How a night on the beers saw the Branson brothers go from backpackers to $20 million success

These British brothers are emulating business tycoon Richard Branson in more ways than one. It all started on a night out.

It’s an Aussie small business success story that all started thanks to a “long night” drinking beers with Richard Branson.

Not Sir Richard Branson, the billionaire Virgin Group founder — Richard Branson from Somerset, England, co-founder of Melbourne-based NBN provider Tangerine Telecom.

“Whenever he books a restaurant he is always guaranteed the best place,” said Andrew Branson, who moved to Australia with his brother Richard in 2004.

“Unfortunately we are not related, but obviously being from England it’s a question we get asked a lot.”

Andrew was 18 when he first came to Australia as a backpacker in 2002.

“One year became two, two became four,” he said.

He “fell into” a sales role selling telco products, swapping people’s home phones off Telstra onto a competitor.

“Even back then I looked at the market and saw how easy it was but also what poor competition there was,” he said.

“So many people were willing to move to another provider if it was going to be slightly cheaper and a better service.”

In 2004 while back home visiting family in the UK, Mr Branson says he “had this idea that I really thought we could do this.

“We’ll start a telco provider to take on Telstra, offer better service and cheaper pricing,” he said.

“I spoke to my brother Richard one night. We had a few beers — it ended up being quite a long and a late night. The next morning he was telling my parents he was going to Australia as well. They were kind of heartbroken about it.”

Richard, who had a degree in marketing and was facing a significant pay cut to join his brother, flew over to Australia two weeks later.

“It wasn’t a hard sell at all,” Mr Branson said.

Together they started a small telco sales business using all of their savings and a “small loan” from their parents — about $100,000 all up.

“We found an enablement partner that allowed us to essentially buy wholesale calls and internet access then obviously charge a mark-up and sell it to customers,” he said.

“Essentially you’re all selling the same copper line, the only real difference was how much you could charge and if there’s a problem how quickly you answer the phone.”

They brought on three friends to help them run the business.

“We were all in our very early 20s, all lacking experience but excited and enthusiastic,” Mr Branson said.

“I remember the first customer was a small business out in Coburg. It was massively exciting.”

With margins in the telco business extremely tight, Mr Branson says it to “quite a long time to become truly profitable”.

“Cashflow was probably the number one challenge in the business,” he said.

“We would pay a sales person to go out and visit a small business, they would get commission for signing that business up. You bring the customer on but you don’t get revenue for at least a month or so until they pay the bill — then you realise you only made a small margin that month. It does take a long time before you break even on a customer.”

Despite a long period “juggling the business over multiple credit cards”, Mr Branson says he wasn’t worried — thanks to “youthful ignorance.

“You think you’re invincible. Luckily it did work out,” he said.

The brothers sold that first business, IF Telecom, to the now Vocus-owned Smart Business Telecom in 2013. They immediately poured the proceeds into starting two new ones — NBN providers More Telecom, focused on the business market and the consumer-focused Tangerine Telecom.

Today the two businesses employ 50 staff, have around 12,000 customers and annual revenue of $20 million.

Last year both companies were named in the Australian Financial Review Fast Starters list.

“We build that up in four or five years significantly bigger and significantly quicker,” Mr Branson said.

“We’re completely debt-free which we’re quite proud of. In a telco that’s quite rare, especially in the NBN world where a lot of people complain about margins.”

Tangerine says its key points of difference are its 14-day “risk-free trial”, 10-second phone answering times and “industry-leading” online sign-up technology.

Customers “want to call the call centre and speak to someone immediately, they don’t want to be on hold for 20 minutes”, Mr Branson said.

The company has a close relationship with listed wholesale provider Vocus Communications, which is connected to all 121 NBN points of interconnect across the country.

Andrew, now 34 and Richard, now 36, both Australian citizens, have repaid their parents the loan.

“I’m sure they look back and think it was a good move,” Mr Branson said.

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