Expanding Sir Richard’s Empire
Peter Lurie on co-founding Virgin Mobile USA
Published in Corporate Counsel Edition® - 2009 magazine
By Michael Y. Park on June 10, 2009
Peter Lurie isn’t intimidated by the prospect of a rapidly deteriorating bank account, a room full of rioting shareholders, or disappointing Sir Richard Branson. But that’s what he faced eight years ago when he co-founded Virgin Mobile USA, an offshoot of Branson’s $20 billion Virgin empire, and attempted to bring a European trend—the pay-as-you-go mobile phone—to the States.
Formed from a complicated network of hundreds of businesses, Virgin Mobile USA is now a $1.5 billion competitor in the U.S. mobile phone market.
“He’s the ambassador of the company,” says CEO Dan Schulman. “Peter’s ability to get what we’re trying to do and create the space for all parties to come together is what enables us to really get things done, and to get them done in a way that’s a win-win for all parties. That’s what Peter’s modus operandi is.”
Lurie, 41, grew up in suburban New Rochelle, N.Y., the eldest son of David, a partner in a corporate travel company, and Yvonne, a onetime computer programmer. By the time he was in high school, his skills as a negotiator, organizer and leader were evident as he led groups like Model Congress while maintaining top grades.
In college at Dartmouth, he majored in English and minored in history, writing his senior thesis on Nietzsche’s influence on American literature. His father always thought he’d be a professor, but Lurie knew it wasn’t in the cards. “I tend to approach things in a very structural way,” he says. “Academia seemed too insulated. I knew I wanted to start a company and build it.”
Lurie chose to attend the University of Chicago Law School for its focus on the philosophy of law and interdisciplinary areas of the legal system. His internships reflected his desire to garner a wide range of experience: one summer at the District Attorney’s Office for the Southern District of New York; the next at Skadden Arps to focus on research and writing; and after law school, a clerkship for a New York federal judge, where he worked on complex banking litigation and intellectual property disputes.
“He’s a renaissance man,” says Thomas Ryan, who worked with Virgin on its music ring tones. “He’s just a well-rounded guy who’s constantly performing at a very high level.”
Returning to New York in 1994, Lurie took an associate position in the transactions group for Credit Suisse First Boston. But an ailing economy meant layoffs—including Lurie. “It was the first time I experienced a personal setback,” he says. “I was always able to achieve a reasonable amount of success without quite knocking myself out. I found at an investment bank it wasn’t enough. I became a more focused person, frankly.”
He quickly picked himself up, joining Simpson Thacher & Bartlett as an associate in the corporate department. “I wanted to get eight years’ experience in four years—and they were only too happy to oblige,” he says. “Private equity and hedge funds were booming.”
Joe Kaufman, now a partner at Simpson Thacher, says Lurie “was always quick to understand the key issues of any transaction he was involved in. Sometimes people can get bogged down in details, but Peter was able to focus on what was important.”
In 1999, Lurie moved on to Commerzbank Capital Markets, the New York-based securities-brokerage arm of the German banking giant, where he was director of strategic planning. But he didn’t stay for long.
While in Europe with a friend in early 2000, Lurie had an epiphany. “It was in London that we realized that pay-as-you-go was the prevalent wireless service, and there was no good reason for it to be completely absent in the U.S.,” he remembers.
Still, when Lurie got back to New York, he wasn’t sure he wanted to take the plunge in Silicon Valley. His family and girlfriend Kristin were on the East Coast, and it meant giving up stable, well-paying work for something that odds said would fail.
But one night over dinner, it was decided. Kristin says: “In February  it just dawned on me that I was going to marry him. He brought it up, and I said, ‘OK, let’s go. I’m ready to move.'”
Two months later, Lurie left his job and moved across the country, with Kristin joining him later that year. From appearances, the prospects for the new venture might not have appeared good. For one, Lurie and his colleagues had to convince both Virgin Group and a telecom company with an established wireless network to buy in.
“Virgin agreed to fund the project for a few months to see if we could work out a deal with any carrier for a joint venture,” Lurie says. “Sprint was a very tough one, because Sprint didn’t want to create a competitor that would cannibalize its own business. We convinced them that prepaid was an untapped market that they hadn’t successfully addressed, and rather than have no part of those customers, it would just increase their share of the pie. It was definitely a leap for them.”
After Sprint signed on, Virgin offered $10 million of startup money. But even while working under the auspices of a complex alliance between entrepreneurial Virgin Group and business-conservative Sprint, their San Francisco offices were far from elegant.
“There was a drug deal that took place every day at 3:15 in the single-occupancy hotel across the way,” Lurie says. “When we called the police, the following week there were bullet holes in the window that faced that street. When my girlfriend, now wife, came to visit our office, I wasn’t sure she was going to show up again. That’s when it occurred to me how my life was far removed from my Simpson Thacher days.
“We were on a shoestring budget. There were times we didn’t make payroll. We had maybe 30 employees, and we said, ‘We’re going to be a few days late with the checks. You’ll be paid, but if you need to walk away, we understand.”
But Virgin Mobile USA took off, with Lurie forging deals with the armada of people needed to support a telecom business that didn’t own its own network. Along the way, Lurie helped define the industry, spawning competing products from such big telecom companies as AT&T, Verizon and T-Mobile.
“He’s done some very creative lawyering,” says Robert A. Copen, whose firm, Skadden Arps, represents Virgin Mobile USA alongside Simpson Thacher and 10 in-house counsel. “He helped dream up a legal theory that became an industry standard.”
By fall 2001, the company relocated its headquarters and executive team (in addition to co-founder, Lurie holds the title of general counsel) to Warren, N.J.
Six years later, in fall 2007, Virgin Mobile USA was ready for its initial public offering. It was a daunting task, involving one of the most complex business models on the New York Stock Exchange.
“Our structure creates complexity: You’ve got multiple parties you’re negotiating with—whether it be Virgin Group, Sprint, company debt holders, various banks, all with different structures for tax reasons,” Schulman says. “During our IPO, Peter not only had to get up to speed on all of those things but do whatever was necessary to get the job done. He had not only the professional skills but the personality and business acumen to understand all sides and create compromises that worked for all parties. That was probably his greatest accomplishment.”
During the most stressful time, Lurie was the model of cool competence, says Robert Samuelson, Virgin Group’s director of corporate development. “Even when there was a lot of stuff going on with the IPO, which was very, very complex, with all that moving around, he was unflappable.”
Virgin Mobile USA debuted on the NYSE with an IPO of $412 million. “I got very little sleep in the summer of 2007,” Lurie says, chuckling. “I wasn’t deeply tanned.”
Most recently, the company succeeded in a $39 million takeover of wireless services company Helio. “I think there are some other acquisitions we can continue to look at, especially in post-paid and in mobile-entertainment services,” Lurie says. “With a much broader portfolio of services, we can accelerate growth. Wireless is one of the most exciting areas in media.”
Today, Virgin Mobile USA has more than 5 million customers.
“It is our baby, and Peter does have a close attachment to this company,” Schulman says. “We’ve seen it grow from an idea to a billion-and-a-half-dollar company. There’s a bond that forms not just between the people but also a passion for the company that Peter really exudes.”
When not at work, Lurie watches over his two little girls with Kristin, and co-chairs the board of the nonprofit Urban Arts Partnership in New York City. He recently picked up photography and cooking.
“I’m not even sure he knew how to make a salad, but since the first baby, he decided to make dinner every night, which he’s kept up for years,” says Kristin. “Miraculously, he’s a great cook.”
For one who faced such precarious uncertainty a few years ago, putting a gourmet dinner on the table every night isn’t half bad.
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