MANY TIMES A VIRGIN

By Bonnie Angelo

A huge silver ball slides ever so deliberately down the pulsing neon face of a building in Times Square, and off leaps one of the world's most wildly imaginative entrepreneurs. It is Richard Branson, the raffish British tycoon who has splashed his company's Virgin logo on everything from airlines to a bridal service. The occasion: the opening of a $15 million, biggest-anywhere, 75,000-sq.-ft. new Virgin music-and-entertainment megastore.

Branson, a self-described "adventure capitalist," is a business-creation engine who was clearly born in the wrong place. In England wealth is traditionally inherited rather than created, which makes him an odd duck in the land of mad cows. He belongs in the U.S., the wellspring of genius entrepreneurs and shameless hucksters alike, which is why the flashy Times Square stunt is a perfect way for Branson to signal the next phase of his U.S. expansion. Says Ian Duffell, president of Virgin Retail Group in North America: "We've planted our flag here."

The new music-and-entertainment store is a dare to U.S. competition. Four other stores are planned for New York. Along with five now operating in California, they will give Virgin 64 of these new-wave entertainment centers in 12 countries. There are plans for 30 more in the U.S. by 1999. Next week Virgin Atlantic Airways, Branson's iconoclastic transatlantic carrier, adds the lucrative Washington-London route to its expanding U.S. service. Virgin Publishing is poised to snag American book readers. In Europe, Branson is starting up a cut-price airline, Virgin Express; he's part of a group taking over the ailing Eurostar train service under the English Channel; he has launched an over-the-phone life-insurance and health-insurance business in Britain called Virgin Direct; and his new British mutual fund is going gangbusters. As if all this weren't enough to keep him busy, in November he hopes to fly around the world nonstop in a balloon to set a new world record.

Floating high over the Times Square store is a 40-ft. sign for Virgin Cola, a somewhat odd ad placement as the product isn't sold here. But that's going to change too. Branson's Virgin Cola company is going to take on American icons Coca-Cola and Pepsi-Cola on their home turf, beginning in July. This is a plan that most marketers would pronounce foolhardy--if only it rose to that level.

But these are Branson odds. He has amassed a billion-dollar fortune by doing things that business strategists suggest he shouldn't: he targets well-established industries with entrenched competitors--airlines, records, retailing--and then attacks head on. In the process, the affable balloonist garners huge amounts of publicity from an unending assortment of goofball stunts and daredevil deeds.

Behind that eccentric entrepreneur is a bulldog competitor and a sore loser. Virgin usually wins because Branson can do the mundane spectacularly well and because he has an almost unerring ability to connect with consumers, particularly younger ones. Those business instincts are matched by an ability to motivate people who work for him. And who wouldn't want to--Branson seems hell-bent on making sure that everybody, but everybody, is having as much fun as he is.

Branson runs his conglomerate of nine divisions and more than 100 companies--the mix is churning constantly--out of an imposing Victorian mansion in London's posh Holland Park, only a few steps from his home and family. The office is surprisingly calm. He is cheerfully rumpled, slipping out of his still tied shoes (revealing a small hole in a green sock), shunning coat and tie like a squirmy 12-year-old. Bright blue eyes and a wide trust-me smile are set off by a private-island tan. Longish, turbulent, sandy hair, streaked with gray, and his trademark vandyke beard are the stamp of his swashbuckling style.

Despite the bravado, Branson is as traditional as high tea when it comes to the most critical asset of the company: the brand. He absolutely believes in the power of brands, much the way that Procter & Gamble or Coke does. This belief is at the core of the empire, and the reason the Virgin name has been extended to businesses as different as vodka and insurance. Says he: "Consumers understand that all the values that apply to one product--good service, style, quality, value and fair dealing--apply to the others." That's why dozens of companies have put up hundreds of millions of dollars to get in bed with Virgin. Branson's outfit retains anywhere from 20% to 75% interest but usually keeps operating control.

In the past 20 months Virgin has gone into eight new businesses in eight completely different areas. "Lots of new excitement--and more is coming," Branson beams. "That's what I like." What attracts him to a new venture? "If it's something that interests me. If I think it is done badly by other people and feel I could do it better. If we can shake up an industry--and have fun doing it." He likes to start from scratch and build a new company his way. "An entrepreneur can go in and put his toe in the water, as we did with one airplane--see whether it is lukewarm, boiling or freezing cold."

When Branson sticks his toe in the U.S. cola market, he will find two competitors ready to smash it. Virgin Cola will sally forth in the U.S. first in the Philadelphia area. The U.S. needs another cola like it needs another celebrity talk show, but Virgin plans to undercut Coke and Pepsi on the shelf price yet offer more profit to retailers.

Virgin is not expecting a kind welcome in the City of Brotherly Love. In Britain, where the company launched its cola 20 months ago, a May industry report gives Virgin just 4% of the market after a bruising battle with Pepsi, Coke and its British partner, Cadbury Schweppes. Although Virgin is a good marketer, distribution is critical--an area in which Branson met his master. For instance, Virgin was not able to get shelf space in half the British supermarkets--no small problem when four grocery chains control more than 60% of the market. The reason: Coke and Pepsi locked up the shelves with exclusive agreements and got down-and-dirty on price. "Coca-Cola decided to throw all their marketing skills against us, to kill it in the first year," says Will Whitehorn, director of Virgin corporate affairs.

Branson is realistic about his cola challenge. "I suspect it will be in my children's lifetime--maybe even my grandchildren's --before Coke becomes second player to Virgin in America." Virgin at least won't be underdistributed in its first U.S. market: in Pennsylvania 500 Supervalue Beverage stores will peddle his new pop.

Virgin's megastore expansion, on the other hand, reflects Branson's strength: an ability to take a consumer's experience to another level. The timing is terrible. Retail record sales in the U.S. slumped last year for the first time in a decade. Yet Duffell, the North American boss, says Virgin megastores are entertainment centers that will attract big audiences because they are so profoundly different. Certainly, calling Virgin a record store is understating the place drastically. The Times Square outlet boasts 250 listening posts and four Sony cinemas, inlaid-marble floors and an artist's replica of Michelangelo's Creation on the ceiling of the performance space in the classical section. In another testament to the company's shrewdness, Virgin paid a giveaway $18 per sq. ft. for the space that some 35 million people will walk by each year.

Branson's entrepreneurial flair blossomed early, at 17, when he started a magazine called Student and brashly talked the likes of John le Carre, James Baldwin and Vanessa Redgrave into contributing articles or being interviewed. Student was short lived, largely because the young proprietor spotted, in the number of ads for mail-order records, a demand among young British music lovers for cut-rate disks. Mail order led to the Virgin name (they were young and inexperienced) and a small store, which led to the Virgin record label, which led to more than 100 companies with 11,000 employees in 17 countries.

Branson grew up comfortably in a 16th century farmhouse in a Surrey village of Merchant-Ivory Englishness, son of a happy, well-connected family. His father Ted carries on the family tradition as a lawyer. His mother, a former dancer and airline stewardess, gets credit for bending the twig. "She wouldn't let us just watch television. She would say, 'Be a doer!'" With second wife Joan and their two children, Branson manages a vaguely normal life-style. The children are not sent away to school; Joan does the cooking; the obligatory nanny is her niece. Weekends are spent in the home of their heart in Oxfordshire, two conjoined cottages set on a river. Of course, there is that little private dreamworld, Necker Island in the Caribbean, rented out between family visits to the $13,000-a-week crowd, like Steven Spielberg and Robert De Niro. Princess Diana too at the usual royal rate, no doubt.

Branson's friends all insist that he is genuinely shy. Shy? A man who once made a speech dressed in a bunny suit? He admits he will do almost anything to advance his companies. It's an act that plays well, and compared with the standard model overstuffed British executive--well, the comparison just isn't fair. Sir David Frost, the transatlantic television personality and partner in Virgin Radio, says, "Richard has always presented himself as a rebel against the Establishment, although now he is an establishment of his own."

Is there no dark side to this fun-seeking tycoon? Just try competing against him. Within weeks, his new European airline--no-frills Virgin Express, owned with City Hotels--will shake up the high-altitude Continental-fare structure, cutting some prices as much as 50%. Says Branson: "We'll give the major airlines in Europe a proper run for their money."

Or ask British Airways. In 1991 he attacked powerful B.A. for "unbelievable tactics to try to push us over the cliff." B.A. had launched a nasty campaign to thwart Virgin, starting with interceptions of Virgin customers in the terminals and going as far as breaking into Virgin's computers to pirate its passenger lists. Branson sued, won--and then sued again. "We came out stronger as a result," he observes. The guy is litigious enough to qualify for American citizenship. He and GTech, an American partner in a group that bested him for the right to run the British lottery, are locked in a bitter two-way libel action. He is also battling a sexual-harassment suit brought by a former employee, who accuses Branson of groping her at a company outing. He says he will fight the charges all the way.

It is typical for entrepreneurs such as Branson to be great at creating companies and less so at running them. In earlier years Branson's impetuous antimanagement style caused internal crises, most memorably when his oldest friend and first partner, Nikolas Powell, left in anger over Branson's undisciplined spending. Later Branson rode roughshod over board objections to starting an airline (with one plane). Yet Virgin Atlantic Airlines is now solidly in the black, after years of marginal results. Retailing is still dodgy: Virgin megastores were a megaflop in Germany, but are thriving from Los Angeles to Paris to Tokyo. Tot it all up, and Virgin enterprises are logging their best year ever, according to Whitehorn, with revenues of $3.4 billion and pretax profits of $416 million projected for the year ending in July. That's a 12% margin--not great but quite respectable.

Branson, of course, doesn't play for money. His personal fortune, estimated at $1.16 billion, ranks him 12th on the London Sunday Times's latest list of the 500 richest Brits. He thrives on creating companies, building an organization and then hiving off a piece to seed a new venture. And always there is Branson at the hub. "He is incredibly creative, always finding new approaches," Frost comments. "Most interesting is how he organizes the companies. He is at the center--there is no corporate headquarters, no large corporate structure." Philip Beresford, who compiles the richest-500 list, asks the logical question, "How far can Branson extend himself without imploding? The brand name may exist only as long as he is alive. He keeps the whole thing fizzing."

What's bubbling up next? The possibilities are endless. At a lunch in New York recently, Branson casually talked about getting back into the record industry. He sold Virgin Records, his invention as a cheeky novice of 19, to Thorn EMI, tearfully, for almost $1 billion in 1992, when he desperately needed funds to buy back his company after a frustrating year as a public corporation. Clearly, he longs to return to the business. But didn't EMI make him sign a "noncompete" clause to keep him out of the industry? "Oh, yes," says Branson, breaking into that disarming grin. "It expired last week."

--With reporting by Helen Gibson/London

With reporting by Helen Gibson/London