Building an exponential business: Fourex, growing at 20% a month, gets more kudos

Startups with great business ideas that are valued at $1bn or more, so called unicorns, have a common trait – exponential growth. That kind of growth brings its own challenges, mostly how to staff a mushrooming enterprise without losing the pacy ethos. With a business that’s growing at 20% a month, Fourex is now on that roller coaster ride. In London,’s Alec Hogg caught up with Fourex co-founder Jeff Paterson and Hugh Bauer of the company’s financial partner Genesis.

Jeff Paterson, co-founder of Fourex, at one of the foreign exchange machines in London.
Jeff Paterson, co-founder of Fourex, at one of the foreign exchange machines in London.

I’m with Jeff Patterson. We’ve just been having a look Jeff, at your Fourex installation here at Kings Cross. It seems to be pretty busy – taking off.

Yes. I think when we arrived, there must have been about four or five people queuing. The last guy to finish up, took out about £500, which is a nice transaction for us

The reason I wanted to get together with you again after our last discussion was that you’ve now been nominated amongst the 140 finalists in 18 categories in the National Business Awards that Lloyds Bank put together here. How does one get into a competition like this in the first place?

Lloyds actually approached us to ask us to enter in a couple of categories and we were thrilled to be nominated for the Duke of York Entrepreneur of the Year. It was just an application that we had to do with a business plan, and we were nominated out of several thousand companies.

That’s pretty good. So they scan the marketplace, find the more exciting new businesses, and they’ve picked you.


I see there are ten finalists. Have you had a look at your competition?

I have had a brief look. I think we’ve got a very good chance at pulling this off.

What’s the value of it? The Duke of York, I presume, comes with some cachet.

It doesn’t come with any cash, but it’s considered to be the Oscars of business in the U.K. This is the biggest business award ceremony in the U.K. every year.

What’s the process from here?

In the middle of September, we have to pitch to a panel of Lloyds’ judges along with the other nine contestants, for the award. They shortlist us and then nominate us. The winner gets announced at a ceremony in November.

So you’d be going along to a gala evening.

Yes, I’d have to get the tux out. Pull the mothballs out and put the tux on.

Jeff, how’s the business been going since we last chatted?

Actually, this morning we just came out of a meeting where we have now finalised our contract with Transport for London and this will see the rollout of significantly more numbers across their network. We’ve also recently signed contracts with Virgin Trains, extended our contract with West Fields and we are seriously looking at a franchise abroad at the moment. In terms of numbers and usage, we’re seeing a 20% month-on-month growth through usage to the machines that we’ve got.

That’s an exponential business, which is not an easy business to manage.

It’s very difficult to go from a start-up to an operational business. We are at that stage now where we’re past the start-up stage and we are now looking at how to run a serious business because the way we’re growing and the more machines we have, we have a serious logistical business on our hands now.

Exponential businesses are not easy to actually manage.

Look, we never for one second, thought that this was a five or ten-machine business. For us, this was always a global business. I’ve just finished reading Elon Musk’s book. If you look at what that guy has done, what we’re doing is so minute compared to what that guy’s achieved but it also shows you that nothing’s impossible. If you put your mind to it, work hard, and believe in what you’re doing, anything is possible.

Jeff, I see that you’re also putting a team around you. My friend Simon Reader here has joined you and you’ve got Hugh Bauer (we’ll talk to him in a moment from a financing side). Is that part of the challenge?

Absolutely. It’s getting the right people into place as we grow. The last six months has been Research & Development and now we’re on a massive growth path. We’re getting some fantastic people in place to take over the operation and we can grow exponentially. Having Hugh and Genesis involved has been fantastic. They support us from South Africa, but are very involved in the running of the business. We’ve brought some great partners on, who have the same vision as we do. We’ve got a global business here. We want to grow this to its full potential and we’ve brought on the right partners to do that.

Hugh, the last time we chatted was when you were still with Investec.

Yes. It’s a while back but that was a good couple of years ago – possibly five or six years ago.

Genesis… Larry Lipschitz (your partner there): he’s a well-known name. How did you guys get to know about Fourex?

Larry’s involved with Genesis as a group and we heard the guys and I think Jeff was on at the time, on the John Robbie show in 702. We just heard them being interviewed prior to their winning Pitch to Rich. We thought it was an amazing idea, called them up, got on a plane, and I think that within three days, we’d met the guys. We built a rapport with them. We love the business and we agreed on a deal.

Jeff, what was it about them that made you want to do business with Hugh and Larry?

It was the same vision. We shared it instantly. I’ll never forget the meeting we had at St. Pancras Hotel. We sat down and within ten minutes, the guys gave us a roadmap of what they believed they could do. We knew we had a multi-million Pound business here but after ten minutes of discussing, we had a Billion-Dollar business if we were smart and we put our heads together, and built a great business.


Why them? Why not somebody else?

Over the past five years, I must have pitched this idea to 1000 people. We’ve had rejections like, “Why would anybody invest in coin business? There’s no money in coin.” These guys completely got what we were trying to do here. We were trying to redesign the entire currency exchange business. Taking away the mystery, putting the customer first, giving the customer a great deal, and bringing digital technology into an industry that hasn’t seen innovation in 30 years. We had the opportunity to revolutionise the biggest industry in the world by adding technology and smarts to a box, and that’s what was exciting to us.

Why do you think that the other guys you pitched to, never got it?

Because it’s never been done before. It was very interesting for us because we’d pitched it. All our friends and family loved it. We could never get anybody to put £1m or £2m into the business, but every single one of our friends and family said, “Look, if you ever want to raise money, let us know and we’ll chuck a couple of thousand Pounds in.” That’s why we decided to crowd fund and that’s what got us initial investment. When we won Richard Branson’s Pitch to Rich; that’s when everybody woke up and said, “Actually, I get what you guys are trying to do.” There’s got to be value in the low value coins. There’s so much of this money lying around in the world. Not only in the U.K., but in the world. Then everybody got it. Once we’d got it and Richard Branson actually aid, “You know what? I get that”, that was a huge turning point for us. What I love is that Genesis saw that before we won it. We were actually in discussions with them before we’d won that, so it wasn’t a case of ‘oh, you guys have won it and now we’re interested’. They were involved with us before that.

So they didn’t throw lifebelt at you while you were already on the shore. What was it that got you another South African based in London, perhaps? Might that have had something to do with it?

I think conceptually, as Jeff said, we though the idea was brilliant and we saw it as a potentially global business. We see, potentially, hundreds of thousands of these kiosks globally. When you look, we’re sitting here at St. Pancras station. You see the people getting off the Euro Star and it’s one of those industries that hasn’t been disrupted. People are still paying too much to change their foreign currency into Pounds, Euros, or whatever they need to do. Here was an opportunity to democratise that space in financial services.

Did the South African connection perhaps help?

Yes. They definitely played a part. When you meet someone eyeball-to-eyeball, you want to build a rapport and see who’s speaking to him. Dealing with ex-South Africans, there is that cultural alignment but that’s only part of it. We believed in the broader vision for this business. As Jeff says, we see this as potentially, a business with hundreds of thousands of kiosks globally. Additionally, we saw how committed the guys were to the business. They’ve spent three years prior to our meeting them, collecting coins, building the technology, travelling around the world, staying in tiny motels where [Tref and El? 0:08:53.9] used to have beds so close to each other that their feet would touch. That’s the level of commitment to the business. When you see entrepreneurs so committed to the business, it’s something that you want to be involved in.

These are big numbers, though. You talk about hundreds of thousands of these kiosks, which don’t come cheap. Have you got the capital to be able to promote it or back it?

Well, as we grow… Obviously, Jeff mentioned that we’re seeing 20% month-on-month growth in the volumes there so the business will obviously be self-funding but additionally, we’ve got potential to chat with the Finance House in terms of financing the kiosks. Earlier on, we were receiving two enquiries per day from parties that were interested in franchising globally. Now it’s slowed down somewhat to a couple of week so also, we’re going to grow through possibly partnering with people in certain countries and we see a huge growth curve for this business.

A listing, Jeff: is that on your horizon?

That’s Hugh’s department but absolutely, nothing’s impossible here. What’s nice about this business is that each region holds its own potential so it means we can ring-fence each region quite easily and make a profit from each region, and that’s exciting for us.

This big National Business Awards: it’s in its 15th year now. Last year, your category for New Entrepreneurs was won by a 19-year old who’s got healthy eating takeaway ‘grab and go’s’ as they call it. It’s quite a long way from there to Fourex, and for a guy who might be double his age. Do you think that puts you at a disadvantage?

Absolutely not. What’s nice about being a young entrepreneur is that you have no fear but for us, I believe we’ve got such a great product and we’ve done the hard yards to bring it to market. There’s a huge difference between having a great idea, and having a great idea and taking it to market. I think we’ve done that and grown it to a point where it’s beyond return now. I think we’ve got a really good shot. There’s some great competition. We’re up against some great competition but I think we’ve got a really good chance at pulling this off.

I guess, like the Virgin competition; if you could win this one, it could give the marketing of the business another big boost.

Absolutely. From the Virgin competition, we must have had £5m of marketing. We still get people down at the kiosk saying, “Oh, I saw you. You won the Virgin competition last year” and we still get tweets from Richard Branson saying, “Oh, I see Fourex is doing this” so that’s what it’s all about. It’s exposure of our brand through competitions like this.

The whole story of exponentiality (just to close off with) is that at Silicon Valley, they know how to do things there. The rest of the world…once you get 20% month-on-month growth, it becomes a runaway train. What have you got in place from the financing side, to be able to manage this?

Part of it is exactly as you say; it’s runaway growth but also, as opposed to businesses – potentially like some of these global unicorns – is that our business is highly cash flow generative. Some of them have these huge valuations but they don’t spit off cash. This business is a business, which is highly cash generative so there’s that element. In addition, once we’re generating all the cash and you start to get that virtual cycle of success, then finance houses (to some degree) start lining up. Along with the cash generated in the business with potential financing and along with franchise partners, there’s a couple of avenues that we can look to.

What about a listing?

Who knows? I think it’s quite early to talk about that. It’s not something that we’re looking to do imminently, but we’ll see. We’ll see where the business goes.

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