We Study Billionaires - The Investor’s Podcast Network - TIP214: Billionaire Richard Branson Lessons (Business Podcast)

Starting point is 00:00:00 You're listening to TIP. On today's show, we're going to be talking about one of the most famous billionaires on the planet, Mr. Richard Branson. Richard is the founder of the Virgin Group, and his holding company has more than 400 companies worldwide. Branson got his start as an entrepreneur at the age of 16 when he started his own magazine, and he self-built his $5 billion empire from there. On today's show, we're going to cover some of Branson's interesting exchanges that define his personality that made him the business mogul he is today.

Starting point is 00:00:30 So without further delay, here's our show covering billionaire Richard Branson. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. All right, welcome to the Investors podcast. I'm your host, Preston Pish, and as always I'm accompanied by my co-host, Stig Broderson. like we said in the introduction, we're super excited to be talking about Richard Branson today. The first question that we're going to be talking about, you started off an airline company

Starting point is 00:01:14 with one aircraft. You purchased a 747 and then you grew it from there into Virgin Airlines. The question was, how do you start out? How do you go from zero to one? Because so many people were paralyzed with that very first step. This is Richard's response to that question. First of all, I was sure that the airline business stank. The quality was ghastly and it wasn't fun. Yeah, a pretty miserable experience to travel from A to B on British Airways or any of the other airlines. So I thought if we could throw into the mix a plane that was great fun, which was beautifully designed, that had staff that really loved what they were doing, where the food was great, the seating was nice,

Starting point is 00:01:58 where there was stand-up bars, the entertainment was great, that we'd have a chance. we couldn't be sure. First of all, I did a deal with Boeing so I could hand the plane back to Boeing at the end of the 12 months if I was wrong about this. And that was protecting the downside. So at least I knew the worst that could happen was about 50% of the profits of Virgin Records for the year if it all went wrong. And then we threw this one plane in against Pan Am with 300 planes, TWA with 300 planes, British Airways with 300 planes, Airways with 300 planes, Air Florida with a couple hundred planes, People Express with a couple hundred planes, British Caledade. with a hundred planes and people loved it. I used myself to make sure we got on the front pages of the newspapers, not on the back pages. Come the end of the first year, we rang up Boeing and asked for a couple more of seven-four-sevons for Florida and for a couple more routes. And slowly, virtually, we grew. And as we were growing, British airways decided they didn't like this at all, even although we were sort of four or five planes. And they launched what famously became known as the Dirty Tricks campaign. We took them to court.

Starting point is 00:03:01 We won the biggest liable damages in history. We distributed it at Christmas time, and they became known as the British Airways Christmas bonus. And all the staff were smiling and happy. And British Airways backed off somewhat. And as we were growing, every one of our other competitors went bankrupt. TWA went bankrupt. Anyway, the whole lot, Air Florida, the lot disappeared. And the only reason I think British Airways survived was they had a monopoly of the slots at the main airport.

Starting point is 00:03:27 So it is possible for a much smaller company to be the David taking on the big glides. And as long as you've got quality and panash and fun and style, you can actually beat them, or at least you can beat most of them. And that's what Virgin Landing did. I really like this response, not so much because Branson actually responded to the question. And many ways, I think that Richard Branson almost doesn't acknowledge that you can be paralyzed. And I mean that the best possible way. I don't see him being paralyzed. He's very much just like, screw it and just do it. and he makes it work. I would like to provide some context to this. I'll have two short stories here about him that can really tell you about how resourceful he is. One of them is that he bought an island pretty early on, an island that he couldn't afford. Whenever he asked the owner why it was so expensive, he was told it was because the power supply was so expensive for him to buy and he simply couldn't supply it. Branson's way of thinking was simply, okay, I'll just build

Starting point is 00:04:30 a power plant done. He went out to the Caribbean and he built a power plant so he could get his island for a lot cheaper. I don't know the price was for the plan. But I'm telling that story just to tell you that he's just very, very resourceful in the way that he thinks about solving problems. He's thinking what is the end goal? And then he solves the puzzle in terms of getting out there. Like, I want to start a carrier. Okay. How do I go there? For me, somebody who's listening to this that doesn't have a lot of startup capital like Richard Branson has in both of those scenarios we were talking about, I think they can kind of roll their eyes at some of these comments. But where I think that you can learn a lot from Richard Branson is more on going back to Stig's Island comment. His idea from the beginning was, I want my own private island, but maybe because it's so expensive, maybe I can bring guests into the island and vacation there whenever I'm not there and looks for these win-win situations.

Starting point is 00:05:26 situations. Going back to the Boeing example that we were talking about, here's a guy he wants to get into this business but is scared for obvious reasons. I mean, he listed all the competitors. Well, he works a deal with Boeing. Even though he had resources to do the deal himself and to assume all that risk, the only reason I think that he stepped into the airline business is because he had that deal lined up with Boeing where he could return the aircraft if it didn't work out. That's where a guy actually even has the resources, but he's still acting like the power of broke, like the Damon John book we read, still operating in this mindset where how can I do things on the terms that I want to do them, but do it in a very cost-effective way that minimizes my downside.

Starting point is 00:06:11 And you heard a little bit of that in the conversation. The first Colin Preston, that was about the thing you said about the island. It almost sounds like the first Airbnb, right? Yeah. I mean, that's kind of what he did, right? Yeah, it was. He wasn't living there for how much of the year. So you could just rent it.

Starting point is 00:06:27 And I think we even looked into that a few years ago, Preston. Yes, we did. Yeah, we didn't rent it, though. But it was interesting to check it out. You also have a good point about whenever you say, you know, I'm not going to buy my own island or I'm not going to set up my own airline. Sure. So let's take another example from what happened whenever he was 15 years old and had no money.

Starting point is 00:06:49 And I think we can all resonate with that example. Back then, you didn't have cell phones. Well, it wasn't invented. And he had this school magazine and he needed to attract advertisers. He actually has so little money that he couldn't afford the change using that phone box at his school. So what he did was he called collect and said, oh, I don't have any change on me, but I have really important meaning with Mr. Sommthingson.

Starting point is 00:07:15 Could you please set me through? And that is what happened. So he did that multiple times. and one of the examples that he bring up himself is whenever he called both Coke and Pepsi, and he called Coke and said, Pepsi just bought ads in their magazines. Would you like to buy ads too? And he did the same thing with Pepsi. And 15 years old, he raised 4,500 pounds. And that was how he got started. Now, I'm not saying it's super ethical. I'm not saying that that is what you should do. It's just like, hey, I'm going to set up this magazine and then I'm going to figure out how to do it.

Starting point is 00:07:45 I don't have any money, so I'm going to figure out how to do it. I don't even have money for a simple, phone call, I'm going to figure away how to do it. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year, together activists, technologists, journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from

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Starting point is 00:12:10 Okay, well, I guess I can't do that. They're done where Richard Brantz is like, oh, that doesn't matter. I can figure out a way to get around that somehow. And then he just figures it out. The key point for me is when you think that it can't be done, the thing that's really limiting you is your thinking and not necessarily your resources or your creativity or whatever, you've got to somehow just keep pressing on to get there. So for the next question, he was asked, you say something really interesting.

Starting point is 00:12:40 your book, you say, if your life is one long success story, you're most likely a liar. I'm sure that you've had no shortage of failures in your own life, but the person starts listing all of the things that he's accomplished, like Virgin Cola, clothing, cosmetics. For the audience and the people that are listening to his response, they're often terrified by failure and aren't willing to take that first step because they're just so scared of fail. And so we're curious to hear your thoughts on that idea and this is his response. I could have added it also makes for a much better book if you've got a little bit of ups and downs because there's nothing worse than reading somebody's autobiography where all they include is all these lovely successes that go from one step to another. As I said

Starting point is 00:13:25 earlier, I'd love to say yes. I love to try things. You know, sometimes fall flat in my face, sometimes succeed. I think because we generally start things from scratch, we haven't had any sort of massive dramatic failures that have really damaged the foundations of Virgin. Generally speaking, if we start a bank, we'll financial service company, we'll just literally start in a very small way and then build it up from there. If we start an airline, we start with one plane and we build it up from there. Because we've created companies that are much better than our rivals, generally the public identify with them and generally more often than not it's successful, where we've come unstuck is where we've taken on a big Goliath, Coca-Cola.

Starting point is 00:14:06 and your product just can't be fundamentally better. I mean, it can be, you know, some people may say it tastes better. But for a year when we took on Coca-Cola, I thought, we're going to be the biggest brand in the world. We're out-selling Coke. We're out-selling Pepsi in every store in Britain. I got a Sherman tank, and I drove into Times Square in New York and turned the turret on the Coca-Cola sign,

Starting point is 00:14:30 which we'd had Paratech wired up the night before. It looked like we blew up the sign. Anyway, Coca-Cola weren't amused, understandably. And what happened, and I only found this out because about two years after, a new bank manager at Lloyd's Bank in England invited me out for dinner, and she happened to be the woman who was behind this back at Coke two years earlier. She went in to see the chairman of Coke or the president of Coke and said, you know, this little virgin brand, we got to take them seriously.

Starting point is 00:15:01 They're outselling us in Britain. And like a bushfire, it could catch up. on. It could take us around the world. So he initially didn't take us seriously. Then a month later, he looked at the new set of figures. He then called her in and said, right, and there's a DC-10 on the runway at Atlanta airport. It's full of cash. It's full of squat teams. You're going to lead the charge. You're going to England, and I want you to snuff them out. Virgin Cola just disappeared from the shells of Tesco's everywhere. It just suddenly disappeared. And we had no idea why people were taking it off. We would ring retailers and protest and they wouldn't let us know. And it

Starting point is 00:15:36 It wasn't until two years later that we found out what had happened. Anyway, we were kneecapped. And the problem was that with British Airways, when we had similar thing, our product was better. So we survived. But with a can of cola, we lost that battle. The reason Stig and I played this is because we found that to be an interesting comment that he made about this competitive nature. And I think it just shows you how insanely competitive business can get, especially at even like macro levels with Coca-Cola, going over. to the UK with a wad of money to convince retailers not to carry a product. That's just crazy, incredible story. And we thought it was a story that was worth sharing and interesting. So Stig, I'm kind of curious to hear your thoughts. That is one fearless gentleman taking on Coca-Cola itself.

Starting point is 00:16:22 And also like he's completely upfront about him failing fall flat on his face on that one. What I really took away from this and what I would like to communicate to the audience, especially if you have followed Richard Branson before and you might be intimidated. in some way, you're feeling like how can he do all that? How has he no fear of failure? It seems that is what he has. I would love to talk about personality types and also if you can do something about it and how to look at this. So I'm personally a huge fan of learning more about who you are and your strength, but also your shortcomings. Specifically about one test, we'll link to it in the show, it's completely free and everyone can take it. You can be so-called assertive or you can be

Starting point is 00:17:06 turbulent. And if you are assertive, it means that you are typically self-assured, even tempered, and resistant to stress. So that would be someone like Richard Branson, meaning you don't spend too much time thinking about past actions or choices and not what other people think of you. I wanted to address that because a lot of that is formed in your early years and it's not always something you can change whenever you grow up. It's not something you can just be like, oh, Richard Branson doesn't care like he just starts an L and I want to do the same. I don't want to discourage anyone when I talk about this and whenever I say that a lot of this is fixed. This is purely empirical. It's sort of like this. If you're short, you can probably still be a good

Starting point is 00:17:49 basketball player, but you just do not have the same advantages as someone who is six, six has. It's important whenever you're talking about that way of life, that way of taking chances, to learn more about yourself in terms of how do you react to failures, how do you react to the experiences lives throughout you. The reason why I also wanted to play this question was really to address that and to encourage people to do something that is fit for them and where they have their own strengths. This is not only something that I'm saying. I think as most people know, both Preston and I, who are heavily influenced by Redalio in

Starting point is 00:18:25 his book principles. And this is one of the key takeaways I took from that book is he's a test. testing himself and he's testing everyone on the team. I think they even have like baseball cats. It breeds water in terms of pinpointing what is people good at and what they're not good at and what should that person do. I want to throw that out there. The website is called 16 personalities.com, which has been immensely helpful both for me and for everyone on TIP. And it's heavily influenced by Redalue. And I just wanted to bring that up here. Now we're talking about Richard Branson in his own way, extreme personality and why that's such a strength in terms of

Starting point is 00:18:58 of what he's doing. Hey, something else that I wanted to address in there. He was talking about how they always start a business from the ground up. It reminded me of a pretty famous book that we read a while back, and maybe we can have the link to it in the show notes. And it's called The Innovators Dilemma. It's a book written by Clayton Christensen. I think he's out of Harvard, right? Harvard Professor. The main premise of the book is that when a company wants to start a new product or service that is really kind of outside of their lane. Oftentimes, the best way to go about it is to literally separate it from the business itself, give the manager who's ever identified to

Starting point is 00:19:37 start this business full reins to start it from the ground up and almost as if they're completely detached from the main company that's starting at itself. And I kind of get the sense, especially after this way that Richard Branson answered this question, that that's how he operates, is exactly what this book was recommending. Now, I definitely didn't do any service to the complexity of everything that Clayton Christensen lays out in this book, but that's a general premise. And it seems like Richard Branson has been naturally doing this since the very beginning. So just something else I noticed in that comment. So for the next question, he was asked, you have more than 200 different businesses. How does this work? Are people coming to you with the ideas? Or are you saying,

Starting point is 00:20:21 hey guys, let's get in the business X, Y, and Z. This is how Richard responded to this. I've literally come from frustration. And I think that's the best way for any business to start. Keep your eyes open. You have a notebook in your back pocket. You get frustrated. I mean, you know, the reason we've gone to the hotel business, I've had a few, too many drinks. I get to the hotel room. I can't turn the bloody Muzak off. I can't turn the lights off. There's a list of about 300 things that you go through. And big hotels never get these things right. You're not quite sure how to turn the television on. The Wi-Fi, you just go through hell trying to get the bloody wife on.

Starting point is 00:20:55 And so it goes on. So, out of frustration, we'll create the kind of hotel that I want to go to. They're sort of perhaps better known, and I respect. Quite a few people know this story about going to tell it anyway. It's fun. I'd been away from home. I was 28 years old, and I was trying to get back to the Virgin Islands. I hadn't seen my lovely lady for three weeks,

Starting point is 00:21:15 and American Airlines tell me that they're going to bump us all because they don't have enough passengers. And the 50 passengers that were there were obviously all the straw that wanted to get to see their loved ones that night. I went to the back of the airport. I hired a plane, borrowed a blackboard and wrote Virgin Airlines, as a joke, $39 one way to the BBI,

Starting point is 00:21:34 and I filled up my first plane. And as we got into the BBI, the person on my left just tapped me on the shoulder and said, chopping up the service a bit and you can be in the airline business. So it got me thinking. Airlines do bump you. They were awful, absolutely dreadful in those days. And so the next day,

Starting point is 00:21:49 I rang up Boeing and I said, this is Richard Branson. I have a record company. I've got Peridic Stones. I got the sex pistols. I've got Bill Collins, Janet Jackson. Anyway, I'd like to buy a secondhand 747, please. And there was a long pause. And there was this lovely old man called R.J. Wilson on the other end of the phone.

Starting point is 00:22:11 And he said, normally Richard, I'd find an excuse to put the phone down on you. But you sound very enthusiastic. I will send somebody to come and see you, but he said, I just want to make one recommendation. If you really seriously are going to go to the airline business, for God's sake, do not use the name Virgin. He said, people will assume your airline's not going to go the whole way. And so you just change the business. Let's take a quick break and hear from today's sponsors. No, it's not your imagination.

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Starting point is 00:25:50 slash income. This is a paid advertisement. All right. Back to the show. Well, it's definitely a funny exchange. He's got me smiling for sure. His incentive for the 200 businesses that he has created is based on frustration, which I think is pretty neat because it shows you a key insight into where maybe you can

Starting point is 00:26:12 start a business. I know there's people out there that all have frustrations with the way that they deal with things. I think the key to Richard Branson's success is not only is he able to identify those frustrations, but then he is able to design products and services that are better than what's out there. And he won't take it to market unless it is better than what's out there. That's just vital. You just can't create something that's as good. I think back to our interview with Ian Siegel from ZipRecruiter. Ian said, if you can take one step out of the process, you've got a winner. But if you're doing the same number of steps or you're adding steps to whatever the process is that people currently have to do,

Starting point is 00:26:52 that is a non-value added activity and people are not going to do it. But if you can make it simpler and you can make it better, that's a business. I liked his response area. I would like to address the concept here of having 200 different businesses and talking about competitive advantage because what Richard Branson is talking about here is that because he had a record company, that doesn't mean that he should be in the music business. That is not necessarily his forte. His forte is probably something else. And I think what he did was to ask himself, what is it that I can do that no other people can do or at least one of my best at. He wasn't an expert in the music. He wasn't

Starting point is 00:27:34 expert in airlines. He really just worked in that frustration. If you really think about what is rich a brand are really good at is to teaming up with the right people. I think that's pretty evident after have followed him for a few years. People that he can inspire and who like him have no shame in life, and I'm saying that the best possible way again, or courageous enough to disrupt the industry. I think if you look at other billionaires, come up with a billionaire like Warren Buffett. And what is his competitive advantage? Is that necessarily, if you look at his early investments and very profitable investments in Geico and American Express? Is that because he's the best credit card guy or the best insurance guy? No, he's the best capital allocator. And the thing is so important

Starting point is 00:28:20 whenever you try to define your own skill set, not to think in terms of an industry, but think, What is my competitive advantage? And then there might be one industry, but most likely it's several industries because that is exactly this one thing you can use, whether it's capital, allocation, achieving out the right people or whatever it is that you can use in your own niche. We enjoyed talking about some of the Richard Branson's stories quite fun. At this point in the show, we're going to go ahead and take a question from the audience. This question comes from Mo, and here's his question. Hey, Stigin, Preston. My name's Mo from Dubai.

Starting point is 00:28:53 I've been listening to your show for the last six months. I've learned a lot from you guys, so keep it up. My question today is about active versus passive investing. For learning purposes, I've set up a small portfolio, definitely not big enough to be diversified. But from what I've read, passive investing has outperformed active investing over the long run. I just wanted to get your thoughts on, say, if you were to build a portfolio, how would you differentiate between active and passive investing? Would you have both kind of investing strategies in your portfolio? Just a general comments and thoughts on that. Thank you guys, and I hope to make it on the show.

Starting point is 00:29:22 Mo, love the question. I can't tell you which one's better, but I can tell you which approach I personally use. I absolutely do both. A lot of the capital that I invest is in a passive way in an ETF, but that ETF is very targeted as to where I kind of see where I'm at in the market and in the specific credit cycle and whether it's international, whether it's in the U.S. And then at the same time as using those passive vehicles, ETFs whenever I invest, I'm also making individual stock picks. I guess mine is kind of a hybrid depending on where I'm at. But in general, I would say that I have a lot more money invested. A much larger portion of my portfolio is in passive than active. So that's me personally. I'm kind of curious how Stig does it.

Starting point is 00:30:13 I think I'm primarily active, but it really depends on what you mean by active and passive and how we define it. I mean, if we define it as passive investing being pure dollar cost averaging approach, putting in the same amount every single month and then into the all stock market, then I guess I'm not. I know that was probably also what you're getting at here before Preston, whenever you said. ATF, that depends on whether or not we define an ETF as being passive. You can have a lot of different ETFs that are not passive, and then you can of course also have ETFs that capture the world market or the S&P 500, or however you want to put that. For instance, there are some ETFs out there who are targeting value companies in the S&P 500,

Starting point is 00:30:58 so based on different metrics like price to book and price to earnings. If you are taking an active approach into that you can beat the market one way or the other, then I would say that you're doing active investing one way or the other. But again, it depends on how you define it. I don't frequently trade. I might have added three stocks this year to my portfolio. For me, that's almost over-trading. And then some people might say, you know, they could do that in an hour or in five minutes. It's hard what is right for you. You mentioned that on average, passive is doing better. And I would say it's a natural conclusion if the way that we measure this is by saying, if you just have the stock market, would you then perform better than investors who also have the stock

Starting point is 00:31:46 market, but you just pay fees because they trade back and forth? Then yes, the passive investment strategy is probably best. I think it really depends on your own mindset, especially after reading books like Margaretowitz's books by Jack Swagger. I have a newfound respect to traders. I think that pulling up some of those statistics, I know that was not the intention why you're doing it, but just for the sake of argument, having these statistics that says that past investing would do better, you say, of course, that is the underlying principle of investing. But that doesn't mean that you shouldn't be an active investor. That doesn't mean that you can't have really successful traders or you can't really have a good track record like Warren Buffett.

Starting point is 00:32:24 I think that what you're getting at goes back to one of your original comments that you were making on the show, which is about personality type. A huge takeaway that I had from reading a lot of the market wizard, Jack Schwagger stuff, was this idea that. You can trade and you can invest in so many different ways. And so much of it is what are you kind of wired for? What is your personality wired for? What I really like about Jack Schwagger's books is he shows you just a multitude of different ways that people have really traded successfully with an incredible track record.

Starting point is 00:32:55 Here's a perfect example. Peter Brandt, just total price action chartist kind of person. His annual returns are in excess of 20 years and the guy's been in the the business for 30 years or something like that. Incredible track record. He is looking at nothing but price and volume whenever he's trading and he's looking at chart patterns. I just can't do it. In fact, I look at Peter's Twitter page all the time because it's just providing me another level of data because he tells people kind of the direction that he thinks things might go because I don't understand that approach. That's not my personality type, but I find it highly interesting.

Starting point is 00:33:34 And I find it as another data point as I'm kind of considering things. So what I would tell you first is going to Stig's point earlier in the show is what is your personality type? Are you somebody who has to be very active or are you comfortable like Stig making three picks in the last six months or whatever? It really comes down to who you are and what kind of fits with the way that you operate. And then find a person out there that implements whatever that approach is. read every single thing you can find on that person and every single book that they recommend and

Starting point is 00:34:07 go for it, see if it is a fit. I think it's a really good comment you had there, Preston. Going back to the thing about personality types and also reach a ransom and him being assertive, if you take one of those tests and you realize that you are assertive, I mean, an action strategy might be good for you. I'm personally very assertive and I'll also just throw Preston under the bus and say that he's two. That is what his test is saying. extremely assertive. And in many ways, that's a good thing if you're an active investor. Because basically it means that Preston and I, you know, we can listen to each other

Starting point is 00:34:40 and we can hear Warren Buffett or whoever on CNBC. We still have our own picks. Like we don't get swayed. Like if everyone tells us we're idiots and we're picking the wrong stocks, at the end of the day, that's not a big concern to me. And I'm pretty sure it's not a big concern to Preston either. If you've realized that you're turbulent and you know that other people's opinion means a lot, And whenever you at a dinner party and the guy next to you who you don't know, he's talking about

Starting point is 00:35:04 how he's made a gazillion dollars on buying biotech in whatever, and you change your opinion, become nervous, you don't want to do passive investing, you have trouble sleeping now, you feel you're missing out on a ton of different things. No, I mean, stick to a hardcore passive investing strategy, sleep well and forget about the concept of investing. I think it's very important to know your own strength and shortcomings when it comes to investing. So yeah, I guess that was my key takeaways. All right, Mo, well, we really enjoyed this question.

Starting point is 00:35:36 As a token of our appreciation for going on the website and asking the question, we're going to give you free access to one of our paid courses, our intrinsic value course where Stig and I teach people how to value individual active picks. If people want to check out the course, it's at tip intrinsic value.com. Mo, we just can't thank you enough. So if anyone's listening to this, you want to get your question played on our show, go to Ask theInvesters.com. If you go there, there's a little media player, you can quickly record a question.

Starting point is 00:36:04 And if it gets played on the show, you can get a free course, paid course from our site. We just really appreciate it when people do that. All right, guys, that was all that Preston and I had for this week's episode of The Investors Podcast. We see each other again next week. Thanks for listening to TIP. To access the show notes, courses, or forums, go to the Investorspodcast.com. To get your questions played on the show, Go to Asktheinvestors.com and win a free subscription to any of our courses on TIP Academy.

Starting point is 00:36:35 This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP network. Written permission must be granted before syndication or rebroadcasting. Music

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