Profile Steve Dengler ‘87 & Beric Farmer ‘87
Currency Giant XE.com Built on Friendship, Perseverance
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In 1993, Beric Farmer ’87 and Steve Dengler ’87, joined forces to start a business. They weren’t sure what this business would be, but away they went. Shortly thereafter, they put a simple currency conversion program (what we’d now call an ‘App’) onto their website as a way to demonstrate to potential consulting clients how websites can be dynamic rather than just provide static information. Little did they know that more than a decade later, based on that simple program, they would be heading the most popular currency site on the Internet – and one of the busiest websites in the world – with the most convenient and most inexpensive currency payment service in the world of finance. Many readers have probably used XE.com simply to convert from one currency to another. But they also allow you to make payments in a foreign currency or transfer money between bank accounts held in different currencies. It’s easy to set up, and very convenient for those making payments internationally. Beric and Steve met in grade 9 at St. Andrew’s and have been fast friends ever since. This friendship, plus their perseverance and “eyes-wide-open” policy has been a winning combination ever since their XE.com conversion site hit the Internet. They have grown surely and steadily, though, they admit, cautiously. That caution has been fortuitous, keeping them afloat during the dot-com crash of 2000 when many good firms like theirs went under. Talkative, personable and enthusiastic about what they do, their story is best told through their own words, with excerpts from a two-and-a-half hour interview conducted in October 2010. On the birth of XE.com STEVE: In 1995, ’96, ’97, the Internet was starting to reach critical mass. We were doing websites for some people at the time, but everyone was just using a static page: one page of information, then another page of information. We wanted to show people that these pages could actually do something. We thought: maybe a currency converter. So we made one, put it up, and right away it started getting used. We were Netscape affiliate partners back when Netscape was a big deal. We got onto their “What’s Cool” list. From that point on we started experiencing tremendous growth. 30 FALL 2010
On the quiet popularity of the site: STEVE: Everybody out there who needs to know about currency knows our site, but I don’t think there is an appreciation that practically everyone else also knows the site. You might use it, and Fred and Bill might use it, but you’re not all aware that you all use it. We’re now solid near a rank of 355 globally, which means there are only 354 sites on the Internet that get used more than we do.
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There are only 354 sites on the Internet that get used more than we do.
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On the keys to the growth of XE.com STEVE: Really, what was important was just the ability to get in and get involved and stay involved, because we simply didn’t have a business model. We used to joke that one day our company would be nothing but currency services. Pretty soon that became less and less of a joke until one day that’s the way it was. That progression from nothing to everything happened from 1993 to maybe 2000. Seven years, that’s a long time. Really, it’s all about what they call entrepreneurial spirit. Not any one particular skill – just staying in the game, keeping your eyes open and making yourself useful. BERIC: I don’t think I would have thought of it in these terms back then, but more just a desire to succeed. You decide to start this business, so, first, it means you’re willing to work hard. Second, you care about doing a good job, and, third, you keep your eyes open. You look, and you realize when something is not working. You realize when something might be a good opportunity. One huge part of it was the decision to get involved in the Internet, which was just becoming commercialized. That part of things ended up exploding very rapidly. It was a very forgiving industry to be in at that time, because you could make mistakes and still grow and succeed.
STEPHEN KIMMERER
Steve and Beric stand at the entance to XE.com world headquarters in Newmarket
THE ANDREAN 31
On protecting the XE.com market share BERIC: We have people who come to our site because they have known about us for 15 years. It’s hard for a competitor to overcome that habit alone. The way Internet businesses gain an audience now is to advertise, and it would probably cost millions and millions of dollars to try and develop an audience of our size from scratch.... There are larger players who could make a dent in what we have though. So part of what we are trying to do is to build up our community – a very large group of people who use our site all the time. You have to build that from scratch. You can’t just buy that community. On the role of their friendship in building a successful business STEVE: People say, “Oh, luck doesn’t play a role in business strategy.” Luck doesn’t play the only role in business, but it’s in there. I mean, you turn left instead of right, you meet a person or you don’t meet a person. But it takes a lot more than luck. First of all: the friendship between me and Beric. Our friendship has been in many ways the cornerstone
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People say, “Oh, luck doesn’t play a role in business strategy.” Luck doesn’t play the only role in business, but it’s in there.
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of the business, just because you always know that no matter how bad something gets – and things have gotten pretty bad over the years – you know you have someone who is going to be there. They’re going to be honest with you; they’re going to be supportive. Or conversely, if you’re making a mistake, they’re not going to be afraid to say, “I don’t think this is what we should be doing.” Over the lifetime of the business, that’s an incredibly positive factor that can’t be replicated by just taking two strangers and starting a business together. On the importance of remaining independent in growing the business STEVE: We were looking one day at the business – at this point it was just the two of us, right? We had two guys and we had the world’s largest currency website. We used to joke, “At what other point in history could two guys have the biggest anything?” Even the world’s biggest ball of string would take at least a dozen people to roll, right? Beric came in and said, “Look at the money we’re making. We could just go home 32 FALL 2010
and collect cheques.” Funny thing was, it wasn’t too long after that – around 2000 – that the bottom just dropped out of the market. We were very lucky because we never had any outside financing or anything like that. We were completely bootstrapped and organically grown. Nobody was hovering over us saying, “No, no, I need profitability two quarters or three quarters from now!” So when the bottom fell out of the market we hadn’t grown to rely on that money to pay investors. Other companies had. When the crash came, lots of other good companies were gone. On turning a small company into a big company BERIC: For years we didn’t have to manage people. When you’re a small company, everybody knows what’s happening, so you don’t have to make any intentional effort to make sure that’s the case. Everybody just knows. As you grow, you start realizing, “I can’t take that for granted anymore. I actually have to make an effort to ensure that everyone understands what’s going on, what we’re trying to achieve, make sure everyone is on the same page.” You have to start consciously ensuring that important things are communicated, and realize that while it’s great to have more resources to get things done, continuing to develop the business now requires paying attention to the people side of things within your company. On maintaining balance when you run a booming business BERIC: It’s very good that I got married and had a family. It keeps me from just working all the time, because I easily could. When I get my teeth into a problem I tend to be very tenacious and just hammer away at it until it’s solved. But when you have kids and a wife, there’s something else in your life that is very rewarding and enjoyable. Plus, you realize that you have a role to play and you have to be there. And so, at the end of the work day, you’re much more likely to say, “Okay, it’s time to go home.” If I were single, I think I’d work much longer days than I do. And I’m not sure that would be good for me. Today, XE.com operates with 20 employees in a Newmarket office that is doubling its floor space in anticipation of things to come. The company is in hiring mode as new possibilities in the global marketplace bloom. Steve lives in Woodbridge, about 35 minutes away, with his wife and two sons, ages 6 and 3. Beric lives in Newmarket with his wife, a son 11 and a daughter 8. Their new business cards call them “The World’s Favourite Currency Site,” and include seven words Beric and Steve have heard more than any other: “I use your site all the time!” To read the entire interview with Steve Dengler and Beric Farmer, and to learn more about the fascinating ascension of XE.com, go to www.sac.on.ca JIM MCGILLIVRAY