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Most Influential CEOs: Virgin's Richard Branson Expands His Orbit


The iconoclast who started by selling record "cut-outs" now pushes biofuels and space tourism.

How does a dyslexic high school dropout go on to make $4 billion, run 153 businesses simultaneously, and hold the world speed record for crossing the Atlantic in a boat?

Ask Richard Branson. He managed to do it.

In 1970, four years after Branson dropped out of the Stowe School at the age of 16, the British government ended what was called the Retail Price Maintenance Agreement, which prevented the discounting of certain goods. But the retail establishment, pleased with the profits they had grown accustomed to enjoying, kept prices right where they were.

The inner free-marketeer took hold of young Richard, and Branson got his hands on an esoteric selection of "cut-out" LP records -- unbought returns to the labels by record stores, which would then have a notch cut into the outer sleeves to identify them as such and be sold off to distributors, who would offer them for sale at closeout prices. Branson moved the merchandise out of the trunk of his car in London, significantly undercutting his competitors and developing a reputation for stocking albums not available in the mainstream outlets.

Branson's literal trunk sales were so successful, he soon started a mail-order division, which led to an Oxford Street shop called Virgin, the name being suggested by one of his first employees, who thought it appropriate for a few guys who had little to no experience in the business, according to a biography of Branson titled The Virgin King.

In 1972, Virgin the record store led to Virgin the record company, called, appropriately enough, Virgin Records. The first album released by Virgin was Tubular Bells by Mike Oldfield, the title track of which is familiar to film fans as the theme to Poltergeist. Virgin also signed the Sex Pistols and made Boy George a global phenomenon after signing Culture Club in 1982.

After releasing albums by the Rolling Stones, Phil Collins, Peter Gabriel, and a host of other household names, Richard Branson, who is now the 212th wealthiest person in the world, set out with the goal to make things that could be better, better.

One thing he made better was flying, by establishing Virgin Airways, which so frightened rival British Airways (BA) that when Virgin announced service from London's Heathrow Airport (the carrier had been operating exclusively out of Gatwick until then), British Airways undertook what was known in the British press as the "Dirty Tricks Campaign" in an attempt to drive Virgin out of business.

Beginning in 1990, a group of BA employees systematically hacked into Virgin's computer systems, obtaining confidential information related to Virgin's "load factors" -- data which BA used to determine how many seats were being filled on Virgin flights. The hackers then used those numbers to help the company gain an unfair advantage by swamping Virgin's routes with competing flights at lower fares.

After British Airway's subterfuge came to light, Branson publicly announced that if the carrier's executives had been caught doing the same thing in the United States, it would be in prison.

"I'm not so sure they shouldn't be put behind bars here," he said.

In 1993, British Airways was ordered to pay Virgin damages of $854,000 by a judge.

If British Airways had succeeded in burying Virgin, Branson may never have had the opportunity to spearhead a movement that's successfully developing biofuels for aviation use, which have the potential to significantly change the industry at some point in the not-too-distant future.

He's also a pioneer in space tourism, with plans to offer civilian space travel aboard Virgin Galactic's SpaceShipOne and SpaceShipTwo.

Branson's Virgin empire has now made things better in over 30 countries, with about 200 companies spanning an array of industries, including mobile phone service, banking, and health care.

But, perhaps most impressive of all, Richard Branson has been immortalized in wax by Madame Tussauds.

Yes, not far from Amy Winehouse…

Margaret Thatcher…

And Yasser Arafat…

…stands the man, hard by the snack bar, who has seemingly done it all:

Now, if he could only get the concessionaire to start selling Virgin Cola instead of Coke…
No positions in stocks mentioned.
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