, and they want to devote their lives to that thing. They’re not limited in their thinking. They’re focused.

The conventional wisdom at business school is that you stick with what you know. Of the top twenty brands in the world, nineteen ply a well-defined trade. Coca-Cola specialises in soft drinks, Microsoft’s into computers, Nike makes sports shoes and gear.

The exception in this list is Virgin — and the fact that we’re worth several billion dollars and counting really gets up the noses of people who think they know ‘the rules of business’ (whatever they are).

We’re the only one of the top twenty that has diversified into a range of business activities, including airlines, trains, holidays, mobile phones, media — including television, radio and cable — the Internet, financial services and healthcare. And believe me when I say this really upsets people. I remember in July 1997 London’s Evening Standard covered our advance into America with an article headlined ‘WHEN BRAND STRETCHING STRETCHES CREDIBILITY’.

I think this says more about the business community generally than it says about Virgin. How far must we fly before pundits of one sort or another stop predicting our fiery descent? Our proposition isn’t hard to understand: we offer our customers a Virgin experience, and we make sure that this Virgin experience is a substantial and consistent one, across all sectors of our business. Far from ‘slapping our brand name’ on a number of products, we carefully research the Achilles heels of different global industries, and only when we feel we can potentially turn an industry on its head, and fulfil our key role as the consumer’s champion, do we move in on it. The financial services industry is an eloquent example. In three years, Virgin Direct acquired 200,000 investors and was managing ?1.6 billion. As a result of its entry into the market, much of the rest of the industry brought their charges down too to compete.

Incredibly or not, Virgin has thrived by weaving its magic through many seemingly unrelated sectors. Between 2000 and 2003, Virgin created three new billion-dollar companies from scratch, in three different countries. Virgin Blue in Australia took 35 per cent of the aviation market and reduced fares dramatically. Virgin Mobile became the UK’s fastest growing network. Virgin Mobile in America was America’s fastest ever growing company, private or public. Our revenue per employee — $902,000 — is the best in the world, and we’ve got the highest customer satisfaction record too, with 95 per cent of our five million customers recommending us to a friend. Over the last thirty-five years we at Virgin have created more billion-dollar companies in more sectors than any other company.

And right now, as everyone is battening down the hatches and preparing for the twenty-first century’s first really big global recession, Virgin turns out to be ready for the storm as well. Because its risks are spread, the failure of one part — even a major part — will not ruin the whole. (Imagine if we hadn’t diversified and if we had just stuck with the record and music industry, which today faces huge challenges because of the digital download revolution — we might well have disappeared!)

So here’s the question: if Virgin has more fun when times are good, and weathers well when times are bad, why doesn’t every company try to ‘do a Virgin’? And why are the business teachers still telling young entrepreneurs to stick to what they know?

Well, I think the business teachers are right. You should focus on what you know. You should also focus on what gets you up in the morning. And for most people, that means you should focus on one core business.

The odd thing about Virgin — and this is what people often have difficulty with — is that Virgin’s particular focus made it absolutely imperative that it diversified into many businesses. Contrary to appearances, Virgin is as focused as any great company. Its oddness comes from what it focuses on. We might have hit upon the exception that proves the rule: our customers and investors relate to us more as an idea or philosophy than as a company.

Virgin’s success upsets people because it seems to contradict the wise rule that you should stick to what you love. Where’s its focus? Where’s its centre? Something must be getting that Branson bloke out of bed in the morning — but what the devil is it? We thought it was music, but then it was air travel, which we sort of understood because of his ballooning, but then it was trains, money and mobile phones, and what is it now? Healthcare? Space? Oh help!

I’ve never made any secret of what gets me out of bed in the morning. It’s the challenge. It’s the brand. Maybe it’s something to do with my surname. I remember a journalist from the Daily Telegraph magazine did some research into the root of my name and discovered that, yes, ‘Branson’ was originally ‘Brandson’: my distant ancestors made their living branding cattle!

For me, the brand is central. Whenever I say this to people, however, an awful lot of them feel their eyes misting over. ‘What the devil does he mean, the brand?’

I’ll try to explain. Let’s start simply with a quick sketch of what a brand can do.

IPC, as we know, publishes magazines. What I want you to do is name three of its titles. If you’re in the industry, you’ll have no problem reeling off a dozen. (They’re very successful.) If you’re not in the industry, you won’t have a clue. Why would you? The IPC brand means plenty to the industry, but nothing to the punter. The punter wants the flavour, tone and content of the magazine, not its purse-holder. The punter cares about the magazine’s brand; the owner’s brand would merely get in the way.

Who published the last novel you read? Which production company made the DVD you watched last night? You probably don’t know, the companies know you don’t know, and you know what? — nobody minds.

Brands exist as a means of communicating what to expect from a product or service — or to highlight the family likeness between different products and services. An established brand on a new product is a guarantee that what you’re getting will be, in its own way, like something you’ve enjoyed before. This is not always a good thing. Readers of Mills & Boon romances may want the same kind of story again and again; families look forward to taking their kids to see the new Pixar movie, regardless of whether it’s about animals, toys or cars. On the whole, though, novelty and discovery count for a lot in the entertainment sector, and the last thing you want to do is stick some galumphing great label over everything you do, suggesting to your audience that your new thing is just like your old thing.

At the other end of the spectrum — perched in splendid isolation in the far, far infrared — there is Virgin. The Virgin brand tells you that using this credit card is rather like using this airline, which, in turn, is rather like using this health spa, and listening to this record, and paying into this pension fund.

What’s the family resemblance? What resemblance could there be between these diverse goods and services?

Pretty obviously, it has something to do with the customer, because when you look at the range of things