Branson: Behind the Mask Read online

  2

  Rebel Billionaire

  Expanding Virgin’s operations into America had been Richard Branson’s plan ever since he had rescued his business from the financial difficulties that began in 1999, and which were compounded in the aftermath of the 2001 terrorist attacks on America. Starved of cash, he had survived by selling a house in London, a hotel in Majorca, shares in an Oxfordshire restaurant and nearly half of Virgin Atlantic. To break out of the straitjacket, he needed to expand. Australia was one target, but success on the other side of the Atlantic was his dream.

  Naturally, he chose not to highlight those problems when he met a group of journalists for breakfast in Los Angeles in October 2002. To relaunch himself and Virgin, he wanted positive profiles describing his genius. Size mattered in America, and in anticipation of the meeting, his publicists had briefed each journalist that the ‘Virgin Group comprises 350 companies with an annual revenue of $8.1 billion’. What appeared to be a repeated exaggeration was never challenged. No journalist who was minded to doubt the publicists’ hyperbole would be allowed near their employer. ‘Richard Branson’, the publicists continued, ‘is head of the privately held Virgin Group, which oversees a vast empire which includes Virgin Mobile, Virgin Atlantic, Virgin Blue, Virgin Express, Virgin Megastores, V2, Virgin and Radio Free Virgin.’ Not mentioned was the fact that seven out of those eight companies were at the time losing money, and three were on the verge of closure. And beyond those eight, Virgin did not have complete ownership of any profitable major trading company.

  Branson’s supreme confidence was built on his conviction that his ambitions would always become reality. During the breakfast, he regaled his guests with his plans to expand Virgin’s empire across America – on land, in the air and on the internet. In particular, he described his plan to launch Virgin America, a cut-price airline based in California. The journalists appeared to be impressed, but the publicity after the meeting barely justified the effort. In his attempt to attract attention among serious American players, he had made no further progress than his disclosure six months earlier to another group of journalists that he intended to raise £2 billion ($2.9 billion) by selling or floating Virgin Blue, Virgin Mobile, Virgin Entertainment, Virgin Atlantic, Thetrainline.com, Virgin Active, Virgin Rail and Virgin Money over the next eight years. The only objective conclusion was that Branson needed cash.

  Two years later, in 2004, his finances had been restored by Virgin Mobile’s success, but progress in America had stalled. Buying into Virgin Galactic was one solution, although it did not satisfy his appetite for instant fame.

  Ever since he prematurely left Stowe, a private boarding school, in 1967 aged seventeen to produce a magazine called Student from a London basement, Branson had sought recognition. Even as a wayward teenager, his gift was to attract talented people to join his easy ‘family’ lifestyle and develop ideas. ‘He plucks what he wants out of you,’ disclosed Eve Branson, his influential mother, about her protégé’s star quality. Unlike his friends raging against the Vietnam war, Branson was a putative trader in search of ideas that would earn him money. One friend suggested selling records, and another mentioned a recording studio. Although he knew nothing about music, Branson snapped up his pal John Varnom’s suggestion to call the new business Virgin Records. The first record which, fearing failure, he reluctantly supported was Mike Oldfield’s Tubular Bells. The album’s phenomenal success made Branson a millionaire at twenty-three. Skilfully, he had retained all the rights, leaving Oldfield with a comparative pittance. Flush with money deposited in the Channel Islands, he banked on outrage to expand his business aggressively. Notoriously, he promoted himself by gambling on the Sex Pistols, an anarchic punk band, and Boy George, before expanding into property and clubs. Along the way, many erstwhile friends became outraged at his reluctance to meet their expectations of a proper reward and his readiness to use the courts to enforce his wishes. ‘You don’t have to be a complete shit to be a success,’ he said. His growing number of enemies were not convinced. They noticed that by the late 1970s, the rebellious youth had been transformed into a rebel tycoon with a mercenary attitude towards keeping the ‘family’ fortune for himself and a hardening disposition towards his partners.

  That trait burst into public after he accepted a proposition in 1984 from Randolph Fields, an American lawyer, to launch Virgin Atlantic, an airline catering to the hip and the hot. To succeed, Branson campaigned against BA, characterising the airline as an old-fashioned monopoly and caricaturing Lord King, the airline’s chairman, as a blimpish toff. King had lost the bitter battle, and Branson, already famous for daredevil stunts in speedboats, was hailed as a public hero. In 1992, he became one of Britain’s richest businessmen by selling Virgin Music to EMI for a record £560 million – a sale that was directed through the Channel Islands to avoid £84 million in taxes. To his associates’ fury, he shared the windfall with only two friends, creating yet more enemies among those who felt betrayed after working for nineteen years to build up the company. To placate them, Branson pleaded that he personally had received no money, but in his subsequent autobiography he wrote: ‘For the first time in my life I had enough money to fulfil my wildest dreams.’

  With his financial credibility enhanced, Branson searched frenetically for new ventures, becoming an accomplished deal-maker and a global celebrity. In America, his entrepreneurship was hailed in Congress and the White House. He boosted his fame by taking more risks in round-the-world balloon trips. His celebrity flourished until 1998, when the public became outraged by the shocking service on Virgin Trains. His famous publicity machine failed to suffocate the criticism. The halo had slipped, and some City players spoke fearfully about associating with Branson. As his businesses languished, his reputation began to slide. He needed money to survive, but his opportunities in Britain appeared to be exhausted. America was his best chance. The possibility of featuring in an American reality-TV show to promote himself would, he hoped, be the beginning of a rebirth.

  For years, Branson had snapped up offers to make cameo appearances in TV series such as Friends and Baywatch. In 2004, he planned fleeting appearances in Hollywood films including Superman and Casino Royale. The publicity excited curiosity but not the same wild excitement as Donald Trump, the then fifty-eight-year-old New York property developer, was generating on television.

  Prior to 2004, Trump had played himself in eighteen different movies and sitcoms. He had featured on endless magazine front covers, authored five best-selling books – including, most recently, Trump: How to Get Rich – and anointed several skyscrapers ‘Trump Towers’. In 2004, his fame was confirmed by The Apprentice, America’s third most popular TV show, which revolved around the tycoon’s hunt for a nascent successor. Huge audiences awaited Trump’s trademark finale, as he mercilessly pointed his finger at that week’s loser and declared, ‘You’re fired!’ The drama transformed the programme into a cultural touchstone and confirmed Trump as an icon, with 500,000 people applying to star in his second series in 2005.

  Every reality-TV hit breeds attempts to reproduce its success. During Branson’s career, his fortune had been earned and lost by copying incumbents. In seeking publicity, he did the same. The potential show was pitched by Branson to Mike Darnell, Fox TV’s zany head of alternative entertainment. Branson’s idea was a contest between aspiring tycoons vying for his job as president of the Virgin global empire. Fox, the producers of American Idol, the season’s runaway success featuring Simon Cowell, believed that Trump, whose show was on a rival station, could be toppled by another vain Englishman.

  Darnell and Branson had much in common. Although the four-foot-eight-inch TV producer was normally dressed as a cowboy, in torn jeans and snakeskin high-heeled boots, he was, as the New York Times told its readers, ‘always racing to one-up his rivals with over-the-top imitations and bizarre send-ups’. Darnell, a former child actor, boasted about how he hunted for ‘visceral emotions’ by producing reality shows about aliens, a
beauty show in a women’s jail and a quiz featuring adopted children picking out their biological fathers from a line-up. Fortunately for him, the failures had been outweighed by the hits. Embarrassed about his initial rejection of Simon Cowell’s offer to broadcast American Idol, which turned out to be such a sensation, Darnell became enamoured of Branson. Finding that ‘one extraordinary individual who has the right stuff to follow in his footsteps’, said Darnell, would grip America. The winner would receive a $1 million prize and the position of president of the Virgin empire.

  Darnell handed the production to Jonathan Murray, based in Los Angeles. From the outset, Murray had no doubt that the purpose was to ‘familiarise Americans with the Virgin brand’. At his first meeting with Branson in London, Murray understood that he was to use shots of Virgin Atlantic planes whenever possible, in a programme showing ‘how Branson leads and what his process is’. In Darnell’s description, Branson was taking ‘a select group of America’s best and brightest around the world to relive his experiences and dilemmas’. Darnell spoke of contestants being pitted against each other in a series of death-defying stunts filmed in exotic locations in ten countries on five continents. ‘Each week,’ he chortled, ‘one will be left behind.’ Originally called Branson’s Big Adventure, Darnell renamed it The Rebel Billionaire, with the subtitle Branson’s Quest for the Best.

  Twenty-five thousand applied to appear in Branson’s show, just 5 per cent of Trump’s wannabe list. The competitors would be flown around the world on Virgin planes, alongside a crew of 135 technicians, with the climax of each programme featuring video shots of the loser at the side of the runway as the plane took off with Branson inside. Unlike Trump’s competition, Branson’s contestants were not tasked with proving any business acumen. Instead, their skills were judged by having them walk a tightrope between two hot-air balloons apparently one mile in the air, dance naked in front of a crowd or go over an African waterfall in a barrel. On paper, the competition appeared visually exciting, but its success depended on the chemistry injected by Branson’s personality. During the death-defying antics, Branson was filmed sipping tea from a silver service. ‘To be honest,’ he would typically say, ‘I’m worried that Sarah may not make it.’ Branson’s expression was as flat as his words. Unlike Trump, he lacked the aggressive flamboyance to outrage the audience.

  Darnell doubted that the winner would be appointed Virgin’s president for more than a brief moment. His prime interest was to crush The Apprentice. Branson’s principal aim was to exploit the unlimited opportunities to promote himself. ‘If Rebel Billionaire is a success,’ he told the New York Times, ‘Virgin will be almost as well known in America as it is in England.’ His message to the Los Angeles Times was similar: ‘In one fell swoop we should get Virgin completely well-known in the States.’

  ‘The show’, praised one newspaper, ‘reflects the Virgin way of doing things.’

  Branson’s intentions passed unnoticed among the American public. Few realised that his ambition went beyond self-promotion: his competitive urge was equally important. While playing the underdog to win sympathy, Branson often genuinely disliked those he challenged.

  Donald Trump was described by many as an egotist decorated with a pompadour hairstyle. But despite the occasional financial crisis, his business triumphs were genuine. Branson’s image as a hippy thrill-seeker contravening conventions to help mankind disguised the same lust for profits that galvanised Trump. Although there was room for both men in the world, Branson was intolerant of co-existing with opponents. During an interview with the New York Times, he derided Trump: ‘His show is based in an office. I never spend any time in an office. And none of my businesses have ever gone bankrupt.’ That last assertion was open to question. His shops, clothing and cosmetics businesses had all withered amid debt. And his next assertion was plainly wrong: ‘We are building five spacecraft right now in the Mojave desert. They will take people into space starting in 2006. Already some 6,000 people’, he added, ‘have indicated they want to fly.’ Branson’s exaggerations were rewarded. The previews for Rebel Billionaire enthusiastically favoured him. ‘Trump may already know that nothing succeeds like success but here comes Sir Richard to remind him that what goes up must come down,’ chirruped a Chicago newspaper. The honeymoon ended after the first show was broadcast. Instead of excitement, there was a yawn.

  In the nature of show business, the blowback was vicious. Rebel Billionaire, wrote a Washington Post reviewer, joins the genre of reality shows ‘that are sillier, stupider and more ridiculous all the time’. He continued, ‘This show doesn’t just feature hot-air balloons. It is a hot-air balloon. It could drift out to sea and never be missed.’ Another, parodying Branson’s description of ‘a search for excellence’, wrote, ‘Bored rich guy dangling money for the common rabble, then sitting back to watch the rats grovel, cringe, connive and betray for a bite of the cheese.’ The universally scathing reviews were matched by low audiences. Only 4.85 million Americans watched the first programme. ‘Fox executives’, reported the Los Angeles Times, ‘who heavily promoted Rebel Billionaire were stunned when the two-hour premiere bombed last week.’ Others reported that Branson’s show ‘flopped’, and while ‘contestants leap over a 350-foot gorge, Richard Branson continues to seem creepy’. Another wrote that the programme had ‘Nothing to do with business acumen … [it] just shows the impulse to lick the boots that kick you is not limited to dogs.’ Two weeks later, the reaction was worse. ‘The show is going over with viewers like a lead balloon,’ reported Reuters. ‘It started with dismal ratings three weeks ago and declined nearly 20 per cent in average audience.’ While Branson’s audience fell below four million, Trump was attracting sixteen million viewers.

  ‘Richard was very disappointed that the show didn’t get a bigger number,’ admitted Jonathan Murray, recalling that Branson repeatedly telephoned to seek commiseration about the bad ratings. ‘It was hard for him for the show not to be a success.’ Mike Darnell denied responsibility for the series.

  Trump chortled at the challenger’s humiliation. ‘I love to beat my opponents,’ he told reporters after the first programme. ‘I think his show is nothing to do with business. I mean, I’m not going to hire a guy based on the fact he’s going to climb on top of a hot-air balloon. Branson even failed at the balloon business. The guy has spent his whole life trying to circle the world in a balloon and then some guy comes out of nowhere and beats him to it.’ Trump could not resist telling the New York Daily News, ‘I thought the show was terrible. And I thought he was terribly miscast. He’s a lot of hot air, like his balloons.’ He even wrote to Branson, saying, ‘You have no television persona,’ and then told newspapers the same: ‘I don’t know the guy but I think he’s got zero personality and zero television persona.’ Finally, his researchers rumbled the truth about Branson’s commercial career. In a letter to the New York Times, Trump commented on their original effusive description of Branson, which had been based on information distributed by Virgin’s publicists. ‘Your article about Richard Branson failed to mention any of his numerous failures, including cola and cell phones. Also I find it hard to believe that anybody in the airline business is in fact a billionaire.’

  Trump had no doubt discovered that virtually all of Branson’s flotations of his companies had flopped, at the investors’ expense. Shares in Victory Corp., a clothing and cosmetic retailer, were down 95 per cent; shares in Virgin Express, a cut-price airline based in Brussels, had fallen 93 per cent; Australian airline Virgin Blue’s shares were down 10 per cent; while the shareholders in Virgin Music, his original success, had not earned any profits, but would discover that Branson had secretly profited by reselling the shares he had bought back from them. His suspicious transaction was referred to the Department of Trade and Industry for investigation but was ruled to have happened too long ago to merit any action. Companies that had invested in Virgin’s assets had also lost money. Singapore Airlines, which bought 49 per cent of Virgin Atlantic for £630
million in 1999, had written off its entire investment; EMI, which eventually bought Virgin Music, had lost 30 per cent of its value; and the value of Stagecoach’s 49 per cent stake in Virgin Trains was down 60 per cent.

  The Rebel Billionaire was won by Shawn Nelson. The wild-haired twenty-six-year-old founder of the LoveSac Corporation, a manufacturer of bean bags which he claimed operated through a network of seventy-eight shops with 400 employees, was, like all the contestants, a genial self-publicist. Branson handed Nelson, whom he had blessed as a ‘Mini-Me’, Fox’s cheque for $1 million and offered him a three-month stint as president of Virgin Worldwide. Shortly after, Nelson’s business stumbled and he was accused by critics of indulging in a ‘complicated shell-game’ to strip the company of its assets. He denied the complaints, and although his three-month spell as president of a Virgin company was not a meaningful experience, Virgin said that he had enjoyed the competition despite the setbacks. All the contestants, however, were constrained from speaking to the media by stiff non-disclosure agreements.

  Humiliation in the TV ratings did not disturb Branson’s public image. Entrepreneurs, he stoically repeated, prospered by learning from failure. Nevertheless, unlike Trump’s show, Branson’s was not recommissioned. The finale was played out in September 2005. Coincidentally, Branson appeared at a fashion show in New York’s Bryant Park to hear Trump loudly condemn Branson’s show as ‘bombing’. In retaliation, Branson predicted to their audience that SpaceShipTwo would be taking off with passengers in just two years’ time. ‘My aeronautical engineers’, chirruped Branson in front of Trump, ‘are designing a Virgin hotel to be built on the moon, or perhaps orbit around it, with glass-encased sleeping areas. You could be making love in these see-through domes and looking at Earth.’

  Branson’s fantasy was enhanced by finding an ally – Governor Bill Richardson of New Mexico. The politician had long lamented New Mexico’s failure to attract any futuristic industries since the atomic bomb had been developed in the state during the 1940s. Searching for ideas to reverse the decline in the state’s population and generate hope among the young, befitting his campaign slogan ‘Run with Richard’, he pondered a suggestion by Rick Homans, his secretary for economic development.