What was your first experience with entrepreneurship?
When I was 17, I started a pizza business on Long Island, New York. I wasn’t motivated at school and pitched the idea to my parents, who owned a restaurant and knew the business. I and my older brother worked day and night, and that’s when I learned all about customer service. When I was 19, we already owned 4 stores.

But you didn’t stay in the pizza business for the rest of your life.
Yes, I finally found the inspiration to learn in the classroom again. It’s important to find out what you don’t want to do in life. So I went to Duke University and Stanford and started to work for Goldman Sachs, that’s how I got back on the traditional career track. We successfully sold the pizza business and it helped fund my college expenses.

Let’s talk about your time at Virgin Group. The list of Virgin subsidiaries is incredibly long. What is the story behind it?
The Virgin Holding is headquartered in Geneva, but the North American companies like Virgin Hotels, Virgin Voyages, Virgin Galactic, etc. were created by a team in New York. We ran a branded venture capital firm. Everybody wanted to pitch their ideas to Richard Branson, that’s how we learned a lot about different industries. We were agnostic about building things in-house or finding a good outside team to invest in.

“Everybody wanted to pitch their ideas to Richard Branson”

How did you decide what to do and which industries to enter?
One of the projects I pushed will actually see the light next year, when Virgin Voyages will start. I joined in 2005, but the formula how to leverage the Virgin brand was already honed in the 1990ies when the company tried lots of things. It consists of reinventing the customer experience in industries where the incumbents simply neglect their customers, be that banking or healthcare or something else. It is all about the user experience. Virgin became a champion for the right psychographic.

What does this mean?
This marketing term describes consumers according to psychological traits. Virgin appeals to a lot of diverse demographics. You have people that shell out 200’000 Dollars for a Virgin space flight, and you have teenagers that use a Virgin prepaid mobile sim card. They have different buying power but similar attitudes. They’re social, open, creative and optimistic persons. This is the power of a brand, that it speaks to a certain kind of people.

Caring about the customer isn’t a revolutionary formula. Why do so many firms struggle with this basic concept?
As Richard Branson pointed out, most companies put the shareholder first, the customers second, and the employees last. This is a fatal error. I learned in my pizza place how important it is to care about your workers. If you treat them nicely, they will go beyond their limits. I also remember the discussion at Virgin about installing a bar in the front of the plane. It’s a great idea, but it takes away the most valuable space and many of the most expensive seats. If you calculate how much revenue you lose per flight, it turns out to be an insane idea. Sir Richard just said: “We’ll make it back from better customer experience”. Virgin’s key to success was always to take the role of the consumer champion.

What holds others back to do the same?
We made fun of other companies and sided with the consumer. Many corporations struggle to take the customer side because the leadership and the board isn’t ready to do it. Why? Because they have a shortage of vision. This is explained by the fact that in large organizations, political people that know how to navigate their way in bureaucracies rise to the top. The few people that have an entrepreneurial mindset are trapped within the system. But it’s not just the people, structure plays a big role too.

What do you mean by structure?
Usually, everybody knows what the right solutions are, but still, they can’t execute on them. In my opinion, wrong organizational structures are the biggest hurdles that stop companies from being innovative. The solution is so basic that it is often overlooked. Instead of having your main business as the main organizational unit, you should treat it just like a portfolio company. Virgin is organized this way. It is the holding where the central idea resides. It is the answer to the question of why you do things. Have a look at Simon Sinek’s “Start with why” if you haven’t seen it yet. Virgin Airlines and all the other subsidiaries are just portfolio companies. If we would come up with an idea that managers from one of these companies didn’t like, because it might pose a threat to them, they had no way to stop us from doing it. This is how structure enables innovation.

Why does a company need a central idea? Isn’t it enough to have a product or service and a market?
Because humans respond to values. They want to be part of a mission and solve the world’s problems. Consumers don’t want to buy just a product, they want to join your mission by buying your product – if it is aligned with their own values. Think about the brand Patagonia and what it means to an activist consumer. Patagonia could easily start to sell branded solar panels tomorrow if they decided so, and these activists would stand in a line to buy them because they care about Patagonia’s long-term goal.

Let’s talk about another organizational unit with long-term financial goals: families. You now run a program for wealthy families at Singularity University. What is your finding from this program?
We were talking about the need for companies to have a mission. It’s exactly the same for families. Kids from wealthy families struggle with questions of purpose and identity. For the majority of the people that grow up with modest financial means, their goals are quite clear: buy a house, being able to pay for their kid’s school and retire with some comfort. But if you have money, these goals are taken care of and you need something to replace them with. You need a reason to get up in the morning and go to work, you need something to accomplish and give you self worth. Having money gives you only a very shallow sense of self-worth. Strong ties to family and friends, the acquisition of knowledge, giving to others, all these things can give you a purpose.

“You need to make space for wealth creation.”

You’ve worked in a family office. What do you think is important when managing families’ wealth?
Many family offices are geared towards asset protection and income. Conserving what you have is all right, but you should also be planting new trees and pursue ventures that allow you to double your assets. You need to make space for wealth creation. Building companies requires time and effort, and usually, the family’s energy is already concentrated on their family firm. So you should have someone in the family office that invests in startups and creates new firms. But I realize that this isn’t a widely accepted strategy. But it is one that could help you shape your family mission, by finding a common focus and discussing what is worth to build up and invest in.

Another benefit is that if you talk to startup entrepreneurs and see all the technological advances first-hand, you get a much more positive view on the future. Why is it that in general, people seem to be quite afraid of technological progress?
Think about all the progress medicine has made in the past decades. It is groundbreaking, but it is also very easy to take all that for granted. It’s the same with airplanes: You hear about plane crashes in the news, but you don’t hear about the many ways in which airplanes are much safer than before. This has to do with the way the media fights for your attention, and the way the human brain works. It has a very strong response to negative news because it was trained by evolution to recognize threats. Furthermore, technology can be used for bad purposes and can have negative side effects which need to be managed. But we shouldn’t repeat the errors of former generations, we should embrace innovation.

What happens when the older generation is not as excited as the new generation about new technologies? Isn’t there a danger that technology can also create rifts between family generations?
Yes, this threat exists, and I have seen examples where this even led to the younger generation leaving the family firm because the older generation wanted to continue to do business as they have always done. The more years we get in between generations the more likely is it that the older generation didn’t use the same technology when they grew up. I, for example, don’t use Snapchat, my nephews do. And the problem isn’t visible just in families, it affects corporations as well. It is also not just a generational issue. Unequal information can also create misunderstandings even in the same generation. Helping people understand the advances of technology is what we try to do at Singularity University.