Interview: Richard Branson

Serial entrepreneur and billionaire Sir Richard Branson talks candidly about startups, success and space travel
Brand builder: Branson is an ambassador for Business is GREAT, a UK government initiative to encourage foreign firms to do business in the UK.
By Courtney Trenwith
Sat 22 Feb 2014 02:41 AM

Sir Richard Branson is not a man you would expect to lack confidence. In fact, some argue the success of his 50-plus businesses that have amassed him a fortune of at least $4bn over almost half-a-century has a lot to do with his personal marketing ability.

He’s famously dressed up as a mobile phone to launch Virgin Mobile, shaved his beard and put on a wedding gown for Virgin Brides, swum naked and driven a tank into Times Square.

But get Branson one-on-one and suddenly his eyes dip towards the floor, barely lifting during the interview. The on-screen, on-stage persona is stripped away to reveal a rather sheepish man who is clearly less comfortable in an intimate setting.

It’s certainly not how he has faced business. The serial entrepreneur has dived — apparently not always with a lot of thought — into scores of companies in almost every industry, including a record label, an airline, health clinics, a bank, condoms, a railway network and most recently, a space travel company.

These days he’s relaxed the strings on most of his ventures, preferring to focus his energies on social issues, putting his money where his mouth is on problems as varied as conservation, HIV/AIDS, abortion and corporate social responsibility.

His advocacy also includes helping others follow in his footsteps by achieving their own startup dreams. Virgin’s not-for-profit arm, Virgin Unite, supports entrepreneurs through its Branson Centres of Entrepreneurship in South Africa and Jamaica, and the Virgin StartUp scheme in the UK.

Branson also is an ambassador for Business is GREAT, a British government initiative that encourages foreign firms, including from the Middle East, to do business in the UK, as well as its off-shoot Entrepreneurs are GREAT, which supports new ideas.

“I lobbied the British government very hard to see whether they would introduce loans for startups rather than just loans for students and we were delighted that about three years ago they agreed to do that,” Branson says. “We now have an organisation in England that administers a lot of those startup loans, which is what helps these organisations that have got great business ideas stand on their feet; it [also] helps mentor them and I think Britain is maybe the only country in the world that’s really going all out now with this loans scheme.

“I really do think we could find the Virgins of 30 years from now started out from one of those schemes.”

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More than half a million new companies were founded in the UK last year, according to entrepreneur campaign group StartUp Britain, due to the country’s ease of setting up and its robust investment environment.

Branson is supporting the government’s Sirius Programme, which is encouraging young foreigners with innovative ideas to relocate to the UK, where they will be given mentoring and support, including investment and visa endorsement, to help get their idea off the ground while retaining full control over the business direction and equity.

“I think the UK is a great place for companies from the Middle East to go, or have a company here and have a subsidiary in the UK,” Branson tells Arabian Business during a recent visit to Dubai.

The first seven startups to join the programme were announced in December and include young entrepreneurs from 13 countries.

The programme threatens to steal the best innovators from their home countries, most likely places where business is tied up in bureaucracy or there’s little opportunity to raise the required funds.

The recent expansion of an online visa application service that allows nationals of the UAE, Oman and Qatar — as well as Kuwait later in the year — to enter the UK for up to six months also is likely to make the country more attractive to Gulf entrepreneurs.

“It’s a good example of governments [working to attract business]. Barriers like visas are something that governments should do everything they can to get rid of,” Branson says. “We’ve been trying desperately to get things changed... for Chinese people coming to the UK... because they go into the Schengen area and it costs one rate [to do business] and they come to the UK and it costs a hell of a lot more. But it’s great that things are going to be easier [for Gulf citizens].”

According to various surveys, the Middle East needs to create as many as 80 million new jobs by 2020 to help sustain the rising population, which is also one of the youngest in the world. The private sector will have to absorb the majority of the employment demand and entrepreneurs will be crucial.

But with the UK actively seeking out the best potential business people and offering one of the most advanced regulatory environments, making life and business easier, the region risks losing some of its top potential entrepreneurs.

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“I think [Middle East governments] should consider what’s happened in the UK,” Branson says. “If the government was to give entrepreneurial loans to people who come up with good ideas for business — they don’t have to be very big loans — that would help encourage thousands of new entrepreneurs in this region.

“It’s a scheme that Great Britain has pioneered; it’s very successful and that’s something that governments should consider here.

“I also suspect that a lot of the government-run businesses should consider privatising over time, because generally it performs better that way.”

Gulf states including the UAE have relatively immature business environments but have been upgrading legislation and boosting support for new businesses in recent years and a stock exchange dedicated to small and medium-sized businesses also is in the pipeline.

But Branson is shocked when he learns the UAE, along with the other Gulf states, does not have a bankruptcy law that would allow failed entrepreneurs to write off their losses, avoiding jail, and potentially try again.

“I’m flabbergasted to hear there’s no bankruptcy law [in the UAE],” he says. “What transformed Great Britain was in about 1850 the bankruptcy law was brought in and people didn’t have to go to the watch house [jail] if they went bankrupt, they had a chance to start again.

“I would say that that would be one of the first things [the UAE government] should do if they want to encourage entrepreneurship, because who’s going to take a risk if there’s no protection?”

It’s an experience Branson knows all too well. While he is flagged as one of the most successful businessmen in recent history, not everything he’s invented has gone well. Virgin Cola barely managed to squeeze out 0.5 percent of the US soft drinks market (not to mention his other drink-related failures); a cosmetics company first called Virgin Vie, then Virgin Vie at Home, lost a reported £21m  ($35m) when it was eventually sold; and critics claim Virgin Galactic’s SpaceShipTwo will never reach space.

Even one of Branson’s most successful companies, Virgin Atlantic (he now owns 51 percent through Virgin Group), has had to admit partial defeat, axing its Hong Kong-Sydney route earlier this month because it was losing $10m a year.

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Branson blames increased costs and a falling Australian dollar, but he concedes personal affinity with Virgin Atlantic’s only Australian service probably inhibited him from stopping the losses from accruing as high as they did.

“I suspect we carried on going too long, and that’s always a danger in business, you hope that next year will be better than the previous year,” he says.

“I love going to Australia and the idea of having to go on Qantas or British Airways is going to be very, very painful. So we’re just going to have [to wear] a bag over our heads for that one leg, from Hong Kong onwards, sadly.”

Fortunately, the London-Dubai route is faring better and Branson expects expansion. “[Virgin Atlantic’s] daily service to Dubai does really well and putting on a bigger plane at some stage would definitely be on the cards,” he says.

Branson also owns about 10 percent of Virgin Australia, alongside UAE flag carrier Etihad, which has a 19.9 percent stake and is expected to soon take up a board seat. A low-cost carrier, Virgin Australia, which has a handful of international destinations, has gradually captured more than 35 percent of the domestic market thanks to the hip marketing and staff attitude synonymous with the Virgin brand.

The airline’s success has led to a recent war of words with Australian rival Qantas, Dubai airline Emirates’ major alliance partner.

Qantas boss Alan Joyce claims Virgin Australia has an unfair advantage because it is not subject to the same foreign ownership regulations as the former state-owned airline. The higher threshold recently allowed Etihad and two other major shareholders, Air New Zealand and Singapore Airlines, to inject a combined $350m into Virgin Australia in what Joyce blasted as a “virtual takeover”.

Branson, who denies reports he’s interested in getting out of Virgin Australia after selling 10 percent of the company to Singapore Airlines last year, slammed Joyce while in Dubai.

“Alan Joyce is in deep s*** because he drew a line in the sand; he said that Virgin were not going to have 35 percent of the market and he’s lost hundreds of millions [of dollars] in order to try and hold that line. Now he’s appealing to the government to give him money and holding his hat out like a begging bowl to the government,” Branson says in his typical uncensored style.

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“These airlines are just investors in the country. He’s [also] raised hundreds of millions from his shareholders over the last few years. It would be incredulous if the government can hand over money to him and they don’t hand over money to Virgin Australia. Every company in Australia will come begging to the government if the government allowed that to happen.”

In return, Branson argues Qantas and Emirates should never have been allowed to create such a mammoth alliance. The tie-up, which was officially launched on 31 March, last year, saw Qantas move its Singapore hub to Dubai and has been described as history-making.

The alliance between American Airlines and British Airways — two of the world’s largest carriers — in 2010 then led to Branson’s Virgin Atlantic partnering with the other big US carrier, Delta. Branson says none of the deals should have been approved.

“Good government would never have allowed that to happen,” he says.

“[Virgin Atlantic was forced] to go along to Delta and say ‘we need a big brother now’. And the regulators have allowed Qantas and Emirates to get together, and so there’s no real competition on that route.

“[Now] you’ve now got less than a handful of big carriers around the world and prices will go up as a result. Competition brings better fares and better quality than cooperation but the regulators in their wisdom have decided to create a number of very big, very big alliances.

“And it’s going to be incredibly difficult for any new airline to ever, ever, ever get up and compete with that.”

It’s far from the days when Virgin Atlantic was able to relatively quickly carve out a name for itself in the international aviation industry with his then unique product and service offering. It was the first airline to provide seat-back TV screens and air hostesses that appeared to actually enjoy their job.

“When we started 30 years ago, the quality of airlines was abysmal,” Branson says. “You were lucky if you had a piece of chicken dumped in your lap, there was no entertainment and the staff who worked in the airlines never smiled. So we thought, let’s try to create the kind of airline that we’d like to fly.”

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Branson has since moved on to space travel and is eagerly awaiting the launch of the first flight for Virgin Galactic’s SpaceShipTwo. Backed by Abu Dhabi government investment first Aabar Investments, which owns 37 percent, the success of Virgin Galactic could see a space port built in the UAE in the near future.

But in the meantime, perhaps Virgin Group’s next venture in the Gulf will be its first Virgin-branded hotel? Why not take advantage of the region’s love of shopping and establish Virgin Malls? Or will Branson put his name to a theme park?

“I don’t know. Most of my time is now spent on setting up not-for-profit organisations,” he says. “That’s really my main concentration but we have a fantastic team of people that run the Virgin business day to day, and I know they’ve got some exciting things on their plate.”

Richard Branson on...

Philanthropy

British businessman Sir Richard Branson does not often mince his words and over the years he’s had plenty to say on all manner of topics; some that have earned him support and others that have left the world shaking their heads.

Among the most high profile issues he’s taken up are, gay rights (he recently called on international businesses not to deal with Nigeria after the government proposed jailing homosexuals), conservation (he has pledged to make his two Caribbean islands 75-80 percent powered by renewable energy by 2020), abortion (he is godfather to a girl whose mother claims she got pregnant when “something went wrong” with a condom sold by Branson’s company), and the decriminalisation of drugs.

But while some of what he has to say doesn’t always align with everyone (Virgin Rail and his three airlines are among the largest polluters and Branson has been accused of tax evasion), Branson is willing to back up his words with cash.

Virgin Group’s not-for-profit arm, Virgin Unite, has sub-organisations that support entrepreneurship, conservation and conflict resolution.

Virgin Unite was instrumental in establishing The Elders, which involves 11 influential world leaders including the late Nelson Mandela, Graca Machel and Lakhdar Brahimi to help solve conflicts including the Syrian war.

“Business globally should become a cause for good and if every single business adopted a [social] problem... we could get on top of most of the world’s problems,” Branson says during a recent visit to Dubai. “Business also should use its clout when they see inhumane things happening in the world.

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“As you build a company and you get into a position of wealth and also international recognition then you mustn’t waste the position you find yourself in. If you’re in a position where you can maybe resolve problems in the world you should try.”

A year ago Branson signed up to the Giving Pledge, the initiative founded by Bill and Melinda Gates and Warren Buffett in which the world’s richest commit to giving away at least 50 percent of their wealth to philanthropy. 

“I think, so they should because we are extraordinarily lucky to be successful and have the sort of wealth that goes with it,” Branson says. “Then it’s [about] trying to work out what’s the best use to put that wealth to.

“At Virgin Unite, what we’ve done is said, what are the big issues in the world, really big issues, and let’s set up organisations just like we’d set up companies, get fantastic chief executives to run them and lets go and see if we can solve those really big issues, and it’s great fun trying to do it. Some of them we may succeed at, some of them we may not but we’ll give it a good shot.”

Virgin Galactic

When you have a dream, you can’t rely on someone else to achieve it for you, especially if your goal is to enter space.

And so half-a-century after watching Neil Armstrong and Buzz Aldrin land on the moon, Sir Richard Branson, disappointed the world-first achievement had not led to wider space exploration, launched his own mission.

“I’m a lad of the ‘60s, I saw the moon landing. I assumed one day that we’d all be able to go to space, and I waited and waited and waited [but] governments are not interested in sending you and I to space, so a few years ago I decided we would embark on trying to build our own spaceship, a mother ship, a space port to enable myself, my family and other people’s families and friends to go to space,” the British billionaire explains.

Virgin Galactic is expected to make its first passenger flight to space this year with Branson and his family on board, in what he promotes as an adventure that will spark the beginning of an entirely new era of travel. One that will see scheduled passenger flights — taking customers from one continent to another in as little as an hour — in about 12 years.

“I think it really will be the start of a whole new space era,” he says.

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“And I think one day we may even give [Dubai airline] Emirates a run for their money. Our spaceship is built in the same shape as an aeroplane; ten years from now I think we’re going to be going at 18,000 miles per hour around the world, so maybe one hour from London to Singapore.”

Abu Dhabi has backed the venture, with the government’s Aabar Investments owning about 37 percent in return for the emirate being in line to host one of the first spaceports, which could see travel to the US reduced to one hour.

But not everyone believes in Branson’s dream. The biggest critics suggest Virgin Galactic will never make it into space. Nor will it gain safety approval from the US regulator. Others refer to Branson’s annual declaration that this will be “the year” as a significant indicator that he may have failed to understand the depth of his goal.

Meanwhile, when Virgin Galactic’s SpaceShipTwo does launch, passengers (who will have initially paid a cool $200,000 each) will barely enter space, which is defined as 62 miles above Earth.

SpaceShipTwo is designed to reach 68 miles above Earth and then fall back without power for five minutes before gliding into the New Mexico space port.

“To be sure, the views will be gob-smacking, but they won’t include galaxies,” Clive Irving wrote recently for the Daily Beast.

Branson dismisses the criticism as “rubbish” and is adamant SpaceShipTwo will take off “in three to four months”.

“We have got to get the spaceship working first and what I’ve realised is that it’s rocket science,” he says.

“If myself and my family are not in space by the end of the year, I would be very, very worried. “There are some people who seem to want things to fail,” Branson says. “The best way of dealing with people like that is to prove them wrong and we will prove them wrong.”

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