caps, T-shirts and jackets made for 1,500 staff and for customers, to trumpet our attitude of going the extra mile.
In 2001, RBS could see this was a great business. They decided they wanted to buy 100 per cent of Virgin One. They already had 50 per cent, but the remaining part was held by Virgin Direct, which was a fifty–fifty joint venture between Virgin and AMP. I owned a quarter of this and there was a lot of discussion about the shareholding. I had lunch with Fred Goodwin and Fred was quite clear with me: he didn’t have a huge amount of time for AMP.
I wrote in one of my notebooks: ‘
On a nearby page I added: ‘
We eventually sorted out a deal with AMP. Once it was announced I phoned Jayne-Anne.
‘I’m really sorry.’
‘About what?’
‘About losing you. I’m phoning to say how sad I am today.’
‘Sorry? Why?’ she said. ‘I’ve just got a very decent cheque and so have my team.’
‘Well, I feel as if I’m selling you and the guys along with all of the furniture. I’ve signed a clause with the Royal Bank saying we can’t go into mortgages in the UK for the next two years. Look: if you don’t like corporate life in two years’ time, come back to us.’
Two years to the day later, I phoned. ‘Are you happy?’
My call had surprised her, and pleased her, but — yes — she was happy. She was doing extremely well with Sir Fred, helping develop the One account, and the First Active account. She was now responsible for all of RBS’s consumer finance in the direct market — and later the whole mortgage business in the UK. She was such a fit and capable person: it occurred to me that she should be running a bank.
She kept in touch and on 19 December 2006 — the anniversary of launching Virgin Direct — she left RBS, departing on good terms. We were keen to get her back to Virgin to take hold of our money business. Luckily Gordon managed to persuade her to return after a short rest, and she rejoined in March 2007. I phoned her from Necker: ‘Jayne-Anne — welcome home.’
By then Virgin Direct had evolved into Virgin Money — a joint venture model offering products with several different partners, whilst the business is owned by our group. Virgin Money undertakes the marketing and designs the products — credit cards, savings and investments, life and general insurance — while our partners provide the rest. (Bank of America operate our credit cards, which means the cards are on Bank of America’s balance sheets, not Virgin’s!) But (possibly fortunately given the unfurling of the mortgage crisis) we hadn’t been able to get back into the mortgage business since selling the One account. I asked Jayne-Anne and the team she brought with her to re-establish the One account on another level to fill the gap left by all the struggling mortgage lenders. It was this springboard that gave us the ability to make a proposal for Northern Rock — which I’ll talk about in the next section.
In this chapter I’ve tried to demonstrate how Virgin has delivered on some of its best ideas. I’ve tried to illustrate the importance of good communications and attention to detail. I’ve stressed how vital it is to think clearly, reducing a business to its essentials. Do not underestimate the effort required to do this. It is very hard to look outside your own industry, and think the way a customer thinks, particularly if, as is likely, your life’s efforts are devoted to one operation, in one sector.
Virgin’s brand values of informality and plain speaking are incredibly useful to us in our day-to-day delivery of business, because they keep us grounded. They stop us from losing touch. They prevent us from ever, in our wildest nightmares, contemplating anything as self-defeating as ‘confusion marketing’.
Remember: complexity is your enemy. Any fool can make something complicated. It is hard to make something simple. Use experts wisely. Direct them. Give them work to do. They’re not there to hold your hand. Ignore flak. Remember, everyone has an agenda, so the advice you receive from outside your trusted circle is not just to benefit you. Almost all of it will be well meant, but even the best of such advice needs interpreting.
Engage your emotions at work. Your instincts and emotions are there to help you. They are there to make things easier. For me, business is a ‘gut feeling’, and if it ever ceased to be so, I think I would give it up tomorrow. By ‘gut feeling’, I mean that I believe I’ve developed a natural aptitude, tempered by huge amounts of experience, that tends to point me in the right direction rather than the wrong one. As a result, it also gives me the confidence to make better decisions.
My plans acquire detail as I test them against questions that on the face of it are really quite simple — and more to do with emotions than figures. If we create the best health club in town, will existing gym users go to all the bother of transferring their membership to us? If the answer is ‘Yes’, then we will give it a go and see if it works.
This is the point where being a well-funded company puts you at a tremendous advantage. Big businesses can afford to do this sort of thing. The good news for small businesses is that the big ones rarely bother to use their advantage to its maximum. Why? Because they’ve forgotten how to think like entrepreneurs. Worse still: many of them have forgotten how entrepreneurs feel.
4. Learning from Mistakes and Setbacks
In 1969 I made the biggest mistake of my life. It was an event referred to as recently as late 2007 by the Liberal Democrat MP Vince Cable in the House of Commons during Virgin Money’s bid for the Northern Rock bank. He said, when speaking under UK parliamentary privilege, that I was not a fit person to run a bank. In the UK, nearly forty years after a lapse in judgement, I was still being pilloried.
I was nineteen years old and driving a shipment of records to Belgium when I stumbled on the fact that records bought in Great Britain that were intended for export were not subject to purchase tax. So I bought the records I needed, pretended they were for export, and then sold them to British customers. The whole ploy involved driving four Transit vans loaded with records to Dover, taking them to France, then returning on the next ferry with the records still on board. It was not only illegal, it was really pretty stupid. In May 1969, I was caught red-handed by HM Customs & Excise, put in a cell overnight and charged under Section 301 of the Customs & Excise Act 1952. It nearly killed off my entrepreneurial dreams; thankfully it didn’t — but it did teach me a hard lesson about never doing anything illegal or unethical ever again. I hadn’t fully appreciated the seriousness of what we were doing or the potential damage it could do to my reputation. It was my mum and dad who bailed me out, putting up their home as security. In the end, customs agreed not to press charges as long as I paid back three times the tax that had not been paid — around ?60,000 — and I was spared a criminal record. What I didn’t know at the time was that the big record retailers were pulling the same stunt in a more systematic way, and they too soon ran into the same problem.
After this shock, all the staff got together and we agreed to work night and day to settle our debts, expanding the company as fast as we possibly could in order to pay off these debts and to avoid me going to court.
It took us three years. But I learned a very important lesson:
One thing is certain in business. You and everyone around you will make mistakes. When you are pushing the boundaries, this is inevitable — and it’s important to realise this. Even when things are running well, there is always
