Free Business Stripped Bare by Richard Branson

and we built a business on the back of them. I think there are some interesting business lessons that still apply today from the creation of Virgin Records. After all, the progressive-rock music business was then in its infancy, and Virgin Records was there from the start.

When we started Virgin Records, mainstream crooner Andy Williams and avant-garde rocker Frank Zappa were in the same alphabetical A–Z racks in Woolworths. While the 1960s had witnessed an eruption in pop music and rhythm and blues groups – led by the Beatles and the Rolling Stones – the old record labels run by big business still dominated. There was no discounting of music, and the industry that existed was very conservative and stuffy. It was presided over by middle-aged guys who listened to string quartets. Most recording studios were sterile and expensive factories set up for only a few recording takes, and music shops with their perforated hardboard sound booths were stuck in the 1950s. There was little excitement attached to buying music. And there were only a few radio shows where you could hear decent rock music.

In the spring of 1970, we decided to create a mail-order service that sold the kind of music we liked: a record company that was outrageous, irreverent and long-haired. That flavour established Virgin, sowing the seeds of what it has become today. From day one, young people identified with it because it was so different.

As well as the American magazine Rolling Stone , there were two British weekly music newspapers when we began. Melody Maker was a serious rock and pop paper, with reviews that also covered folk music and jazz. Although it was a must-read, the writers were rather worthy and full of their own self-importance. And there was New Musical Express , or NME , which was more pop-orientated and somehow stuck in the sixties. Then a new arrival, Sounds , with its tagline 'Music is the Message', came along.

Sounds was first printed on 10 October 1970 and I was on the phone to the advertising department to secure some cut-price adverts. I've always believed in trying to get into a new publication that is trying to break the mould. Sounds was a magazine that mattered for our success. It was right in our marketplace. It sold 200,000 copies in its first week and gave the opposition, Melody Maker and New Musical Express , a bit of a fright. Sounds ' first rock album chart was dominated by Black Sabbath's Paranoid , the Rolling Stones' Get Yer Ya Ya's Out , Led Zeppelin II , Deep Purple in Rock and Cosmo's Factory by Creedence Clearwater Revival. These would be the albums that our mail-order business would sell. Unfortunately, there were some dreadful anomalies in the charts too, such as The World of Mantovani . His world would be banned from Virgin Records. So too was Andy Williams.

For this start-up business there was a basic flaw – we didn't have any credit. We didn't have any references either, which meant the record companies wouldn't supply us. So we took out adverts in the music press and I managed to get a deal whereby I could pay for them a month in arrears. We didn't have any records either, so we went along to Ray Larone's company in Notting Hill Gate. We'd buy them from him at a discount and then mail them out to our customers. That way, we had the cash in from the public before we bought the records and paid for the advertising. This is how we got the business up and running.

When I hear of today's entrepreneurs launching new businesses by putting all their debt on their credit cards, I think that this pretty much parallels what we were doing with Virgin Records. I'm not going to sit here and say, 'Don't do it.' But if you do do it, you have my sympathy. Self-funding your first business is cripplingly difficult.

Ray's tiny shop soon became one of the biggest record sellers in England. The record companies' lorries would turn up with piles of packages of records, and we would have a lorry outside the back of his shop