Read an excerpt from the book
I was in my early twenties when the owner of a west London nightclub
invited me and my friends round for a drink. We turned up there that
evening and the door staff unceremoniously threw us out: we'd had the
front to turn up in jeans.
Back home, I made a call: 'Is this somebody's idea of fun?'
The owner was apologetic. 'Please, Richard, it was a terrible
mistake. Come round, I really want to talk to you.'
He really did. It turned out that the club was a money pit, and the
owner was desperate to off-load it on to the first likely-looking target
that crossed his line of vision. In the early hours of the following
morning, I shook hands on a deal that made me owner and proprietor
of a roof garden on Kensington High Street. And as it turned out I
didn't lose my shirt over it (we let people in with jeans!) - and the club
is still mine.
I was last there on 29 September 2008, launching the first, hardback
edition of this book. The publishers wanted me to say a few words.
The headlines that day had given me perfect material for the launch
of a book of business advice. We had reached one of the great and
memorable milestones of the current global recession. The United
States House of Representatives was due that day to hand an eyewatering
$700 billion to US and foreign banks in an attempt to shore
up collapsing credit markets.
'And painful as this is,' I said, 'it's as well that this is going to
happen. It staggers me that banks worldwide have failed to protect
against the downside, and it angers me and just about everybody else
that, rich and poor alike, we're having to pick up after them. But we
have to. We need to make banking trustworthy again. We have a stark
choice: this package of bail-outs, or another Great Depression.'
My phrases had an unexpected effect. My audience buzzed. They
squirmed. They stared into their outstretched palms - and a deep,
expectant silence descended. Okay, I thought, this is weird - and I
ploughed on.
What I said then - and it's repeated again and again in this book -
is my first rule of business, and if you take nothing else from this
book, take this: you have to protect against the downside.
In business, as in life, risks are essential. Take no risks, and you will
not succeed; take moderation to extremes in your personal life, and
you won't even truly live. Before you can take a risk, however, you
have to understand that risk. You have to reduce that risk as far as
possible. And you have to know, in detail, what the world will look
like should everything go catastrophically wrong. I am not saying
'Don't take huge risks'. Over the years, I've taken risks that could have
severely damaged Virgin. What I'm saying is this: They were calculated
risks - risks I and the people around me were willing to take, once we
had taken everything into account. Whether or not observers liked
what they saw, the fact is we knew what we were doing. Can every
bank CEO say the same today? Can every chancellor?
When I finished speaking, a publisher friend, Richard Cable, came
up and offered me a glass of champagne. 'Best drink this,' he said.
'What's up?'
'The call came through as you were speaking.' He showed me the
message on his Blackberry. 'I thought you'd noticed.'
Now I understood: my audience was full of business people, and
they had all had their phones set to vibrate, hoping to catch the news
when it came through. And here it was. I read it.
Then I read it again.
Richard raised his glass. He did not smile.
'They threw it out?'
'By twenty-three votes,' said Richard, gently lifting his phone from
my fingers.
The House of Representatives had just rejected the bail-out package
- and the next day the US Dow Jones index saw its biggest one-day
points fall, dropping nearly 7 per cent.
The publishers have asked me to bring this book up to date, in the
light of recent events. 'About ten pages should do it,' they said.
Ten pages?!
Six months have passed since the hardback came out, and you don't
need me to tell you that six months is a long time when the world is
teetering on the brink of financial ruin. Things look different today.
In most respects, they look worse. The House did finally authorise
President Bush's $700 billion rescue package, and a few months later
it approved Barack Obama's $900 billion 'stimulus package', too.
Has the US stemmed the collapse of its financial system? The brutal
truth is that nobody knows. This has made the idea of offering
'business advice' a strange, perhaps even a rather treacherous task.
Still, I stand by the advice in this book - every word of it. Here, you
will learn about business from my personal perspective. Except,
perhaps, for the debt I owe my family for teaching me the value of
money, I have learned how to do business entirely by doing business.
I haven't peddled any theories, because I don't follow any. Instead, I
keep my eyes open. These notes will give you an idea where I think
we stand today. The chapters that follow will show you how I'm
going to handle tomorrow.
- Business Stripped Bare
