Richard Branson on Differentiating Your Business: Start with a Personal Frustration

It goes without saying that entrepreneurs are risk-takers, but Sir Richard Branson’s most explosive (literally) publicity stunt also turned into his biggest business failure.

In 1998, the founder of the Virgin Group drove a German tank through Times Square over a three-ton pyramid of stacked Coke cans and shot down the Coca-Cola sign in a show of dazzling pyrotechnics.

It was Branson’s way of giving the symbolic middle-finger to Coca-Cola and Pepsi as his nascent Virgin Cola brand prepared to enter the US market after two years of outselling the American cola giants at British supermarkets like Tesco and Selfridge’s.

Photo from Virgin website 

According to Branson, Coca-Cola retaliated by chartering a UK-bound DC-10 jet filled with SWAT officers. “Suddenly, Virgin Cola started disappearing from all the shelves,” the entrepreneur, who is worth $5.1 billion, said at the Qualtrics X4 Summit in Salt Lake City.

“What we learned from that was if you’re going to take on a giant, which [Virgin Atlantic] had done with British Airways, you’ve got to be palpably better than that giant,” Branson added.

Here are some of the more anodine takeaways from Branson’s keynote.

1. The best business ideas come from a sense of frustration

Businesses that solve real customer pain points are the ones most likely to defy the 90 percent startup failure rate. Branson famously said: “There is no point in starting your own business unless you do it out of a sense of frustration,” an epithet he seems to have honored.

He launched Student magazine at age 15 in protest against the Vietnam war and founded Virgin Records in order to sell records at lower prices than the “High Street” outlets.

His hugely successful airline, Virgin Atlantic, came about after Branson was bumped from a flight to the Virgin Islands and told he was scheduled on another flight the next day. “I had a beautiful lady waiting for me on the Virgin Islands, so I was damned if I was going to wait,” he chuckled.

Branson decided to charter his own 747 from the airport. “I borrowed a blackboard and I just wrote ‘Virgin Airways, one-way $39,’ went over to all the people who got bumped and flew my first plane.”

Mulling over the incident afterwards, Branson realized that airlines’ habit of bumping people from overbooked flights was a sign of poor customer service - ergo, a business opportunity.

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With no background in aviation, the record company owner called Boeing asking to buy second hand 747s. He was amazed that the wary sales rep didn’t hang up the phone after Branson described his day job representing the Sex Pistols, Rolling Stone and Janet Jackson.

“The guy said: ‘Richard, I’ll come and see you, but on one condition: you do not call your airline Virgin. Everybody will assume that your airline won’t go the whole way,” Branson recalled.

It had taken him four years to get the Virgin name approved by the registry office for his record label, and he wasn’t about to renounce it. Three decades later, the fledgling airline beat out British Airways by being voted Europe’s best long-haul carrier by airlineratings.com, while British Airways failed to scoop a single accolade.

Photo courtesy of Qualtrics

“Because we came in with a completely unique product and the wonderful staff were really proud of what they were doing, even when British Airways did everything they could to [erode] our business...the airline just grew and grew and grew,” Branson said.

2. Employee culture is a source of differentiation

Branson believes that two crucial things help brands differentiate: their employees and “the little things,” like making sure the right inflight meals are served to passengers with dietary restrictions and that the entertainment systems are fully functioning - and not just for the customer’s benefit, but also the employee.

“All these tiny points matter, and if you’re running the company you’ll always have a notebook in your pocket when you’re on a Virgin plane,” Branson advised. “Talk to your staff, talk to your customers and write these things down.”

Read more: President Barack Obama on Why a Leader is Only as Good as His Employees

Virgin’s much-vaunted employee culture emphasizes work/life balance by offering unlimited paid vacations, but unlike other supposedly progressive companies where the “indefinite vacation days” perk brings some unspoken caveats, Branson said that if an employee wants to take two months off, they can. It goes without saying that working from home is well-embraced.

“People respect that, they get the work done and they give back 100 percent in return,” he said of the company’s liberal policies. “Just by treating people as adults the company will get everything back from those people.”

Branson dislikes dress codes, with his own penchant for leather jackets and button-downs, and believes that forcing employees to wear ties is stifling. “We need to get rid of these kinds of restrictions and let people be their whole individual selves.”

In 2016, JP Morgan famously revoked the tie requirement and changed its dress code to business casual.

3. Give employees a second chance

Another thing Branson doesn’t believe in: firing people - especially for first-time offenses. Years ago, he received a call from a local second hand record store claiming that one of his employees was reselling Virgin’s own records. Branson told the worker he would get one more chance.

“He was so grateful that we’d given him a second chance that he ended up signing Genesis, Culture Club and lots of wonderful bands.”

Branson holds firm to the belief that those given a second chance don’t reoffend. “As a result of that experience, as a group of companies we take on as many ex-convicts at Virgin as possible.”

In fact, the head of security at one of the Virgin brands is a current inmate who leaves prison on Monday morning, works through Friday and returns to prison Friday nights. “She’s very good at security,” Branson joked.

He also said that a leader’s main principle should be to source talent with better skills than them, and to delegate not just for employee empowerment but so that you as a manager or founder of a business can focus on the bigger picture.

Photo courtesy of Qualtrics

4. Work hard, but remember that life should be a game

In 2014, Branson told Inc. magazine that the late entrepreneur Sir Freddie Laker once told him, “Get on the front pages of the papers, even if it means to make a fool of yourself.”

Branson’s zany pursuits have become an integral part of his brand, like being the first one to fly a hot-air balloon across the Pacific Ocean. After the hot-air ballon lost half its fuel while halfway across the ocean, Branson navigated it towards a jetstream and ended up overshooting Los Angeles by 2,500 miles and landing in the artic. 

Virgin Atlantic’s tongue-in-cheek jibes against competitor British Airways have also made headlines. When the British Airways-sponsored London Eye was erected in 1999, the giant ferris wheel could not be lifted off the ground.

“We happened to own an airship company, so we scrambled up an airship, it flew over the top of the wheel and we got the headline,” Branson said. 

Emblazoned across the side of the blimp in red, all upper-case letters was: “BA can’t get it up!”

Photo from Virgin website