Branson: Behind the Mask (33 page)

None of the audience knew of any facts to challenge Branson’s exuberance, and there were no controversies concerning Virgin’s tiny business in Australia to dent his reputation. Similar appearances in Britain had become rare. He had last flown with thirty British journalists to Mumbai in October 2012 to relaunch Virgin’s flights to India. Shepherded to various vantage points, they would witness his flower-strewn drive through the city, with Branson dressed as an Indian groom on the roof of a black and yellow taxi and surrounded by Bollywood dancers. His destination was the British High Commission, where 300 guests waited to see the celebrity, accompanied by four glamorous Virgin stewardesses, make a grand entrance. ‘Welcome to
the party,’ said Branson. ‘There’s great food and lots of pretty women.’ During the journey in the taxi, he had wondered out loud what he could announce to get a new headline. ‘I’ll say we are planning routes to Hyderabad, Goa and Bangalore,’ he told his staff. He faced the difficulty that Virgin Atlantic had no slots at Heathrow, nor the money to finance the routes in the near future, but Virgin got the desired headlines. His flamboyance once again smothered the sceptics.

His charmed life even silenced potential critics when Virgin Atlantic entered into a formal alliance with Delta in December 2012. The American airline paid £224 million ($360 million) for the 49 per cent stake owned by Singapore Airlines, who had paid £630 million ($965 million) for the same stake in 1999. Together, Delta and Virgin would have a 25 per cent share of the transatlantic market from Heathrow, compared to BA’s 60 per cent. ‘Consumers’, said Branson without embarrassment, ‘will benefit from the alliance.’

This was nearly the last throw of the dice. For the fourth year in succession, Virgin Atlantic had lost money – this time £128 million. Branson’s wealth could not continue to fund repeated losses. He finally bid farewell to his long-standing managing director, Steve Ridgway, and recruited Craig Kreeger from American Airlines, the very man who had arranged AA’s alliance with BA. The appointment was a blow to the internal candidates. Kreeger immediately announced redundancies, cuts and a pay freeze, contrary once again to Branson’s homilies in
Screw
Business
as
Usual.
Branson was unembarrassed.

BA boss Willie Walsh could not resist predicting that Virgin Atlantic would disappear within five years. Branson’s attempts to persuade Holly and Sam to become joint captains of his conglomerate had come to nothing. Now in his sixties, Branson’s own public performance was deteriorating, and yet his presence held Virgin together. With alacrity, he bet Walsh £1 million that Virgin
Atlantic would survive. Walsh replied, ‘I don’t think £1 million would hurt him but I don’t have £1 million. Maybe we should make a bet that would be as painful to him as to me. Maybe a knee in the groin.’ He added, ‘I don’t know Richard Branson very well, but on the limited occasions I’ve met him I haven’t seen anything that would make me want to meet him again.’

On 5 September, Virgin Galactic executed a second powered flight. Visually, it looked better after flying for twenty seconds at Mach 1.43 – or 1,100 mph – than on the previous test, but to send six passengers into space the rocket would need to fly at 2,500 mph within seventy seconds. Branson’s critics doubted that the gap could be closed in time for him to fulfil his prediction and fly on Christmas Day.

Branson refused to appear daunted. On 25 September, he welcomed 600 guests, including many ticket-holders, to a newly built hangar in Mojave. His text was Virgin Galactic’s future. Although it was exactly nine years since he firmly predicted taking tourists into space by 2007 – as long as NASA’s original moon programme – his ambitions remained unfulfilled. Instead of showing any embarrassment that Virgin Galactic had not yet achieved its objective of gliding for just four minutes in space, Branson told his audience that Virgin would soon offer an ‘unprecedented range of new, smart technologies’. His spaceship, he said, would be capable of launching a hundred satellites every day! Plus, Virgin would offer the world space-based solar power, asteroid mining and ‘giant mirrors to reduce solar radiation on Earth, offsetting the effects of global warming’. And on top of that, Virgin’s new two-man spaceships based at the company’s space hotels would be programmed to fly guests on an excursion to just ‘a couple of hundred feet above the moon’s surface’. Thereafter, Virgin would be flying ‘to Mars and beyond’. And all that courtesy of a man and his corporation who had so far only managed to fire a primitive rocket
for twenty seconds in the Earth’s atmosphere. Nevertheless, the applause was loud, especially from those ticket-holders who had enjoyed holidays on Necker. They believed in Branson. His ability to appear untroubled by another missed target had been an essential ingredient in his survival. In mid-November, he finally conceded that he would not be heading for space, dressed as Father Christmas, in 2013. His next target was autumn 2014. The timetable for his biggest personal investment had slipped yet again. Regardless of his failures and faults, he expected that in 2014 he would, as ever, inspire the ambitious and the perennially optimistic by posing as the people’s champion.

The reward for his celebrity is influence among believers. It is to his advantage that, in a world short of larger-than-life heroes, his admirers have confused stardom with enduring greatness. Even his limited admission in October 2013 that he was a tax exile drew few criticisms. The reason, he explained from his newly rebuilt home in Necker, which was available to rent for £37,600 a night, was ‘to look after my health’. Most Britons believed his explanation that he would not have left his homeland for ‘tax reasons’. In any event, he added, he was not liable to British taxes since nearly all his time was spent earning money for charity, on which he would not pay tax. He did not mention the unquantified millions of pounds his companies based in tax-free offshore sanctuaries still earned every year to sustain his lifestyle. The impression following his reluctant admission that he no longer actively managed his empire was of an ageing sun lizard.

Without Branson, can Virgin survive like Apple continues to without Steve Jobs? It’s a question he deflects adroitly. His silence poses another riddle: does his remarkable success as a businessman justify his continuing status as a unique trailblazer?

A decade ago, his ownership of global music, media and airline businesses ranked him alongside the Silicon Valley billionaires as an inspirational star. But since then, his empire has shrunk and
his relative wealth has diminished. He no longer owns any of the principal Virgin businesses, and the company has ceased to innovate. In December 2013, Virgin revealed that it was even withdrawing from the management of trains, surrendering 90 per cent ownership of Virgin Trains to Stagecoach, its partner. In normal circumstances, a fading idol is of little consequence. But Branson is special. For a new generation of aspiring entrepreneurs, the master still maintains his mystique. He remains in the spotlight as the iconic model of a super wealth-creator whom many yearn to copy. No doubt he has created prosperity for himself and for a handful of others, but any enhancement of Britain’s economy and society by the nation’s most famous businessman has been limited. Virgin is proving to be a brand without a legacy. The inventor has enjoyed an amazing ride, but his new followers will draw the wrong lessons from his glory. As the curtain begins to fall, his swansong appears to be protecting the money stashed away offshore. Financing innovation, with the exception of the risky investment in Virgin Galactic, features only in Virgin’s history. Over forty-five years, the deal-maker has hit gold, but then, like his rocket, his trajectory has faltered. Refusing to succumb to age is understandable, but to disguise his flaws within a book called
Screw
Business
as
Usual
provokes the question: what is the reality behind the mask? The answer is important for his disciples.

Acknowledgements

This book is not a revised version of the biography I completed fifteen years ago. Rather, it focuses on the quest over the last decade of Britain’s most popular businessman as he sought to become a global star. Even Sir Richard’s uncritical admirers will find the result revealing.

Branson and Virgin did not give me any help. On the contrary, some employees who had originally agreed to speak to me suddenly became unavailable. Virgin’s spokesman wrote that the company would not assist me but would be prepared to read and correct my manuscript. I did not take up the offer.

In writing the book, I relied on many people. Most asked for their contributions to remain anonymous. Of the others, I would like to thank the following:

Solomon Hughes, who undertook critical research, was immensely helpful, finding information which would otherwise have been overlooked. He was more of a partner than he realised.

I am grateful to Carolynne Campbell and Geoff Daly, whose steadfast research into Virgin Galactic’s fate was invaluable.

Of the others who I can publicly thank, I am grateful to Kathy Gyngell and Dave Raynes for their information about drugs; Chris Green and Gerald Corbett about Virgin Trains; and Graeme Lowdon, Darryl Eales, Nick Fry and Nick Wirth about Virgin Racing; and to so many others who, for understandable reasons, prefer not to be mentioned.

I am grateful to Joseph Busuttil at Merrill, who organised and
provided the transcripts to the trial of the BA executives.

As always, I owe a lot to the publishers. Angus Cargill, Ian Bahrami and Will Atkinson at Faber and Faber are loyal supporters. David Hooper, my libel lawyer, has been as enormously helpful as usual. Jonathan Lloyd, my agent at Curtis Brown, never misses an opportunity to voice encouragement. Thanks are also due to Doug Messier of Parabolic Arc and Susan Watt for editorial advice.

The rock remains Veronica, forever crushing the demons and keeping the flame alight.

Notes and Sources

The sources listed below are in the public domain. I have not named any of the numerous people I interviewed. The vast majority did not want to be acknowledged and, on lawyers’ advice, it was considered best not to name the others. Where only a date is given for newspaper articles, that is because the relevant material is an amalgamation of several press sources published on that date.

INTRODUCTION

‘In his breathless quest for publicity …’ Agence France-Presse, 28 June 2008.

‘While business has been a great …’ Richard Branson,
Screw
Business
as
Usual
(Virgin Books, 2011), p. x.

‘We must change the way we …’ ibid., p. 50.

‘Among Virgin’s strengths, Branson wrote …’ ibid., pp. 17, 19.

‘“Our vision”, he wrote, “is a world where business …”’ Virgin Unite accounts, 15 February 2013.

CHAPTER 1

‘“My gut feeling”, he explained, “was that we …”’
Australian
Financial
Review,
18 December 2004.

‘By adapting proven technology …’
Wall
Street
Journal,
2 January 2008.

‘“several years before I met Rutan …”’
Wall
Street
Journal,
17 December 2011.

‘His commitment to spend $110 million …’ Dow Jones, 22 October 2004;
Chicago
Sun-Times,
9 October 2011.

CHAPTER 2

‘Not mentioned was the fact that seven …’
New
York
Times,
30 April 2002.

‘In particular, he described his plan …’ Ben Berkowitz, Reuters, 18 October 2002.

‘“He plucks what he wants out …”’ Tom Bower,
Branson
(HarperCollins), p. 16.

‘Flush with money deposited in …’ ibid., p. 30.

‘“You don’t have to be a complete shit …”’ ibid., p. 54.

‘They noticed that by the late 1970s …’ ibid., p. 67.

‘In 1992, he became one of Britain’s richest businessmen …’ ibid., p. 141.

‘“For the first time in my life I had enough …”’ ibid., p. 144.

‘The halo had slipped …’ ibid., p. 293.

‘“always racing to one-up his rivals …”’
New
York
Times,
15 April 2004.

‘The winner would receive a $1 million prize …’ Dow Jones, 2 April 2004.

‘“If
Rebel
Billionaire
is a success …”’
New
York
Times,
9 November 2004.

‘His message to the
Los
Angeles
Times
was similar …’
LA
Times,
9 November 2004.

‘“The show”, praised one newspaper …’
Atlanta
Journal,
7 November 2004.

‘“We are building five spacecraft …”’
New
York
Times,
7 November 2004;
Atlanta
Journal,
7 November 2004.

‘“Trump may already know …”’
Chicago
Daily
Herald,
9 November 2004.


Rebel
Billionaire,
wrote a
Washington
Post
reviewer …’
Washington
Post,
9 November 2004.

‘Others reported that Branson’s show “flopped” …’
LA
Times,
15 November 2004.

‘while “contestants leap over a 350-foot gorge …”’
Dallas
Morning
News,
16 November 2004.

‘While Branson’s audience fell below four million …’ Reuters, 25 November 2004.

‘He even wrote to Branson, saying …’
New
York
Times,
22 November 2004.

‘“I don’t know the guy …”’
Chicago
Tribune,
12 November 2004.

‘“Your article about Richard Branson …”’
New
York
Times,
28 November 2004.

‘Coincidentally, Branson appeared at a fashion …’
New
York
Times,
13 September 2005.

‘“My aeronautical engineers”, chirruped Branson …’ ibid,

‘If Virgin Galactic moved to New Mexico …’ Based on study by Futron.

‘The New Mexican government, Homans revealed …’
Wall
Street
Journal,
16
December 2005.

‘And no one questioned the exaggerated statistics …’
New
York
Times,
14 December 2005.

‘“We’ll have a cargo service from …”’
Cincinnati
Post,
15 December 2005.

‘“A number of companies around the world …”’ Reuters, 29 March 2006.

‘“Personally,” said Branson, “I think there’s …”’
Sunday
Business,
2 April 2006.

‘“Stephen Hawking plans to hop a flight …”’
LA
Times,
3 March 2007.

‘“This is your classic Old West story …”’ 26 November 2006.

CHAPTER 3

‘“I’ve got a plan for you.”’
Daily
Telegraph,
26 June 2009.

‘Many supported taxation …’
Wall
Street
Journal,
12 December 2005.

‘Like many other dotcom billionaires …’ Dow Jones, 12 June 2006.

‘“We need to declare war on oil …”’
New
York
Times,
30 November 2012.

‘Together, the “ethanolites” were promoting …’ The friends’ good fortune was a law passed by Congress in 2005 encouraging ethanol production. Oil corporations were given a subsidy of 51 cents per gallon for mixing petrol and ethanol, and motorists received a tax incentive to use cars powered by biofuel. Under the law, America was compelled to produce and use about 7.5 billion gallons of ethanol a year by 2012. To protect American producers, the government imposed tariffs to prevent cheaper imports from Brazil.

‘For Branson, focused on money …’ Tom Bower,
Branson
(HarperCollins), p. 20.

‘His success echoed that of Bill Gates …’ Russell Hasan, ‘Ethanol Investment Claims Bio-ethanol Will Not Be Profitable’,
Alternative
Energy
News.

‘The company by then held a majority stake …’ Almuth Ernsting,
Biofuel
Watch,
January 2008.

‘The project, Jerry Wilhelm of the Greater Rochester Enterprise group …’
New
York
Times,
14 June 2006.

‘In June, he won approval from …’ Dow Jones, 25 June 2006.

‘A month later, he said that Virgin’s investment …’
Business
2.0 magazine, July 2006.

‘“In a few years it will be a major field …”’
Sunday
Times,
10 September 2006.

‘The IMF estimated that the increase in ethanol …’
The
Spectator,
18 August 2012.

‘The majority of Virgin America’s shares …’
Wall
Street
Journal,
2 February 2007.

‘Senator Hillary Clinton would also be attending …’
New
York
Times,
28 February 2008.

‘“Sir Richard usually owns a big chunk …”’
New
York
Times,
22 September 2006;
Washington
Post,
22 September 2006.

‘“If you’re hoping to stand …”’
Wall
Street
Journal,
22 September 2006.

‘The
Wall
Street
Journal
concluded after hearing …’
Wall
Street
Journal,
22 and 25 September 2006.

‘Speaking three weeks later at a celebrity dinner …’ 17 October 2006.

‘A fortune would be earned …’
Sydney
Herald,
26 April 2013.

‘He was guilty, wrote one analyst …’ Peter Lilley, ‘What’s Wrong with Stern?’ 31 August 2012, Global Warning Policy Foundation.

‘“Man created the problem …”’ Reuters, 9 February 2007.

‘“If I ground my fleet …”’ Associated Press, 25 June 2008.

‘“Thank God it’s happened …”’
Boston
Globe,
19 August 2007.

‘The fund’s authenticity was …’
Financial
Times,
20 February 2007.

‘In America, the fertilisers used …’ Almuth Ernsting,
Bio
fuel
Watch,
26 April 2013.

‘Governor Schwarzenegger offered $15 million …’ 21 December 2003

CHAPTER 4

‘Critically, Randy Chase was similarly reassured after …’ ‘Federal Aviation Administration, August 10, 2004, Nitrous Oxide’,
Federal
Register,
vol. 69,
no. 153, p. 48,549.

‘Friction causes heat, and that heat …’ For those interested in a fuller explanation: it is well known that the vapour or gas phase in many compounds ignites first, with the least amount of energy, well before the liquid phase. Although ignition in this configuration and scale has not been demonstrated as proof, it is apparent that vapours from the top of the tank entered the liquid stream. This
could have been through a leak at the connection or in the body of the newly installed submerged drain pipe. Fluids flowing at sufficient velocity through small openings, as a vapour will, create friction and heat. Ignition occurred both at the top of the composite vessel and in the metal pressure vessel.

‘Virgin’s flawless publicity machine …’
Space,
23 January 2008.

‘Take-off, he said with certainty …’
Guardian
, 25 January 2008.

‘but a
Washington
Post
writer had described …’
Washington
Post,
29 July 2008.

‘Just as Burt Rutan was about to speak …’
Guardian,
25 January 2008.

‘“Richard lives a certain lifestyle …”’
News
Anchor,
21 August 2008.

‘“We’ve already had a number of inquiries …”’ ibid,

‘Unlike Branson’s fascination for space tourism …’
Wall
Street
Journal,
27 March 2008.

‘“The signal that we wanted to get across …”’
Aeronews,
30 July 2008.

CHAPTER 5

‘“Ridgway did reveal to Sir Richard Branson …”’
R
v.
George
and
others,
Ref. T20080944, day 7, para 104.

‘That allegation would be repeated by a defence lawyer …’ ibid., William Boyce QC, representing Burnett, day 9, p. 89.

‘Or as another defence lawyer alleged, “Sir Richard …”’ ibid., day 10, p. 82.

‘If Virgin’s executives, with Branson’s agreement …’ ibid., day 7, p. 35, line 17.

‘To conceal Virgin’s financial reality …’
Wall
Street
Journal,
18 May 2004; Reuters, 30 August 2002.

‘Yet Branson, despite his financial problems …’ 8 May 2003.

‘Branson, as the champion of competition …’
Wall
Street
Journal,
4 March 2003.

‘He railed against BA’s new bid …’
Sunday
Business,
27 November 2005.

‘Few ever quite understood his undisguised fears …’
R
v.
George
and
others,
Ref. T20080944, day 7, pp. 51, 81.

‘Soon after the decision was taken …’ ibid., day 9, p. 89
.

‘Moore reported to Branson that BA was briefing …’ ibid., day 11, pp. 13ff; day 7, p. 104.

‘Branson, it was alleged, did not want Virgin …’ ibid., day 9, p. 89.

‘The two men did, however, agree about …’ ibid., day 7, p. 98.

‘Moore told them, “You won’t believe the call …”’ ibid., day 7, p. 99.

‘Virgin’s two executives decided that the airline should …’ ibid., day 7, p. 99.

‘Weeks after the £6 surcharge was announced …’ ibid., day 7, p. 105.

‘Boulter reported his agreement with Burnett …’ ibid., day 7, pp. 104/5.

Acting as messengers, they agreed …’ ibid., day 7, pp. 108/17.

‘On 24 June, after more discussions …’ ibid., day 8, p. 3.

‘On the same day, Branson appeared on TV …’ ibid., day 9, p. 12.

‘Branson had discussed imposing a higher …’ ibid., day 9, p. 24.

‘Initially, Boulter explained, he was “reluctant” to …’ ibid., day 8, p. 25.

In an email sent to Virgin Atlantic staff …’ ibid., day 9, p. 21.

‘Pertinently, the prosecution would decide not to mention …’ ibid., day 15, p. 25.

‘Moore, for example, while implicating Branson …’ ibid., day 15, p. 33.

‘In his early statements, he always …’ ibid., day 15, p. 31.

‘One indignant executive even ordered …’ 3 April 2005.

CHAPTER 6

‘“Since our launch in November 1999 …”’ Reuters, 2 February 2002.

‘Many customers modified their handsets …’ Reuters, 1 October 2004.

‘There, Virgin Mobile was reported to have been …’ Dow Jones, 6
May 2002.

‘“There are no plans to change …”’ Reuters, 16 July 2004.

‘At the end of a tense trial …’ 30 April 2013.

‘The company was valued at £502 million …’ 22 July 2004.

‘Virgin Mobile’s position deteriorated …’ Reuters, 28 September 2004.

‘Virgin had been shunned and few …’ 6 April 2006.

‘Virgin would receive 0.25 per cent …’
Wall
Street
Journal,
5 April 2006.

‘“BSkyB is dominant …”’
Guardian,
28 April 2006.

‘Speaking from Necker, he described …’ Tom Bower,
Branson
(HarperCollins 2008), p. 374.

‘British broadcasting, he said …’ Dow Jones, 30 November 2006.

‘“A businessman’s job”, Branson admitted …’
Daily
Telegraph,
22 November 2006.

‘Virgin Mobile in Canada would attract …’ Reuters, 13 March 2007.

‘While in the past Branson had aggressively attacked …’
Virgin
Mobile
v.
Orange,
March 2001.

‘“He never bothered to return …”’
Guardian,
5 March 2007.

‘The government, he said …’ Dow Jones, 5 March 2007.

‘Another 64,300 subscribers had been lost …’ Reuters, 2 March 2007.

‘His solution was for Virgin …’ Dow Jones, 21 August 2007; 11 November 2008.

‘He gambled that if the shares …’
The
Times/Financial
Times,
7 June 2007.

‘Next, he borrowed a further $80 million …’
Guardian,
15 May 2009;
Financial
Times,
12 September 2009.

‘During the preparations, he approved …’ Tom Bower,
Branson
(HarperCollins), p. 389.

‘Five months later, the share price …’
The
Times,
14 March 2008.

‘Within a year of the flotation …’
Kansas
City
Star,
14 August 2008.

‘By the end of the year, Virgin Media’s shares …’
Daily
Telegraph,
1 November 2008.

‘At the same time, Branson also withdrew …’
Daily
Telegraph,
28 July 2009.

‘He had finally found a partner …’ Reuters, 14 April 2011.

‘In its potted description of the chairman …’
Guardian
interview, 20 September 2007.

‘“Like Virgin Trains,” he said …’ 9 May 2007.

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