Virgin Atlantic: When Stelios met Richard

Richard Branson and easyGroup's Stelios Haji-Ioannou are entrepreneurs and proud of it. Campaign was on hand when these two mavericks of the skies met to talk bank balances and business. Stelios: How would you define the values of the Virgin brand?

Richard: We never used to take the brand too seriously in the early days - we were building a record company that happened to be called Virgin. We just did things that were fun, that we enjoyed doing. It wasn't until 15 years later that we started seeing editorial pieces on the importance of the Virgin brand. I was about 32 years old and that made us wake up. The brand, we realised, stood for irreverence, quality, value, fun and innovation. We then became careful about doing things that damaged the brand.

- You seem to love taking personal risks? Are you an adrenaline junkie or is it a business thing?

Well, I don't do it as much as I used to do. I enjoy life enormously and I try to calculate the risks in life as in business. I have pushed the limits on occasions; I've been pulled out of the water five times and I've been lucky to survive. It has helped put Virgin on the map on a global basis but I enjoy doing it as well.

- So you are an adrenaline junkie?

Oh, OK.

- So we've established one fact! How do you reconcile that aspect of your image with financial prudence?

Any public company that we have, it's unlikely that I would either be a chairman of or a director of.

- Well, you've changed then because in 1988 you took the whole group public with yourself as chief executive and chairman.

I learned my lesson. You and I are entrepreneurial, conformity does not fit in with that. And if you're a public company you have to conform, and play the game properly. I would rather have other people who are good and willing to play that game properly than do it myself. Do you agree?

- Well, yes.

- What's been your biggest failure? I'm willing to reciprocate to make you feel better. Mine was internet cafes. Now your turn ...

I think that anybody who builds companies from scratch as you and I do will have failures. Most venture capital companies have seven failures out of ten and our record is a great deal better. There's soft drinks but I've lost the most money in retailing, I guess; the Megastores in their various guises. On the other hand, without music retailing I wouldn't have Virgin Mobile.

- Does it bother you that the British press talks more about failures than successes?

I think having a free press matters, you just have to take the knocks with the praise and I've never actually sued a newspaper despite some pretty inaccurate stuff being written over the past 35 years. There is no question that the British press as far as business is concerned is more negative than, say, the US press.

- Do you believe in PR or in advertising?

Well, good PR is an awful lot cheaper than advertising and good PR can often get the message across a lot more powerfully than advertising. I remember a few years ago you asked me whether you should let the cameras into easyJet for a TV show. I said you should because it'll be warts and all but it'll really put easyJet on the map as a low-cost airline.

- How much involvement do you have in the creating of the messages?

I used to have a lot and now I have very little. But we've got people such as Alison Copus who runs Virgin Atlantic's marketing and James Kydd who runs Virgin Mobile's marketing who I trust 100 per cent.

- Would you create an ad agency as a business?

I think it's unlikely. The best advertising agencies are generally ones where the owners are hands-on and I don't think advertising agencies really work as big agencies. That's why we often work with small agencies and when they get bigger, perhaps because of our accounts, we're apt to move on and search out other smaller ones. What about you?

- I don't use ad agencies, that's why I'm not very popular with Campaign. The easyJet brand, remember, is all about price. Our messages are very simple.

- Do you have plans for a successor?

No, I'm going to live forever so it's not an issue. But seriously, Virgin is very diversified, as you know; we have a small central team of five or six people who help make the decisions. My daughter wants to be a doctor, so she's not interested in going into business. My son's only 18, so it's too soon to see whether he'd be interested and I'm certainly not encouraging him. At the moment, if I get run over tomorrow, we have a small central team who would take over.

- Would you ever float the group again?

No, never, ever. I don't mind floating individual companies but the City does not understand conglomerates. They have analysts who specialise in entertainment, in aviation, in clothes and so on, and because they don't have conglomerates specialists they mark them down.

- But Virgin is far too valuable to allow it to disintegrate. Would you appoint an heir-apparent?

It's possible, companies such as Virgin and easyJet do benefit from having a human face. How much time do you spend on marketing easyJet out of the total?

- I'd say a lot, I can't put a percentage on it. But my guess is that if I wasn't around, the easyGroup would probably disintegrate, easyJet would continue but the group is too young.

- Over the years there have been so many press reports that Virgin's like a pack of cards. How many times in the 35 years were you close to losing the whole thing?

Well, the reason I wrote the book Losing My Virginity was to reassure people who were building businesses that the chances of failure were great.

For years we came close to the whole thing collapsing on a number of occasions.

11 September was not one of them. We lost £100 million in four weeks on Virgin Atlantic alone but fortunately, because we'd just sold 49 per cent for £600 million to Singapore Airlines, we had the financial muscle to withstand 9/11. What I learnt early on in life was not to have a group. Everybody trading with us knows the companies stand on their own two feet.

The last time I felt I could have lost the whole thing was the day after we started Virgin Atlantic. I came back from New York to find the bank manager sitting on my doorstep because we were £300,000 over our overdraft limit and he was going to bounce the cheques on Monday. So I pushed him out of my house and scrambled over the weekend for some finance.

- How wealthy are you?

I've never been drawn on my personal wealth because I think it's a mug's game. You're either going to be accused of bragging or under-egging it ... you can't win either way! The important thing is that we have the resources to build new businesses.

- You've invested in the new Upper Class Suite, and congratulations, it's wonderful. But how do you see that game panning out? When one airline improves its service, the others match it, so what's the endgame? Will it go the other way?

The only way of succeeding in long haul is to be the best. You've got to innovate, spend the money on design and we did all of that in-house.

We knew we were ahead of BA but we had to keep it quiet because we wanted BA to roll out all its fairly average seats so that it would be too late for them to turn back when we announced it. With this particular seat, we've got a lot of the costs back by selling the rights to Air New Zealand.

But we'll only do that to one or two carriers we are not competing with.

I can't think of any innovation that'll compete on that seat.

- Finally, who would you ask to deliver your eulogy and what would you want them to say?

I'd like a family member to do it because I suspect they'd be nicer than other people! I'd like them to say I lived life to the full, had fun, made a bit of a difference in the air, bought some good music and hopefully by this time next year we will have made the trains run on time.

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