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CHAPTER TWO
What You See Is What You Get

I was one of the first people in the country to use a mobile phone in the 1980s. It weighed more than Holly did at the time and was almost as big. To call it a brick would be disrespectful to bricks. However, by the time their size got more manageable, mobiles spread rapidly and transformed the way we did business. I no longer had to be at certain places at specific times so often, and was free to spend more time with my kids in the great outdoors, or just disappear for a while. I hated being stuck at a desk, and could see how mobiles would be transformative for workforces, providing freedom as well as convenience.

The spark for Virgin Mobile came back in 1999. I was sitting in the kitchen of my Holland Park house, working my way through some correspondence, when Will Whitehorn, my head of communications, came in, waving a piece of paper.

"Guess what, Richard. We've won a prize."

"Oh great. Which one?" I asked.

"Actually...I've won a prize." Will put the document—a phone bill—down on the table in front of me. "You have made me call you and every journalist in the country so often that BT has awarded me a trophy for the highest phone bill in Britain."

Will's bill got me thinking. No, not that I should bother him less often. But why were we giving BT all the money from so many calls? Why not start our own phone company?

In 1998, global mobile phone sales more than doubled to 162.9 million—we needed to get into the market. But I, along with everybody else, was paying through the nose for the pleasure of using my phone. Lengthy contracts that had huge service charges became the norm. Mobiles had become so useful so quickly that most people just accepted they would be ripped off.

I saw this as a prime opportunity to shake up the market. The Virgin Group was relatively stable and we had cash from Virgin Atlantic's new partnership to invest—mobile was the obvious space to do it in. My one concern was the idea of footing all the costs of a huge infrastructure investment. This, though, was where the really unusual part came in: we wouldn't have to build a whole new network, we would piggyback off one of the existing ones. In 1997, we started a twenty-year partnership with Fast Track, a network ranking the UK's top performing private companies in the 'Sunday Times'. I couldn't help but notice many of the successful start-ups, such as Carphone Warehouse, were in the telecoms sector. I asked Stephen Murphy and investment guru Gordon McCallum why we weren't already investing. They were ahead of the game, quickly showing me a Goldman Sachs report about the possibility of MVNOs—mobile virtual network operators. It was filled with jargon that made my head hurt, but, once most of the dozens of acronyms had sunk in, the direction we should take seemed clear: if we could persuade one network to agree, we would rent time and bandwidth on their system, and bring our marketing and customer service expertise to the table.

Once I got the word out that Virgin was interested, we were approached by many networks for partnerships, as well as entrepreneurs with ideas for the mobile space, from handset designers to pager developers. I came across two young men from BT Cellnet with considerable experience in the telecoms industry, Tom Alexander and Joe Steel. After negotiations to form a deal with Cellnet got nowhere, I suggested to Tom that we start a truly different mobile company together.

I invited Tom up to my then home in Kidlington, Oxfordshire, for lunch. In old-fashioned entrepreneur style, we hashed out a plan over the kitchen table. We would launch a pay-as-you-go service, where users would only pay for what they actually used. We would aim at the youth market, appealing to teenagers getting their first phones, as well as slightly older people who had grown up with Virgin and were fed up with being stung by their old providers. And we would use our Virgin Megastores to sell the phones. By this point we had 381 stores worldwide and new flagships in London (Piccadilly Circus), Miami, Glasgow, Strasbourg and Okayama, filled to the brim with the sort of savvy people we could aim our product at. Tom, along with Joe, agreed to leave Cellnet and joined James Kydd from Virgin Drinks as Virgin Mobile's first three employees.

There was just one small problem. These smart young men were, well, too smart. Being dressed neatly in suit and tie was not really the Virgin way.

"Do you really want to come to work dressed like that every morning?" I asked, yanking Tom's tie. "How do you breathe?"

On their first day working for Virgin Mobile, we had a somewhat unusual initiation ceremony: we took their suits and ties, and, making a small fire, set them alight. As we watched the material go up in flames to cheers all round, I knew we had made the right decision. Now we just had to light a similar fire underneath the mobile phone industry itself.

***


This excerpt ends on page 16 of the hardcover edition.
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