Essence of Entrepreneurship

What about how you think about entrepreneurship and what you’ve learned about bringing, arguably, two different businesses or products to market, both in Virgin and at Naked? What does that word, entrepreneurship, mean to you?

I think the core of it is resilience. The thing which distinguishes a lot of entrepreneurs from people who are cleverer and harder working and had better ideas, but didn’t succeed, is that they never bloody give up. Whenever everyone else thinks it’s hopeless, they’re still plugging away at it. Every time I hear about some start-up that’s pivoting, I groan slightly, because I see so many people who start with a really brilliant idea and when they confront the inevitable problems, they say, we’re going to pivot and we’re going to give up on our original idea. We’re going to try some other idea. The only difference between the ideas is that they can’t see the problems with the second idea yet. But they will.

I’ve done five start-ups. Four out of the five have succeeded. But the common theme, in all of them, was after the initial rush of doing the start-up, came a really, hard, difficult period where things were tough, suppliers were doubting you, the bank was calling up saying that they want to call in the overdraft, star employees were starting to dust off their resumés, thinking it was going to fail and it looked like all was lost. I think resilience is the thing that gets people through that.

What was the moment, in your background, where you faced the most adversity or the biggest challenge, where you had to be resilient?

I set up Virgin Money, with the team. Then a bank, called the Virgin One account. Then we did Virgin Wines and the thought was, what could possibly go wrong? It’s the internet, it’s Virgin, it’s wine, all those sexy ideas, all combined into one. We raised £20 million in 1999, when £20 million was still a lot of money. We blew it all, copying all the other dotcom start-ups, with fancy advertising campaigns and glamorous head offices and gigantic IT teams and all the rest of it. It completely flopped.

At first, I didn’t have the humility to go, I’ve got this wrong. I kept thinking, no, no; I’m a successful entrepreneur, so the problem isn’t me or my idea. The problem is something else. I had to take a big dose of humble pie to go, actually, maybe I do have this wrong. We, literally, ran out of money. One of my colleagues, a guy called Luke Jecks, who landed up setting up our Australian business, for Naked. Luke was the one who eventually said, look, if we look through the customers, most of the customers come and go pretty quickly, but there is this small group of customers who are really resilient and stick around and are very valuable. What makes those customers different, is they’re not buying big brands; they’re buying wines from small wineries. They are subscription type customers and if we just had those people, we’d have a great business. Let’s just reconfigure our whole business, round acquiring those people, instead of configuring it around selling wine.

That’s what we did and we rescued it. But to do that, we had to get rid of 80% of the people, go from a fancy head office in London, to a much more humble headquarters in Norwich. We had to boot strap it. That was very tough, losing a lot of good people and good friends amongst them. But it was also a very valuable learning experience. In the end, that business became what is Virgin Wines today, and a lot of the thinking that went into Naked was formed through that experience, as well. But that was a very tough time. It would have been a very easy time to give up, but I did believe in the core of it, so that’s what kept us going.

When you look at entrepreneurs, or yourself, and the character, what makes someone resilient, in an idea, but also in character?