I worked a bit with Branson in the Seventies, and was very interested in his business methods then. I assume they have changed ;-)
He functioned very much as a Venture Capitalist - but with a difference. Many people came to him with different ideas, mostly connected with Virgin Records, but some were from different areas addressing his same audience.
For him then , it was about a solid business plan. He would put up most of the dough on the basis of the plan, which had to yield 12% return on invested capital. He ralso equired a commitment from the owners, so they took part of the risk. He had gathered around him a bunch of accountants and legal advisors to help him assess these plans, and they often guided the start-up at the beginning. But he was very intuitive in selecting which start-ups to go with.
As long as he got his 12% - no more, no less - every year, he didn't care how much the co-owners made. Some made millions, a lot got ploughed back. For the start-up owners, it was highly motivatiing. But if any plan failed (in providing the 12% return) the business was terminated quite fast.
This 12% was, of course, a very good rate of return. Only vintage stratocasters could offer similar growth and you'd have to sell them to get the cash;-).
There was another element to the Branson MO - still evident today. His father was a High Court judge and Richard was fairly savvy about the law and lawyers. He used these weapons quite regularly, but rarely against people he was in business with, since it would be a reflection on his poor judgement. Like David and Goliath, he was never afraid to take on the big boys. And I think he has triumphed rather more often than he has failed. You can't be me, I'm taken
Most of the VC's do not limit their rate of return goal. I haven't looked at the numbers recently, but most want to be in the upper quartile of VC's in terms of IRR, and I believe that requires in most "vintage years" of funds returns that are more like 45%, IRR's that is.
For him, business was fun, or it had to be. He did, and I had quite a few conversations with him about it, want to change the world. Yet it wasn't in the goody goody, sense of change, but in just making life more fun. I was staying at his place just before the launch of Virgin Airways, and all he wanted to talk about was the logo on the planes - nothing about the business or even the service concept. It was the logo and how it would appeal to the potential audience. But that IS the fun side.
I am biased of course, but his business success is, for me, inspirational. Not at all in the sense that I could do the same - because I don't have the chutzpah or brains - but he showed that there was an alternative, and that original thinking could be rewarded. You can't be me, I'm taken
And I am sure their kids will be wondering what is so special about virtual reality, or millions of people gathering together virtually to change corporate decision-making. You can't be me, I'm taken
