ONE SOCK HAS a hole. That is not how people worth $4.2 billion (Rs 22,486.8 crore) generally dress. But then Richard Branson, founder and chairman of the Virgin Group, is not your average billionaire and often makes news for his maverick style. After creating from scratch a $21 billion (2011 revenue) group that employs about 50,000 people in 34 countries, the 62-year-old business magnate is flying around the world these days using not just his wealth, but his charm and influence to make a difference to a variety of causes. Despite his brand’s and his own high visibility in India, most of Branson’s companies, except Virgin Atlantic and Virgin Mobile, have stayed away from the country. Last month, Branson and Steve Ridgeway, CEO of Virgin Atlantic, were in India. They spoke to Fortune India about the group’s ventures, and what it means to be Virgin. Edited excerpts:
What are the big problems you are solving now? Are you still a businessman or have you become a statesman?
RB: Right now I feel like a man with a cold (laughs). Well, I spend 80% of my time on not-for-profit ventures. From Delhi, I’m off to Egypt for a meeting with The Elders. [The Elders, founded by Nelson Mandela, former President of South Africa, to solve problems such as poverty and climate change, is currently chaired by Desmond Tutu, South African social rights activist. The likes of Jimmy Carter, former U.S. President, Kofi Annan, former U.N. secretary-general, and Ela Bhatt, founder of the Self-Employed Women’s Association (SEWA), are part of it. Branson was one of the brains behind the idea.] We also have an organisation called the [Virgin] Oceanic that is campaigning to protect marine species and make oceans more sustainable. We have The Carbon War Room that is trying to tackle global warming. There’s also the Centre for Disease Control in Africa.
I still enjoy diving with new ventures—the space project [Virgin Galactic’s commercial space tourism] is getting close to becoming a reality and that is tremendously exciting. So yes, I’m still very busy.
Virgin has been in and out of India. The airline dropped Mumbai a few years ago and you are back now. Why?
RB: We’ve been in Delhi for 12 years. In Mumbai, we couldn’t get the [time] slots for connections across the Atlantic. So, three years ago we decided to retrench rather than lose money on an unproductive slot. We had said we would come back if we got the right slots which we now have. Although India has been through a slight growth hiccup, I think the recession in Europe and the U.S. is starting to come off. We think it is an auspicious time to start again. I like to party. We came once [before], we had a party. We come again, have another party.
But as a brand, Virgin is still not as hot in India as it is in most other markets.
RB: We haven’t done a lot in India. I suspect we should be doing more. Virgin Mobile is growing. You should remember that until now India has been quite closed to [foreign] companies. Even now, we can’t come and buy, say, a [company like] Land Rover in India, whereas Indians can do that in Great Britain. Now, we can go up to a 49% stake, and that’s a big improvement. Many will make the best of that. But there are other countries where we can go and set up companies, and own them 100%. It’s the way we have grown over the last 30 or 40 years. If the opportunity arises for us to take a 49% stake in something, we are open to suggestions.
Would that mean a Virgin India, like Virgin America or Virgin Australia?
RB: We don’t have any immediate plans for that. You have over capacity even with Kingfisher gone. I’m not sure right now would be an opportune time.
Your mobile venture hasn’t taken off unlike most other Virgin businesses. There are rumours that the Tatas could take over its entire joint venture with Virgin Mobile.
RB: Whatever happens, the Virgin brand will continue in mobile in India. I’m not sure what the ownership will be like.
Your entry into any market creates all sorts of reactions, including price wars. What would you attribute it to?
RB: We have a brand which is far bigger than the reality of the brand. In some countries, it is as big as Apple, though we’d love to have Apple’s bottom line. We do some exciting things, such as space travel, that makes the brand large globally. And everybody drops their fares when Virgin Atlantic enters the market. But I guess that benefits consumers.
SR: When you are small, you have to fight very hard to cut through—we’re always fighting big, established players. You need that personality and style—Virgin companies have it. That’s why they are respected, and get noticed.
There are businesses that have tried to imitate you, but mostly failed. Kingfisher, for instance. Why?
RB: The airline industry is extraordinarily difficult. Since Virgin was set up in Britain, every American carrier we competed against has gone bust. Pan Am, TWA, PEOPLExpress, even Continental went bust three times, but have come back. American—they’ve gone bust at the moment. I think Virgin has survived because we offer good quality products, and so, even though we are smaller than the guys we compete with, people go out of their way to fly with us. We’re willing to take tough decisions, like pulling out of a route for a while when losing money and then coming back. It’s good management doing that rather than putting the airline at risk. We grew steadily instead of trying to become the biggest airline quickly. I don’t swap my socks very often (points to the torn pair that he’s wearing). That’s more frugal.
SR: I suppose Kingfisher was sitting in a market that was allowed to grow fast very quickly. Being based in Europe, we were more diverse in terms of where we were flying. Kingfisher was riding a roller coaster, wasn’t it? That’s hard, especially in an industry where margins are thin.
Virgin has been working on biofuels. When will we see its increased use?
RB: First of all, biofuels work. When we first pushed the idea, people laughed. But now the American Air Force is flying planes 100% on biofuels. There are many approaches. There are biofuels from waste products of steel and aluminium units—such plants [that convert these wastes into fuel] are being set up in China by a New Zealand-based company, for instance. Algae is another approach and we have invested in algae-based companies. We may have to wait for four or five years to get the required quantity.
How will higher production of biofuels affect the prices of jet fuel?
RB: It will finally be the competitor which jet fuel never had. But it all depends on the scale [of production]. If it is produced for $75 a barrel compared to more than $100 of jet fuel today, it could have a downward effect on prices.
Do you miss the excitement of Formula 1? (Brawn GP, with Virgin as its sponsor, won in F1 in 2009. Later, Virgin set up its own team, but couldn’t repeat the success and withdrew.)
RB: We still have a bit of involvement through Marussia [F1 team]. We were just extraordinarily lucky the first year with Brawn and Jenson Button. I think that will keep me going in the near future.
Leave a Comment
Your email address will not be published. Required field are marked*