Millionaires & Billionaires Secrets Revealed. Darren Stephens
the single venture of Branson’s paper, further establishments grew and spread, like ripples on a pond. In 1970, when Branson was 20 years old, Branson saw another opportunity.
The Retail Price Maintenance Agreement was abolished by the British government. This agreement kept records from being sold at discount prices, but this would be possible after the regulation was ended. However, record stores did not voluntarily discount their prices, and Branson took action.
He began a mail-order discount record company advertised through his own paper. His readership, as Branson well knew, was hungry for music and willing to pay. The record company took off and Branson expanded by adding to his staff and taking a space above a shoe store to distribute his records.
His new employees wanted to think of a company name that would reflect the new business and be more dynamic than “Student”. Names like “Slipped Disc” were considered and discarded before one associate suggested Virgin, because they were all untried and untested in business. And the first Virgin company was born.
The young Richard attempted a daredevil move in order to sell the discount vinyl and to avoid taxes. Record makers would sell “cut-out” discs that had been returned unsold from retailers, so-called due to the fact that these records would by marked by cutting off a corner, or cutting a notch or hole into the spine of the jacket. Branson travelled to the continent to purchase crates of these cut-outs. He would then return to London with the records in the back of his van to be sold at his bargain prices to retailers. This way Branson avoided paying a purchase tax and saved about £5,000.
After several trips, Branson attracted the attention of the Customs and Excise office. He was arrested and he spent a night in jail. The fines were steep, as Richard needed £15,000 immediately in order to be released and would need to eventually pay a total of £45,000 to keep the incident off of his criminal record.
Branson’s intrepid mother came to his rescue at this point, mortgaging her home to get Richard out of jail. Richard redoubled his efforts with Virgin to make the money to pay the fines. In a strange way, prison fuelled the growth of the future Virgin Megastores. Branson was arrested in 1971.
He opened his first record shop in Oxford Street in 1972, two years after beginning the mail-order business. The shops made money through retail concerns, and also exported records. Branson says in his autobiography that “avoiding prison was the most persuasive incentive I’ve ever had. Since there was limited growth left in the mail-order business, we concentrated on expanding the record shops. The next two years were a crash course in how to manage cash. From being a completely relaxed company running on petty cash from the biscuit tin and a series of unpaid IOU notes, we became obsessively focused. We used every penny of the cash generated from the shops towards opening up another shop, which in turn was another pound towards paying off my Customs and Excise debt. Eventually I was able to pay everything and relieve Mum of the bail she had put up.”
Branson went on to open many other companies that form the Virgin Group. He purchased the nightclub Heaven in 1979. This was a gay nightclub near Charing Cross in London. In 1980, Virgin Records went international.
Branson continued to expand his influence in the entertainment industry with Virgin Vision, which later became Virgin Communications, which is a distribution company that sends films to television and radio broadcasting.
“Branson
owns over
300 separate
companies
under the
Virgin aegis.”
On the personal front, Branson has been married twice. He married Kristen Tomassi in 1972, at the age of 22. They were divorced four years later.
He has been married to his second wife, Joan, since 1977. In 1979, Branson suffered the biggest tragedy of his life. The couple’s first daughter, Clare Sarah, was born three months prematurely, and died a few days later.
Another year and a half later, their daughter Holly was born. She is now a doctor. The couple also have a son, Sam.
Today, Branson owns over 300 separate companies under the Virgin aegis. The net worth of his empire can only be estimated but, at last count, by some calculations, was worth PS2.6 billion.
That figure is far below some calculations, partly due to the recent economic downturn. It is also due in part to the fact that such figures are always in flux and estimates vary. In any case, the fortune is huge.
Wealth Accumulation
Branson actually credits his dyslexia for some of his business success, as much as it also caused his educational failures. Since he could not read and study business reports any more than he could school papers, he cultivated an intuitive sense of people and of business. His creative approach has put an indelible stamp on his corporate style.
Whatever his intuition told him, the record company, although struggling, was ultimately successful.
When musician Mike Oldfield met Branson, he was unsigned, and apparently unsignable. Branson, however, with his characteristic disregard for risk, simply decided to form a record label in order to publish this release.
With the money from his mail-order business, Branson built a studio in Oxfordshire. It was here that he oversaw the recording of his first vinyl album. Mike Oldfield recorded Tubular Bells and Branson began distribution of this album in 1973.
Thus was born Virgin Records. Oldfield’s Tubular Bells rose to the top of the charts and the top of the best-selling records. This, of course, was just the beginning of Virgin Records.
Virgin rose to success by signing controversial and cutting-edge bands. They signed the Sex Pistols and later signed groups from Genesis to Culture Club.
Richard Branson was in touch with his generation and had already begun a strategy of operating a business successfully as an underdog. This is now as much a hallmark of his business model as his high-profile image.
With Virgin Records, Branson’s early success was assured, and his image as an extraordinary entrepreneur was already solidified. Richard Branson had made a name for himself by the time he was 20 years old. His meteoric rise, and his fame, has not flagged since. He has spent more of his life in the spotlight than out of it.
In 1984, Virgin took another turn, unexpected and, in the opinion of many, doomed to fail. Not that such opinions have ever stopped Branson. Virgin Atlantic Airways was launched out of a simple (or simple-sounding) wish to live to the fullest and to overcome big challenges.
“…never again
to put himself
in the power
of bankers.”
Branson’s foray from the entertainment world into the realm of transportation might seem nonsensical from the outside, but to Branson it made sense. He is a man who quite simply makes things happen.
“My interest in life comes from setting myself huge, apparently unachievable challenges and trying to rise above them…. I felt that I had to attempt it.”
Attempt it he did, and the rest is history. Virgin Atlantic was the nucleus of an empire. Branson expanded his transportation companies to include airlines worldwide. He eventually sold Virgin Records to keep the planes flying, much as it pained him.
This story illustrates the way in which Branson will do whatever it takes to succeed. Virgin Records had been the cornerstone of his empire and the original smash success. But, when it was struggling, Branson made the difficult decision to let it go.
Actually, Branson was pushed into this decision by bank managers to whom he was indebted for the airline. He claims that this taught him never again to put himself in the power of bankers.
The result of the painful personal and corporate decision was a one billion-dollar US deal with THORN EMI. After the 1992 sale, it is said that Branson cried over the loss of his label. He was not to stay out of the music business for long, however. He loves