Richard Branson on risk

This morning I was lucky enough to hear Virgin Group chief and legendary entrepreneur Richard Branson speak at a Business Chicks breakfast in Melbourne.

It was an impressive event, with more than 1500 business women (and a smattering of men) eager to listen to one of the world’s few bona fide business rock stars.

Like most people at my table (hosted by our great friends at PwC) my image of Branson is of a bold serial entrepreneur who thrives on risk but I came away from the event with a different view.

Take for example the genesis of Virgin Airlines, which started when Branson was stranded in Puerto Rico on his way to the Virgin Islands after an airline cancelled his flight.

He chartered a 60-seat plane, grabbed a chalkboard, wrote “Virgin Airlines, $29 to the Virgin Islands” on it then walked around the airport selling tickets to his fellow stranded passengers, making $29 out of the exercise because he didn’t have to chip in for his own ticket.

At that moment Virgin Airlines was born.

For Branson going into the airline business was a huge risk because he was a record label and record store owner and his experience was minimal.

This morning Branson said his fellow Virgin Group shareholders and his bankers panicked when he started the airline.

So he worked out a risk mitigation strategy, buying a second-hand plane for the airline’s launch year and striking a deal with Boeing whereby he could give the plane back at the end of the year if the venture was a disaster.

That way the most he would lose in one year was about six months of profit from the record business – a risk, but a highly calculated one.

“To be a true entrepreneur you’ve got to take bold risk throughout your life,” Branson told this morning’s audience. “But you’ve got to make sure you protect the downside.”

Branson returned to this idea of “protecting the downside” a few times during his presentation and it was clearly something he has put a lot of thought into and that he has learned from sometimes bitter experience.

But his focus on that idea cast him in quite a different light. Should we see Branson as a bold risk manager rather than bold risk taker? It certainly doesn’t sound as cool but it may well be more accurate.

A few other things I picked up from Branson today:

• He prefers to hire from within where possible. “It can be very depressing bringing in someone over and above everyone else from outside.”

• He sees Virgin as a “way of life brand” and says that is why it has been able to succeed across so many sectors. But there is a downside to that. “There is always the danger you could make a terrible mistake and damage the entire brand.”

• He has no plans to retire for a very simple reason: “I’ve never really thought that I’ve been working.”

He remains a fascinating figure.