For the launch of the first Virgin Hotel that just opened in Chicago, I sat down with jetsetting billionaire Sir Richard Branson in what may have been the most Bransonian of spots: the Shag Room, a lounge area right off of the hotel’s second floor bar. In the middle, a mega leather ottoman resembled some sort of super-sized circular bed.
We did not sit on the ottoman/bed.
Instead, we opted for a peripheral bench with a neat little cafe table between us. And then we spoke for 20 minutes about his businesses, his penchant for design, and why £8 bottles of water can even piss off billionaires.
You’ve launched dozens of Virgin businesses over the years–how are you so prolific?
Well, I suppose Virgin is an unusual brand in that I suspect we’re the only “way of life” brand in the world. We’re one of maybe the top 30 best known brands in the world, yet if you look at the other 29 they all specialize in one area. Whether it’s Google, Coca-Cola, Microsoft, etc., they all generally specialize in one area. With Virgin, I’ve just loved creating things. And as a private company, I can get away with moving Virgin from records to airlines to train companies to space companies to whatever, without ever having to worry about analysts knocking the value of my stock.
Is there a benefit?
I think everybody at Virgin has just found it a hell of a lot more fun and challenging. We promote a lot from within, and people don’t have to feel like they’re stuck in one company all the time.
Why start a hotel?
I fly a lot. I travel a lot. And one of the things that I’ve found going to a lot of hotels around the world is that generally the kind of hotels that I’d like to hang out in are membership-only. I thought if we could create what normally is a sort of membership-only club in a hotel in a city like Chicago, New York, and others, for people who don’t necessarily pay what Soho Club asks for their membership, and make it just as good, if not better, then that would be a very Virgin thing to do, very popular.
And then also, there are other frustrations, I find in hotels: They rip you off all the time with hidden charges. A bottle of water is £8 [about $12] in the room–
You can’t get frustrated, personally, about that!
No, I do, I get annoyed!
It would cost you more money to be worried about the bill than to just sign it and walk away.
It costs me more money because I then set up hotels to answer these things!
We went into a financial services company–we set up a bank–because I wanted to invest money. And when the guy agreed to invest money for me, I looked down at the piece of paper, and it said “bid-offer spread 5%.” I said, “Well, sorry, what is bid-offer spread? I’m dyslexic. I don’t understand these things.” He sort of looked a bit shifty, and when he had left, I asked someone else what bid-offer spread meant, and was told it meant he took 5% of my money before he even started. And so I thought, “Screw that, we’re going into this business and we’re going to compete!”
I take an interest in life and do take an interest in these things. I mean, they’re fairly superficial interests, but I like to live.
At this point, Branson goes to pour himself some tea, when he realizes the cup is a glass mug.
This sounds ridiculous–could I have a cup?
He then goes through a series of negotiations with an assistant to acquire one of the many ceramic teacups sitting nearby.
I can’t do hot drinks out of glass. It drives me crazy.
I can’t either! I actually said today, we must get the hotel to fix this–we’re making our normal list of little things we’d like to get changed.
Do you have a design philosophy?
There’s no design rules for Virgin Group as such, but I think people know–designers who come to work for Virgin or work with Virgin–sort of what’s expected of them.
Why invest so much effort in design?
Designers can impact the financial performance of a company. With Virgin Atlantic, we said to our designers, look, we want to offer a better-than-first-class product at a business-class fare, but we can’t afford the space the chairs would take off with a first-class seat. So they came up with this idea of designing a seat that fit into the aisle. And they came to me one day with the idea and said, “If we do this, we’ll need to get rid of the push trolleys. The crew is going to have to bring in the food by tray because we’re going to be using up a lot of the aisle. But we can get an extra foot on a British Airways first-class seat without losing any seats.”
It was a brilliant idea. We suddenly could charge $3,000 less for a seat than British Airways was charging for an equivalent seat. As a result, Virgin Atlantic has survived 30 years in business, whereas all our rivals–Panam, TWA, Air Florida, all went bust. Eighteen other airlines went bust. Design has been very important.
That’s an example of design having a very 1:1 impact on your bottom line. A smaller seat allowed you to fit more seats onto the plane. But a lot of your decisions in design–when it comes to the experience of a plane or hotel–don’t seem to have such a clear return of investment.
Well, another extreme, we had little pepper pots, and salt pots on our planes, shaped as a windmill. When I was running Virgin Atlantic, the chief executive came in one day and said, “We’re losing thousands of these. It’s costing the airline tens of thousands of dollars a month. You’re going to have to take them off. They’re far too popular.”
And I thought, “If they’re far too popular, do we really want to take them off? It’s a compliment.”
So we just put underneath them, “pinched from Virgin Atlantic.” We then found that people were continuing to steal them, and they were ending up on their dining-room table. They hadn’t looked underneath. Their guests would look underneath. And the whole evening was spent talking about Virgin Atlantic in one of our best advertising tools ever! That was a fun one which worked really well.
So your new hotel is designed for women, and there’s been some pushback. In places like the Economist, they’ve said it’s silly. I think their tacit question is, do you want the face of feminism, or designing for women, to be that women have somewhere to put on their makeup or shave their legs?
Well, I mean, of course, the story was also [generally] miswritten in saying we’ve designed it solely for women, which, I’m not too worried about that story coming out. As a man, I’d definitely want to be staying at that hotel.
Look, my wife came and spent a week here last week to check it out and make sure it was what we wanted to create, and she’s been absolutely delighted with it. I know from traveling with her and my daughters, the frustration over, “Dammit, if I want to put my makeup on, there’s no light on the mirror!”
All these little touches, I think they’re great, and a lot of these touches are good for men as well. I think journalists who criticize that most likely are not female. I don’t know of any women journalists who’ve written criticizing it. And interestingly, I met the head of Hilton hotels the other day, and he said, “That was brilliant, and we’re going to see if we can catch up with you.” So I think the team has been absolutely right in making the hotel female-friendly, and in doing so, I think men will have benefitted as well.
You’ve started a lot of business over the years–many of which have failed. How do you get through that and keep going?
Fortunately, there aren’t many that have failed. We have had failures. I think if you’re going to be a true entrepreneur, you have to accept that some things are going to work and some things are not going to work.
We’ve never had a spectacular failure, in that all of the business we’ve started from scratch. So basically, we think we see an opening in the marketplace where we can do it better, we give it a try, and if it doesn’t work out, we close it down or we sell it and we move onto something else.
And sometimes we get crushed. Our most notable failure was taking on Coca-Cola. They literally waged a dirty tricks campaign against us which succeeded due to the sheer might of their checkbook, going into retailers and basically paying them to take Virgin off the shelves. When British Airways tried that trick against us, people stuck with us because we were better than them. With a can of cola, we couldn’t differentiate ourselves enough.
But fortunately, 90% of the time we have made these things work. And therefore, if we do have a failure, we brush ourselves off and move on to the next project. It’s not like losing a child. Generally speaking, we can find jobs for people in the next venture we’re launching.