Virgin Cola was poised to become a worthy rival to Coca-Cola and Pepsi when it started outselling both beverages in Britain. Virgin founder Richard Branson was so confident that his soda would also take America by storm that he staged an elaborate publicity stunt in which he drove a German tank through Times Square and pretended to blow up the neon Coca-Cola sign.

"The Coke sign didn't really blow up, but what [the stunt] did do was awaken a giant," Branson tells Inc. president and editor-in-chief Eric Schurenberg in an interview.

Branson says one of his colleagues told him that she was working for Coke at the time Virgin Cola launched, and she had warned the president of the company about Virgin's potential, saying it was "the one brand in the world that could actually topple Coke." According to Branson, Coca-Cola then sent a team with an unlimited budget to the U.K. Shortly after, Virgin Cola products began disappearing from the shelves nationwide.

"A very big Goliath decided to squash us, and I think they did it pretty effectively actually," Branson says. Virgin companies, however, have succeeded against big competitors before, including record labels and major airlines. So to what does Branson attribute Virgin Cola's demise?

"If you are going to be a David taking on a Goliath, you have to have something radically different to offer," he says. When British Airways launched a "dirty tricks" campaign against newcomer Virgin Atlantic, Branson says, travelers stood by the upstart because Virgin had better planes and customer service. According to Branson, a can of Virgin Cola and a can of Coke were indistinguishable in terms of quality.

"Ever since then, we haven't launched new businesses against bigger competitors unless we have a product that is supremely better," he says.

To hear more from Branson about what he learned from the failed Virgin venture, watch the video below.