'I don't think of work as work and play as play. It's all living.'

By Betsy Morris

September 22, 2003

It is 7 a.m., and Richard Branson has been hard at work for 2 1/2 hours, though you'd never know it by watching him. Barefoot, clad in a navy bathing suit, he is lying in a hammock strung up in one corner of the great room of his Necker Island home, open to the West Indies trade winds and looking due west out over the turquoise Caribbean. He has a black composition book in his lap and the tip of a plastic ballpoint pen in his mouth. He is writing a letter to the Financial Times. "Hello," he says, looking up. "Can I get you a cup of tea?"

Already this morning, from his hanging perch, he has scanned a pile of faxes and had several phone conversations in an attempt to resolve a thorny disagreement with his Australian partner, Patrick Corp., over their airline, Virgin Blue. He has begun to mend fences with T-Mobile, a Virgin partner and supplier. The portable phone in his lap rings, and he takes a message. It is Monica, over at the Fat Virgin's Cafe, wanting to know if anybody on the island can share a supply boat today; she's running out of food. He writes the message on the back of his hand so he won't forget.

As he works, the rest of the house— a glorious Balinese structure, open to the ocean on all sides, roofed in Brazilian cedar, and decorated casually with mahogany furniture and Buddhist statues—begins to stir. Branson's wife, Joan, floats in, wrapped in a white-silk sarong. A couple of bleary-eyed teenagers wander through and flop down in front of a big-screen TV at the opposite end of the room; they are friends of Branson's son, Sam, and they have been up most of the night celebrating Sam's 18th birthday. Empty bottles of Red Stripe, Bacardi Limon, and Sour Apple Pucker, along with bits of fluttering crepe paper, disappear into the dustpan of an island caretaker who looks more like a mermaid than a maid. The big screen suddenly comes alive, filling the room with the opening strains of Beauty and the Beast. "Sometimes," Branson says, "I do wake up in the mornings and feel like I've just had the most incredible dream. I've just dreamt my life."

Richard Branson's life is better than a fairy tale. The 53-year-old corporate bad boy was never supposed to end up like this: the master of his universe, directing a $7 billion empire he created from scratch as a teenager, from his hammock in paradise. He is not necessarily the world's greatest businessman, or the most successful. His empire is spread willy-nilly from bridal gowns and cosmetics to airlines and railways; most recently he has jumped into cellphones and consumer electronics. His track record is varied, with home runs in records and airlines and fumbles in retail and rail. He's not the wealthiest businessman around either, although his net worth (estimated by his financial advisors at $2.6 billion) is as hard to pin down as the profitability of many of his companies. His holdings are mostly private, controlled through offshore family trusts. (All told, Virgin Group says it expects worldwide earnings before interest, taxes, depreciation, and amortization to be $600 million this year.)

But if you were able to trade places with any corporate chieftain, wouldn't it be Richard Branson? He simply has the most fun. Branson's greatest business feat, perhaps, has been to engineer a breathtaking life for himself. We're not talking expensive art collections, or memberships at Augusta, or well-appointed apartments, or fancy cars. We're talking about a career that feeds his passions, holds his interest, incorporates his family, allows for his quirks. He loves adventure, and his job provides plenty of it: from his quixotic attempt to save the high-speed Concorde to his dangerous transoceanic hot-air balloon races (he's been rescued four times by helicopter). He has trouble with authority, so the brand he came up with demands that he mock it. He gets bored easily; with Virgin he can constantly reinvent himself. He loves beautiful women, and they are always around. He has an insatiable curiosity, and his job provides the education he was never able to get in a classroom. "I don't think of work as work and play as play. It's all living," Branson says. "I'm living and learning every day—it's like being at a university, studying a course you're really fascinated by. And in between all that, I am surrounded by family and friends."

Underlying it all is an unorthodox circular logic that, in the case of Necker Island, goes something like this: Virgin stands for fun, and that of course justifies owning a Virgin Island. There you can entertain not only your top brass but your kids' friends, your investors, your parents, your pilots—oh, and Bill Gates, if you think you might've ticked him off when you said that Microsoft should be split up. You do this by partying and diving and speedboat racing; sometimes, just for fun, you pull a plug on one of the boats and watch the CEO of your biggest airline begin to sink. When you're not using it, you rent it out to people like Robert De Niro for $22,500 a day. You rent it as well, just like any other paying customer, because if you didn't it would count as a corporate perk, and you'd have to pay taxes on it. And at the end of the year your profits offset your cost.

Necker is the perfect synthesis of work, play, and life that seems to be Branson's underlying business model. "I get up in the morning, and I come into what must be the nicest office in the world. It is a fantastic time for reflection and thinking about things," he says. "I come up with more ideas here than I ever do in the day-to-day running back home." He is almost always up by 5:30. "England has been at work for two or three hours, and Australia is just going to bed. The U.S. is waking up," he says, a twinkle in his eye. "We're quite well positioned here on the time zones."

For someone who was invited to speak at a Microsoft conference, Branson is hilariously low tech. He never uses a computer. He uses his black book and writes all his ideas down in longhand, including the e-mails he will dictate to his secretary. Immediate things to remember—like phone messages—he writes on the back of his hand.

If Sir Richard (he was knighted in 2000) doesn't think like a conventional businessman, it's because he never purported to be one. The outlines of the story are familiar: He was a middle-class British kid with dyslexia who nearly flunked out of one school, was expelled from another, and finally dropped out altogether at age 16 to start a youth-culture magazine called Student that he hoped would one day be Britain's Rolling Stone. (He still lacks a high-school degree.) He never set out to be rich, nor did he ever intend to be a CEO. "I had no interest whatsoever in running a company," Branson says. But he needed to fund his magazine. So he started a mail-order record business. That led to a recording studio and eventually to Virgin Records, and Virgin Atlantic, and so on.

He continues to be a corporate iconoclast, defying conventional wisdom, pushing the envelope, poking fun at the big guys, saying exactly what he thinks and doing exactly what he wants. Which includes foolish publicity stunts like dressing up in a bridal gown to promote his apparel company Virgin Brides and descending into Times Square by crane from atop the Bertelsmann building nearly buck-naked (he was wearing a body stocking) except for a cellphone. Right now, though, he's not looking so foolish. Virgin—the naughty name he dreamed up in 1969, when he was 19 and living in a drug-infested London commune—has become one of the world's best-known brands. Virgin Atlantic, the niche player that everybody said he was crazy to start from scratch in 1984, has become (along with Southwest Airlines) one of the models for the airline industry. Virgin Atlantic and Branson's two other niche airlines, Brussels-based Virgin Express and Australia-based Virgin Blue, are profitable; Virgin Blue took 30% of Australia's airline business in its first year. Branson is planning to launch a new low-cost regional airline in the U.S. next year.

His goal was never to be the biggest. Branson likes being a disruptor—taking on industries that charge too much (music) or hold consumers hostage (cellular) or treat them badly and bore them to tears (airlines). His goal was never to be the most profitable. Although two of his companies—Virgin Express and the clothing and cosmetics company Victory—are publicly traded, he generally prefers to stay private. (Branson took Virgin Atlantic public in 1986, then private again two years later after its market value fell by half.) He has little interest, most of the time, in delivering a nice, steady earnings stream. As a public company, "you can't suddenly have profits of $400 million one year and minus $300 million the next," he says. But that's exactly what he likes to do: invest profits from one venture in the next, and the next—which, by the way, greatly reduces his tax bill. His offshore trusts allow him to avoid paying capital-gains tax on asset sales as long as he reinvests the proceeds.

So Virgin Group operates like an eclectic venture-capital firm. Branson has mostly majority stakes in its 224 companies, each of which has its own CEO and board of directors. Each board includes at least one member from Branson's seven-man advisory council, a team of bankers, strategists, and accountants who are more or less in constant touch. Each company also has its own set of outside investors and/or joint-venture partners (Singapore Airlines owns about half of Virgin Atlantic; Sprint owns about half of the U.S. cellular business). Some of these companies will go public eventually, in part because his other investors may demand it. That could spell trouble down the road, given Branson's penchant for doing things his way. But he is enough of an opportunist to covet the cash some IPOs would bring: It's fuel to keep him growing and to finance his obsessions, like trying to revive the Concorde, which he regards as an important national symbol. "He's not driven like other people. He's driven to do stuff," says Tom Alexander, a former British Telecom executive who is now head of Virgin's U.K. Mobile. "The money is the byproduct. If it makes money, well, then great, because then he can go off and do more stuff. Doing nothing is not an option. If you've ever been on holiday with him, it's hard work."

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