Richard Branson: A Profile in Failure

This post was published on Thursday, October 30. The following day, Richard Branson and the Virgin family suffered a tragic loss when one of their Virgin Galactic space planes crashed during a test flight in California. This article does not address that event, but rather is a story of how Richard Branson has overcome failure and learned from his mistakes throughout his life to become one of the world’s most successful entrepreneurs and visionaries. We wish Sir Branson and the team at Virgin Galactic peace and healing at this time, and admire them for their bravery and strength as they continue to push the limits of space travel.

The greatest people in history have been failures. Certainly, we remember these individuals as successes--success stories--and we treat those stories as legends and those individuals as gods. But each of them failed epically and repeatedly, more so than the combined successes of all of humanity.

Failure should not be overlooked in anyone, especially not those we admire. It is through failure that these individuals were able to learn, grow and ultimately succeed. We know this about ourselves but even as we learn to accept our own failures, sometimes we don’t recognize that the most successful people in the world have had an abundance of failure.

Our heroes need to be held to the same standard as the ancient Greek gods: awesome but not infallible. Failure is a humbling exercise, both for the observer and the observed. But learning is a humbling process. Once we realize that our heroes are just like us, we can examine how failure drives success. So I’ve started collecting stories about the failures of successful people, as a reminder that if you’re making mistakes and learning from them, you’re actually on the path to success.

There is no doubt that Richard Branson, sometimes referred to as “the rebel billionaire,” has earned that nickname. Known for his bold business ventures as well as his adrenaline-fueled hobbies, Branson is certainly a guy who is not afraid to take risks. When he dropped out of high school at age 16, his headmaster said “Congratulations, Branson. I predict you will either go to prison or become a millionaire.” Branson’s headmaster was right on both counts and by the end of the first year of Branson’s first music venture, he was in jail.

To call Branson’s first company a failure is an understatement. Branson’s Virgin Mail Order, as he called it, sold records by mail at a lower price than the big record stores, thereby attracting swathes of customers. One day Branson received a large order from Belgium and packed his van to drive the albums from the UK to Belgium himself. He was able to purchase the records from the publishing company without paying the UK tax since they were headed out of the country, and then received papers showing that the records were exported as he left the UK port of Dover. But when shipment arrived in France, he was asked by the French authorities to produce a document saying that the records would not be sold in France on the way to Belgium. Branson didn’t have this document so he was forced to turn around and head back to London.

On the drive back he realized that the records he was hauling were officially “exported.” He had papers to prove it. No one knew he hadn’t actually made it into France or Belgium. Who would stop him from selling the records in the UK without paying the purchase tax? He knew it was illegal, but in his words, he had “always got away with breaking rules before.” Besides, he was in serious debt. While Virgin Mail Order was becoming more popular every day, the prices were simply too low to make a profit. Virgin was £15,000 in debt and Branson had a £20,000 mortgage on a recording studio he had purchased. Not only could he make a profit with his truckload of records, it would only take a few more trips down to the Dover port to make enough money to pay off all of Virgin’s debt.

He started making regular trips to Dover and reaping the benefits of selling records without paying tax to the UK government. Then one day he got an anonymous phone call, from a man telling him his record store was about to be raided by the Customs and Excise office. The man said that when the records were purchased for export they had been marked with an “E” by the record company with ink that could only be seen under UV light. Branson hung up the phone and rushed out to buy a UV light, and sure enough, he had thousands of marked records. He and his friends spent the entire night finding the marked records in his mail order warehouse and moving them to his record shop on Oxford Street. The next day he waited for the customs officials to arrive and smugly welcomed them into the warehouse to inspect the records. Branson said he “enjoyed their confusion” when they couldn’t find any marked records. That is, until the phone rang. It was another customs official, calling from Virgin’s Oxford Street shop. Customs had simultaneously raided all of Branson’s Virgin properties, and he was busted.

“I couldn’t believe it,” Branson recalled, “I had always thought that only criminals were arrested: it hadn’t occurred to me that I had become one….I spent that night in a cell lying on a bare, black plastic mattress with one old blanket. The first part of my Stowe headmaster’s prediction had come true: I was in prison.”

His mother had to put up her home as bail, and Branson had to pay £60,000 in penalties to Customs. It was three times the amount he stood to profit by selling the illegal records. The huge fine was painful enough, but for Branson, the night he spent in prison was the part of the experience that resulted in the most important lesson learned:

“I was locked in a cell and utterly dependent on somebody else to open the door. I vowed to myself that I would never again do anything that would cause me to be imprisoned, or indeed do any kind of business deal by which I would ever have cause to be embarrassed. In the many different business worlds I have inhabited since that night in prison, there have been times when I could have succumbed to some sort of bribe, or could have had my way by offering one. But ever since that night in Dover prison I have never been tempted to break my vow.”

The obvious lessons learned are that crime doesn’t pay and there are no shortcuts, in business or in life. Branson was thinking small, looking day-to-day and focused only on turning his bad business into a trivial success. Branson left prison thinking bigger, longer-term. If there are no shortcuts in life, then life is too short to think small.

But Branson learned something even more powerful than that: he learned that the best model for him was to be a rebel, but to do so within the confines of the law. To succeed, he had to think outside the “business as usual” norms, and challenge the cultural status quo. He needed to accelerate his business model, but he had to do it legally. He did this by thinking big and acting bigger, creating a sense of space, style and comfort. He challenged the old record studio model by transforming an enormous English manor into a place where artists could stay, relax, and be creative when the mood struck instead of paying by the hour for a cold room stuffed full of equipment. He challenged the airline industry by focusing on making travel fun, with mood lighting and personal entertainment systems in all cabins. He challenged the record store model by creating megastores so large that people would regularly get lost in the stacks. He challenged the very notion of how a corporate CEO should behave by engaging in crazy publicity stunts, many of which involved nudity, cross-dressing, and stunts that negated his own insurance policies. Using this model, Branson launched dozens of successful ventures: Virgin Megastores, Virgin Records, Virgin Airlines, Virgin Holidays, Fuel, Money, Digital, Cosmetics, Trains, Healthcare, Virgin Galactic. Always the same Virgin model, always different industries, always disruptive.

Branson has leveraged this model over and over again. He pushes the envelope as far as it will go, and accordingly has had some spectacular successes as well as failures--Virgin Cola, Virgin Brides, Virgin Clothes, and Virgin Vodka belong in the latter category. But through it all he has managed to continue to rebel while avoiding significant financial and legal trouble. Going to prison may be the best thing that could have happened to young Richard Branson.

Be sure to check out the other articles in the failure series:

• Steven Spielberg
• Oprah Winfrey
• Jeff Bezos
• Jay-Z
• Warren Buffett
• J.K. Rowling
• President Obama
• The Science Behind Failure
• How to Fail the Right Way
• The Greatest Failures of All Time
• Two Years of Failure
• Lady Gaga
• James Dyson