I would say more than anyone else, Richard Branson was the guy who inspired me to become an entrepreneur.
I have a terrible memory, but I remember so vividly Branson’s first appearance on the Late Late Show. That was Ireland’s biggest talk show, and it was 1986. And it was the first time I’d ever seen a businessman who didn’t act like a businessman.
Woolly jumper and jeans, big hair, big teeth, and when he talked, he just made business sound like fun, an adventure. Which, for most of us who love business, that’s exactly how we see it. Yeah, it’s tough, it’s challenging, but that’s all part of the fun and adventure.
And the story I’m going to tell today, where Branson leaves school at 16 to set up an anti-establishment magazine, gets arrested for cheating the taxman, signs the Sex Pistols when no one else would touch them, starts a transatlantic airline, uses his hair-raising escapades on boats and hot-air balloons to publicise his businesses, and brings the mighty British Airways to its knees, makes for a cracking story.
A Childhood Built on Adventure
Richard Branson was born in 1950 and grew up in Surrey. His father, Ted, was a barrister and came from three generations of barristers.
But despite being kind of posh, they weren’t very wealthy. His mother, Eve—a former dancer, glider pilot, and airline stewardess—had to hustle constantly, making hand-painted wooden tissue boxes and wastepaper bins.
His mother also believed in building independence in her children through pretty bizarre physical tests. For example, when Branson was four, she stopped her car miles from home and made him find his own way back across the fields.
As Branson later put it, “She did things then that if she did them now she would be arrested.”
So it’s pretty clear that Branson got his entrepreneurial streak and his sense of adventure from his mother.
At school, Branson didn’t perform well academically because of undiagnosed dyslexia. This link between dyslexia and successful entrepreneurs has cropped up in so many people I’ve covered—Alex Karp of Palantir, Kerry Packer, Ingvar Kamprad of IKEA, Michael Rubin of Fanatics.
For people like these guys, dyslexia helps them to build resilience because they learn to keep going when things are difficult, and it also forces them to find different ways to solve problems.
Anyway, because Branson wasn’t strong academically, he focused on sports, and he was very good, becoming captain of the cricket, rugby, and football teams. But he got a very bad knee injury at just 11, and that put an end to that.
So he put his energy into business. He started selling Christmas trees, breeding budgies.
Leaving School at 16
In secondary school, he started putting together the idea for a magazine called Student, anti-establishment, anti-Vietnam War. And at the same time, he was getting increasingly frustrated by school.
And in his own words:
“School wasn’t teaching me anything relevant. I decided that the only way to make the magazine happen was to throw myself into it full time.”
So that’s what he does. In 1967, at the age of 16, he left school.
And his headmaster told him the following:
“Branson, I predict that you will either go to prison or become a millionaire,”
He moved into a basement flat near Hyde Park with his friend and co-founder Nik Powell, and that became the magazine's office.
Now, they only had one phone line, so to give the illusion that they were this big publishing house, Branson disguised his voice, transferring callers between fictional departments.
The first issue of Student was published in January 1968, and Branson managed to talk Peter Blake into designing the cover. He was the artist who had designed the Sgt. Pepper album cover for the Beatles.
Branson also got an interview with Vanessa Redgrave, a very high-profile British actress back then. And in later editions, he interviewed John Lennon, Mick Jagger, Bertrand Russell, David Hockney.
I mean, these are big names to get for a teenager running a magazine from a basement.
As Branson said:
"I suspect that I didn't know failure. So the idea that somebody would say no is something which I couldn't have been able to understand."
But despite getting such big names, the magazine didn’t sell well, and within two years it was gone.
Virgin Is Born
Branson had noticed, though, that the ads for discounted records in the magazine always got a lot of interest. So he and Powell moved into selling records by post.
For the new business name, Branson suggested Slipped Disc.
But someone else said:
“What about Virgin? We're complete virgins at business,”
And that's the name they went with.
In May 1970, Branson put a full-page ad in Melody Maker, one of the UK’s biggest music magazines back then, offering vinyl records by mail at discounts of 10% to 15%.
Purchasers mailed cash or cheques in advance, and Virgin was earning thousands a week within the first few weeks. But the margins were tight.
Then, in January 1971, Britain's postal workers went on strike, so there was no money coming in. Branson needed to pivot.
And he persuaded a guy who owned a shoe shop on London’s Oxford Street and had some extra space upstairs to let Virgin use it rent-free, because Branson said that the young people coming to buy records might also buy shoes.
And the record shop he set up was very different from the norm.
There were cushions, headphones and free tea, so you could sit there listening to music for hours without any pressure to buy, creating a hub, somewhere people wanted to spend time.
And on the back of its success, Virgin opened up shops in Liverpool and Birmingham.
Now, as mentioned, the margins were really tight, so Branson came up with a way of improving those margins. And, well, it was illegal, fraudulent.
So for context, this is in 1971. Records sold in Britain carried a tax of 33%, but exports were tax-free.
So Branson purchased albums declared for export to mainland Europe, loaded the stock into a van, drove down to Dover port, got the export paperwork stamped, but then turned around without boarding the ferry.
Back in London, he sold them in his shop, undercutting his rivals while still making a healthy profit by pocketing the tax.
A disgruntled rival retailer, suspicious of the prices Branson was charging, tipped off Customs. They investigated, raided the business and arrested Branson.
He spent a night in jail and had to be bailed out by his parents, who had to put up the family home as security to pay the bail.
And look, you know where I stand on this. Most of us did stupid stuff when starting out in business, and you learn from it.
Anyway, Branson reached a settlement with Customs—a £70,000 fine paid in instalments.
Tubular Bells and a Musical Revolution
But this run-in with Customs and the huge fine doesn’t slow him down.
Branson borrowed £35,000 from a bank and bought a manor house in Oxfordshire and turned it into a very successful recording studio.
So by this stage, and remember he’s only 21, Virgin now has 14 record shops, they have a recording studio, and so the next logical, or maybe organic, move for them is to start a record label.
And that’s exactly what they did in 1972, when a 19-year-old musician named Mike Oldfield submitted a demo tape that he’d made in his flat, using a tape recorder to build up layers of guitars, bass and other instruments.
There were no vocals. And so the established record companies had turned it down because they didn't think it would sell.
Simon Draper, who was in charge of buying the records for Virgin’s stores, thought there was something in it.
So Draper persuaded Branson to sign Oldfield and launch Virgin Records in 1972.
Oldfield’s first album, Tubular Bells, came out in May 1973, and sales were solid at the start.
But then, in December, they get a huge break.
The opening piano section from Tubular Bells is used in The Exorcist, which was not only a huge box-office hit but was also a cultural phenomenon. And as a result, Tubular Bells ends up selling more than fifteen million copies worldwide.
That success gives Virgin the money to sign more artists, but for the first years, Oldfield remains their only successful signing.
And at the same time, we’re in the mid-70s now, the British economy is struggling, sales in Virgin’s shops are falling, and the company took out big loans to pay for their store expansion, which by 1976 had reached 24 stores.
So the company is under huge financial pressure.
But in the spring of 1977, Virgin finds itself at the centre of a musical revolution.
Enter stage right—the Sex Pistols.
The band had already caused one of the most notorious moments in British television history when they swore live on teatime TV.
The newspapers went nuts. The Daily Mirror’s front-page headline was ‘The Filth and the Fury’.
As a result, the Pistols had been dropped by their record company, and no other record label wanted them, including Virgin, because Draper, Branson’s head of music, argues against signing them.
Branson overrules him because he could see that punk represented a big shift in youth culture.
And Branson actually got on pretty well with the Pistols' lead singer, Johnny Rotten.
And here’s a quote from Rotten. I love this:
"I've always liked Richard Branson because, pompous rich twat that he is, he has a great sense of rebelliousness."
And he’s 100% right.
Branson has this boyish rebelliousness, and still has it, a curiosity that most entrepreneurs have, but also a sense of adventure and an anti-authority streak. He’s always very politely pushing against the grain and having great fun doing it.
So in May 1977, Virgin signed the Sex Pistols, and Branson immediately weaponised the controversy.
So the Queen's Silver Jubilee is happening just a month later, and Branson charters a riverboat to take the Sex Pistols down the Thames, blasting "God Save the Queen".
The police intercept the boat. There are scuffles. Malcolm McLaren, the Pistols' manager, and several others are arrested.
The outrage is huge, and so is the publicity.
And this becomes one of Branson’s great strengths throughout his career—getting enormous attention for his businesses without having to pay for it.
When the Pistols launched their album Never Mind the Bollocks a few months later, the BBC imposed a complete broadcast ban, and major record stores refused to stock it.
And of course, all of this only serves to make the Pistols even more appealing to young people.
So the demand for the record is huge, and you can only buy it in Virgin record shops as well as some independent ones. The album went to number one.
So a huge win for Virgin on every front.
Now, the Pistols break up the following year.
But signing a band that no other record label would touch because of their controversy, their profanity, their anti-establishment attitude, gives Virgin credibility with other musicians and helps it sign up big established names like Peter Gabriel, Steve Winwood and, later, the Rolling Stones.
The Hits That Kept Virgin Alive
In 1979, Virgin opens its first Megastore on London’s Oxford Street.
It’s billed as Europe’s largest discount record shop, with a huge range of music that people can spend hours browsing.
But despite its success, the wider business is constantly under financial pressure.
Branson keeps expanding, and by 1981, Nik Powell—his childhood friend, 40% partner and the man trying to keep the finances under control—has had enough.
He sells his stake for around £1 million, roughly £5 million in today’s money.
Now, a decade later, that 40% would have been worth over £200 million, but Powell said he never regretted leaving.
He goes on to co-found Palace Pictures, the film company behind films including Mona Lisa and The Crying Game.
And I can see why Powell left.
Virgin's business is so chaotic, they always seem to be relying on the next big thing to get them out of trouble.
But somehow, they keep finding it.
First, in late 1981, the Human League released the single Don’t You Want Me. It becomes a massive hit, and their album sold millions, giving Virgin a badly needed financial lifeline.
And that success is followed by Culture Club, whose first two singles flop.
Then, in September 1982, Virgin releases Do You Really Want to Hurt Me? against Boy George’s wishes.
He thinks it’s too slow and personal, and actually said:
“You’re going to ruin our career before we’ve even started!”
But it’s a huge international hit. Their first album sells four million copies.
Then, in 1983, comes Karma Chameleon, and their second album goes on to sell over ten million.
Also in 1983, Virgin teamed up with EMI to launch Now That’s What I Call Music!
A double compilation album, it reaches number one and sells over 900,000 copies in Britain within weeks.
It later expanded into an international series, selling hundreds of millions of albums worldwide.
That same year, 1983, Branson launched Virgin Games.
I never knew about this business. It was pretty low-profile compared to a lot of his other businesses.
It turned out to be very successful because in 1994 it was sold for $135 million.
So by 1983, with revenues of £94 million, the business really seems to be hitting its stride.
And Branson is the type of entrepreneur who is always restless, he’s always on the lookout for new opportunities.
And in 1983, he decides to start an airline.
From Records to Airlines
Now, the genesis for this idea was back in 1979, when he was in Puerto Rico waiting to catch a plane to the Virgin Islands because he was going to Necker Island.
This is an island that Branson had bought in 1978 for just $180,000, but as part of the deal, he had to develop the resort within four years or he’d lose it.
So he ends up putting about $10 million in total into the island.
Anyway, back to 1979.
The flight was cancelled. His girlfriend, who went on to become his wife, was waiting for him on Necker Island.
So 29-year-old Branson was obviously very keen to get there, so he chartered a private plane and then went around the airport to all the people who were on his cancelled plane and convinced them to pay $39 to cover the cost.
So this planted the initial seed in his head.
And by 1983, with Virgin's revenues at over £90 million, he decided to go for it and start an airline.
Now, British Airways back then was the big beast and had what amounted to a monopoly that it fiercely protected.
For example, Freddie Laker had already taken on BA and the other big transatlantic carriers in 1977, but Laker Airways collapsed in 1982.
Laker alleged that airlines including BA, Pan Am, TWA and Lufthansa had worked together to drive him out of business—basically a cartel.
And there was obviously a lot of truth to this because BA and the other airlines later agreed to a $48 million out-of-court settlement.
And when Branson approached Freddie Laker for advice, Laker told him the following:
“B.A. is a vicious company—they will do anything to get rid of you. Be on your fettle all the time to combat anything they do. Watch your backside."
In terms of the business model, Branson knew cheap fares alone weren’t enough.
Virgin needed something people would choose even when the bigger airlines matched its prices.
Here’s a quote from Branson:
“I wanted to provide something different and better for customers. I thought if Virgin had an airline we could put the fun back into flying and bring glamour back to the skies.”
So how exactly was he going to differentiate Virgin?
In the established airlines, first class was very expensive and stuffy. On BA flights, you had to wear a suit in first class, while passengers in economy weren’t really made to feel welcome or were treated with indifference.
So what Virgin did is they had what was called Upper Class, and this was first-class treatment at a business-class price.
A chauffeur to the airport, better food and service, and an onboard bar where you can get up and have a drink.
And Branson was also keen that economy passengers enjoyed themselves.
There was friendly cabin crew and, over time, personal video screens and ice creams during the film.
Small touches, but they give people a reason to choose Virgin.
Branson was obviously wary of the amount of money needed to start an airline, so he put a limit on the initial risk.
They started very small, by leasing a second-hand Boeing 747, with an agreement that he could return it after a year if the business didn't work.
But then, three days before the first flight, the aircraft hits birds during a test flight, blowing an engine.
And while nobody was hurt, the replacement engine cost £600,000. And because of an insurance oversight, Virgin had to find that money itself.
So, not a great start.
For the maiden flight from Gatwick to Newark on June 22nd, 1984, Branson greets guests dressed as a pilot.
There are celebrities, journalists, champagne and caviar, and it generates huge publicity.
Adventure as Advertising
Now, on the publicity front, Virgin Atlantic has a tiny advertising budget, so Branson finds a way to keep the business in the headlines by combining two things he loves—adventure and promoting his businesses.
In 1985, he sets out in the 65-foot Virgin Atlantic Challenger to beat the record for the fastest Atlantic crossing by boat.
But just hours from the finish, they hit something. Could have been a buoy or debris.
The boat sinks, and the crew are rescued by a cargo ship.
Even though they didn’t beat the record, Branson and Virgin get huge publicity.
The following year, he tries again—and beats the record.
Days later, Margaret Thatcher joins him aboard the boat on the River Thames, telling the press:
“What a boost it gave to the whole of Britain.”
Then, in July 1987, Branson and Swedish engineer Per Lindstrand make the first Atlantic crossing in a hot-air balloon, reaching 130 miles an hour in the jet stream.
But as they approach Northern Ireland, they hit severe turbulence.
The balloon bounces off a stone wall and goes back out over the Irish Sea.
Lindstrand jumps from a height of 50 feet into the water, leaving Branson alone in the balloon.
He eventually brings it down in the ocean, and both men are rescued.
Another death-defying adventure and more publicity.
But the airline itself is still tiny. Like, as we get to the late 80s, Virgin has three jumbo jets. Compare that to BA, which had over 160 jets.
Branson wanted to expand, and so in 1989 he sold a quarter of the music business to a Japanese media group for £98 million.
Then, in 1990, Iraq invaded Kuwait, and Saddam Hussein prevented thousands of foreigners from leaving, using them as human shields.
Branson uses his friendship with the King and Queen of Jordan to help arrange a deal—medical supplies in exchange for freeing some of the hostages.
And it's brilliant PR for Virgin Atlantic.
Major TV networks across the world lead their news coverage with footage of the Virgin 747 landing, and Branson is first out the door.
And it’s the kind of coverage that is really starting to annoy BA, and in particular their chairman, Lord King.
He has always been extremely close to the Conservative Party and is one of Margaret Thatcher's favourite businessmen.
But here you have Virgin and Richard Branson himself leading this mission, coming to the rescue of British hostages, a role that BA, as the national carrier and one of Britain's most visible and successful brands, should have fulfilled.
And Branson, with his long hair, big smile, no suit, always casual, he was the total opposite of Lord King.
And within BA, despite the fact that Virgin was still tiny, they acknowledged that Branson had given Virgin "style and flair".
And because he’s this young, hugely ambitious entrepreneur, he was seen by BA as a big threat because he was appealing to younger passengers.
The Battle With British Airways
So Branson has been annoying Lord King for a few years.
But the straw that breaks the camel's back comes in March 1991, when Thatcher’s Conservative government scraps restrictions on access to Heathrow to encourage more competition.
And Heathrow is the most popular airport for business travellers, so Branson can finally compete for those lucrative passengers that BA more or less had to themselves.
Lord King was furious.
He saw this as a betrayal by the politicians who he had always supported and lobbied, and many of whom had gotten lots of free flights on BA.
He calls Branson a pirate.
So what does Branson do?
On Virgin’s maiden flight from Heathrow, he turns up dressed as a pirate.
And he puts Virgin colours over the giant British Airways Concorde model that sat outside the airport.
And again, as always, the press cameras are there to capture all of it.
So you know, by this stage Lord King has just reached the end of his tether.
He gathers his top people and instructs them, and I quote:
"Do something about Branson."
And this one command kicks off what became known as the BA Dirty Tricks campaign.
And the whole campaign is so dirty, so below the belt.
For example, BA employees illegally access an airline reservation system, get the contact details of Virgin Upper Class passengers, then ring these passengers at their homes and hotels, pretending to be from Virgin, telling them their flights are delayed or cancelled, and offering them transfers on BA flights.
They hire a PR consultant to plant false and negative stories in the financial press, claiming Virgin Atlantic is close to being insolvent, is unable to pay its fuel bill, and is cutting corners on maintenance.
So hugely damaging to passengers’ confidence in the airline, but also hugely damaging because this was also at a time when Virgin was looking for investment.
And then it gets personal.
BA hires private investigators to follow Virgin executives, check their phone records, and go through their rubbish, looking for anything it can use against them.
But fortunately, there were some people within BA who knew that this was just plain wrong, and one of them goes to Branson and tells him everything.
So Branson writes to BA setting out his accusations.
BA writes back denying them, then goes further.
In its weekly staff newsletter, it attacks Branson’s credibility, dismissing his allegations as another publicity stunt.
Basically, BA are saying Branson is making it all up to get attention—because that’s what Branson does.
I mean, it’s corporate gaslighting on a massive scale.
And the reason why BA are so bolshie is because they know that financially Virgin Atlantic was in a bad way.
The Gulf War has resulted in a drop in airline travel as well as high fuel costs, and unlike BA, Virgin Atlantic doesn’t have the cash reserves to weather this for much longer.
So BA are thinking that Branson doesn’t have the funds to keep the airline going or to fight them.
Selling His Baby to Save the Airline
But Branson isn’t going to be bullied, and he’s not going to give up on the airline business.
So he has to make an agonising decision.
And here’s a quote from Branson:
"I felt sick. It was a choice between letting the airline go under—throwing thousands of people out of work—or selling my first company. Virgin Records was my baby. It was where the whole Virgin story began."
In March 1992, he sold Virgin Music Group—the record label—to EMI for £560 million.
Lord King and the BA executives were totally blindsided because the sale of Virgin Music was a huge shock.
And now Branson has the money to not only grow his airline but also to fund a massive High Court action against them.
And during discovery for the case, internal BA documents are uncovered with details of all of their payments to private investigators, their operation to poach business-class passengers, all of their dirty tricks.
So on 11 January 1993, the day the trial was due to begin, BA completely capitulated.
They issue a public apology in open court.
They agree to pay £110,000 to Virgin Atlantic, and roughly £3 million to cover legal fees and £500,000 in personal damages to Branson.
And Branson, brilliantly, takes the £500,000 and distributes it equally among Virgin Atlantic's employees and calls it the "BA Christmas bonus."
It’s a huge humiliation for BA and for Lord King, who is forced to bring forward his retirement.
As for Branson, he emerged from the scandal with his reputation enhanced, the ultimate plucky underdog standing up to the establishment.
And that’s where I leave it for now, with Branson, still only 42, a self-made billionaire with a net worth of $1.7 billion.
And through his swashbuckling adventures and his David vs Goliath battle with BA, he has become one of the most recognisable, and I think rightly admired, entrepreneurs in the world at this time.