Happy New Year! We at BransonBlog.com want to wish all of you a wonderful 2005… May it be your best year ever. The tragic events in Asia this past week have given us all even more reason to pause and count our blessings. To no one’s surprise, Richard is donating £50,000 and flying in needed supplies, as well as soliciting charity donations from Virgin airline passengers as they’ve always done. In a time when so many other companies, including many with factories in the area, have been silent about committing aid, it’s incredibly inspiring to see Virgin rise to the occasion to help. And when you run a few international airlines, you’re uniquely positioned to bring supplies and relief into the area better than most other organizations. Very well done, Richard… thank you.

On a cheerier note, what better way to ring in the New Year than by Wired dedicating its first cover of 2005 to our favorite billionaire? Their new story about Virgin Galactic is more detailed than the usual fare and well worth the time. (There’s even an interesting page at the end listing various Virgin companies with annual revenue figures.) There’s far too much here to quote, so you really should just go read the whole article. But for the busy Branson fan on the go, here are some highlights…  

Despite such a dazzling career, the business world has always been ambivalent toward Britain’s best-known entrepreneur. He launches trendy companies the way Trump builds casinos. But a farsighted innovator like Steve Jobs or Jeff Bezos or even Southwest Airlines’ Herb Kelleher he is not. Branson traffics in opportunism. He spots a stodgy, old-line industry, rolls out the Virgin logo, sprinkles some camera-catching glitter, and poof - another moneymaker. While that formula has kept him in champagne and headlines, no Virgin business has ever changed the world.

Until now. Mojave Airport isn’t just where aging jets wait to die; it’s where the dusty dream of commercial space travel is finally coming alive. Last summer, a tiny winged wonder called SpaceShipOne spiked 62 miles into the desert sky on its way to nailing the $10 million X Prize for the first sustainable civilian suborbital flight. The world’s stuffed-shirt airline chiefs took one look and went back to worrying about fuel prices. Branson took one look at the gleaming white carbon-fiber spaceship and said, Beam me up.

The upshot is Virgin Galactic, the world’s first off-the-planet private airline. Under a deal still being negotiated with SpaceShipOne’s owners - Microsoft cofounder Paul Allen and legendary Mojave airplane designer Burt Rutan - Virgin will pay up to $21.5 million for an exclusive license to SpaceShipOne’s core design and technologies. Another $50 million will go to Rutan’s company Scaled Composites to build five tricked-out passenger spaceships. An equal amount will be invested in operations, including a posh Virgin Earth Base somewhere in the California desert. Total outlay: $121.5 million. Business plan: 50 passengers a month, paying $200,000 each. Core product: a two-hour flight to an apex beyond Earth’s atmosphere, wrapped in a three-day astronaut experience. Lift off: T-minus three years.

Good summary there, and the account of the Mojave team and the people involved is really insightful. Note also that it now says it’s an exclusive license, unlike earlier reports suggested. Perhaps the best coverage, though, is the accurate explanation of Branson’s brilliant marketing play, which we Branson fans saw at work from day one. But beyond our obvious guesses, the article provides much greater detail from Virgin’s director of brand development (and Branson’s right-hand man), Will Whitehorn.

Among Whitehorn’s other contributions is a neat bit of business jargon, "branded venture capital." The phrase describes what Virgin does: fund and launch companies that can benefit from the group’s accumulated experience and shrewd application of the Virgin logo. From an 80-person West London headquarters only a short stroll from Branson’s town house, Virgin Management controls nearly 200 companies organized in a dozen major groups, with a total of 50,000 employees. Branson and a small group of other shareholders fund new businesses from a $600 million war chest fed by profits, sales of mature assets, and IPOs. Three Virgin companies are on stock exchanges in the UK, Belgium, and Australia, a number Whitehorn says could triple over the next several years, starting with Virgin Mobile’s US offshoot in fall 2005. "We’re like a little investment bank with a marketing department," he explains.

Virgin Galactic has the potential to be more than just the latest addition to the portfolio. "We’ve been looking for a flagship company for the 21st century," Whitehorn says, "especially for the US." The trans-Atlantic reference is no minor detail. Virgin Mobile found a sweet spot selling pay-as-you-go cell phones to young Americans who don’t want long-term contracts. Still, overall, the US accounts for only 10 percent of Virgin Group’s global revenue. So next in line is a low-cost, high-frills airline, Virgin America (Whitehorn calls it "JetBlue with business class"). Even much-maligned Virgin Cola will be getting a new US push.

"Galactic will put the Virgin brand on the American map in a way money can’t buy," Whitehorn says. "It will cost us $100 million to take people to space. Vodafone is spending $100 million putting decals on Formula One racing cars. Every time someone mentions space travel, they’ll mention Virgin."

Wow… We all knew it was a marketing play (Virgin is, after all, a lifestyle marketing company, not an innovative R&D firm), and we all knew he was getting a lot of great marketing for the relatively small sum invested. But suddenly to see just how little that amount really is (the entire investment is only half the cost of a single Airbus, and Virgin bought 26 of those last year), and to see in stark contrast how other companies are wasting similar sums, makes this the single best marketing case study that MBA students will be studying in decades to come.

And what about previously-discussed FAA regulation issues? "We’re not too worried," Whitehorn says. "Who’s going to want to come out and say, ’Branson can’t be allowed to take people into space’?" Exactly it. The brilliant worldwide marketing launch and commitments from lots of wealthy individuals already creates perhaps the most powerful "grassroots" constituency ever assembled. Attempts at legislating this new arena will have to contend with some very well connected billionaires, even beyond Branson and Paul Allen and the others involved. And finally, I hate to give away the ending (like I said, go read the whole article!), but this closing paragraph was just too good to pass up…

The simple fact is that going into space gives Branson a chance to do what a lot of massively successful guys wish they could do: grab the wheel of history and tug. Opening the final frontier to private citizens will ensure Branson’s place in the human saga. And if that means fleets of Virgin spaceships soaring through the inky void, serving sip-packs of Virgin Cola on the way to the latest Virgin Clubhouse, so be it. "Space is virgin territory," Branson says, trying out a prospective marketing line and shooting another grin. "Is that 21st-century enough for you?"

Marketing professors, start rewriting those textbooks now…