The British entrepreneur Richard Branson has has made an incredible career, and a US$5 billion (Dh18.4bn) business, out of selling dreams.
Virgin's enterprises can soar - but also fail to reach orbit
Ask anybody from Abu Dhabi to Zanzibar. The name Virgin is synonymous in the business world with Sir Richard Branson, the British entrepreneur who has made an incredible career, and a US$5 billion (Dh18.4bn) business, out of selling dreams. He might call it a "branded venture capital investor", but that is what it really does - it sells a dream to consumers, and occasionally to international investors.
The dream has morphed over the years, from hyper-hip music in the 1970s, to super-cool air travel in the 1980s, to fast, efficient rail travel in the 1990s. There have been other dreams on offer too - shopping, drinks, bridal wear, mobile phones, holidays (including Zanzibar) and financial services - but they all have the same unique selling point: an image of youth and rebellious adventure, slightly wacky but ultimately reliable. Virgin shows that the next generation is as good as the old-timers at business. The kids are all right, it says. They can put the show on in the barn.
The brand mirrors the image of the man himself. Though he hits 60 his next birthday, he still gives the impression that he has his finger on the pulse of "youth" in a way no other entrepreneur can master. He will invariably dress casually, in jeans and jumper, though occasionally in a full bridal gown or colourful national costume of whatever country he is launching in that day. He is as ready to spin a flight attendant in his arms, or join the boys for serious drinks at the bar, as he is to attend a board meeting.
The Branson achievement has been to sell this dream to successive generations of consumers and investors without altering the basic image. Virgin was "cool" in the 1970s, and for some people at least, it is still "cool" today. His business is a textbook study of branding and marketing in a changing world. The classic Virgin formula has proved irresistible for punters from the US to Singapore, and last week it showed it had just as much pulling power in the Gulf, with the $280 million deal with the UAE investment company Aabar. Even as Virgin dreams go, this is the ultimate - a trip to the stars onboard the Virgin Galactic spacecraft. Per Abu Dhabi Ad Astra, you might say.
A couple of years back, I attended a rather glitzy party at the Roof Gardens restaurant in London's swanky Kensington. The bash was Branson's personal "thank you" to Will Whitehorn, who had been his faithful communications mouthpiece for many years, but who was moving on to become president of Galactic. It was a Virgin bash par excellence. Grey-haired investment bankers mingled with Virgin flight attendants in daring evening attire; the drinks flowed and the music got louder. Whitehorn eventually gave his farewell speech in an astronaut suit from a podium arched by digital starlight. This was the Virgin dream in all its intensity.
That kind of vision must have been overpowering for Aabar, part of the International Petroleum Investment Company run by Sheikh Mansour bin Zayed Al Nahyan. Its $280 million outlay for a 32 per cent stake values Galactic at an eye-watering $900 million, despite the fact that no space tourists have yet made a trip beyond the stratosphere and the first flight is still two years off. Virgin says some 300 people have signed up for a flight, and put down deposits for the trip, which will cost £200,000 each. Virgin has already sunk £100 million into Galactic to get where it is today, with the prototype SpaceShipTwo vehicle. The UAE will get the rights to Virgin space tourism in the region, and Abu Dhabi will also invest $100 million in a satellite-launch facility in the Emirates.
All exciting, cutting-edge stuff, a classic of the Virgin genre, and on the 40th anniversary of the moon landings, it must have been difficult not to get carried away with the astromania of it all. The deal fits another Virgin pattern too. Virgin Atlantic, the global airline and still Branson's baby, is 49 per cent owned by Singapore Airlines; Virgin Trains is only 51 per cent owned by Branson's group, with the balance in a UK transport company. There are many other examples of Branson selling equity stakes in his businesses to well-heeled investors, while maintaining the impression that they still have the Virgin "touch".
It would be mean to disillusion starry-eyed Gulf investors, and there is no doubt the project is a mould-breaking, exciting enterprise that deserves success. But it must be pointed out that Virgin dreams do not always come true, and sometimes verge on the nightmarish, for consumers and investors alike. In particular, Branson has not had much luck when his companies bravely go onto the world's stock markets. His formative experience with Virgin Group in the 1980s was a disaster, and since then there have been others whose return for investors has hardly been stellar - Virgin Victory, Virgin Express, Virgin Media and Virgin Blue come to mind. Just last week he sold his American company Virgin Mobile for less than half its flotation value.
Abu Dhabi should reach for the stars, by all means, but the financial people should keep their feet on the ground. firstname.lastname@example.org