Protecting the downside and making luck: advice from the Virgin Group founder
Sir Richard Branson was 50 and hugely successful before he learned the difference between net and gross profit.
It clicked when a director drew him a crayon picture of a fishing net during a board meeting.
"This is your profit", he told Sir Richard, pointing to the fish in the net. "The rest is your turnover."
“I thought it was the other way round,” Sir Richard laughs, “I thought we were much richer than we were!”
Being real - Sir Richard's success secret
The founder of the Virgin Group was speaking to delegates of the AICPA & CIMA event in partnership with The Growth Faculty.
He says the story proves the benefits of delegating.
“Delegating is the most joyful thing you can do. I learned the art by my 20s…I could never have achieved without learning that art of delegation, it’s made life a lot more fun.”
But the story also illustrates Sir Richard’s decision to be real.
He’s brave enough to be himself in public - warts and all.
To this day, he says, he lives by a motto he wrote on the back of a magazine at age 15:
- THE BRAVE MAY NOT LIVE FOREVER BUT THE CAUTIOUS DO NOT LIVE AT ALL.
Protecting the downside
From school dropout to magazine founder, Sir Richard via his Virgin Group has gone on to grow successful businesses in sectors including mobile telephony, travel and transportation, financial services, leisure and entertainment and health and wellness. Virgin is a leading international investment group and one of the world's most recognized and respected brands.
The famous adventurer says his bravery is tempered with protecting the downside.
“The downside of flying in a balloon is not coming home. When running a business or diversifying, you must protect the downside,” he says.
For example, when starting his airline he made a deal with Boeing that they would take back their plane after one year if he couldn’t attract customers.
Making his own luck
Later, when his fledgling airline couldn’t raise a loan of $10 million to install the first seat back video screens, he did another deal with Boeing. Virgin would buy new planes if they came fitted with seat back videos.
“So, I couldn’t borrow $10 million, but I could borrow $2 billion!” he laughs, “An element of cheekiness plays a part.”
It's his admission that yes, he's been lucky. But he makes a lot of his own luck.
“If you’re going to start a new business and compete against bigger players you have to be much, much better than them,” he says, “So we designed a better-than-first-class product and charged a business class price for it.”
A group of good people.
His other brave move – treating his employees like adults.
“Covid has taught us that people can work from home. So, if they want to work from home, let them work from home Mondays and Fridays,” Sir Richard advises. “If someone in their family is ill let them take the day off, let them go to the wedding, to the birthday. If they need a decent holiday, even 2-3 months holiday let them take it…they will make it up to you 3 times over.”
Sir Richard points out that there’s nothing more to a company than a group of good people.
He recommends leaders get out and talk to their people, always with a notebook in hand.
“If someone working on a plane has a shoe where the heel is rubbing then you change out the shoes…it’s these little things that make for an exceptional company.”
Sir Richard credits “fantastic people” for keeping Virgin Atlantic alive when the pandemic forced planes out of the air for 18 months.
“With fantastic people you can survive the bad times and enjoy the good times.”
Hiring and promoting top performers
For the past two years, Virgin Group has placed personality before qualifications in many hiring decisions.
Sir Richard hires and promotes managers who are great with people.
He chooses people who:
· Care for the cleaning lady as much as their directors.
· Are called by their first name, and don’t insist on suits.
· Are fundamentally decent and look for the best in others.
· Praise and don’t criticise.
· Can inspire, be adventurous, and take the company forward into new horizons boldly.
Sir Richard prefers to promote from within his companies.
“You know their weaknesses and strengths, and it’s great if your employees know you’re the kind of company that promotes from within.”
He also says it’s less likely you’ll make mistakes.
“The Whiz kid you bring in could destroy the company,” he cautions.
At the forefront of diversity
A long-time champion of speaking up on current topics, including climate change and diversity, Sir Richard says he's given some prisoners a second chance by offering them work at Virgin Group.
“When I was 18-19, I messed up with the tax man and I could have gone to prison. My mother took out a second mortgage and I got a second chance.”
He also likes diversity quotas.
“I believe in the Scandinavian model where, by law, they have to take 40-50% of women into board rooms. It seems to have worked, and the companies have benefitted.”
The adventure of a lifetime
Given Sir Richard still owns 100% of his parent company he “can do things that other companies would think too risky to do.”
“When I launched Virgin Galactic my own directors thought I should have been sent off to a funny farm!” he laughs.
"80% of people watching this would love to go to space, it's the adventure of a lifetime. You only live once, and space is infinite, it’s beautiful, it’s extraordinary."
As to when he himself will go into space, Sir Richard won't reveal a date.
“I can’t say when, but... so...watch this space…”
In the meantime, he’s been watching drama series Mare of Easttown and shares a family story about its star Kate Winslet.
“On Necker Island one morning our house burned down in a massive hurricane storm,” he remembers. “Kate happened to be in the house – I ran from another house - stark naked - to rescue my mother and arrived to see Kate carrying my mother down the steps. She stayed on a couple of days, and fell in love with my nephew, and they now have two kids.”
Kate and Ned name their son Bear Blaze in memory of the fire.
It was another tale of bravery in the extraordinary life of Sir Richard Branson.
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