Richard Branson is my kind of billionaire. He has tackled some hard problems in his career: music (Virgin Music), telecommunications (Virgin Mobile), finance (Virgin Money), air travel (Virgin America, Australia, and Atlantic) and space travel (Virgin Galactic). He also finds time to have a lot of fun and to promote numerous charitable endeavors through Virgin Unite.
This week marks another milestone for Branson and the Virgin Group: Virgin America celebrated its sixth anniversary yesterday and also reported a solidly profitable quarter, with an expectation of the first full-year profit.
I had the opportunity to sit down with Branson to talk about challenges, competing against giants and entrepreneurship. (Disclosure: The interview was in conjunction with Virgin America’s launch of its Los Angeles to Las Vegas route. Virgin America provided transportation and lodging.)
Sponsored by VB
When I think of the current generation of entrepreneurs, the only one thinking as big as Branson has is Elon Musk. Musk cofounded PayPal, launched Tesla, is sending rockets into space with SpaceX, working on a greener planet with Solar City, and is pitching a hyperloop that would revolutionize transportation. Coincidentally, the pair did a Google Hangout together.
This is a lightly condensed version of the interview. The full video is available on YouTube.
Why do everything that’s hard?
I love a challenge. It’s much more fun being a David versus Goliath than being a Goliath having a David after you. If you are a David, it only takes one stone to kill a Goliath. For instance, when we started with Virgin Atlantic, we had one second-hand 747. We were up against about 16 different airlines, all of whom had more than 100 planes each. Every single one of those airlines, except for British Airways has gone bankrupt. Pan Am, TWA, Air Florida, People’s Express, Freddie Laker, British Caledonian, and so on and so on and so on. They’ve all gone bust. They went bust because they didn’t get the quality right. What I’ve learned is you can go into industries which are much bigger than you if you get the quality right and you get the right people, you can achieve miracles. Having worked out that formula, we’ve had fun moving into whole lots of different sectors and repeating it.
How do you compete against giants like United?
We’ve said to the department of transport, please investigate, and we’re putting our case to them. We hope that United will get the biggest fine they’ve ever had. They deserve it because we’ve got a whole catalog of things that United had got up to. Having said all that, Virgin America is now profitable, and this year will be its first profitable year yet. We’ve got a brand that’s strong enough to withstand the onslaught. United, on the other hand, will lose we estimate about $130 million in what they’re trying to do to us. But 99% of any other small carriers would have no chance at surviving the kind of onslaught that’s going on against Virgin America. The job of governments is to stop anti-competitive behavior.
[I asked United several times for comment and did not receive one.]
How can you continue to provide a product like Virgin America is providing? I was just in the LA lounge, and I tweeted the other day that with American Airlines, I paid $50 to go into the lounge and then they wanted $1.50 for M&Ms. And here you are giving away food and drink and all that. How do you compete successfully?
We have no chance of competing if we get rid of our quality difference. The only way that a carrier like Virgin America can survive and thrive is to make sure we continue to make every single little detail better than our competitors. It’s a lot more expensive. As I left JFK last night, there was a row of Virgin Atlantic limousines as far as the eye could see. I must admit, I said to myself, “fuck.” We give four limousines per business class ticket. Passenger gets a limousine when they get off the plane, they get a limousine to the plane, they get a limousine the other way back to their office and they get a limousine back to the plane. That’s four limousines which we pay for, just as part of the price of a business class ticket. A big chunk of our ticket is just going into those limousines. And yet we also offer first-class sleeper seats, stand up bars, the best lounges in the world, hairdressers for free, masseuses for free, shoeshine boys for free. We throw everything at it. Yes, we don’t make a lot of money, but we create the best flagship airlines in the world. Airlines that we can be really proud of and make a real difference. People love flying them. Our margins are much, much smaller than our competitors, but we still can afford the occasional glass of champagne. [He says this as he swirls a glass of champagne.]
One of the things that I know you’re passionate about is using business to do good, and trying to do good for the world as a whole. I come from Silicon Valley where I see a lot of startups that are focused on what I call “rich white guy problems” (no offense). How do you get the entrepreneurial community focused on solving the world’s problems?
There’s nothing wrong with people creating businesses that make a difference to everybody and anybody. No criticism of somebody that creates a business that looks after wealthy people rather than looking after poor people. … But if every single business person can use their entrepreneurial skills to get out there and tackle small problems, or medium size problems, or big problems, we can get on top of the world’s problems. At some stage of your life, if you’ve made some money, if you’re an engineer or a technician, there are big problems in this world that need solving. I’m absolutely certain that if people could put their minds to them, we can get on top of these problems.
We need somebody to come up with a way of winning the Virgin Earth prize, which is a $25 million prize to see if you can get carbon out of the Earth’s atmosphere. I’m sure it’s winnable. I don’t know how it’s going to be winnable. But in the same way that somebody discovered how to measure longitude 300 or 400 years ago, I think someone will win this prize. And it could save our Earth. It’s important for people to try these things.
You’ve been at the entrepreneurship game for a long time, since you were in high school, I believe. What do you say to the kids coming out of college or skipping college in Silicon Valley who are looking to be entrepreneurs. What’s the best advice you can give them?
Screw it, just do it. Give it your best. If you fall flat on your face, pick yourself up and keep doing it until you succeed. You don’t necessarily have to go to college. If you’ve got a great idea, start maybe four years before. In America, the colleges, some people do seem to benefit from the kinds of colleges you have here. If you feel you’ve got an idea that’s going to make a real difference in people’s lives, see if you can sell that idea to a group of other people, get them to embrace the idea, help you launch your idea, and have a blast doing it.
When are you going into space?
It’s very exciting now. This is going to be Virgin Galactic’s year. By the end of the year we should be starting to do regular space flights. It should be an exciting year ahead.
Rakesh Agrawal is a consultant focused on the intersection of local, social, mobile and payments. He is a principal analyst at reDesign mobile. Previously, he launched local, mobile and search products for Microsoft, Aol and washingtonpost.com. He blogs at http://redesignmobile.com and tweets at @rakeshlobster.