6
Entrepreneurs and Leadership

Holding on and Letting Go

In 2004 I did a programme called The Rebel Billionaire for Fox Television, where I was nice to people and then had to whittle them down to a winner. It only got seven million viewers but it really helped our brand in America.

In one episode, I told a participant we were going to be the first to go over the Victoria Falls in a barrel.

Annie Taylor was the first person to conquer the Niagara Falls in Canada, riding the 170-foot drop in an airtight wooden barrel in October 1901. Since then many other daredevils have copied her achievement. But the Victoria Falls in Africa – at 360 feet – is more than twice as high, and much more dangerous, with jagged rocks at the bottom. I asked one of the contestants, Sam Heshmati, if he was ready for the challenge of going over the falls with me, in a barrel I said had been specially created by NASA.

Were we going to do this thing?

Bravely, Sam nodded. We got into the barrel. A large crane lowered us into the fast-flowing river, a few metres away from the drop. A two-minute countdown began. It seemed an eternity, Five. Four. Three. Two . . .

A split second before we were due to plummet, I shouted: 'Stop! Hold on just one moment, I want to show you something.'

So we got out. And I showed young Sam the bottom of the falls. I pointed at the rocks below.

'Sam,' I admonished him, 'you were ten seconds from certain death. You shouldn't blindly accept a leader's advice. You've got to question leaders on occasions.'

Fast forward three years. I'm in Las Vegas announcing the new route to San Francisco with Virgin America. Someone has had this idea for a publicity stunt: they're going to drop me on a wire, dressed in black tie, from the Fantasy Tower at the top of Palms Casino, into the midst of the cocktail party taking place on the ground below.

Now, I've abseiled many times before, so this stunt is actually something I should feel relatively comfortable with, even though I've never before been dropped off the side of a building at 100mph. But it's an October day, and it's windy. I'm looking at all the harnesses and wiring used in the Spider-Man movies . . . and there's something about all this that's making me feel uncomfortable. And as I stand there on top of the tower, minutes before the leap, I know what it is: I'm far too close to the building. So I say to the technical team: 'I'm sorry, I need to go to my room.'

Everyone thinks I'm chickening out. But I just need to think. Four hundred feet. A windy day. And I'm being dropped almost within touching distance of the building . . .

There's a knock on my hotel-room door. It's our Virgin America publicity people.

'Would you mind just coming up to the roof to do the press anyway, Richard?'

I know I'm being suckered, but I can't get the words out to refuse. My legs carry me upstairs and there is the stunt team boss, assuring me that the wind has died down a little. It doesn't feel like the wind has died down at all. Indeed, it feels a damned sight windier to me. But these people are professionals, right? And everybody is counting on me to do this thing, right? And I don't want to disappoint people, right? And suddenly I'm hurling myself off the top of the building. I hurtle down, and on the way down I hit the casino. Twice.

I reach the bottom, utterly dazed and very sore. Have I broken my back? I just hang there like a rag doll while free airline tickets – part of our stunt – rain down unnoticed on the appalled guests now crowded around me.

Sam, you can consider yourself fully paid back for that joke we had at your expense. My backside hurts. My trousers are ripped to shreds. The press get some pictures of me looking rather grey and dishevelled. I should have listened to my own advice.

True leadership must include the ability to distinguish between real and apparent danger.

This is as true in business as it is in ice climbing, ballooning, mountaineering or powerboat racing. You need to understand the challenges to your enterprise and face up to them. Equally, you have to resist the temptation to overreact at the first sign of trouble.

Since I've been littering this book with tales of our own successes, mistakes and lessons, I hope you'll forgive me if – for once – I illustrate this last point by giving you an account of someone else's mistake.

On 14 February 2007, the combined company of NTL, Telewest and Virgin Mobile relaunched as Virgin Media, creating the largest Virgin company in the world. For the first time consumers could get everything they needed from one company – we were the UK's only quad play of TV, broadband, phone and mobile, offering the most advanced TV-on-demand service available, V+, our high-spec personal video recorder and really fast broadband Internet access.

Overnight, Virgin Media had become the UK's most popular broadband provider, the largest mobile virtual network operator and the second largest provider of pay TV and home phone. We were taking on the Murdoch empire.

Rupert Murdoch has wielded more power over a longer period of time than any other businessman on the planet. The Australian, born in Melbourne, built a newspaper empire in his homeland, expanded into Britain in 1968, and snapped up Dow Jones in the USA in 2007. His satellite television empire straddles the globe, and his newspapers are hugely influential. Rupert Murdoch is someone to be feared and admired in equal measure.

Rupert is now in his late seventies, and while he still has immense energy, it is his two sons, Lachlan and James, who are poised to take his place at the helm. In November 2006 James, the chief executive of British Sky Broadcasting, heard that Virgin Media were planning to acquire a majority stake in ITV, Britain's first and largest commercial TV station.

Deeply worried that the combination of Virgin Media and ITV might give Sky a very serious run for its money he tried to stop us. How? He bought 17.9 per cent of ITV's shares – at a cost to Sky's shareholders of £940 million.

At the time, he was generally praised by the press for pulling off this deal – but it turned out to be perhaps the biggest mistake of his otherwise stellar career.

The media world – and the politicians – knew that his move was anti-competitive, and he had only done it to stop us getting ITV. To that extent, he may have succeeded. James Murdoch's intervention had, for the time being, frustrated our plans to take over ITV.

The intervention led to a war of words between us, legal action and a decision by Sky to withdraw content, such as Lost and 24, from our Virgin Media service, at significant cost to itself in terms of lost advertising income.

Soon after BSkyB bought the stake, Virgin Media complained to the Office of Fair Trading, arguing that competition in the UK TV market had been impacted. The Secretary of State referred the acquisition of a 17.9 per cent stake to the Competition Commission.

James Murdoch bought ITV's shares at £1.35 each, overpaying in the market to secure them from two large institutional investors, who promptly then went back into the market and repurchased positions at about £1.10!

On 29 January 2008, the Competition Commission ruled that Sky must cut its stake in ITV from 17.9 per cent to below 7.5 per cent. BSkyB, having paid 135p a share, could now be forced to sell below 50p. And ITV's share price continued to fall. In July 2008, the ITV shares were worth only 40p each.

So what's the cost to BSkyB of that share purchase? At a share price of 40p it would be in excess of $1.3 billion. James's mistake was to overreact to what Virgin was doing. He could see that Virgin Media was going to be a threat to the Murdoch media empire and that we would do well. Virgin Media's aim was to give Sky a run for their money. But I don't think it would have damaged Sky in any dramatic way – certainly not nearly as much as he's lost trying to stop us.

Once you've been able to assess the level of danger in any given situation, you must be able to honestly gauge your own strengths and weaknesses as leader. You need to be able to recognise what you can do as an individual – and how you inspire and motivate other individuals to cooperate willingly to get the job done.

How to achieve this? Well, for starters, this is something that should – no, must – be written into every business plan: This company will have lots and lots of parties and social get-togethers. Parties are a way of galvanising teams and allowing people to let their hair down. They have to be inclusive and encouraging, and then they are an excellent way of bringing everyone together and forging a great business culture.

I used to invite everyone in the Virgin business to a party at my home in Oxfordshire – but unfortunately it became too big. At the last one we held – over three days – we had nearly 60,000 people. We put on fairground rides, sideshows, hamburgers and hot dogs, and rock bands – all paid for by the Virgin Group. I stood at the entrance and made sure I shook everyone's hand. My hand was swollen and rather painful after two days of this, but it was worthwhile. Today we have smaller gatherings, and I aim to get to as many of them as possible.

The Virgin Blue party, meanwhile, has become a glittering, red-carpet event – raising thousands for charity in Australia. The event is organised, set up and served by Virgin Blue people. It's headed by Jane Tewson, who established Comic Relief in the UK and lots of other charity projects, and who has been working in Australia with Aboriginal people. I donate a week's holiday in Necker Island in the British Virgin Islands as a major auction prize, and one trick I use is to get the runner-up, who has bid perhaps A$80,000, and the winner, who's paid A$90,000, both to pay A$85,000 and both go to Necker together. It's forged some great friendships. We also raise A$100,000 by letting someone name one of our aircraft, and all that costs is the paint job. It's easy money for charity and fantastic for staff morale.

I think governments should make parties completely tax-deductible, with the proviso that every time there's a knees-up, shindig, disco or rave, the proceeds go to charity. That's the deal. It should be much more than just a fun night for everybody. A night when everybody gets merry is good, but it's even better if you can combine it with something that makes a difference to others. Music events, fashion shows, sports contests, anything that gets people together and is enjoyable can be rolled out across every business – just don't let anyone use the charity's money to pay for the drinks!

A poor leader can make life hell for so many people. Leadership is not about a person sitting at the top of the tree, making all the decisions and expecting everyone to do as they're told. That's hardly leadership: it's more like dictatorship.

I have huge admiration for the British version of the TV show The Apprentice, in which people compete for a single job with Alan Sugar. The camerawork is slick, the editing is clever, the music is great. The power of television is immense, and if it's capable of inspiring people to treat business with excitement and enthusiasm, that can only be a positive thing. Frankly, anything that can be done to inspire young people to give it a go has to be worthwhile.

But I have one issue, and that's with the way Alan has to say, with a frown, at the end of each episode: 'You're fired!' It's in his contract because it makes good television. And it's cobblers. The whole competition is structured around the fear of being fired. While this does make it interesting for the viewer, it is not, in my opinion, how businesses should be run.

Where The Apprentice is successful is in its wider portrayal of the modern business world. There are few jobs for life any more. As individuals we need to be positive and sell ourselves. Most of those taking part in the show will have a better grasp of this than is apparent on camera. They know that failure is not something to fear. They know there are other options, other places to work.

So here it is important to stress that there is a fundamental difference between an entrepreneur and a manager. They are often contrasting people and it's crucial to realise this. Although I'm sure there are entrepreneurs who could make good managers, my advice would be: don't try to do both.

Entrepreneurs have the dynamism to get something started. They view the world differently from other people. They create opportunity that others don't necessarily see and have the guts to give it a go. Yet an entrepreneur is not necessarily good at the nuts and bolts of running a business. I admit that this is not my true forte – and recognising this weakness is essential for the entrepreneur. The annals of business are littered with stories of the driving force trying to run the business on a day-to-day level – and failing dreadfully.

Good managers are worth their weight in gold. People with the acute psychological know-how to smoothly organise and handle the pressures of an ongoing business venture are the glue that binds the business world. My notebooks are full of contacts and names of people who have been recommended or whom we seek out to come and be Virgin business managers. Cherish them, and give them a proper stake in the business, because they deserve a big share of any success. Once the entrepreneur has the company up and running, they often need to pass the baton on to the manager. The creator's job is to find someone with expertise who understands the vision and is prepared to follow the path.

The entrepreneur's job is effectively to put themselves out of a job each time the new company is up and running. Then they can step aside and free themselves up to be entrepreneurial in a different business. It is generally asking for trouble for an entrepreneur to stick around for too long, trying to cover both roles.

In a small business, you can be both the entrepreneur and the manager while you are getting it going. But you need to know and understand everything about that business. And I really mean everything. An emerging entrepreneur should sign every cheque. Examine every invoice, and you'll soon appreciate where your money is going. Even in a big business like the Virgin Group, I sit down now and again and sign every single cheque that goes out, and I ask my managing directors to do the same. For a month. Sign everything for a month every six months and suddenly you're asking: 'What on earth is this for?' You'll be able to cut out unnecessary expenditure quite dramatically when you do that.

As a small-business person, you must immerse yourself 100 per cent in everything and learn about the ins and outs of every single department. As you get bigger, you will be able to delegate, and when people come to you with their problems, they'll be surprised how knowledgeable you are and how much practical advice you can offer. The reason you're knowledgeable is because in the early days of the business, you learned all about it. This is how business leadership is achieved. There are no short cuts. Remember my earlier description of Brett Godfrey at Virgin Blue who insists that all of their senior managers spend time doing the different manual jobs like luggage loading. (I needed a physical after my stint!)

And as the business gets bigger, you will have to decide if you're a manager or an entrepreneur. If you're a manager you can stay with that business and help it grow. If you're an entrepreneur, you need to find a manager. Then you should move on, enjoy yourself and then set up your next enterprise.

Nothing in business is quite like the early, frenetic days of an ambitious start-up project. There's always an amazing buzz about this kind of thing. It's high-octane and high-risk and it builds a tremendous spirit and camaraderie which takes everyone through some very trying times. I've seldom seen people work harder than in the initial stages of a new venture. Once a business matures and is established, it can become more challenging to retain that excitement. What we do at Virgin is not let businesses get too mature. If you can keep the businesses relatively small, people will know each other within the organisation and feel like part of a team.

It's then down to the leadership of that organisation to keep making sure that people are challenged and motivated. Jack Welch, a great business leader, who transformed GE into one of the world's leading corporate powerhouses, was constantly evolving tools and methods in search of continuing growth. He encouraged managers to start each day as if it was the first day in the job. He said that managers were often afraid of change – and they must embrace it. I agree with Jack on that.

We never let people sit on their laurels, and we keep on trying to improve things. The minute Virgin Atlantic was voted 'The airline with the best business-class seats in the world' in the UK Airline awards, our designer was already beginning to work on the next seats in order to beat our own expectations rather than our competitors'. You must either stay ahead of other people, or stay ahead of yourself, all the time. If you really put your mind to it you are normally going to find a better way. You have to keep on questioning the way people do things.

Looking back over the personal notebooks I have kept for more than thirty-five years, I don't think there has ever been a letter from my office which criticises the staff or an individual. Now and again I've disagreed with something and suggested changes in behaviour. But the Virgin Group has always tried to look for the best in people. That way, you get the best back.

A plant needs to be watered to flourish and people need encouragement so that they can flourish. If this sounds precious, so what? It's true. When someone says something nice about any of our Virgin ventures, I feel great. I'm flattered. When someone has a go, it knocks me back. We've developed a thicker skin over the years, but I hope we haven't lost the sensitivity to do things properly. If witless criticism can deflate me, after thirty-odd years of business success, then what a fool I'd be to go around ticking off other people. People say business is a cut-throat affair. Certainly it's a tough game – we talk about 'the competition' for a reason. And, yes, sometimes people play dirty. But nothing in my years with Virgin has eroded my habit of saying thank you to people or praising them. I was brought up in England by parents who praised and encouraged me a lot. Why would I behave differently to others?

Right across our business we have a philosophy of encouragement. Our people are very rarely criticised. If someone makes a howling mistake, usually they don't need to be told. They know.

One of my weaknesses is that I find it very hard to tell someone that their services are no longer required in the business. It's an unpleasant obligation, and one you absolutely must not shirk. If you're a small company, it is vital to do it personally. You really have to see the person face to face rather than get someone else to do it. I think, generally, a personal explanation of the situation is appreciated, and it helps the individual you're letting go to move on.

Of course, if you actually enjoyed firing people, there'd be something wrong with you. Jack Welch made a point of continually weeding out the people at the bottom. Alan Sugar and Donald Trump aren't afraid to fire people either, though I doubt they go about it quite the way The Apprentice would have us believe. There's a machismo about the way some managers talk about hiring and firing that I find downright repugnant. A senior person at Apple rather proudly says in his speeches about firing people that 'I'd rather have a hole than an asshole.' My philosophy is very different. I think that you should only fire somebody as an act of last resort.

If someone has broken a serious rule and damaged the brand, part company. Otherwise, stop and think. Indeed, these days you have to. There are a lot of legal and employment issues to take into consideration before you even go down that route. This can be frustrating, but to be honest I don't think it's the nightmare that some managers make it out to be. People respond to their surroundings. If someone is messing things up royally, offer them a role that might be more suitable, or a job in another area of the business. You'd be amazed how quickly people change for the better, given the right circumstances, and how willing they are to learn from costly mistakes when offered a second chance. If you've over-promoted someone and it hasn't worked out – which happens – then offer them their old job back rather than firing them. It's your fault for over-promoting them. Not theirs.

A lot of companies these days call themselves 'families'. Usually, this is just an embarrassing bit of public relations flannel. I think companies can be like families, that it's a good approach to business, and that Virgin's created better corporate families than most. We've done it by accepting the fact that we have to think beyond the bottom line. Families forgive each other. Families work around problems. Families require effort, and patience. You have to be prepared to take the rough with the smooth. You have to put up with your troublesome siblings. They're your family: you can't just throw them out on the street.

The higher up you go in a company, the more perilous your job position is if you don't perform. In football, dropping out of the Premiership – or failing to get into the Champions League – can be disastrous. The board of directors, or the club chairman, must hit upon a formula for success, and the buck has to stop with the coach. Sacking the coach is easy. The hard part is making sure you're getting someone better than the person you're dropping. In football, that doesn't always seem to be the case.

I often read about chief executives, managing directors and large company bosses who are told to resign from their high-profile companies by investors because they have made a hash due to poor business decisions. In the United States, for example, we've had Angelo Mozilo, the CEO of Countrywide Financial, Citigroup's boss Chuck Prince and Merrill Lynch's Stan O'Neal all departing with $100-million-plus compensation packages despite their businesses being caught in the sub-prime mortgage meltdown.

Too many top executives are given massive payouts and allowed to walk away, leaving others to sort things out. I think the opposite should happen. In most cases, leaders should stay on until any problems are sorted out – or a solution found – and then they can go and with a fraction of the money they would earn if successful.

Decent leadership is about explaining clearly and unemotionally why a decision has been taken. This applies just as much to a large company when there are lots of jobs at stake. For a business to survive under extreme pressure it must take decisive action. And when there are a lot of redundancies, that can hurt the pride and self-esteem of a lot of hard-working individuals.

After the terrorist attacks on New York City, Washington and United Flight 93 on September 11, 2001, our 'Council of War' met each day to look at the unfolding situation. I see from my notebooks that my first phone calls – of many hundreds made within those vital hours – were to our bankers, to let them know of the cash position; and to the UK government, seeking their support and encouraging a common approach. We also had to talk candidly to other airlines to get a proper picture of events, so we needed temporary anti-trust immunity – we didn't want to be accused of working in consort. I called the New York mayor, to pass on my condolences.

Transatlantic air travel stopped and I pleaded with Stephen Byers, the Transport Secretary, not to let the position of Britain's airlines be weakened when the US government was supporting its own national carriers. We didn't get the same cushion of support as the American airlines – and we couldn't and didn't hide in Chapter 11 administration. If Virgin Atlantic hadn't responded decisively to the Twin Towers attack, then we would certainly have gone out of business. We began renegotiating our bank lending and our aeroplane contracts and we did everything necessary to cut our costs. We had to reduce our US capacity by a third, and so we began looking at other international routes instead, such as launching into Nigeria, China and India. Then we had to relay the bad news: reluctantly, we were letting 1,200 Virgin Atlantic people go. It was the first mass redundancy in Virgin's history. We offered our people part-time work, job sharing and unpaid leave. We also tried to find them work in other parts of the business. Our managers made tough decisions that hurt many people, but we promised to get them back on board as soon as conditions improved – and, thankfully, most returned.

Dealing with Virgin Atlantic's flight engineers was particularly difficult for us. A breed of aviators with a passion for flying, they had considerable skill, and were tremendously loyal and committed to our company. And here we were, putting them out of a job.

If your rival airlines introduce planes that require only two people in the cockpit – that's the captain and first officer – rather than three, as was still the case with Virgin Atlantic when we had the flight engineer on board, then you're faced with a serious business issue.

The reliability of a new generation of planes and the increasing sophistication of fly-by-wire systems meant that airlines could reduce the number of flight crew in each cockpit and, in the process, save a great deal of cash. Unfortunately, the flight engineers were the victims of progress and obsolescence in the airline industry. There was no longer any need for them, and we had to tell many of our engineers that they had to go. It happens sometimes. It's horrible. And there is no way around it. If we hadn't done this, we wouldn't have been competitive.

Over the years in the Virgin Group our diversification has been a bonus. We've been able to move people around our various companies, offering different jobs until things improved again. But this wasn't easy with our flight engineers. They had extremely specialised skills and we didn't think that converting them to commercial pilots would work for us. Our captains and first officers were normally highly experienced pilots who had spent up to ten years on short-haul flying.

Since we were saving cash by laying these people off, they deserved the lion's share of the savings in their redundancy pay. It was far more than the legal minimum and I think most of them appreciated the gesture. It was a decent package. The engineers thought it fair and – just as important – so too did their colleagues who were staying on with the company.

Many elements of leadership can be prepared in advance, planned and rehearsed. You don't have to be Winston Churchill to be a good leader.

That said, I think there is such a thing as natural leadership. It takes a certain generosity of spirit to trust people, and to judge their merits and limitations fairly. It takes not a little bravery to bear bad news to people. Optimism, openness to possibilities and sheer self-confidence – some people have more of these qualities than others.

So, in addition to the practical steps you can take, I think there is a huge amount to be gained in following the examples of great natural leaders. You can certainly read about them; but you should also be asking who among your circle is a leader you can learn from. I am hugely privileged to have met some great natural leaders in my time. Some are internationally famous; many are not. To describe all the help, influence and mentorship I've been sustained by over the years would make another book, so for now, let me just tell you about one important figure in my life: Nelson Mandela.

When people think of 'Richard Branson', they tend to think first of all about Virgin's involvement in the music industry. It's a piece of our heritage we're extremely proud of. When I cast my mind back to what shaped me most as a businessman, however, I find myself remembering an even earlier phase of my career; and I recall my brief, fortunate and illuminating adventures in journalism.

What, after all, could be better for a young man searching for answers in life, than to go around interviewing people? I was never going to be a great journalist, but one skill I did have was being able to keep my mouth shut. I let the people I was interviewing do the talking. I was also quite unembarrassed when it came to asking what, in hindsight, seem naive and obvious questions. Both are skills I've carried into business, and they have served me incredibly well. The ability to listen, and the willingness to stick your neck out and ask the obvious question, are criminally underrated business essentials.

I was brought up in the mid-1960s and this was generally a caring and compassionate time, when a lot of young people became socially aware and began to understand how the world treated minorities, what their rights should be, and how a fairer deal might change things. From the other side of the Atlantic, I followed with fascination the struggles of black Americans against racism, discrimination and economic inequality.

In March 1968, I was proud to be marching to the US embassy in Grosvenor Square in London in protest at US involvement in the Vietnam War. I strode side by side with left-wing firebrand Tariq Ali and actress Vanessa Redgrave, and I remember the fear when the police on horseback charged us with truncheons and tear gas. I was also invigorated by the thought that young people were doing something direct and positive. And through the prism of Student magazine, I – a privileged English public schoolboy – heard for the first time about the horror of Africa. I learned a little about oppression, and disease, and famine. Student campaigned against the horrific Biafran War in Nigeria, and we used harrowing photographs by Don McCullin, the celebrated photojournalist whose Sunday Times images would go on to define the conflict in Vietnam and Cambodia. We helped bring to the public's attention the plight of millions of children dying of starvation who were caught up in the civil war.

The autumn issue of Student in 1968 was awash with anger: the black American ghettos were exploding with violence; rioting students were throwing cobblestones at the police on the streets of Paris; Russian tanks had crushed the Prague Spring in Czechoslovakia; Vietnam was withering under a rain of bombs. There was so much to cover. I remember we had Gyles Brandreth writing on America, and a report from Vietnam by a fresh-faced seventeen-year-old Julian Manyon – now a veteran ITN foreign correspondent – in which he interviewed a North Vietnamese doctor about the death of Vietcong soldiers through dysentery. But it was the interview I conducted with the American black militant writer James Baldwin which shocked me to the core. If you are harbouring any doubt in your mind about the value of naive questions, read this. Look what he made of my stumbling questionnaire. I would never have elicited such fire had I been less direct.

What kind of education did James Baldwin have?

'At school I was trained in Bible techniques. I received my education in the street.'

Were there good schools in America?

'How can there be? They are built by the white state, run by white powers and designed to keep the nigger in his place.'

Can the white man give you freedom or must the black man take it for himself?

'The white man can't even give it to himself. Your record has not been very encouraging. I DON'T EXPECT YOU TO GIVE ME ANYTHING. I am going to take what I need – not necessarily from you, this is your myth – but I intend to live my life. I am not interested in what white people do. White people are not that important. What one is fighting against is not white people, but the power standing between a person and his life. It is as simple as that. It is not a race war, it is a war between poverty and privilege, freedom and imprisonment.'

I was transfixed by what Baldwin was saying to me – his vitriolic yet restrained anger at what he saw as the inequality of life.

In The Fire Next Time, written in 1963, he had predicted that in ten years' time we would see the end of white supremacy. I asked him if he still believed this.

Baldwin replied: 'I didn't say it in quite that way. I said that this was a prophecy – and the prophet may well be right. I am telling you that Western societies are visibly in trouble and are visibly crumbling.'

'Under pressure from the black man?'

'Under the weight of their own lies.'

This was strong, urgent stuff for a white, teenage editor. It was an anger that I could not understand, because I had nothing to measure it against. I wanted to help change the world, but what did I know about the world?

Fred Dube, a black African, born in Johannesburg, a social worker married with two children, joined the African National Congress in 1955. From 1964 to 1967 he served four prison sentences for sabotage, in Ladysmith in Natal, Leeuwkop in Transvaal, on Robben Island and in Groenpunt in the Orange Free State. He left for England in July 1968, and became a bank clerk in London. He told Student that the poverty, homelessness and malnutrition in his homeland all stemmed from one problem: South Africa's vicious and unjust apartheid society. Some time later I heard about the black activist Steve Biko, and then I encountered the name of Nelson Mandela. His parents called him Nelson because it sounded 'white', and they thought he would get on better in a whites-only society. He was viewed as a dangerous extremist by some in Britain but I began to know the truth about this incredible man.

When I first got to know Madiba – as he is affectionately known in Africa – I was always in awe and slightly nervous meeting him. Then when he smiled, his warmth and impish humour simply radiated into your heart: 'Richard, it is a great honour to meet you.' I soon learned that he says that to everyone on first meeting them! Here is a man who has suffered so much because of his colour and what he believes in. He was a victim of apartheid injustice, handed a life sentence at forty-six. His prison number was 466/64, which stood for the 466th prisoner admitted to the dreadful Robben Island jail in 1964. His cell was six feet square, the walls two feet thick. When he lay down his head touched one end and his feet the other. His first months in jail were spent with fellow political prisoners crushing rocks into gravel using a four-pound hammer. It was achingly strenuous and constantly painful. I have seen his cell – it must have been hell on Earth.

He says in his autobiography, Long Walk to Freedom, that 'Robben Island was without question the hardest, most iron-fisted outpost of the South African penal system. It was a hardship station not only for the prisoners but for the prison staff. The warders, white and overwhelmingly Afrikaans-speaking, demanded a master–servant relationship. They ordered us to call them baas, which we refused to do. The racial divide on Robben Island was absolute: there were no black warders, and no white prisoners.'

Yet I have never witnessed one scintilla of anger or indignation from the man.

His spirit is best captured, I think, in the address he gave, not long after being elected president, at the unveiling of a statue of Steve Biko. 'While Steve Biko espoused, inspired and promoted black pride, he never made blackness a fetish . . . accepting one's blackness is a critical starting point: an important foundation for engaging in struggle. Today, it must be a foundation for reconstruction and development, for a common human effort to end war, poverty, ignorance and disease.'

Here are the characteristics of great leadership, contained in a handful of sentences. The concern for people is here; so too the easy intelligence Mandela brings to the judging of individual merits. There's authority in these words, but they're not hectoring or bombastic: they create for us a clear, simple vision of what has to be achieved.

The unveiling of Biko's statue, sculpted in bronze by Naomi Jacobson, took place on 12 September 1997. Peter Gabriel and I were on hand – the only white faces in a crowd of around 100,000. I urged Peter to sing the song that had done so much to keep Biko's name alive. That rendition of 'Biko', backed by Nelson Mandela and a crowd of 100,000, is something I will treasure to my grave. From the moment Mandela came up to shake my hand and thank me for my support, I wanted to do something meaningful for South Africa, to help it recover from its terrible wounds. I wasn't a songwriter – and I didn't have to wait long for the call.

There is one characteristic of Mandela's leadership that isn't apparent from his speech, but it is typical of most of the great leaders I've met: they are all inveterate salesmen! Mandela is an entrepreneur through and through. He absolutely will not stop. Whenever we were together, Madiba seldom missed an opportunity to pull a few strings for his country. He was in London one time, having lunch with Joan, Holly, Sam and me and a few close friends, and afterwards I wrote in my notebook. 'No lunch or dinner ever goes by without him asking a favour for someone in need: He came to my house with his new wife, Graca Machel, and his daughter, "That was a delightful lunch, Richard, Now last week I saw Bill Gates and he gave £50 million in dollars." Gulp!'

I am proud to say that Nelson Mandela has become a close friend. As we pass his ninetieth birthday, he has remained an inspiration to me as a human being and I have many cherished memories of time spent in his company. I think it's worth explaining how the former South African president's astonishing acumen for business, coupled with his sense of duty, helped his country. For Madiba knew that the 'long walk to freedom' for his black brothers and sisters meant embracing a positive economic future. While he recognised it would take many years – even a generation – to reverse the inequalities of racial discrimination, he had few qualms about seeking my involvement – and that of other business leaders – if he believed it would bring jobs and wealth to South Africa.

One occasion was in September 2001, just days after the World Trade Center atrocities in New York. Tourism and business travel had dried up overnight, the whole airline industry was in meltdown, and I was sitting in the bath thinking how the Virgin Group could deal with the immense disruption to Virgin Atlantic when he phoned. Madiba's voice was like an anaesthetic balm: calm and reassuring.

'Richard, you said that you wanted to help South Africa,' he said.

'Yes, Madiba. You know I'm willing to help,' I replied.

'Well, we have a problem . . .'

One of South Africa's biggest health clubs, the Health and Racquet chain, had collapsed. It meant the loss of 5,000 jobs. 'Do you think you could do something with it? Do you think you can save the people?'

I didn't really know if this was a viable business, but I went with my gut instinct, and my desire to support a man I revered. Also, I trusted Madiba: in another life he would have made an astute corporate financier!

I rang Frank Reed, the Virgin Active chief executive, and Matthew Bucknall, his finance director, who ran just three large clubs in the UK. Would they be prepared to take on an ailing South African business nearly eight times their size? There was a palpable gulp from Matthew – but he then said they'd jump at the chance. Brilliant! Within hours we were able to put a rescue package together – rebranding the whole business Virgin Active. I called Madiba back to say we were definitely on board.

But money was tight for us and we needed to raise funding, so we approached the UK private equity company Bridgepoint Capital who agreed to take a 55 per cent stake in a deal worth £110 million, leaving Virgin with 36 per cent, and Frank, Matthew and the team around 8 per cent. When Gordon McCallum heard about the speed of the transaction he said: 'At this pace, we should rename the company Virgin Hyperactive.'

Our strategy involved keeping on as many people as we could, and retaining Health and Racquet's 900,000 customers, although we had to change the arrangements for many health-club users. They had been given free lifetime membership, in return for signing up with a big upfront fee – fine until the new memberships dried up! We judged, correctly as it turned out, that nearly all of the members would agree to start paying a monthly subscription provided we gave them a first-class health-club experience and fixed the dilapidated gyms that had been starved of investment.

The rescue gave us a fantastic footprint in South Africa from which we have continued to expand. By October 2005, Virgin Active was in a better financial position – having doubled in size and expanded into Italy and Spain – and we were able to buy back Bridgepoint Capital's 55 per cent share for £134.5 million.

*

When Nelson Mandela was president of South Africa he knew his diplomatic position. South Africa's re-emergence as a nation was reliant on China's increasing strength and its investment as an economic superpower. He didn't want to offend China. And he never ever did.

Once free from the burden of presidency, of course, Madiba was his own man again.

In November 2004, I was in Johannesburg at the CIDA City Campus, the first free campus for black students from townships and rural areas who cannot afford education. I was with Kelly Holmes, the double gold-medal Olympic runner, the singer Estelle, and the team from Virgin Unite for the launch of an initiative called Women on the Move, which focuses on empowering young women across South Africa. After the ceremony I stayed on to listen to the Dalai Lama, the exiled Tibetan leader, who had been invited to speak at CIDA. It was his third time in South Africa and he spoke with verve, compassion and gentle humour. He smiled as he welcomed people from all religions, the non-religious, and black, white and brown alike. I was enthralled listening to this deeply spiritual man appealing for peace and justice.

He said: 'If you wish to experience peace – provide peace for another. If you wish to know that you are safe, cause others to know that they are safe. If you wish to understand seemingly incomprehensible things, help another better understand. If you wish to heal your sadness or anger, seek to heal the sadness or anger of another. Those others are watching for you now. They are looking to you for guidance, for help, for courage, for strength, for understanding and for assurance at this hour. Most of all, they are looking for your love.'

There was nothing the Dalai Lama said that day that could possibly have incited the Chinese authorities. He simply asserted that the gap between rich and poor was morally wrong.

I had been with Madiba at his home the previous afternoon, and I asked him why he had never met the Dalai Lama. He frowned and told me it had been too political. The South Africans didn't want to upset China over their activities in Tibet. But I thought it would be good to get these two wonderful elders together – and that political expediency should not bar them from meeting.

'You're no longer president, Madiba,' I said. 'He can visit you as a private individual. He's staying only a few blocks away from here.'

Mandela smiled and looked across at Zelda le Grange, his assistant and adviser. I could tell that he was persuaded. Later the next day, Zelda invited me to join them for the get-together I had suggested – but I found myself declining this extraordinary invitation. I felt it should be a special occasion between two inspirational people, and that no one else should be present. That night, after the meeting, we got the following message from Wendee, who works for the Dalai Lama: 'On behalf of the entire delegation, thank you for setting up what may be the first and last meeting of these two giant spirits . . . The meeting lasted an hour in deep discussion.'

There are many things in my life that have given me satisfaction. But the union of two iconic figures in Johannesburg will be a moment I will cherish for as long as I live. And that meeting began to strengthen the idea Peter Gabriel and I had had: to bring together a group of wise global elders . . .

Necker Island, January 2004

Dear Madiba,

An idea – yes, I'm sorry – another idea. Out of the most wonderful day – the 46664 concert [in November 2003 – a declaration of war on Aids in South Africa] – Peter Gabriel and I were inspired to write to you.

As well you know, in an African village there are elders who the rest of the village look up to. We believe that the Global Village needs to equally tap into our elders. You told us then that it had been easier for you to gain the trust of the generals negotiating in Rwanda, as they said talking to you was like talking to a father. We would like to set up a small body of the most respected 'Elders' in the world and as you are accepted as the most respected person of all today, we would ask that you become the father figure to this organisation and the first Elder.

Einstein once said: 'How I wish that somewhere existed an island for those who are wise and of goodwill.' I said it would be wonderful if the Elders could meet somewhere like my own Necker Island two or three times a year to discuss how they could help tackle the pressing issues of the world.

We would suggest that the Elders are initially chosen by yourself, and then in the future chosen by the world community, giving them added legitimacy on the world stage. None of them would be current politicians. The Council of Elders would comprise 12 men and women. Four of these could stand down every three years. The new four could be voted in from a shortlist selected by the Elders through channels like the Internet, television, post and email. They would represent a broad spectrum of the world's people.

Peter and I said that the first worldwide vote would encourage people to think globally, to feel part of events and engage with a world beyond their borders, culture and religion. As the United Nations represents the governments of the world, the Elders would represent the hopes, aspirations, fears and dreams of the people.

The Elders would have at their disposal a 'Growing Tree' – an army of people worldwide who have retired, or who have the time, who are willing to give their time and expertise to help tackle the problems of the world. Whether setting up an Open University for Africa or India, tackling conflicts, diseases or poverty. They would also help mentoring programmes. They would be a huge educational resource.

The aim from the start was for the Elders to be a group of global advisers and not to instruct people to do things. They were to be individuals, and not simply representatives of a country or state. They were to be beyond party politics and free to speak what they saw as the truth.

I appreciate that you would have difficulty finding much time yourself but it would give enormous credibility to the future of the Elders if you were to give it your blessing and be its founding father.

I would pledge myself to find the time and resources to help organise it behind the scenes and to make sure it becomes a force for good in the world and hopefully continues for many years to come.

Kind regards,

Richard

Nelson Mandela loved the idea. It appealed to his entrepreneurial instincts. He agreed to become its founding Elder, along with his wife Graca, and they issued invitations to the eleven people in the world he felt had the greatest moral authority.

I'll never forget walking out of Madiba's home with Jean Oelwang after he and Graca had made the final selection of Elders. I had a wonderful feeling that this was the start of one of the most hopeful and inspiring ventures in my life. I also felt so blessed to be able to spend time with two true global leaders. Graca and Madiba share the extraordinary ability to lead with humility, honesty and an unfailing focus on those whose voices are not yet being heard. Madiba frequently reminds us that if something is not going to make a difference at village level, then we shouldn't be doing it.

With Virgin Unite's support, we then went on a journey of creation, reaching out to people all over the world to shape initiative and build support. We had two glorious weeks during which Archbishop Tutu and ex-President Carter helped Peter and me to host a range of different groups on Necker – from scientists, to philosophers, to entrepreneurs, to front-line leaders. As with the development of any business idea, there were moments when we thought: what are we doing?, and then that magnificent moment when it all clicked into place and we knew that this was going to be something that really could make a huge difference in the world. We also wove in some fun – impossible not to do with the cheeky archbishop there to keep us all on our toes. One of my fondest memories from this time is of Peter and me teaching him to swim in the beautiful waters surrounding Necker.

I will never forget the speech Madiba gave to everyone when we first brought the initial group of Elders together at Ulusaba:

Let us call them Global Elders, not because of their age, but because of their individual and collective wisdom. This group derives its strength not from political, economic or military power, but from the independence and integrity of those who are here. They do not have careers to build, elections to win, constituencies to please. They can talk to anyone they please, and are free to follow paths they deem right, even if hugely unpopular. I know that as a group, you will support courage where there is fear, foster agreement where there is conflict and inspire hope where there is despair.

After this gathering the Elders decided they wanted to announce their existence to the world on Madiba's upcoming birthday on 18 July 2007. The team at Virgin Unite went into overdrive preparing for the launch and working with me to raise the funds we needed for the first few years – all in a little over five weeks! During this time, we had the opportunity to connect with an amazingly humble and sincere group of entrepreneurs and organisations who helped found the Elders. Their spirit in coming together behind this dream and the absence of any individual agendas truly captured the essence of the Elders. They have not only become partners in this initiative, but I'm also sure they will become lifelong friends.

As I write this, the other Elders are Madiba's wife, Graca Machel, a renowned advocate for women's and children's rights; the Anglican archbishop Desmond Tutu, who was a tireless campaigner against apartheid in South Africa; Kofi Annan, Secretary General of the United Nations from 1997 until 2006; Ela Bhatt, founder of India's Self-Employed Women's Association; Lakhdar Brahimi, the Algerian-born former ambassador who began life in his country's liberation struggle and then became a mediator in many Middle Eastern conflicts; Gro Harlem Brundtland, the former prime minister of Norway, who has made a significant impact on global society through her commission on the environment and sustainable development; the sociologist Fernando Cardoso, the former president of Brazil, who has fought hard for human rights in South America; Jimmy Carter, who brokered the historic Camp David peace accords when he was president of the US; Mary Robinson, former president of Ireland and a distinguished United Nations High Commissioner for Human Rights from 1997 until 2002; Muhammad Yunus, the Bangladeshi economist and Nobel Peace Prize winner, and founder of the wonderful Grameen Bank; and Aung San Suu Kyi, a fearless and outspoken critic of the military junta which dominates her Burmese homeland.

The Elders are, in essence, a group of immensely influential world figures acting like entrepreneurs who use their moral courage, wisdom and independent leadership to help tackle huge intractible problems. The beauty of the Elders is that they are at a time in their careers where they have no other agenda but that of humanity.

Once, whole empires were operated out of small rooms by a handful of oligarchs. Those days are effectively over, thank goodness, and certainly it's not anyone's plan to give the Elders political power! But what we do hope and intend is that the Elders can bring their influence to bear on the world stage, quickly and responsively, providing the peoples of this planet with a voice and a conscience.

So over these few pages, as I explain to you how the Elders work, I hope to convince you that entrepreneurism is not something you ever grow out of; nor is it something uniquely fitted just to sole traders, or small companies, or even to modular enterprises like the Virgin Group. Entrepreneurism is – if this doesn't sound too pompous – a universal business virtue. I mean that it can be applied to problems, challenges and opportunities regardless of scale.

The Elders have been assembled in much the same way that a Virgin company is created. We have facilitated their organisation, and have provided them with the means to work together. We've made sure there is a motivated administrative team. And we are ensuring that the Elders' name and brand is protected. It is important that the group develops a recognised single identity, to sustain it through frequent changes of membership and a constantly evolving roster of activities.

Peter Gabriel and I felt it was essential that we stepped back from this – that the Elders had complete independence and that their articles of association enshrined that complete independence. The Elders are beholden to nobody – and that includes the founders and any of the people funding them.

The twelve Elders are people with tremendous personal integrity. They are generally all over sixty years of age, and beyond ego. Their mission statement says that the Elders' role is to work to resolve global issues and alleviate human suffering. It has taken a huge amount of work to get the mission statement and the structure properly sorted.

As mentioned, we've brought together a wonderful group of entrepreneurial founders whose generous contributions ensure that the first three years' operating costs of the Elders are paid for, so that they can go on missions to places like Darfur and Kenya. The Elders are not paid for their work. They are able to tap into some of the leading conflict and dispute-resolution professionals from around the globe. The international stature of the Elders means that if they call on someone for specialised help in a project, then they will get an immediate response. Professional mediators will be able to do the groundwork before the Elders go into any area.

I hope that in 100 years' time – if it is run correctly – the Elders' group will still be in existence, and that people who have excelled in their lives, be they politicians, diplomats, humanitarians or business figures, can be part of it. When these good and worthy people get into the last fifteen years of their active lives, then the Elders can ask them to join in tackling global problems.

Does this extraordinary-sounding organisation motivate you to create and facilitate something similar in your own industry? I do hope so. After all, the idea for the Elders came in the first place from my nigh on forty years of business experience and Peter's experience starting up global organisations such as Witness. Every industry has its revered figures, people that companies and entrepreneurs go to for advice and sound judgement. Many of the great and good in business are living longer these days, they're living healthier lives, and more often than not their appetite for business is unquenched. Imagine how much mentorship, sound advice and even practical assistance is out there, waiting to be tapped. Imagine if your industry were supported by a network of revered business figures like Sir Brian Pitman.

I concede this isn't so much business advice as a call to arms – but if these pages have inspired you to consider the good of your industry as a whole, and how your organisation can contribute to the effective and responsible conduct of that industry, so much the better. The great and good in your business sector are a resource you should take seriously. Finding a way to harness that resource to best support and encourage your industry will add value to your brand – and what you learn will have a direct and positive effect on your business.

*

To be a serious entrepreneur, you have to be prepared to step off the precipice. Yes, it's dangerous. There can be times, having jumped, when you find yourself in free fall without a parachute. There is a real prospect that some business ventures will go smashing into the ground. It has certainly been very close at times throughout my own business life. Then you reach out and grab a ledge with your fingertips – and you claw your way back to safety.

Life has become too cosy for many, who have their lives mapped out by parents and teachers. It's all a bit, well, comfortable: off you go to university to study a course. Land a good job, get a mortgage, find a nice girlfriend, boyfriend, partner. It's a solid life – a good life in many ways – but when was the last time you took a risk?

Many people reading this book will be affluent. If you don't feel affluent right now, take a minute and think: the very fact that you could afford this book, or afford the time to take it out of the library – the very fact that you are able to read at all – marks you out as one of world history's richest and most privileged people. There's not that many of us, and we haven't been affluent for very long, and so we're not very good at it yet. Affluence makes us lazy. It makes us complacent. It smothers us in cotton wool. If your job's well paid, who can blame you if you're not willing to take a risk and, say, set up your own company?

The vast majority are very happy with this arrangement, and good for them. But if you want swashbuckling action in your life, become an entrepreneur and give it a go. Learn the art of trying to set up your own business. Which is the same as saying, learn the art of making mistakes and learning lessons.

Because if you want to be an entrepreneur and you don't make a few errors along the way, you certainly aren't going to learn anything or achieve very much.

People have a fear of failure, and while this is perfectly reasonable, it's also very odd. Because it seems to me that it's through making mistakes that we learn how to do things. Watch a musician practise sometime. Watch a baby figure out how to walk. Listen to a toddler speak. Skills like walking and talking and playing music emerge gradually, steadily, from a blizzard of (often pretty funny) mistakes. I think this is true of everything – that learning is about making mistakes and learning from them. And that is the fundamental reason that flying has become so safe in the twenty-first century; so safe in fact that sitting on a 747 to New York is safer than watching TV at home.

Now, I grant you that you may hit a limit, beyond which you can't learn from your mistakes. Don't expect a chart-topping album from me any time soon, or a recital at Carnegie Hall, or a sequence of sonnets, or any of the billion and one other things I'm never going to be great at. But that's not failure. That's finding out what you're good at. The world is much, much bigger than you, and no amount of worldly success is going to change that fact.

Failure is not giving things a go in the first place. People who fail are those who don't have a go and don't make an effort. Failures can't be bothered. There are few people who've tried something and fallen who didn't get enormous satisfaction from trying, and I've learned more from people who have tried and faltered than from the few charmed people for whom success came easy.

In my home country, the British education system has a lot to do with our fear of failure. I think it concentrates exclusively on academic achievement and downplays the other contributions people can make to society. I've huge admiration for scientists and engineers; whereas they are given due respect in Germany, the United States and Japan, in British society they tend to get a raw deal.

As someone who never went to university, perhaps I've a radical view of education. I am committed to excellence and expertise in business but I believe we need to show young people the value of wealth creation too. I think some university degrees could be finished more quickly – I've never understood why some courses have only two or three lectures per week, and why students are left to their own devices much of the time without much direction from tutors, lecturers and professors, who now spend most of their energy, it seems to me, chasing funding grants. But one thing is apparent to me: we still need a good deal more entrepreneurial thinking in our universities and colleges.

One of my greatest entrepreneurial heroes was Sir Freddie Laker. Freddie, who died in February 2006, aged eighty-three, lived his life to the limits. He was a tremendous person: a man of magic and mirth. He lit up a room and he was the ultimate salesman. An ex-colleague and close friend, David Tait, said he could sell a glass of water to a drowning man. Freddie was a huge inspiration and supporter of Virgin Atlantic and he was the godfather of cheap international air travel.

The first Skytrain flights took off from Gatwick to New York in September 1977. Although Freddie's airline was no-frills, the ticket prices were unbelievable. It was only £59 single to get to America – a third of the price of any of the other carriers. He made £1 million profit in the first year – and I was one of his regular customers as we expanded our Virgin Records business in America.

Skytrain were carrying one in seven transatlantic passengers – and Freddie was knighted in 1978. Then in 1982, the company went into receivership with debts of £264 million. He had borrowed heavily to buy fifteen new planes just as the pound plunged in value against the dollar, but worse than that, the major airlines had conspired against him, offering cheaper fares to undercut him. The airlines also threatened the airframe manufacturers, telling them not to sell to Freddie. His airline collapsed – with passengers still in the air.

In 1983, the liquidators Touche Ross started an anti-trust action in the United States, claiming $1 billion from ten major airlines – including British Airways, PanAm, TWA, and Lufthansa – who had got together to plot Freddie's downfall. The defendants settled out of court, negotiating a reported £35 million payment to Freddie's creditors – while he reluctantly accepted £6 million in compensation and retired to the Bahamas.

Three days before the collapse, in typical style, he said: 'I'm flying high – I couldn't be more confident about the future.' And David Tait recalls sitting next to Freddie as they flew out of Gatwick airport on an Air Florida flight ten days after the collapse. Below, jammed in wing tip to wing tip in the Laker hangar, sat Freddie's life's work, a forlorn cluster of grounded DC-10s still emblazoned with the Skytrain logo. But Freddie turned to his distraught partner and said: 'Don't worry, mate, it'll all work out just fine.'

His company was bust. Yet four-times married Freddie still knew that there was much more to life. He enjoyed reminiscing with me over a Pusser's rum and orange on his yacht in the Bahamas, and he relished a pint and a laugh with his friends.

It was on another Air Florida flight that he met an off-duty Eastern Airlines stewardess called Jacqueline Harvey. It was love at first sight – or first flight – and Jacquie made Freddie's last twenty years a lot more fun, erasing any memories of his airline's failure.

It was his business sayings that were so memorable for me.

'Only a fool never changes his mind.'

'Don't bring me your problems – bring me the solutions.'

And his most famous one: 'Sue the bastards.' Litigation lawyers the world over still celebrate that one! But it was about the best advice I got when I had to take on British Airways after their dirty tricks campaign against Virgin Atlantic in the late 1980s.

Freddie was never afraid of failure. He succeeded in life – and always gave it a go. That's why we named one of our planes the Spirit of Sir Freddie.