Sir Richard Branson’s start-up tips and insights
Mentoring, start-up loans and honing your business pitch: Sir Richard Branson reveals all about starting a business
Sir Richard Branson is a man synonymous with business and wealth, but remains as passionate about start-ups as ever.
Possessing more than 200 companies in the Virgin Group, he's quick to recall his early business life in the music industry with Virgin Records, all the way to the stratosphere with space-tourism venture Virgin Galactic – each of which was once the next big thing.
However like most start-ups, Branson's beginnings were humble. After dropping out of school at 16 and starting his first business with just £200, he knows what it takes to work from the ground up.
At the latest Virgin Media Pioneers' Pitch to Rich event, Branson and his panel of judges were looking out for a start-up that could one day emulate some of his success. Speaking at the event, Branson shared his thoughts on start-up loans, tax, the importance of mentoring and, responding to questioning from Startups, revealed (aside from the event winners) his pick for the world's next great start-up…
Branson on his first business
“Most of the jobs in Britain will be created from new businesses, not from big established businesses. I literally started with £200 from a necklace that my mum found and handed in to a police station. Three months later nobody claimed it so she sold it and gave me the money and I used that for my telephone calls to sell my advertising to get my magazine going. “Very, very, small amounts of money can result in companies like Virgin being created. Some ideas break through and tens of thousands of jobs get created.”
Branson on honing your pitch for the audience
“I remember pitching as a teenager to IPC newspapers, I'd just started my student magazine and we were having lunch with them and they were quite interested about getting involved in the magazine. But then I started talking to them about student hotels, student airlines, student this, student that, and after a while they just showed me to the door – they thought I was completely off my head.
“Patricia Lambert from IPC wrote me a letter about 10 years ago saying “uh – we were wrong” so anyway I was talking ahead of myself in those days. So I suspect I would have lost by talking ahead of myself, which I often do and did!”
Branson on free marketing and focusing on product first
“I think I would spend a tight budget on improving the product, making sure you've got the best product in the field and then use myself to try to get free marketing – rather than spending on advertising. “I didn't have this profile when I started out. Freddie Laker said to me ‘Get out there and make an arse of yourself, get on the front page of the papers rather than the back.' You've obviously got personality, I'm sure you'd have no problems in getting journalists to write about you.”
Branson on the value of mentoring
“When I started as an entrepreneur there were no mentors, no-one to get help from. You were literally thrown in the deep end. If you were very lucky you learnt to swim. Most people tend to fail. So the idea of Virgin Media Pioneers is that you have a large group of people who are in the same water together, helping each other and you've got mentors that they can feed off, films they can learn from, books they can learn from and hopefully the success rate will be that much bigger than it used to be. “I think it's up to all of us to find mentors to help all these new start-up businesses. Not paid mentors, there are thousands of people who've just retired or who maybe haven't retired but can give up a weekend or something to help people. So helping mentorship schemes, helping mentors find the time to help these start-up businesses. I'm not sure if it's a government thing but it's important.”
Branson on loans for start-ups
“We've encouraged the government to set up entrepreneurial loans, so if people don't want to go to university and they have a business idea – instead of saddling themselves with debt going to study they can saddle themselves with debt by setting up a business. Hopefully they'll have a better chance of paying it off with business.”
Branson on starting a business irrespective of age
“It's important to encourage anybody who has a good idea that's going to make a difference to other people's lives to give it a go. It doesn't really matter if they're young or old. But in college, in school, we could do a lot better than we've done up until now in encouraging entrepreneurialism and if people want to go to college to learn entrepreneurship it would be great if while they're there they could start a little business because I think that's a really good way of learning how to run a business – just give it a go!”
Branson on businesses avoiding tax
“I think the traditional way of running a business is that businesses find every way to pay the least amount of tax – and they'll get tax advisors to do that and they'll play within the rules and government will set the rules. It's quite within the power of government to change the rules. That's the traditional way, but then there's moral arguments – it's up to the chief executive to decide if that might be morally damaging for the company or just damaging from a public relations point of view.”
Branson on the rise of major cities outside London
“Well, I like to think that – in the last 40 years since I've been in business I've seen places like Manchester, Newcastle, Edinburgh, Glasgow, Leeds, Liverpool thrive compared to what it was 40 years ago and I think better train services going out to these places have meant more people are willing to live out there and so on. “It would be a great pity if that started reversing. I didn't know about those statistics [one in four jobs will be created in the capital] but I think we've got to do everything we can to make sure there's an equal spread of job creation. “So there are people all over the world – I've had approaches with our spaceship company to launch a whole array of satellites from another entrepreneur which will transform telecommunications, wifi, and internet access. The great thing about entrepreneurs is that they're always thinking, always coming up with new ideas to benefit people's lives and that process creates jobs and creates wealth.”
Branson on the next big thing in the start-up world
“Well, there's a little company in New Zealand called Lanzitech. Lanzitech is tiny, it's run by a British guy and he's come up with this fantastically unique way of taking the waste product from steel plants and aluminium plants and turning it into jet aviation fuel. It's what was going up the chimney pipes before and just cluttering up the skies. He puts it through a whole filter programme and turns it into aviation fuel. “Virgin Atlantic has pledged to put all the profits we make from our airline into developing clean aviation fuel and we've got the first use of Lanzitech's fuel. They've set up plants in Shanghai and in a number of cities in China and if they set up a little plant alongside every steel plant and aluminium plant in the world – the airline industry could go from being one of the dirtiest industries to one of the cleanest. And that's just a young-ish British entrepreneur.”
Branson on being inspired by travel and the sugar-free opportunity
“I think those people that can get out and travel and monitor what's been successful elsewhere and then borrow the ideas – they can see what's been successful – it makes a lot of sense. If you can reinvent the wheel even better but if not see what works overseas. “And I think sugar, apart from cigarettes, is the biggest killer there is, so if you can make products that are sugar-free and taste good then that's great.”
Branson on launching a Virgin Accelerator for UK start-ups
“Well, we do some, in the British Virgin Islands Larry Page and myself have set up a fund where we're lending monies to start-up businesses that can't get funding from banks. The glass bottom boat in the British Virgin Islands has just paid off his loans and he couldn't get money from the bank, and someone wanted to build a conch farm and we've helped.
“There's different things going on in the world, we've got Branson School of Entrepreneurship in Johannesburg which helps people from the townships get mentors and training and we're marrying up business people from the UK who go there and help with funding and the like. In terms of the UK I don't know how much we do, but if we don't do a lot we should do more…”