Interest rates and an exclusive with the man running the Virgin brand
The business news that matters.
Hello and welcome to the latest edition of Off to Lunch…
Imagine running one of the most famous brands on the planet. A company that is more than 50 years old, employs 70,000 people in over 30 countries and has one of the world’s most well-known business figures as it founder. Well, Josh Bayliss knows all too well. He was appointed as the chief executive of Virgin Group in 2011 and has been steering Sir Richard Branson’s brand to new heights ever since.
Bayliss spoke with our editor-in-chief Graham Ruddick in the latest episode of our podcast. The conversation offers a fascinating look under the bonnet of Virgin, offering insights into its strategy, how to protect such a well-known, what it’s like working with Sir Richard and overcoming setbacks.
Sir Richard has spoken about the importance of employees in all his books and in almost every interview he’s done – and for a very good reason, as Bayliss explains:
When we think about the brand, we think about it first and foremost from the employees’ point of- view. We want to give those employees the tools and the freedom to express themselves for the benefit of our customers; showing them a great time, frankly, when they show up in our businesses.
Bayliss has learnt many things from Sir Richard but one lesson stands out above the rest:
When I became chief executive, I thought it would be a terrific idea to have a really tightly defined strategy. I can recall discussing that with him.
He thought it made a lot of sense, but said to me: “What you must always ensure that you do is keep your eyes open for opportunity as well. Don’t let the strategy distract you from that.”
It’s been a really valuable lesson.
One of the keys to the group’s success, according to Bayliss, is the fact that it is privately owned and therefore doesn’t have to make decisions based on ensuring good quarterly earnings. Instead, it can work to a long-term vision.
If I think about our investment portfolio, for example, our average hold period for Virgin-branded companies is something like 17 or 18 years. That's very different to most investment businesses.
The private equity model, of course, is to target a three- to five-year turnover of capital and because we don't have that constraint, it means that we can plan for the very long term. That's consistent with the idea that’s been around for 50 years.
This is a great conversation. You can listen to the episode on Substack here, Spotify here and Apple here.
Other stories that matter…
1. The Bank of England (BoE) has held interest rates at 5.25 per cent for the sixth time in a row but says it is “optimistic” that things are moving in the right direction. Seven members of the Monetary Policy Committee voted to hold rates, while two voted to cut them to 5 per cent. The BoE’s boss Andrew Bailey says there has been “encouraging news” on inflation, which he expects will fall close to its target in the next couple of months but could rise again towards the end of the year. You can follow the latest on the news here.
2. James Watt, the CEO of the brewer BrewDog, is to step down after 17 years leading the firm. Watt says he will step into the newly created position of captain and co-founder, with the chief operating officer James Arrow stepping up to the chief executive role. Watt co-founded the brewery and pub group in Fraserburgh, Scotland in 2007 alongside Martin Dickie. It has expanded rapidly but Watt’s tenure has been controversial, with the firm accused of having a “culture of fear” in an open letter written by former staff. Read more on the news here and an analysis of Watt’s tenure here
3. More news from Aberdeen as FTSE 250-listed John Wood Group rejects a £1.4bn takeover offer from its Dubai-based rival Sidara. The oil services company said the bid “fundamentally undervalued” the company and its future prospects. John Wood Group is the latest British firm to receive a takeover offer with the markets viewing that UK-listed firms are undervalued compared to other global companies. Learn more here.
4. Monzo’s valuation has risen to £4.1bn in a new £150m funding round it has raised amid expansion into both new products and new markets. The investment comes from Hedosophia, a venture capital firm that was an early investor in Uber and Airbnb, as well as existing backers including CapitalG, Alphabet’s independent growth fund. The firm last raised funding just two months ago as it preps to move into pensions, mortgages and the US market. It expects to post its first annual profit this year. Read more here.
5. Online used car marketplace Cazoo is preparing to call in administrators as it attempts to avoid a full collapse. The move means the firm’s creditors cannot move against the company and aims to give it time to find a buyer or other rescue deal. it marks a dramatic fall for the British firm, which was valued at more than $8bn (£6.4bn) after floating on the New York Stock Exchange three years ago. Read more here.
And finally…
Just a quick note to say that there will be no Off to Lunch tomorrow but we will be back as usual on Monday.
I want to finish this edition of Off to Lunch slightly differently. With Mental Health Awareness Week kicking off on Monday, I wanted to share a social experiment around learned helplessness. It occurs when a person who has experienced repeated challenges comes to believe they have no control over their situation. They then give up trying to make changes and accept their fate…
You fail once, you think you’ll fail again. Everyone around you is running a perfect business and yours has endless problems. Running a business can feel isolating, but you are not alone.
Open up to friends, family, or other business owners who understand what you’re going through. If you are struggling with your mental health, charities like Mind offer brilliant resources and support. Do reach out here.
Thanks for reading. If you enjoy Off to Lunch then please share it with others and spread the word. If this newsletter was shared with you then please sign-up below to get Off to Lunch sent directly to your inbox