If you have the right people, empower them
Rowan Gormley founded Virgin Money before moving into wines, first with Virgin Wines, but then with Naked Wines and now as CEO of Majestic. He tells Smith & Williamson's Hall of Fame how being hired and fired has helped shape his career.
As an entrepreneur, Rowan Gormley had two pieces of luck: the first was to be hired by Richard Branson; the second was to be fired by Tony Laithwaite. Both galvanised his career in different ways.
Born in South Africa, he trained as an accountant before moving to the UK to work in private equity. A potential deal brought him into contact with Richard Branson; the deal didn’t go ahead, but the Virgin boss hired him.
“He had no specific job for me and I went to work for him with no clear mandate. In the early days, I had an ideas lunch with various Virgin grandees, who wanted to talk about rocket ships and night clubs. I suggested financial services. That was the start of everything.”
Why financial services? For Rowan, it was clear that no one trusted financial services, but everyone trusted Virgin. This was the Virgin approach - to find the biggest gap between what customers want and what they get. “We wanted to create a good business that would do the right thing for consumers,” says Rowan. This was the start of Virgin Money, now a £1.7bn turnover business.
He was left alone to run the business, to an extraordinary degree. This was always Richard Branson’s approach: “Entrepreneurial energy is a vital component and we wanted to build a business in that image. Virgin left people to get on with doing things, rather than sitting around and talking about doing things. We test and learn.”
Later, he recognised the opportunity in selling wine on the internet. While the concept eventually worked, he made a lot of mistakes along the way. He over-spent on flashy London headquarters and big advertising campaigns. After a while, he recognised the need to retreat, to cut costs and to shift the focus from big brands to selling interesting wines.
Ultimately, he managed to make Virgin Wines profitable, but it was sold to larger UK firm Direct Wines, owned by Tony Laithwaite, in 2005. He tried to lead a management buyout in 2008, but at a meeting – he thought – to discuss the purchase price, he was passed a letter of dismissal. He instantly decided to set up a rival business, but needed to secure key members of staff, who were at that very moment being wooed by the opposition. After a frantic few days, he got who he wanted and Naked Wines was born six months later.
“It was 2008 and I knew we had to be more radical. We launched Naked Wines as a crowdfunding business. The idea was that we would fund winemakers to make wines happen. We created a wonderful company, which grew to £200m in sales.”
The big idea at Naked was that customers would become "angels", paying a regular direct debit for which they would get reduced wine. Naked uses these subscriptions to pay independent wine producers in advance. This means they can focus on making wine, rather than sales and marketing. Today, the business has 320,000 angels.
“Naked helps the wine makers, giving them the capital to fund vintage to vintage. Winemakers pitch to us and we filter out those that we believe to be the best.” This is supported by the group’s clients who are encouraged to rate the wines and say whether they would buy again.
Majestic Wines bought the company in 2015. Majestic was a giant company and had been a pioneer in wine sales, but had seen three years of flagging sales and had lost its way. It became a reverse takeover, with the Naked Wines team running Majestic and Rowan at the helm.
Apart from finding the right boss, there are a number of key lessons Rowan has learnt: “If you have the right people, empower them. If you have the right customer proposition, you will make money somewhere. Also, don’t debate, test – encourage people to take their ideas and bring them to creation. It is better than talking. Also, don’t believe you can get away with a poor proposition in this market: retail is going through 1,000 shifts. There will be winners and losers. The rewards for being a winner will be enormous and I want to be on that side!”
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