Business Stripped Bare (33 page)

Some people have asked why don't I give straight to charity the profits I have pledged to clean technologies and renewable energy. But that won't do the trick. There is a time for giving in a charitable way, but where there are business opportunities to be had, one is much better off harnessing the might of the commercial sector to one's cause. Given our rapidly rising population and the consequent environmental pressure, our solutions have to be technological as well as social. I'm not saying: let the market dictate everything, and all will be well. Quite the opposite – I'm saying: let's use our position in the market for the greater good and prove there is money in greener technologies. That's what Virgin Green Fund is trying to do.

Business has a duty to continue to push the boundaries. In the next ten years, we'll all head into unknown territory. There will be a vast increase in our demand for energy – yet I believe we may well have passed the point of 'peak oil', and that it is now starting to run short relative to demand. Carbon fuel prices look set to remain high, and alternative fuels are urgently needed. It is not beyond the wit of man or woman to come up with an answer. And if we go into this for the right reasons, in a concerted way to tackle climate change, we will, on the way, definitely create some very exciting and successful new businesses and technologies for the future.

Most of them will be small businesses. If the complex and often overheated debates about climate change have taught us anything over the years, they've taught us that local solutions and small initiatives punch well above their weight, while broad-brush initiatives get horribly bogged down in their own complexity, and very often have unintended and sometimes damaging consequences. I say this as a global businessman, working at a global scale on global problems.

Big initiatives – like Virgin Fuel's project to develop a clean aviation fuel – depend on small initiatives – like the coconut-oil-powered cars on Vanuatu – for their development. No one is going to solve global warming by edict, and at Virgin, we never forget that, in business, small is beautiful.

Holding on and Letting Go

In 2004 I did a programme called The Rebel Billionaire for Fox Television, where I was nice to people and then had to whittle them down to a winner. It only got seven million viewers but it really helped our brand in America.

In one episode, I told a participant we were going to be the first to go over the Victoria Falls in a barrel.

Annie Taylor was the first person to conquer the Niagara Falls in Canada, riding the 170-foot drop in an airtight wooden barrel in October 1901. Since then many other daredevils have copied her achievement. But the Victoria Falls in Africa – at 360 feet – is more than twice as high, and much more dangerous, with jagged rocks at the bottom. I asked one of the contestants, Sam Heshmati, if he was ready for the challenge of going over the falls with me, in a barrel I said had been specially created by NASA.

Were we going to do this thing?

Bravely, Sam nodded. We got into the barrel. A large crane lowered us into the fast-flowing river, a few metres away from the drop. A two-minute countdown began. It seemed an eternity, Five. Four. Three. Two . . .

A split second before we were due to plummet, I shouted: 'Stop! Hold on just one moment, I want to show you something.'

So we got out. And I showed young Sam the bottom of the falls. I pointed at the rocks below.

'Sam,' I admonished him, 'you were ten seconds from certain death. You shouldn't blindly accept a leader's advice. You've got to question leaders on occasions.'

Fast forward three years. I'm in Las Vegas announcing the new route to San Francisco with Virgin America. Someone has had this idea for a publicity stunt: they're going to drop me on a wire, dressed in black tie, from the Fantasy Tower at the top of Palms Casino, into the midst of the cocktail party taking place on the ground below.

Now, I've abseiled many times before, so this stunt is actually something I should feel relatively comfortable with, even though I've never before been dropped off the side of a building at 100mph. But it's an October day, and it's windy. I'm looking at all the harnesses and wiring used in the
Spider-Man
movies . . . and there's something about all this that's making me feel uncomfortable. And as I stand there on top of the tower, minutes before the leap, I know what it is:
I'm far too close to the building.
So I say to the technical team: 'I'm sorry, I need to go to my room.'

Everyone thinks I'm chickening out. But I just need to
think.
Four hundred feet. A windy day. And I'm being dropped almost within touching distance of the building . . .

There's a knock on my hotel-room door. It's our Virgin America publicity people.

'Would you mind just coming up to the roof to do the press anyway, Richard?'

I know I'm being suckered, but I can't get the words out to refuse. My legs carry me upstairs and there is the stunt team boss, assuring me that the wind has died down a little. It doesn't feel like the wind has died down at all. Indeed, it feels a damned sight windier to me. But these people are professionals, right? And everybody is counting on me to do this thing, right? And I don't want to disappoint people, right? And suddenly I'm hurling myself off the top of the building. I hurtle down, and on the way down I hit the casino. Twice.

I reach the bottom, utterly dazed and very sore. Have I broken my back? I just hang there like a rag doll while free airline tickets – part of our stunt – rain down unnoticed on the appalled guests now crowded around me.

Sam, you can consider yourself fully paid back for that joke we had at your expense. My backside hurts. My trousers are ripped to shreds. The press get some pictures of me looking rather grey and dishevelled. I should have listened to my own advice.

True leadership must include the ability to distinguish between real and apparent danger.

This is as true in business as it is in ice climbing, ballooning, mountaineering or powerboat racing. You need to understand the challenges to your enterprise and face up to them. Equally, you have to resist the temptation to overreact at the first sign of trouble.

Since I've been littering this book with tales of our own successes, mistakes and lessons, I hope you'll forgive me if – for once – I illustrate this last point by giving you an account of someone else's mistake.

On 14 February 2007, the combined company of NTL, Telewest and Virgin Mobile relaunched as Virgin Media, creating the largest Virgin company in the world. For the first time consumers could get everything they needed from one company – we were the UK's only quad play of TV, broadband, phone and mobile, offering the most advanced TV-on-demand service available, V+, our high-spec personal video recorder and really fast broadband Internet access.

Overnight, Virgin Media had become the UK's most popular broadband provider, the largest mobile virtual network operator and the second largest provider of pay TV and home phone. We were taking on the Murdoch empire.

Rupert Murdoch has wielded more power over a longer period of time than any other businessman on the planet. The Australian, born in Melbourne, built a newspaper empire in his homeland, expanded into Britain in 1968, and snapped up Dow Jones in the USA in 2007. His satellite television empire straddles the globe, and his newspapers are hugely influential. Rupert Murdoch is someone to be feared and admired in equal measure.

Rupert is now in his late seventies, and while he still has immense energy, it is his two sons, Lachlan and James, who are poised to take his place at the helm. In November 2006 James, the chief executive of British Sky Broadcasting, heard that Virgin Media were planning to acquire a majority stake in ITV, Britain's first and largest commercial TV station.

Deeply worried that the combination of Virgin Media and ITV might give Sky a very serious run for its money he tried to stop us. How? He bought 17.9 per cent of ITV's shares – at a cost to Sky's shareholders of £940 million.

At the time, he was generally praised by the press for pulling off this deal – but it turned out to be perhaps the biggest mistake of his otherwise stellar career.

The media world – and the politicians – knew that his move was anti-competitive, and he had only done it to stop us getting ITV. To that extent, he may have succeeded. James Murdoch's intervention had, for the time being, frustrated our plans to take over ITV.

The intervention led to a war of words between us, legal action and a decision by Sky to withdraw content, such as
Lost
and
24
, from our Virgin Media service, at significant cost to itself in terms of lost advertising income.

Soon after BSkyB bought the stake, Virgin Media complained to the Office of Fair Trading, arguing that competition in the UK TV market had been impacted. The Secretary of State referred the acquisition of a 17.9 per cent stake to the Competition Commission.

James Murdoch bought ITV's shares at £1.35 each, overpaying in the market to secure them from two large institutional investors, who promptly then went back into the market and repurchased positions at about £1.10!

On 29 January 2008, the Competition Commission ruled that Sky must cut its stake in ITV from 17.9 per cent to below 7.5 per cent. BSkyB, having paid 135p a share, could now be forced to sell below 50p. And ITV's share price continued to fall. In July 2008, the ITV shares were worth only 40p each.

So what's the cost to BSkyB of that share purchase? At a share price of 40p it would be in excess of $1.3 billion. James's mistake was to overreact to what Virgin was doing. He could see that Virgin Media was going to be a threat to the Murdoch media empire and that we would do well. Virgin Media's aim was to give Sky a run for their money. But I don't think it would have damaged Sky in any dramatic way – certainly not nearly as much as he's lost trying to stop us.

Once you've been able to assess the level of danger in any given situation, you must be able to honestly gauge your own strengths and weaknesses as leader. You need to be able to recognise what you can do as an individual – and how you inspire and motivate other individuals to cooperate willingly to get the job done.

How to achieve this? Well, for starters, this is something that should – no,
must
– be written into every business plan:
This company will have lots and lots of parties and social get-togethers.
Parties are a way of galvanising teams and allowing people to let their hair down. They have to be inclusive and encouraging, and then they are an excellent way of bringing everyone together and forging a great business culture.

I used to invite everyone in the Virgin business to a party at my home in Oxfordshire – but unfortunately it became too big. At the last one we held – over three days – we had nearly 60,000 people. We put on fairground rides, sideshows, hamburgers and hot dogs, and rock bands – all paid for by the Virgin Group. I stood at the entrance and made sure I shook everyone's hand. My hand was swollen and rather painful after two days of this, but it was worthwhile. Today we have smaller gatherings, and I aim to get to as many of them as possible.

The Virgin Blue party, meanwhile, has become a glittering, red-carpet event – raising thousands for charity in Australia. The event is organised, set up and served by Virgin Blue people. It's headed by Jane Tewson, who established Comic Relief in the UK and lots of other charity projects, and who has been working in Australia with Aboriginal people. I donate a week's holiday in Necker Island in the British Virgin Islands as a major auction prize, and one trick I use is to get the runner-up, who has bid perhaps A$80,000, and the winner, who's paid A$90,000, both to pay A$85,000 and both go to Necker together. It's forged some great friendships. We also raise A$100,000 by letting someone name one of our aircraft, and all that costs is the paint job. It's easy money for charity and fantastic for staff morale.

I think governments should make parties completely tax-deductible, with the proviso that every time there's a knees-up, shindig, disco or rave, the proceeds go to charity. That's the deal. It should be much more than just a fun night for everybody. A night when everybody gets merry is good, but it's even better if you can combine it with something that makes a difference to others. Music events, fashion shows, sports contests, anything that gets people together and is enjoyable can be rolled out across every business – just don't let anyone use the charity's money to pay for the drinks!

A poor leader can make life hell for so many people. Leadership is not about a person sitting at the top of the tree, making all the decisions and expecting everyone to do as they're told. That's hardly leadership: it's more like dictatorship.

I have huge admiration for the British version of the TV show
The Apprentice
, in which people compete for a single job with Alan Sugar. The camerawork is slick, the editing is clever, the music is great. The power of television is immense, and if it's capable of inspiring people to treat business with excitement and enthusiasm, that can only be a positive thing. Frankly, anything that can be done to inspire young people to give it a go has to be worthwhile.

But I have one issue, and that's with the way Alan has to say, with a frown, at the end of each episode: 'You're fired!' It's in his contract because it makes good television. And it's cobblers. The whole competition is structured around the fear of being fired. While this does make it interesting for the viewer, it is not, in my opinion, how businesses should be run.

Where
The Apprentice
is successful is in its wider portrayal of the modern business world. There are few jobs for life any more. As individuals we need to be positive and sell ourselves. Most of those taking part in the show will have a better grasp of this than is apparent on camera. They know that failure is not something to fear. They know there are other options, other places to work.

So here it is important to stress that
there is a fundamental difference between an entrepreneur and a manager
. They are often contrasting people and it's crucial to realise this. Although I'm sure there are entrepreneurs who could make good managers, my advice would be: don't try to do both.

Entrepreneurs have the dynamism to get something started. They view the world differently from other people. They create opportunity that others don't necessarily see and have the guts to give it a go. Yet an entrepreneur is not necessarily good at the nuts and bolts of running a business. I admit that this is not my true forte – and recognising this weakness is essential for the entrepreneur. The annals of business are littered with stories of the driving force trying to run the business on a day-to-day level – and failing dreadfully.

Good managers are worth their weight in gold. People with the acute psychological know-how to smoothly organise and handle the pressures of an ongoing business venture are the glue that binds the business world. My notebooks are full of contacts and names of people who have been recommended or whom we seek out to come and be Virgin business managers. Cherish them, and give them a proper stake in the business, because they deserve a big share of any success. Once the entrepreneur has the company up and running, they often need to pass the baton on to the manager. The creator's job is to find someone with expertise who understands the vision and is prepared to follow the path.