<THE FOOL PORTFOLIO>
A Look at Richard Branson
A true Rule Breaker

By Yi-Hsin Chang (TMF Puck)

ALEXANDRIA, VA (Dec. 9, 1998) -- The words "Rule Breaker" were precisely what came to mind when I recently read Virgin Group Chairman Richard Branson's new autobiography Losing My Virginity. You can see from the title that this is not your typical business autobiography and Richard Branson is not your typical businessman. The book is subtitled How I've Survived, Had Fun, and Made a Fortune Doing Business My Way.

One Fool was so shocked by the unconventional title in my recent review of the book that she wrote to complain that "Losing My Virginity is not a topic a mother sends her 14 year old daughter, even if it is innocently referring to investments." Little did she realize that the book is definitely "Rated PG" -- this is the family friendly Motley Fool.

Branson, who was about 20 at the time, chose to name his upstart mail-order record business "Virgin" at the suggestion of one of the girls working there: "What about 'Virgin?' We're complete virgins at business." In fact, being completely new to business was what gave Branson his edge. He was able to start fresh, with no preconceived notions. He wasn't programmed to think a certain way about how to run a business.

When Branson opened his first record shop, he broke the mold of existing competitors by making it a place where people could meet, hang out, and listen to music. This was in sharp contrast to rival stores that were dull and formal, "staffed by people in brown or blue uniforms who appeared to have no interest in music." Virgin also developed a distinct image by refusing to carry mass-market teenybopper records, instead catering to "elitist, hip taste."

Later, with the Virgin record label, Branson again broke the rules by creating a totally new, informal recording studio in the form of a 17th century manor house about five miles north of Oxford. "I imagined that the best environment for making records would be a big, comfortable house in the country where a band would come and stay for weeks at a time and record whenever they felt like it, probably in the evening."

Last month, David Gardner laid out the First Principle of the Rule Breaker Portfolio (a.k.a. the Fool Portfolio): "We consciously take on lots of risk, believing that for experienced and Foolish investors, high risk will lead to high reward." Richard Branson could be the poster child, if not for the whole portfolio, then at least for its first principle. He doesn't shy away from risk. In fact, he thrives on it. Remember, this is the same guy who set new records for crossing the Atlantic and Pacific Oceans in a hot-air balloon -- and nearly died doing it.

The self-proclaimed "adventure" capitalist describes his many daring business ventures as "a step into the unknown... like a loss of one's virginity, but unlike the real thing... you can keep embracing the new and the different over and over again." He has successfully launched Virgin Records, Virgin Atlantic Airways, Virgin Cola, Virgin Pubs, Virgin Vision -- you get the idea.

In fact, the rule-breaking company chairman dressed in drag in a white wedding gown -- he even shaved off his signature beard -- to kick off the opening of Virgin Brides (there's a must-see picture of him in drag in the autobiography).

In short, Branson is definitely a Rule Breaker. He relishes breaking new ground and taking on big companies with near monopolies (or duopolies), be it British Airways (NYSE: BAB) or Coca-Cola (NYSE: KO). In fact, Virgin succeeded in exposing British Airways' malicious smear campaign designed to drive Virgin Atlantic out of business -- Branson and Virgin won 610 million British pounds in damages as a result.

As for Coke, Branson's hardly intimidated by the soft-drink giant: "the dinosaurs didn't last forever either. If any brand can give Coke a serious run for its money, it's Virgin," he says. When the company launched Virgin Cola in the U.S. in May 1998, Branson drove a tank into Times Square in New York and aimed the gun at the Coca-Cola sign, which went up in a burst of flames thanks to pre-rigged pyrotechnics. It was "great fun" and showed Coke Virgin meant business.

Branson writes, "In all ventures, Virgin is ultimately about service, value for money, and simple products." With each new venture, Branson asks, how can Virgin offer a better product or service at a better price? He even solicits comments and suggestions from customers and employees at every available opportunity, be it on a Virgin Atlantic flight or in a Virgin Megastore.

Now that I think about it, there's a double alliteration of sorts -- if there is such a thing -- in "Rule-Breaking Richard Branson." (See the "R" in Rule and Richard, and the "B" in Breaking and Branson?) Hmmm, does that make him a meta-Rule Breaker?

Anyway, I read this 360-page book in about a week and a half when I had allotted at least a month or more. Check it out if you want to be entertained reading about a true Rule Breaker.

Order your copy of David and Tom Gardner's new book, Rule Breakers, Rule Makers, in advance. This Simon & Schuster beauty doesn't arrive until January, but you can reserve your copy today! The first half of the epic book, on Rule Breakers, elucidates the Fool Port's investment style; the second half, on Rule Makers, further explains Cash-King investing.

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Bookmark Live Fool Port Quotes

12/09/98 Close

Stock Change Bid ---------------- AMZN +12 3/16216.25 AOL +2 7/16 92.75 T +4 71.00 ATHM + 15/16 64.06 DJT - 1/16 4.19 DD - 11/16 54.19 XON + 3/4 73.94 IP - 5/16 42.50 IOM - 3/16 7.13 LU + 5/16 99.44 SBUX +1 1/4 51.00 TDFX - 7/8 15.44
Day Month Year History Annualized FOOL +2.35% 7.46% 122.48% 646.64% 58.84% S&P: +0.18% 1.71% 21.96% 158.18% 24.40% NASDAQ: +0.77% 5.17% 30.57% 184.71% 27.23% Rec'd # Security In At Now Change 8/5/94 1100 AmOnline 1.82 92.75 5002.60% 9/9/97 440 Amazon.com 19.74 216.25 995.62% 5/17/95 1960 Iomega Cor 1.28 7.13 456.46% 10/1/96 84 LucentTech 23.81 99.44 317.66% 8/12/96 130 AT&T 39.58 71.00 79.39% 4/30/97 -1170*Trump* 8.47 4.19 50.55% 2/20/98 200 Exxon 64.09 73.94 15.37% 12/4/98 450@Home Corp. 56.08 64.06 14.23% 7/2/98 235 Starbucks 55.91 51.00 -8.78% 2/20/98 215 DuPont 59.83 54.19 -9.44% 2/20/98 270 Int'l Pape 47.69 42.50 -10.89% 1/8/98 425 3Dfx 25.67 15.44 -39.86% Rec'd # Security In At Value Change 8/5/94 1100 AmOnline 1999.47 102025.00 $100025.53 9/9/97 440 Amazon.com 8684.60 95150.00 $86465.40 5/17/95 1960 Iomega Cor 2509.60 13965.00 $11455.40 10/1/96 84 LucentTech 1999.88 8352.75 $6352.87 4/30/97 -1170*Trump* -9908.50 -4899.38 $5009.13 8/12/96 130 AT&T 5145.11 9230.00 $4084.89 12/4/98 450@Home Corp. 25236.13 28828.13 $3592.00 2/20/98 200 Exxon 12818.00 14787.50 $1969.50 7/2/98 235 Starbucks 13138.63 11985.00 -$1153.63 2/20/98 215 DuPont 12864.25 11650.31 -$1213.94 2/20/98 270 Int'l Pape 12876.75 11475.00 -$1401.75 1/8/98 425 3Dfx 10908.63 6560.94 -$4347.69 CASH $64208.05 TOTAL $373318.30

</THE FOOL PORTFOLIO>

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