Business Stripped Bare (37 page)

I concede this isn't so much business advice as a call to arms – but if these pages have inspired you to consider the good of your industry as a whole, and how your organisation can contribute to the effective and responsible conduct of that industry, so much the better. The great and good in your business sector are a resource you should take seriously. Finding a way to harness that resource to best support and encourage your industry will add value to your brand – and what you learn will have a direct and positive effect on your business.

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To be a serious entrepreneur, you have to be prepared to step off the precipice. Yes, it's dangerous. There can be times, having jumped, when you find yourself in free fall without a parachute. There is a real prospect that some business ventures will go smashing into the ground. It has certainly been very close at times throughout my own business life. Then you reach out and grab a ledge with your fingertips – and you claw your way back to safety.

Life has become too cosy for many, who have their lives mapped out by parents and teachers. It's all a bit, well,
comfortable
: off you go to university to study a course. Land a good job, get a mortgage, find a nice girlfriend, boyfriend, partner. It's a solid life – a good life in many ways – but when was the last time you took a risk?

Many people reading this book will be affluent. If you don't feel affluent right now, take a minute and think: the very fact that you could afford this book, or afford the time to take it out of the library – the very fact that you are able to read at all – marks you out as one of world history's richest and most privileged people. There's not that many of us, and we haven't been affluent for very long, and so we're not very good at it yet. Affluence makes us lazy. It makes us complacent. It smothers us in cotton wool. If your job's well paid, who can blame you if you're not willing to take a risk and, say, set up your own company?

The vast majority are very happy with this arrangement, and good for them. But if you want swashbuckling action in your life, become an entrepreneur and give it a go. Learn the art of trying to set up your own business. Which is the same as saying, learn the art of making mistakes and learning lessons.

Because if you want to be an entrepreneur and you
don't
make a few errors along the way, you certainly aren't going to learn anything or achieve very much.

People have a fear of failure, and while this is perfectly reasonable, it's also very odd. Because it seems to me that it's through making mistakes that we learn how to do things. Watch a musician practise sometime. Watch a baby figure out how to walk. Listen to a toddler speak. Skills like walking and talking and playing music emerge gradually, steadily, from a blizzard of (often pretty funny) mistakes. I think this is true of
everything –
that learning is about making mistakes and learning from them. And that is the fundamental reason that flying has become so safe in the twenty-first century; so safe in fact that sitting on a 747 to New York is safer than watching TV at home.

Now, I grant you that you may hit a limit, beyond which you
can't
learn from your mistakes. Don't expect a chart-topping album from me any time soon, or a recital at Carnegie Hall, or a sequence of sonnets, or any of the billion and one other things I'm never going to be great at. But that's not
failure
. That's finding out what you're good at. The world is much, much bigger than you, and no amount of worldly success is going to change that fact.

Failure
is not giving things a go in the first place. People who fail are those who don't have a go and don't make an effort. Failures can't be bothered. There are few people who've tried something and fallen who didn't get enormous satisfaction from trying, and I've learned more from people who have tried and faltered than from the few charmed people for whom success came easy.

In my home country, the British education system has a lot to do with our fear of failure. I think it concentrates exclusively on academic achievement and downplays the other contributions people can make to society. I've huge admiration for scientists and engineers; whereas they are given due respect in Germany, the United States and Japan, in British society they tend to get a raw deal.

As someone who never went to university, perhaps I've a radical view of education. I am committed to excellence and expertise in business but I believe we need to show young people the value of wealth creation too. I think some university degrees could be finished more quickly – I've never understood why some courses have only two or three lectures per week, and why students are left to their own devices much of the time without much direction from tutors, lecturers and professors, who now spend most of their energy, it seems to me, chasing funding grants. But one thing is apparent to me: we still need a good deal more entrepreneurial thinking in our universities and colleges.

One of my greatest entrepreneurial heroes was Sir Freddie Laker. Freddie, who died in February 2006, aged eighty-three, lived his life to the limits. He was a tremendous person: a man of magic and mirth. He lit up a room and he was the ultimate salesman. An ex-colleague and close friend, David Tait, said he could sell a glass of water to a drowning man. Freddie was a huge inspiration and supporter of Virgin Atlantic and he was the godfather of cheap international air travel.

The first Skytrain flights took off from Gatwick to New York in September 1977. Although Freddie's airline was no-frills, the ticket prices were unbelievable. It was only £59 single to get to America – a third of the price of any of the other carriers. He made £1 million profit in the first year – and I was one of his regular customers as we expanded our Virgin Records business in America.

Skytrain were carrying one in seven transatlantic passengers – and Freddie was knighted in 1978. Then in 1982, the company went into receivership with debts of £264 million. He had borrowed heavily to buy fifteen new planes just as the pound plunged in value against the dollar, but worse than that, the major airlines had conspired against him, offering cheaper fares to undercut him. The airlines also threatened the airframe manufacturers, telling them not to sell to Freddie. His airline collapsed – with passengers still in the air.

In 1983, the liquidators Touche Ross started an anti-trust action in the United States, claiming $1 billion from ten major airlines – including British Airways, PanAm, TWA, and Lufthansa – who had got together to plot Freddie's downfall. The defendants settled out of court, negotiating a reported £35 million payment to Freddie's creditors – while he reluctantly accepted £6 million in compensation and retired to the Bahamas.

Three days before the collapse, in typical style, he said: 'I'm flying high – I couldn't be more confident about the future.' And David Tait recalls sitting next to Freddie as they flew out of Gatwick airport on an Air Florida flight ten days after the collapse. Below, jammed in wing tip to wing tip in the Laker hangar, sat Freddie's life's work, a forlorn cluster of grounded DC-10s still emblazoned with the Skytrain logo. But Freddie turned to his distraught partner and said: 'Don't worry, mate, it'll all work out just fine.'

His company was bust. Yet four-times married Freddie still knew that there was much more to life. He enjoyed reminiscing with me over a Pusser's rum and orange on his yacht in the Bahamas, and he relished a pint and a laugh with his friends.

It was on another Air Florida flight that he met an off-duty Eastern Airlines stewardess called Jacqueline Harvey. It was love at first sight – or first flight – and Jacquie made Freddie's last twenty years a lot more fun, erasing any memories of his airline's failure.

It was his business sayings that were so memorable for me.

'Only a fool never changes his mind.'

'Don't bring me your problems – bring me the solutions.'

And his most famous one: 'Sue the bastards.' Litigation lawyers the world over still celebrate that one! But it was about the best advice I got when I had to take on British Airways after their dirty tricks campaign against Virgin Atlantic in the late 1980s.

Freddie was never afraid of failure. He succeeded in life – and always gave it a go. That's why we named one of our planes the
Spirit of Sir Freddie
.

Just Business

Over the years, we've watched billions of dollars go into development aid and emergency relief. Yet, unbelievably, we still have well over 16,000 people dying every day from preventable and treatable diseases like Aids and TB, half the planet still lives on less than $2 per day, one billion people have no access to drinking water, and the list goes on and on. The fact that these problems persist is not due to lack of hard work and commitment from the social and environmental sectors; nevertheless, without normal market forces and businesses ensuring that the best ideas can be fully realised and communicated, what we end up with is a market of good intentions.

Through my travels over the last couple of decades, I've started to realise that the only way we are going to drive the scale of the change we need in the world is if we pull together some very unlikely partnerships with businesses, charities, governments, NGOs and entrepreneurial people on to the front lines. More often than not, the people most affected know the answers – we just need to listen to them. None of us can do it alone; we all have to put aside our differences and revolutionise the way we work together to ensure that we leave this world in good shape for at least the 'next seven generations', as is the philosophy of the indigenous people we are working with in Canada.

In this last chapter, I want to tell you about Virgin's adventures in the territory where business and making the world a bit of a better place meet. This has always been important to me and really began when I was eighteen and opened up the Student Advisory Centre on Portobello Road, helping young people with sexual health. Forty years later, it has changed shape a bit, but it's still there, and still in the same place offering counselling services.

When Aids first started to become a major issue in the mid-eighties we launched Mates condoms, combining our business and creative skills to get young people to wear a condom while still enjoying sex (well they certainly weren't going to be stopped!). We decided that this was so important that we would make it a social business and all profits would be ploughed back into extending the safe-sex message. The team did a great job. We even got the BBC to run an advertising campaign for the first time in their history, which significantly raised awareness of the importance of safe sex across the UK – all in a cheeky Virgin way. Here in the Caribbean, the slogan goes: 'No glove – no love'.

Several years ago, I realised that if Virgin really wanted to make a difference with some of the tougher issues facing humanity, we had to start pulling together everything we were doing. I knew that the only way this would work was if we put social responsibility at the core of what Virgin is. So we spent months talking with staff, customers and front-line organisations all over the world, and out of this we built a company philosophy of 'doing what is best for people and the planet' and created Virgin Unite. Virgin Unite has now become the entrepreneurial foundation of the group, working with our businesses and partners to develop new approaches to tackle the tough issues. It's really about ideas and people – finding the best of both and then helping them to scale up. Our fundamental belief is that doing good is great for business. It's not about the 'golden charitable cheque' but, rather, it's about making sure that we leverage everything we have across our businesses – especially the wonderful entrepreneurial spirit of our people – to drive change.

There
is
such a thing as enlightened self-interest, and we should encourage it. It
is
possible to turn a profit while making the world a better place.
And, inasmuch as there can ever be answers to the problems of the world, capitalism – generously and humanely defined and humbly working with others who understand the issues and solutions – can create some of those answers. More about Virgin's ventures in this area later, but first I want to tell you about some of the people who have inspired me.

We've had many impressive and influential people come and stay with us on Necker Island. But the visit of Bill and Melinda Gates at Easter in 2001 provided me with plenty of inspiration for what I should be doing in a philanthropic way.

It takes a bit of time to get to know Bill Gates. He's cerebral and intense about all he does. This intensity made for an excellent game of tennis which ended in an honourable draw.

During his visit he spoke to me a great deal about the Bill and Melinda Gates Foundation, which in 2008 had assets of $37.6 billion, making it the world's largest charity and a force for immense good in troubled parts of the world. In 2006, the foundation handed out $1.54 billion in grants in three areas: global health, global education and programmes in America, including the creation of forty-three new high schools in New York City.

I wrote in my notebook: '
He's very involved with it. Not just giving way billions but reading up about African diseases and seriously trying to help with Aids/malaria/tuberculosis and educating people to use condoms
.'

At that time, the Bill and Melinda Gates Foundation had just overtaken, in the value of its trust fund, the Wellcome Trust – one of the UK's long-established charities, which has funded research into human and animal health since 1936 and was spending £650 million a year. Since then, the Foundation has grown dramatically and is now, by far, the largest charitable foundation in the world, alleviating poverty, disease and ignorance around the globe. Bill and Melinda have done such a brilliant job as 'venture philanthropists' that Warren Buffett, who pipped Gates in 2008 as the world's richest man, handed over much of his substantial wealth for them to look after.

My wife Joan didn't know what to make of Bill at first, though she warmed to him and enjoyed spending time with his wife, Melinda. Melinda was then in her late thirties, a charming and intelligent woman. She had amassed a huge amount of knowledge about malaria-carrying mosquitoes, tuberculosis, Aids and rotavirus, a severe form of diarrhoea that kills more than 500,000 infants a year. Effectively she was giving Bill a running personal tutorial on some of the key issues in global health. While Bill was interested in the actual microbiological science of vaccine research and finding a scientific solution, Melinda wanted to alleviate as much suffering as possible now.

I went sailing with Bill – discovering to my surprise that he used to race sailing boats – and he told me about the Microsoft Xbox, which he was about to launch on to the market to take on the Sony PlayStation. 'It's the biggest thing I've ever done,' he said. But he was thoughtful, and I sensed that his mission in life was changing. He had achieved so much with Microsoft, building it to become one of the most powerful businesses on the planet. In little more than twenty years he had changed the face of the modern world. Now he was turning his formidable brain to solving some of the apparently intractable problems facing our Earth. He told me he went to see Nelson Mandela. 'I said: "Most people think you're a saint. Tell me the truth. Did you hate the people who put you in prison?"'

'Yes, I did,' was the answer to Bill's question. 'For twelve years I lived off those people and I hated them. Then I realised they couldn't take my mind or my heart away.'

Bill was astounded and said meeting Mandela was a seminal point in his life: 'He taught me about living.'

That must have been quite a moment: the richest human in the world talks to the most revered human and acquires a new purpose and a challenge in his life. I think it may eventually go into the history books as a turning point – the start of something big.

In January 2008, Bill Gates was a guest at the World Economic Forum in Davos, in Switzerland. He said: 'We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.' He has called this idea 'creative capitalism', saying that by harnessing the basic factor that drives capitalism – self-interest – creative capitalism can enhance the interests of the giver
and
the recipient.

I agree. I think capitalism is a proven system: it works. But it has got a lot of faults. Breathtaking wealth goes to relatively few people. This would not matter so much, were it not for the fact that the very poorest in society are destitute, lacking even the basic amenities for survival. This being the case, an enormous responsibility falls on a successful business leader. Leaders need to reinvest their wealth by creating new jobs or by tackling the social problems of the world (ideally, both – which is what makes Muhammad Yunus's microcredit movement so exciting).

History has thrown up no viable alternative to the free exchange of capital, goods and services, and the enterprise of law-abiding people. But capitalism as an ideology needs work and reform. Capitalism has to be more than the survival of the fittest.

My own fairly unexceptional view is that capitalism should pay far more attention to people and to the resources of this planet. I call it 'Gaia capitalism' for short, and as a tribute to the work of Professor James Lovelock, who has spent a lifetime tracing the life-sustaining connections between the living and non-living parts of the Earth. Human behaviour and human capital have to work with our planet.

More generally, entrepreneurs and wealth creators around the world must be a positive force for good. There is nothing unbusiness-like about sharing the benefits of your industry with happy, fulfilled people and a planet that is going to be there in all its glory for our children and grandchildren.

In 1997, while proposing a lottery scheme in Johannesburg, I called upon the world's business community to run their companies more ethically – and, to get the ball rolling, to adopt a zero-tolerance approach to bribery. Perhaps the most unethical and dangerous abuse of a company's financial muscle around the world is the use of bribes to secure contracts. If company directors bribe politicians they start a rot at the very top. Police, customs officers, tax officials and the judiciary will then start saying to themselves: if our bosses are accepting bribes, why shouldn't we?

In my speech, I kept my definition of ethics simple. Business ethics interest me, and ethical questions are less complex than some academics on business courses make out. I said we should all pledge to do nothing that we'd regret reading about in the press. In the developed world, we're extremely fortunate in having a free press. Being misquoted or misinterpreted can be frustrating, and a bad journalist can do a lot of damage, but set against the big picture, these are really just inconveniences. A free press is a society's conscience. You may, for instance, be trying to discourage a competitor. A scheme is sitting on your desk that would undoubtedly work. But it rides close to the wind. These things can get complicated, so you can't rely entirely on gut instinct. If the public and the media got to read this document, what would they do? Would they shrug, or laugh at your cheek – or would you and your company be vilified?

As we work to improve and reform capitalism, I think this connection between free commerce and free expression will become ever more evident. And whilst having a free press is a wonderful check, ideally it will be needed less and less as a conscience as we all start putting the well-being of people and the environment at the core of our business.

In June 1999, Nelson Mandela invited me to his leaving party and to the inauguration of his successor, Thabo Mbeki. At the banquet, my neighbour, a doctor, told me about her hospital – which receives more patients than any other in the world – and I agreed to visit.

The next morning I went to Soweto. After the previous evening's pomp and glamour, I was brought back down to earth with an incredible bump. The hospital was worse than she had described. The accident and emergency section was like a Vietnam War movie. The queue for medicines stretched for half a mile. I have a deep respect for South Africa and I wanted to help so much. This was a country with fabulous potential and people who were so warm and friendly. Yet a staggering 20 per cent of female South Africans coming into antenatal clinics now had HIV, she told me, and medicines were just not going to the people who needed them. We had already done some work with HIV/Aids in the UK and I was now determined to do everything in my power to stop this unnecessary human suffering in South Africa.

For some years, Virgin had been investing in companies to help drive the South African economy. Virgin Unite had also started to look at creating opportunities for young South Africans. One of my favourite examples of this is the Branson School of Entrepreneurship at the CIDA City Campus. This took off when CIDA's charismatic leader, Taddy Blecher, literally chased Jean and me down the street to sell me on the idea of forming a partnership to assist financially disadvantaged young people to start up their own businesses. As I write this, I have just spent my birthday with some students at the school. Their energy and positive spirit always inspires and humbles me. One after the other, they got up and talked about their small businesses, which began as part of the Branson School and now gave economic freedom not only to these young people, but also to their families and communities. This was the best birthday gift I could have asked for! I wrote down the following quote from one of them in my notebook:

One thing that I like about the Branson School is that it's a place where you feel like when you're there you get inspired – there's that inspiration that is drawn from the Branson School. You're always excited. The moment you get there, you forget your problems, and you just focus on growing your business. To all the beautiful Virgin people, I would like to wish you guys all the best, and I need to tell you something. Please keep on supporting the Branson School. We love you. Thank you.