Lessons from Virgin's U.S. Brand Builder

For Frances Farrow, the central trick is to see the business from the customer's perspective and respond to the customer's needs

The Executive: Frances Farrow, 44

Background: Farrow, an executive member of the board of Virgin Atlantic Airways since 1993, arrived in New York eight years ago to help build Virgin USA, the headquarters of the Virgin Group in North America, where she is currently chief executive. Virgin is already a household name in Europe, with more than 200 companies run by charismatic entrepreneur Sir Richard Branson. Farrow's job is to expand the Virgin brand in North America.

The Company: Virgin USA was established in 2001 and currently consists of about 15 different brands (BusinessWeek.com, 7/8/08). This year, the company launched Virgin America, a domestic airline service based in San Francisco.

Revenues: $23 billion (Virgin Group global revenue)

Her Story: Everyone's got something to say about Virgin. With an unusual brand name and a mold-breaking leader in Richard Branson, that's hardly surprising. From praise of his business acumen and curiosity about his home on Necker Island in the British Virgin Islands to head-shaking at our outrageous company stunts, I have heard them all. But the ones I appreciate most are comments about the brand's elasticity and its unique ability to succeed in diverse markets: "I fly your airlines, my kid uses your cell phones, we rock out at the music festival, and we're excited for Richard to invent alternative energy options."

It is a reminder of Virgin's infinite opportunities, but also of the risks of letting the brand stray off course.

My job is to help start new Virgin companies in North America while making sure the global brand remains strong. The mission is pretty clear: Our brand values have been the same since 30 years ago, when Richard went from running a student magazine to running a record company and then an airline. And even as we are expanding the global brand, including here in the States, with much higher stakes, the approach is still the same.

Virgin Innovations

First of all, the customer viewpoint remains the heart of our companies' origins: We spot gaps in the market where consumers have needs, and we try to fill them. Richard himself was a frustrated consumer who found a better way. Stranded at an airport, he chartered a plane and got himself and his fellow passengers home. That experience inspired him to start an airline that he himself would want to fly. Virgin Atlantic introduced the seatback entertainment system and an onboard bar, and it taught cabin crews to make friendliness a priority, to name a few innovative firsts.

How does our startup process work? Even as a global enterprise, Virgin Group starts companies with the same alacrity and speed as when Richard first began to build the brand. Consistent with Virgin's entrepreneurial genesis, the process is not complicated, and we keep pace with market changes. Our corporate development team has experience with private equity, investment banking, and entrepreneurial activities. Together with the brand team, it looks for sectors currently experiencing consumer "headaches," which to us are opportunities. The teams work together to make sure these opportunities fit our brand values and offer something better and fresher in their sectors. Partners and other investors come to us with all sorts of ideas, to which my teams ask and answer the following questions: Are we meeting a gap where there is a need? Does it offer consumers a better deal? Is it the right fit for our brand? Can we offer both substance and a unique Virgin flair across many consumer touchpoints?

The better consumers know us, the more they love us. That's what our brand studies have found, and I think it's in no small part due to how we go about deciding what companies to start. We don't ask ourselves, "What do we want to bring to market?" but rather: "What do consumers want?" We look at the world from the point of view of the consumer. The result of that kind of criteria is loyalty.

Maintaining Freshness

In spite of our track record in Britain, U.S. consumers were not so familiar with the Virgin brand when we started out here. This gave us the opportunity to enter U.S. markets with the same entrepreneurial passion that breathed life into Virgin's first British companies. But the brand is fresh and innovative, not only because of what we do but how we do it. Let me give you a few examples.

In the early 2000s, we recognized that both the young and the budget-conscious had limited cell-phone options. So we partnered with Sprint (S) and started Virgin Mobile USA (VM) as the first mobile virtual network operator in the U.S. to offer affordable but quality handsets and wireless service with excellent customer care and mobile data services. Six years later, its customer base exceeds 5 million consumers. It's a crowded marketplace—to cut through, one of the things Virgin is known for is its irreverent attitude when it comes to advertising. We started Virgin Mobile with holiday advertising, such as Chrismahanukwanzah and SugarMama, a revenue-generating program where users were rewarded with free minutes for watching online content.

It's not just about marketing. One of the ways we've continually stood out is by finding a niche, differentiating our product among existing ones, and improving customer service. For instance, when we launched Virgin America, as an affordable option to a sector in need of a makeover, we offered such features as seatbacks with a functioning PC run off Linux that houses on-demand movies, video games, and a first-of-its-kind seatback food ordering system. We're tickled that people are blogging about other extras, such as seat-to-seat texting, the mood lighting, and even the safety video.

Humane Lending

The financial-services industry is another pain point in the U.S. We recently watched a small company called CircleLending build a steady customer base and expertise in family-and-friends lending programs. Because we liked what they did and felt it could go even bigger and bolder with the Virgin brand, we invested in it and rebranded it Virgin Money. We saw the power of the brand immediately: Six months after rebranding, revenues jumped more than 50%. The brand has given the business permission to communicate in a fun and more human way. We now have advertising about friends, family, and loans with characters asking with a wink, "Anyone up for a threesome?"

We've also taken some knocks, however. One unique hazard in building on a known global brand is making the assumption that a product or service that works in one market will work here. In the late 1990s, we launched Virgin Cola in the U.S. with hype and fanfare. Richard drove a tank into Times Square and knocked down cola cans. Despite success in Britain and other countries, U.S. consumers didn't want another cola, and we retreated. It offered us a valuable lesson: One size doesn't fit all.

Virgin got its start as a true upstart. Richard launched a student magazine that led the way to a record company, and so forth. We are fortunate that instead of constantly reinventing ourselves 30 years later, we can stay true to our authentic roots, our rock-and-roll spirit, and the challenge laid down every day by our founder, who seems always to be one step ahead of everyone else in gauging the next big thing. But the entrepreneurial Web 2.0 world we live in means there are fewer Goliaths to slay and plenty of upstart Davids. We certainly don't rest on our laurels, because there is always room for better options of style and substance. That's what gets the folks at Virgin USA out of bed every day (and Richard out of his island hammock).

Copyediting? Ship the Work Out to India

Not far from New Delhi, Mindworks now has eight overseas clients, and it's mounting a big effort to go after more U.S. publications

by Nandini Lakshman

In a squat, gray building in Noida, a leading outsourcing destination 15 miles from New Delhi, is the headquarters of Mindworks Global Media. Here, 90 young men and women peer into their computers, editing copy, designing and laying out pages, and even reporting over the phone. Mindworks isn't a new publication. It's a company to which media groups in Asia, Europe, and the U.S.—including the Miami Herald and South China Morning Post—outsource work that journalists and copyeditors usually do. The Mindworks staff works two to three shifts a day, seven days a week. Tony Joseph, 46, an editor-turned-entrepreneur, is Mindworks' founder and chief executive. He sometimes drops by at 6 a.m. to see his employees, just when U.S. clients are putting their papers to bed.

Mindworks has been handling outsourcing assignments from non-Indian publishers for four years. It expects plenty more business as the cost-cutting in U.S. and European print media grinds on. Some Western publishers do their outsourcing in-house—Thomson Reuters (TRI), for instance, has moved basic Wall Street reporting on U.S., European, and Gulf equities to a new bureau in Bangalore. But other media companies prefer to outsource to the Indians directly. On June 24, Mindworks made global headlines when the Associated Press reported that the company had taken on copyediting and layout work for a couple of publications owned by the California media publishing group Orange County Register Communications.

Mindworks' Joseph, who was born and bred in Kerala, has spent most of his working career in New Delhi in senior editing positions at such leading India papers and magazines as Economic Times, Business Standard, and BusinessWorld. Now he lives in New York to be close to his clients and travels to India every quarter. He wouldn't divulge names or details about his clients, but he says Mindworks has eight from the publishing industry in all. The Orange County Register is the latest. A deputy editor at the Register says that Orange County's outsourcing to Mindworks "will be a one-month trial" for the service of laying out pages for one of its community papers and of copyediting stories for the flagship Register.

Markets in Flux

The U.S. is a new market for Mindworks, which got its first American client last year. "The U.S. is the world's biggest media market, and the business there is changing rapidly," says Joseph. "For us, the greatest opportunity for creativity and growth is in markets where there's a lot of flux and everything is open for reconfiguration." Indeed, U.S. publications have been plagued by declining print readership and advertising as readers keep switching to online media. Outsourcing work to India helps keep publications in business. "It helps them improve efficiencies in editorial packaging and reallocate resources to reporting and writing," Joseph says. Mindworks claims that it helps publications cut costs 35% to 40%.

Mindworks didn't start out with foreign clients. It began locally, publishing magazines for such companies as Bharti Airtel (BRTI.BO), India's largest telecom provider. At the height of the technology outsourcing boom in 2004, Mindworks got an assignment from a British airline magazine. The job: Do a story on this question: If you had 2 million pounds to spare, what's the best seaside property you'd buy in Europe? Sitting 5,900 miles away from London, Joseph and his team made international calls and delivered the article in eight days. It was a one-off job, but it encouraged Joseph to relaunch Mindworks as a global media outsourcing company in 2005. After mulling which aspect of journalism would make the most business sense—writing, reporting, or editing—Joseph concluded that copyediting was where Mindworks could most excel. "Tony's track record in journalism and India's labor arbitrage are a big value-add and cost saver for clients," says Ranjan Kapur, who heads the India arm of Martin Sorrell's WPP Group (WPPGY) and personally was an original angel investor in Mindworks Global.

Mindworks' other investors nudged it to explore the U.S. market. In 2007, Helion Venture Partners, a venture capital fund registered on the island of Mauritius, came aboard, buying out the initial investors—WPP's Kapur and the Kolkata-based media house Ananda Bazar Patrika, owner of BusinessWorld, which Joseph once edited. "We felt that media content outsourcing was underutilized but had great potential,— says Sanjeev Agarwal, managing director of Helion. Agarwal has an excellent record—he founded Daksh, India's most successful business-process outsourcing company. Agarwal made a fortune when Daksh was acquired by IBM (IBM) in 2004.

New U.S. Thrust

Joseph and his editorial team honed their global outsourcing skills on publications from Southeast Asia (South China Morning Post) and the Middle East(Gulf News), for which they edited copy and laid out pages. Mindworks now has a dedicated editorial and design team, ranging from 5 to 15 people, for each of its eight global clients.

The staffer logs into a foreign publication's general desk basket, where the client's raw stories are parked for editing. Each team member is assigned a few stories, which are checked for grammar, style, and accuracy. In case there are inconsistencies or inaccuracies, the copy editor at Mindworks gets in touch with the news editor of the foreign publication. If the team is handling a particular section of the publication like Sports or Lifestyle, then the contact person in the U.S. is the section head. The reporter is never contacted.

Every deal goes through a two-month transition, when the client and the customer try to understand each other's needs. Either the publication's representative comes to India, or a senior Mindworks team member is posted overseas, for a fortnight to a month, to familiarize himself with the client's style requirements and work culture. "It helps minimize errors," says Joseph. Mindworks plans to increase its staff from 100 to 1,500 people by 2013. Joseph has just hired a new head in the U.S. for new business development and plans to build a five-member U.S. operations team to help market Mindworks'services.

Today, Mindworks may have an early-mover advantage in global media outsourcing, but others are bound to follow. Helion's Agarwal says media outsourcing could be a $2 billion opportunity for India. For the past four years, Gurgaon-based Express KCS has been designing restaurant and product ads for a host of Northern California papers, including Contra Costa Times, The Oakland Tribune, The Argus in Fremont, and Tri-Valley Herald. A year ago, Express KCS ventured into copyediting and layout for London's Property News. More media outsourcing business will flow to India—and to Mindworks. "The issue is, how quickly can they scale up?" says Agarwal. Joseph is confident he can stay ahead. "Our processes are not easy to replicate," he says.