#47 Losing My Virginity How I Survived, Had Fun, and Made a Fortune Doing Business My Way

In the episode, the host revisits Richard Branson's autobiography "Losing My Virginity," reflecting on how Branson's philosophy of business as a fluid, creative, and non-formulaic endeavor has shaped the Virgin Group's dynamic growth and constant reinvention. Branson's early ventures, from a student magazine to a record label, demonstrate his knack for seizing opportunities and his inclination to challenge norms. The host also touches on Branson's brief stint as a public company owner, which stifled his creative and decision-making processes, leading to his decision to take Virgin private again. Additionally, the host plans to delve into the detailed struggles and strategies of Branson's business journey in subsequent episodes.

• Richard Branson does not believe in a one-size-fits-all business philosophy.
• Success in business is not guaranteed by following a specific formula.
• Business requires being active and on the move, with a good team and luck.
• Virgin Group is characterized by constant change and evolution.
• Branson's autobiography aims to provide an insight into his life and business, not just financials.

"You cannot clearly define our business success and then bottle it as you would a perfume. It's not that simple."

This quote emphasizes that business success is not something that can be easily codified or replicated like a recipe or a fragrance.

• Business is a fluid and dynamic entity that cannot be definitively predicted.
• The Virgin Group is an example of a business that has continually adapted and changed.
• Branson's book serves as a reflection on his life's journey and the ongoing nature of his work.

"Business is a fluid, changing substance, and as far as I'm concerned, the Virgin Group will never stand still."

Branson is stating that business is inherently unpredictable and that Virgin Group is perpetually evolving, never remaining static.

• The journey of entrepreneurship is often characterized by struggle and reinvestment.
• Branson's wealth accumulation was not immediate; it took years of building businesses.
• The Virgin Group's expansion came at the cost of immediate personal wealth for Branson.

"Struggle. And it's not until he sells... that he actually had, for the first time in his life, money to do things, other things that he wanted to do."

This quote points out that Branson's path to financial freedom was filled with challenges and that his success was not overnight.

• Branson started his first business endeavor at a young age with a magazine called "Student."
• He employed creative strategies to attract advertising for the magazine.
• Branson's youthful naivety allowed him to pursue ambitious projects without fear of failure.

"Had I been five or six years older... would have prevented me from picking up the phone at all. But I was too young to contemplate failure."

The quote reveals that Branson's lack of fear of failure as a youth was a significant factor in his early business ventures.

• Branson attributes part of his success to the support and encouragement from his parents.
• Open communication with his parents provided a foundation for his confidence.
• Good parenting played a crucial role in fostering Branson's entrepreneurial spirit.

"They always encouraged me to go ahead and do whatever I wanted to do."

This quote highlights the importance of parental support in nurturing an individual's entrepreneurial ambitions.

• Branson did not initially identify with the traditional image of a businessman.
• He viewed business as a creative pursuit rather than just a means to make money.
• His businesses are driven by passion, pride, and the desire to create something of value.

"I can honestly say that I have never gone into any business purely to make money."

The quote underlines Branson's ethos that business should be about more than just financial gain; it should be about passion and creativity.

• Richard Branson believes in setting big, audacious goals and enjoying the challenge they present.
• Not every day in the pursuit of these goals is fun, and understanding this is crucial.
• Branson's approach is characterized by his enjoyment of business as a fun activity.

"Dalio taught us a few weeks ago, you have to be who you are. And for Richard Branson, he wanted to like his, his main goal in life was to set these big, audacious goals and see if he could rise to the challenge."

The quote emphasizes the importance of authenticity in personal and business endeavors, highlighting Branson's affinity for setting and rising to significant challenges.

• Branson started with a student magazine that struggled but led to the realization that his audience spent significantly on music.
• The observation that his magazine's audience would rather spend on music than on food sparked the idea of selling cheap mail-order records.
• The first advertisement for mail-order records in his magazine led to a successful business venture.

"I began to think about setting up a record distribution business. I thought about the high cost of records and the sort of people who bought student magazine and wondered whether we could advertise and sell cheap mail order records through the magazine."

This quote reflects Branson's entrepreneurial spirit and ability to identify market opportunities based on customer behavior and interests.

• The name "Virgin" was chosen for the new business venture, symbolizing inexperience in the business world.
• Branson's rapid decision-making is linked to his reliance on intuition, possibly stemming from his dyslexia and academic struggles.

"So he has a young woman working for him, and she goes, I know. She said, what about virgin. We're complete virgins at business. Great. I decided on the spot. It's virgin."

The quote shows Branson's quick decision-making process and the origin of the iconic "Virgin" brand name, which was chosen to reflect the team's inexperience.

• Branson faced legal issues for tax evasion, which led to a brief imprisonment.
• The experience in jail taught him the importance of freedom, reputation, and ethical business practices.
• He vowed never to engage in activities that would compromise his integrity or lead to imprisonment again.

"I vowed to myself that I would never again do anything that would cause me to be imprisoned, or indeed do any kind of business deal by which I would ever have to cause to be embarrassed."

This quote captures Branson's commitment to maintaining a good reputation and ethical standards in business following a transformative experience in jail.

• Virgin's mail order business was successful, leading to the opening of more record shops.
• Branson and his co-founder used strategic lease negotiations to facilitate expansion without committing to high overheads.
• The rent-free period strategy allowed them to use initial sales to fund the opening of additional shops.

"After negotiating the lease until we were sure that the landlords would go no lower, we would push for a rent free period for the first three months."

The quote illustrates Branson's strategic approach to business expansion, using clever lease negotiations to mitigate financial risks.

• Branson recognized the potential for vertical integration within the music industry.
• Virgin's expansion into record labels, recording studios, and retail shops was designed to benefit all aspects of the business and the artists.
• The mutual compatibility of these businesses allowed Virgin to reduce costs and maximize profits.

"The three businesses were mutually compatible and would also benefit the bands we signed, since we could reduce prices at the manor. That's the recording studio, the manufacturing end, and increase promotion at the shops, the retail end while still making our own profit."

The quote demonstrates Branson's vision for creating a synergistic ecosystem within the music industry, where each business supports and enhances the others.

• Branson's approach to business deals focuses on limiting downside risk while leaving upside potential virtually unlimited.
• Virgin Records' decision to pursue a pressing and distribution (P&D) deal for Tubular Bells instead of a standard licensing deal was a calculated risk.
• The success of Tubular Bells made Virgin a significant profit and established the company's reputation in the music industry.

"If you are a risk taker, then the art is to protect the downside. It seemed to us that tubular bells was so good that we could promote it ourselves."

This quote reflects Branson's philosophy on risk-taking and the importance of self-promotion and self-reliance in maximizing business success.

• Branson's purchase of Necker Island was a strategic and opportunistic move.
• Despite having limited funds, Branson negotiated a significantly lower purchase price than initially asked.
• The acquisition of Necker Island is an example of Branson's ability to capitalize on unique opportunities.

"Back in London later, I found out that the owner of Necker island wanted to sell it in a hurry. He wanted to construct a building somewhere in Scotland, which would cost him around 200 grand. I upped my offer to 175 grand and held on for three months."

The quote shows Branson's negotiation skills and patience, resulting in the acquisition of Necker Island at a fraction of the asking price.

• Richard Branson agreed to purchase Necker Island for $180,000, significantly below the $3 million asking price.
• The Virgin Islands government required development within five years or ownership would revert to them.
• Branson was determined to afford the development costs, including building a house and piping water from a neighboring island.

"Finally, I got a call. If you're to offer 180,000, it's yours. There was never a hint that 180,000 was only a fraction of the 3 million asking price. So I agreed on the spot, and Necker island was ours."

This quote shows Branson's opportunistic acquisition of Necker Island at a price far below its asking value.

"The Virgin Islands government had decreed that whoever bought Necker would have to develop it within five years of its ownership, would pass to them."

The quote highlights the condition set by the Virgin Islands government, which added a development requirement to the purchase of Necker Island.

• While staying on Beef Island, Branson and his partner Joan were stranded and unable to catch a flight to Puerto Rico.
• Branson chartered a plane for $2,000 and sold seats to other stranded passengers, effectively creating a makeshift airline.
• A passenger's comment about Virgin Airways led Branson to consider starting an actual airline.

"Joan and I stayed on Beef island for the rest of that holiday. And it was there where I set up Virgin Airways."

This quote explains the context in which the idea for Virgin Airways was conceived due to a disrupted travel plan.

"I made a few calls to charter companies and agreed to charter a plane for $2,000 to Puerto Rico. I divided the price by the number of seats, borrowed a blackboard and wrote Virgin Airways $39 single flight to Puerto Rico."

The quote describes the entrepreneurial action Branson took to solve a travel issue, which inadvertently led to the test concept of Virgin Airways.

• Richard Branson's approach to business includes a strong focus on protecting downside risk and maintaining optionality.
• He aims to broaden Virgin's business interests to avoid reliance on a single source of income.
• Branson's philosophy is to limit potential losses while keeping options open for new opportunities.

"This is one of the examples where I wish I had the Kindle version of the book, because you can search for specific, like how many times a specific term appears in the book. And this whole thing is protect downside, limit, downside. What's our downside? Cap our downside, I would guess it appears 20 times in the book."

This quote underlines Branson's consistent emphasis on protecting the downside in his business ventures, a key component of his strategy.

• Branson received a proposal from a young American lawyer, Randolph Fields, about operating an airline.
• Despite the risks, the idea excited Branson, and he relied on his gut instinct over detailed statistical research.
• He made a list of potential risks to understand the venture better, especially aircraft leasing terms.

"I rely far more on gut instinct than researching huge amounts of statistics."

The quote reveals Branson's decision-making process, favoring instinct over extensive data analysis when evaluating business opportunities.

• Branson considered starting an airline to be a high-risk, capital-intensive venture.
• He strategized to lease a plane for one year with an option to return it, limiting Virgin's exposure if the airline failed.
• This approach reflects a broader philosophy of testing business ideas quickly and efficiently.

"If I could lease the plane for one year and then have the chance to return the plane, we would have a clear escape route."

The quote illustrates Branson's method of mitigating risk by creating a clear exit strategy for the airline venture.

• Branson had a strained relationship with Simon, a co-founder of Virgin Records, over the airline venture.
• The argument highlighted their differing philosophies: Simon preferred sticking to the music industry, while Branson sought broader challenges.
• This tension never fully resolved, demonstrating the difficulty in maintaining co-founder relationships.

"My interest in life comes from setting myself huge, apparently unachievable challenges and trying to rise above them."

This quote encapsulates Branson's personal philosophy and drive for taking on ambitious projects, which can sometimes conflict with more conservative business partners.

• Virgin's profits and employee numbers increased significantly between 1984 and 1986.
• Branson was 33 years old when he started the airline, highlighting his entrepreneurial spirit at a young age.

"In 1984, profit of 12,003,000 employees. 1985, profit of 15 million. So went up another 3 million. And then 1980, 719 million."

This quote provides concrete figures demonstrating Virgin Group's rapid financial growth during the mid-1980s.

• Virgin Group briefly went public, but Branson disliked the loss of control and the formalities required by the city.
• He had disagreements with non-executive directors, especially regarding dividend policies.
• Branson preferred reinvesting profits rather than paying out large dividends.
• The stock market crash of 1987 and the constraints of being a public company led him to take Virgin private again.

"Most people think that 50% of a public company is the key to controlling it. While this is true in theory, to a large extent, you lose control just by having to appoint non executive directors and generally giving up your time to satisfy the city."

The quote reflects Branson's dissatisfaction with the loss of control and the bureaucratic demands of running a publicly traded company.

• After privatizing, Virgin Group's structure became more complex, involving joint ventures and partnerships.
• Branson developed a model of "branded venture capital," partnering with entrepreneurs and sharing profits.
• This approach allowed for a diverse portfolio of companies under the Virgin brand, each with a high degree of autonomy.

"He says, okay, you're going to call your new company, let's say Virgin Cola or whatever, you're going to own 50% of it. It's going to be a small company. Usually most of his companies have less than 60 employees."

This quote describes the decentralized and entrepreneurial structure of Virgin Group, where each venture operates independently but under the Virgin brand umbrella.

• Richard Branson maintains optionality by diversifying his investments across a multitude of companies.
• Branson's approach limits downside risk while providing significant upside potential.
• An example given is a small airline in Australia that started with a $3 million investment and later generated $250 million.
• Branson's business model is decentralized, with a loose structure of holding companies and subsidiaries.

"So you see that all I can lose in this airline is $3 million, but he winds up making a whole lot more."

This quote illustrates Branson's risk management where his potential loss is capped at the initial investment, but the potential for profit is much higher.

• Edwin Land, the founder of Polaroid, envisioned a conglomerate of small companies, each generating revenue and heavily investing in R&D.
• Land's primary goal was inventing technologies to help people, such as polarization to reduce headlight glare at night.
• The speaker relates Land's vision and business philosophy to Richard Branson's diversified and innovation-driven approach.

"And every company would dedicate like ten or 20% of their annual budget to R&D."

This quote emphasizes Land's commitment to innovation and R&D, suggesting that a similar philosophy is mirrored in Branson's business practices.

• Branson sold 25% of Virgin Music for $100 million, which indicated that the company was undervalued by the public market.
• The transaction suggested that Virgin's total value was at least $400 million, far above the previous public valuation.
• The decision to go private allowed Branson to prove the true worth of his company without the constraints of public markets.

"By selling 25% of virgin Music for $100 million, we had vindicated our argument that the city, meaning the public, had undervalued virgin."

This quote highlights the strategic move by Branson to demonstrate Virgin's undervaluation and the benefits of operating as a private entity.

• Richard Branson faced periods of depression and questioned his life's direction, even after significant business milestones.
• The entrepreneurial journey can be an emotional rollercoaster with extreme highs and lows.
• Branson's personal experiences during tough times are candidly shared, reflecting the human aspect of entrepreneurship.

"I had taken so many telephone calls from journalists demanding to know whether our checks were bouncing that I could barely think straight."

This quote reveals the intense pressure and emotional distress Branson faced amidst financial difficulties and public scrutiny.

• The speaker discusses the future content of the podcast, including a deeper dive into Branson's battles with British Airways and his business philosophies.
• FoundersPodcast.com is promoted as a resource for supporting the podcast and accessing additional content on entrepreneurship.
• The speaker also encourages listeners to join the email list for Founders Notes, which provides key takeaways from entrepreneurial podcasts.

"So if you want to hear that and ten or eleven other member only episodes, plus get a new one every week and support a podcast that hopefully is providing you value, become a founders member founders.com support."

This quote is a call to action for listeners to support the podcast and gain access to exclusive content that delves into entrepreneurial insights and stories.

• The speaker believes in learning from historical context and biographies, as exemplified by Elon Musk's reading habits.
• FoundersPodcast.com aims to document the history of entrepreneurship through the exploration of biographies and autobiographies.
• The speaker promotes various ways to support the podcast, such as becoming a member, leaving reviews, and sharing the podcast with others.

"The best way to learn about entrepreneurship is by doing something, trying to go out and sell something. Right. And then the second way, the best way is by learning from people that have already done it."

This quote underscores the speaker's philosophy that practical experience and learning from successful entrepreneurs are the best ways to understand and succeed in entrepreneurship.