Headlines > News > Richard Branson conquered the world. Now he wants to fly you to space.

Richard Branson conquered the world. Now he wants to fly you to space.

Published by Sigurd De Keyser on Tue Jan 11, 2005 11:19 pm
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chabot image wired.com released a must to read 5 page article. Please take your time and enjoy.

By Spencer Reiss:

One lightly frozen billionaire has just climbed down from the port wing of a Virgin Atlantic 747 parked at the edge of a runway at Mojave Airport. It’s a blustery gray morning in California’s southern desert, and Virgin in chief Richard Branson has spent more than an hour standing in the wind, waiting to tape the opening sequence of his new reality show, Rebel Billionaire. The jet’s not going anywhere, either: It’s a mothballed reserve plane, prettied up just for the shoot. “We’ve been thinking about sinking her in the Caribbean for divers,” says Branson, deep-sixing hot cocoa from a styrofoam cup.

Suddenly the sun pops out. Branson clambers back up onto the wing and runs through his paces again for the boom-rigged camera: crossed-arm stance, million-mile gaze across the desert, then a quick turn as the lens swoops in for a close-up, with a tease of that famous toothy grin and a glint of sky-blue eyes. Take that, Donald Trump! The rest of the cast hustles out onto the wing, the camera whirs again, and it’s a wrap. To celebrate, Sir Richard Charles Nicholas Branson, 54-year-old lord of a $9 billion-a-year global empire, joins his happy TV troupe in mooning the crew. Everyone cracks up.

Branson has been mugging and grinning, diving and rappelling, ballooning and mooning his way to extreme mogulhood for nearly 40 years. (He started his first business, a magazine, while still in boarding school.) In that time, his Virgin Group has expanded from a funky record business into a sprawling keiretsu encompassing air travel, cell phones, train travel, soft drinks, African safaris, digital downloads, and Caribbean hideaways. Branson’s own Virgin Island – no kidding – is available starting at $25,000 a day. All of which adds up to a personal fortune pegged by Forbes at $2.2 billion.

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.

Of course, Virgin Galactic is a tiny bit riskier than the typical Branson venture. For starters, the first passenger-carrying Virgin spaceship – already dubbed VSS Enterprise – is still just a glow on Rutan’s computer screen. No one knows how big the market for seats into space might be. And what happens to the business model when a ship full of amateur astronauts fails to make it back to Mojave in one piece?

But look at the upside. The total price tag is half the cost of a single Airbus A340-600 – and Virgin Atlantic ordered 26 of those last summer. In return, Branson gets bragging rights to one of the cooler breakthroughs of the early 21st century, with rocket-powered marketing opportunities that could fuel excitement – and sales – in his entire 200-company holding group.

For the happy-go-lucky tycoon, though, there’s something else at stake: Virgin Galactic is his chance to climb off that 747’s wing and into the history books with the first airline – make that the first brand – on the final frontier. “Affordable private space travel opens a new era in human history,” he tells reporters at a mini press event for the reality show in LA. “We’ll go into orbit; we’ll go to the moon. This is a business that has no limits.”

Virgin Galactic isn’t just about seizing first-mover advantage in space – it’s about opening space to a wave of other entrepreneurs who will follow if Branson succeeds. Commercial spaceships will lead the way for private investment in what has been a government-funded vacuum, bringing a new physics of market forces to outer space. If Branson and his Virginauts can attract even a quarter of the customers they believe are out there, they’ll rally today’s alt.space backwater of wild dreamers, cranky engineers, and rich geeks to launch an era of glittery, out-of-this-world-class new businesses. “If we can make space fun,” Branson says, “the rest will follow.”

So today Branson is a billionaire with a mission. Forget low-cost satellite launches and zero-gravity platforms for growing crystals. Here comes caviar, designer space suits, and charter membership in the 62-Mile-High Club. The right stuff for everyman – or, at least, anybody with four and a half times the median annual US salary to burn on a three-day weekend.

Hangar 78, part of Scaled Composites’ jumble of buildings at the edge of Mojave Airport, is as clean and well lit as a hospital nursery. Some of Rutan’s babies crowd the broad floor; others hang upside down from the ceiling. The muttonchopped proprietor is away on what is described variously as a confidential business trip and a post X Prize extended golf vacation. But Branson is dropping by anyway. He’s due back in LA in 90 minutes – Entertainment Tonight wants the rebel billionaire – but the cameras will have to wait. He’s not leaving Mojave without a quick peek at his newest love.

White Knight, the mother ship that carried SpaceShipOne its first 47,000 feet into the sky, reclines just inside the open hangar door. The smaller space vehicle rests next to it, a shiny white winged cocoon. It’s the size of a minivan, but it looks like one of the toys that come with a Happy Meal.

The adventure capitalist lopes in, not quite like he owns the place but definitely like a VIP customer. He inspects the newly stenciled 16p-x2 on SpaceShipOne’s fuselage (Rutan decoder ring: 16th flight, powered; second X Prize launch). Then he steps around back to admire the Virgin Galactic logo neatly painted on the tail. “To think that this little ship can head off into space,” he muses. “Tell me something more awesome.”

Most of the Mojave crowd got the space bug as kids launching backyard model rockets or, like Rutan, watching Wernher von Braun explain Mars missions on The Walt Disney Show. Not Branson. He became interested in extraplanetary travel watching Jane Fonda in Barbarella as a teenager. “I saw it again when I was 21. I’d just been circumcised for health reasons, and I popped my stitches.”

At 21, Branson was just about to launch the business that would start him on his way to the Forbes list: Virgin Music, a hit factory noted for Mike Oldfield’s stoned classic “Tubular Bells,” the Sex Pistols, and Culture Club. By the 1980s, the Virgin Group – so named, Branson says, because “we started with no experience at business whatsoever” – had moved into films, books, food, pubs, and apparel. Then, over the transom from an American dealmaker, came an offer that dramatically raised the stakes: Would Virgin want to front an upstart transatlantic airline?

What became Virgin Atlantic soared, but so did the Virgin Group’s debts. A cash crisis in 1992 forced Branson to unload the family silver, Virgin Music. The $1 billion proceeds allowed him to regroup – and then to fund new ventures. The ones that stuck were airlines in Europe and Australia, newly privatized British rail lines, and mobile phones – plus a kaleidoscope of companies that contribute more to brand equity than to the bottom line.

The move from entertainment to travel inspired Branson to take up the feats of derring-do that have become his personal trademark, Virgin-branded adventures that typically involve high speed or altitude. He followed up the airline’s debut with a record-breaking Atlantic crossing aboard a Virgin mega motorboat. He made the first transatlantic hot-air balloon trip in Virgin Atlantic Flyer, then a 6,761-mile jaunt from Japan to a nasty crash in the Canadian Yukon. Branson’s last challenge was a 1999 attempt to balloon around the globe nonstop. Heading east, he made it from Morocco to Hawaii. When a rival Swiss team succeeded soon after, Branson was at a loss for new records worth pursuing.

Since then, the nearest thing he’s had to a grand adventure revolves around Virgin Atlantic Global Flyer, a giant white gull of a plane being readied in one of Rutan’s hangars for the first solo nonstop flight around the world, scheduled for January. Slight problem: Branson isn’t a pilot. Instead, his buddy Steve Fossett will go for the record, with Branson listed as his backup. “Steve’s an extreme human,” Branson says. “I’m quite sure he won’t be sick.”

But Global Flyer turned out to be the start of something a lot bigger. In 2003, a Virgin pilot visiting Mojave to check on the new plane’s progress spotted Rutan’s SpaceShipOne, then still under wraps. Bells went off when word reached headquarters in London; almost a decade before, Virgin had quietly registered with the British government to use the company name for a space tourism business. Branson asked Rutan who owned the ship, but Rutan kept mum; Paul Allen had sworn him to secrecy. When the project went public last spring – and with an X Prize attempt looming – Rutan swung into gear.

“Burt was worried stiff,” Branson says. “He thought Paul might drop the project after they won. Paul doesn’t run airlines; he’s a technologist. Burt urged me to pick up the baton.” Rutan remembers things differently. He says he “wasn’t looking” for a new backer but adds: “I know of no one who is better qualified and better motivated to do this than Sir Richard.”

Billionaire jostling ensued over where the two principals would meet: Branson’s private island? Allen’s 413-foot yacht? They finally sat down in London last May. Soon Rutan joined the talks, which culminated in the announcement of a preliminary agreement just two days before SpaceShipOne’s first X Prize flight in September. Branson opened his London news conference with a huge grin: “Well, we’re going to space.”

Branson likes to boast that Virgin is “the best place in the world to work and have fun doing it.” Exhibit A: Alex Tai, Virgin Atlantic Airbus captain, Virgin Galactic chief pilot designate, and the space venture’s acting program director. A 36-year-old former RAF flier, Tai did a stint shuttling wealthy Middle Easterners before he joined Virgin as a pilot in 1995. On one flight, Branson popped his head into the cockpit, looking for advice on possible balloon launching sites in North Africa. Tai suggested an airstrip he knew in Morocco. Branson liked the idea, and Tai’s reward was to fly the chase plane, a sideline that became one of his regular duties for Branson’s ballooning exploits.

Today Tai is piloting a rented yellow Mustang convertible from Mojave to LA after a round of meetings with Rutan’s design team. He does the run from the desert to Los Angeles International Airport on autopilot; he has spent the past six months bouncing among Rutan’s shop, LAX, Allen’s offices in Seattle, and Virgin’s London headquarters. Tai is not quite Virgin Galactic’s CEO – send résumés to Virgin Management Ltd., London – but he’s flying point on the only really critical mission right now, working with Scaled Composites to transform its X Prize-winning prototype into a luxury spaceship capable of carrying a stream of high-net-worth individuals safely into space and back.

Some of the issues Tai is working out are basic, starting with how many paying astronauts Virgin’s ships will carry. Rutan’s team puts the range between five and eight. The trick is to balance revenue per flight against passenger experience: Will people pay a fortune to view the stars in a packed minibus? But there’s no question about one thing: Everyone gets a window seat.

There’s also the weighty question of what the passengers will wear. “People who are going to be astronauts want space suits,” Branson says. But Rutan, the less-is-more engineer, is holding out for SpaceShipOne’s “shirtsleeve” environment. Thick suits, he says, would take the fun out of going weightless. “The flight is too brief to be encumbered by those awful things. Better to put the entire cabin in one big space suit, with double windows, walls, and door seals.”

Tai has the calm-voiced captain’s job of charting a course between these two forces of nature. “We’re looking at all the possible configurations,” he says diplomatically. “We have to keep our eye on the ball: passenger experience.”

One experience no one needs is fiery death. “Everyone involved knows that one incident can put the whole business in deep trouble,” Tai says. “Burt has designed and built nearly 300 planes during his career, and he has never lost one due to aircraft failure. SpaceShipOne was conceived as a passenger ship from day one. Safety isn’t an add-on.”

Take the X Prize winner’s hybrid engine. Traditional rocket motors use volatile liquid or solid propellants that can explode at the slightest spark. Rutan’s design combines both approaches, resulting in an engine that’s more stable and easier to control. The liquid component is compressed nitrous oxide – laughing gas. The solid is basically tire rubber, guaranteed not to blow up no matter how hard you whack it. “Burt has golf balls made out of the stuff,” Tai says. “This is the safest rocket engine in the world.”

SpaceShipOne’s “shuttlecock” design adds an extra measure of safety. When the craft reaches its airless apogee, it hinges (feathers, in pilotspeak) into a broad V shape that automatically brakes the descent. “It lets you take an averagely competent pilot – like me – and throw anything you can think of at him, and still have everyone aboard get away safely,” Tai explains. “The space shuttle does that with all sorts of fantastically complex systems. Burt’s brilliance is that his ship uses smart design and the laws of physics. Which are, in fact, the only ways you can be truly drop-dead safe.”

Tai pulls the Mustang off Wilshire Boulevard for a 40-minute flyby with Buzz Aldrin, the guy who was there to snap the photo when Neil Armstrong took his first steps on the moon. Aldrin is part of a kitchen cabinet Branson is assembling to tap the broader aerospace community. The Apollo veteran works in a gleaming seventh-floor home office packed with enough lunar memorabilia to fill a small museum, including a Buzz Aldrin GI Joe. Like a lot of the first-generation space crowd, he’s slightly amazed at the excitement over suborbital flights. It’s easy to see where his heart is. “Burt’s feathering mechanism doesn’t get us back from orbit,” he points out. “It either has to evolve, or we need other options.”

Tai’s final stop is the air-crew hotel near LAX, where he’ll nap for a few hours. Then he’ll climb into an Airbus cockpit and pilot a couple of hundred Virgin Atlantic passengers on the red eye to London. “Flying the plane saves buying me a seat,” he says, as if it’s the most obvious thing in the world.

Will Whitehorn is barking orders into a cell phone. Standing in the lobby of a sleek London hotel, he wears a black leather jacket and carries a flame-red helmet. What he calls “my office scooter,” a hulking 650-cc Honda Deauville, is parked outside. At 44, the former North Sea oil-rig helicopter crewman is Virgin’s group director of brand development, which usually translates as Branson’s right hand. Whitehorn swears that’s an exaggeration. “Richard has a lot of right hands,” he says. “Left ones, too.”

Branson himself has a different take. “Behind my back, our directors call me Dr. Yes,” Branson says. “Their name for him is Will Lightyear.”

It was Whitehorn who registered the idea of a Virgin space-travel company back in 1995. Four years later, amid talks with a now-defunct Mojave outfit called Rotary Rockets, he and Branson took the next step, trademarking the name Virgin Galactic. They also toyed with sponsoring the X Prize but realized they could avoid risk and save money by waiting in the wings until a winner emerged. “The X Prize was going to either produce an answer to suborbital flight or prove it couldn’t be done,” Whitehorn says. “Paul Allen de-risked what might have been a very hairy project.”

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.”

Of course, Vodafone’s racers don’t have to reckon with the FAA. Virgin Galactic opens up a Pandora’s box of questions about how to regulate commercial spaceflight. A bill in Washington that would authorize suborbital flights on an “experimental” basis and establish liability guidelines passed the House by 402 to 1 last spring. (The sole opponent was Texas libertarian Ron Paul, who opposes regulating space travel and pretty much everything else.) A similar bill bogged down in the Senate over precisely what constitutes a spacecraft and whether the experimental era should have a time limit.

“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’?”

If no one is stopping him, certainly others would like to get there, too. The Russians are already selling seats on Soyuz rockets. What about Disney? “Walt would have done this in a heartbeat,” Whitehorn says. “I don’t think the current bunch are up to it.” The big airlines? “You’re joking! British Air couldn’t keep Concorde going.” Whitehorn is more respectful toward the rest of the embryonic commercial space crowd – Rutan’s Mojave neighbor XCOR, John Carmack’s Armadillo Aerospace, Jeff Bezos’ supersecret Blue Origins. “We wish them nothing but the best,” he says. “Does anyone seriously think space will be a monopoly?”

But Virgin Galactic’s first job is just to make space a profitable business. “Everybody’s saying, ‘Go straight to orbit,’ or ‘Build space hotels,’” Whitehorn observes. “We’re saying, you can sit around talking about that that for 30 years. You already have. What we really have to do is prove that it works with the public.”

Whitehorn wouldn’t be a Branson hand if he didn’t add a note of swagger. “We need 3,000 people over five years,” he says. “We’ve already registered four times that number on our Web site. People are throwing checks at us.”

Oscar Wilde once remarked, “We are all in the gutter, but some of us are looking at the stars.” Branson is no bard, but it’s hard to avoid the sense that he’s going into this project at least a little, well, starry-eyed.

The huge advantage of being Richard Branson is that you can strap engines to your dreams. “My father will be 90 when he goes into space with us three years from now,” he says, taking a break in the lobby of a West Hollywood hotel. “What a way to end your life! And I’m sure we’ll get to orbit. Imagine sitting up there in a bubble window, watching Argentina drift between your legs.”

Why stop there? “I hope we’ll get to the moon in my lifetime. The first baby born there – what country will it be a citizen of? Maybe we can put a Virgin bank in space, or maybe a Virgin tax haven. We could pay for all our people to go up there just by depositing their money.” Now, that’s adventure capitalism!

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?”

Branson’s nearly 200 companies are worth $9 billion.

Here’s a sampling of some of his holdings:

Virgin Blue Australian airline $2.5 billion
Virgin Atlantic International airline $2 billion
Virgin Rail Railroad $878.6 million
Virgin Mobile Telecom provider $872 million
Virgin Express European airline $259.9 million
Victory Clothing Apparel designer $119 million
Virgin.Net Internet service provider $37.9 million
Radio Free Virgin Digital broadcaster N/A*
Ulusaba African game reserve N/A
Virgin Brides Wedding apparel retailer N/A
Virgin Experience Days “Ultimate experiences” N/A
Virgin Games Online gaming provider N/A
Virgin Limobike Motorcycle chauffeur N/A
Virgin Unite Charitable organization N/A
Virginware Lingerie designer N/A

Sources: Hoover’s, Yahoo! Finance, VirginGroup.com. Figures represent most recent year available.
*Privately held; revenue figures not available.

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