Money man

The man who built a billion dollar global business empire from a tiny shop in London tells Rhys Jones about his rags to riches success story and his plans to move into the Middle East. Thirty years ago, Lloyd Dorfman owned a small bureau de change kiosk in London’s Holborn. He ran the tiny booth himself 12 hours a day, seven days a week and had to close up just to go for a break. “I had to shut the shop to go to the toilet in in the hotel across the road because I didn’t have one,” he recalls.

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By  Rhys Jones Published  October 9, 2005

Money man|~|200-travelex.jpg|~|LAP OF LUXURY: Travelex founder Lloyd Dorfman is now worth US$1.1bn, but it took a lot of hard work and time to get there.|~|The man who built a billion dollar global business empire from a tiny shop in London tells Rhys Jones about his rags to riches success story and his plans to move into the Middle East. Thirty years ago, Lloyd Dorfman owned a small bureau de change kiosk in London’s Holborn. He ran the tiny booth himself 12 hours a day, seven days a week and had to close up just to go for a break. “I had to shut the shop to go to the toilet in in the hotel across the road because I didn’t have one,” he recalls. Today, Lloyd Dorfman is worth US$1.1 billion. And his little toiletless kiosk is now Travelex — the world’s largest retail foreign exchange business, which has an annual turnover exceeding US$44 billion. Headquartered in London, the privately owned group provides overseas-currency payment facilities for big business as well as spending money for travellers. Dorfman certainly finds it easier to pop out for a toilet break these days — he can hand over the reins to any of his 6000 employees worldwide. Nevertheless, the 53-year-old Londoner still finds it hard to believe that his once modest company is valued at over US$1.75 billion. “I somehow went from one little shop on my own to having built a global business. I occasionally step back and think ‘wow, how did that all happen?’,” Dorfman candidly admits. “It has been and continues to be a commercial venture the like of which I never imagined,” he adds. Travelex’s retail operations have grown rapidly since Dorfman started his one-man enterprise back in 1976. It now operates over 700 retail travel money branches, 400 of which are located at airports; comprising the largest such network in the world. Simply put, Travelex serves over 1.3 billion people in 112 different countries across the United States, Canada, Australia, New Zealand, Asia and Continental Europe. Now Dorfman has the Middle East in his sights. “In the Gulf, things are expanding and developing at an unbelievably rapid pace,” he explains. “This is a part of the world where Travelex only has a very small presence but I’m keen to have a much bigger one,” he adds. Travelex moved into the region two and a half years ago with an operation in Oman Airport, which a year later expanded to include an outlet in Bahrain Airport and an office in Dubai. And although Dorfman is keen to see Travelex build its retail and airport-based businesses in the region, it is in the Middle East’s remittance market that he sees the most potential. “We have a money transfer service product, which is our equivalent to Western Union and MoneyGram, who are the only two global operators in that market, but if anyone can become the third global force in that business I think we can,” he explains. “We come from small and humble beginnings, but I reckon we’ve got everything to shoot for and in the remittance market the Middle East is one of the largest markets in the world,” he says. Travelex recently introduced a range of reloadable, pre-paid debit cards into other markets with considerable success. As a result, Dorfman is keen to launch these Visa-branded top-up cards in the Middle East. “It’s a bit like the plastic travellers cheque of the 21st century and I think it has application here,” he says. “Again, in the money transfer area immigrant workers in the region looking to send money home will actually use this as a way of doing it, so it could be a big hit,” he adds. Dorfman is keen to stress the importance of Travelex’s airport retail business, which he calls the company’s “shop window”. But despite the fact that this is worth some 20% of the group’s profitability he feels there is more scope to develop Travelex’s commercial foreign exchange segment — an international payments business principally for corporate customers — in the region.||**||Big opportunities|~||~||~|“There’s a big opportunity to develop that business here in the Middle East because we are the world’s largest non-bank provider of international payment services, so for us it’s very serious,” explains Dorfman. “As well as the usual corporates, we are looking to talk to small and medium-sized banks for whom there’s an opportunity to enter into a white labelling relationship, which we do elsewhere in the world,” he continues, adding that he believes the region is a “ripe market for Travelex to develop its suite of products”. Ripe is certainly the right word, especially in the Gulf’s burgeoning tourism industry, which is full of rich pickings. Dubai alone is expecting 10 million visitors by 2010 and is somewhere Dorfman is clearly impressed by, both in terms of growth and future ambitions. “I’ve seen pictures of Dubai’s main drag back in 1990, and when you look back at how that looked it’s a shining example of what you can achieve with major investment and the growth that generates as a result of that,” he says. “From a Dubai point of view, tourism has totally changed the place,” he adds. The transformation of the travel and tourism industry has obviously played a huge part in Travelex’s success over the past quarter of a century. But it’s not just in a business sense that Dorfman is grateful for the travel revolution — he believes it will continue to have a positive effect in many different facets of life. “Travel is great for the tourism industry and in terms of international relations — for people feeling more comfortable with each other and fostering good cosmopolitan understanding around the world,” Dorfman passionately asserts. “The more that people travel and exchange cultures the better — it is a good, healthy thing,” he adds. Dorfman is clearly a man passionate about travel and the experience it brings. In fact, he goes as far as to call people who don’t embrace the changes brought about by tourism “short-sighted and stupid”. It is also good economically, politically and “for world peace” he says, sounding rather statesman-like. Like a good politician Dorfman has strong-held beliefs — one of which is that entrepreneurship fosters business and generates prosperity “in every sense”. And he believes Dubai in particular is “reaping the dividends” of having created a “vibrant business friendly environment”. He also sites China’s turnaround as a case in point. “Look at the way China has gone after communism,” Dorfman explains intently. “They would have wrapped that great wall around the whole country if they could have done, but now they’ve removed trade barriers and are encouraging business, prosperity has spilled over,” he says. “I’m being a bit statesman-like here again, aren’t I? I’ll have to remember that I’m just a humble money changer!” And that’s what he was when he started out just under 30 years ago — although you wouldn’t guess that to look at him now. The strikingly tall, bespectacled businessman with the monogrammed shirt, gold cufflinks and manicured nails has the prosperous sheen of a man who has made it. Despite his riches and considerable success, you get the feeling Lloyd Dorfman isn’t yet ready to sit back and enjoy the ride. You actually get the impression that he never stops working. Even when he’s sitting opposite you with his legs crossed sipping green tea you feel his mind is working overtime.||**||Rags to riches|~||~||~|However, hard work wasn’t always something Dorfman was fond of. Prior to starting Travelex at the age of 24, “Mr.D”, as his staff now call him, wanted to go into law. “I wanted to become a barrister, so I went to the bar for a year and I liked it but wasn’t too keen on the studying,” he recalls, adding that business was always his real passion. “As a lad I always looked at the business pages before I looked at the sport pages because it was what I was interested in,” he explains. Academic work never really was Dorfman’s forté and unlike so many of his high-ranking colleagues, he took the do-it-yourself route to success and shunned a university education — something he quite obviously didn’t miss. “Education is a great thing, but it’s not necessarily the answer to everything. I didn’t go to university and so far I don’t feel I’ve suffered as a result,” he says with a wink. “I know people within my own organisation that didn’t have a university education, but had a little bit of sparkle, enthusiasm, passion and commitment and as an employer that’s really what you want,” he explains. After a brief but unsuccessful attempt at forging a legal career, Dorfman tried his hand at investment banking, not because he saw himself as a future banker but “to get as much commercial experience in the shortest possible space of time,” as Dorfman puts it. It didn’t work out quite as well as he had hoped however and turned into what he calls the “ultimate baptism of fire”. It was 1973 and the financial business community in London was thriving and going through an extremely vibrant and exciting stage. But three months into Dorfman’s short investment banking career the whole of London’s financial community became embroiled in a huge crisis. “Oil prices quadrupled overnight, there were miners strikes in the UK, three-day working weeks became the norm, the Conservative government of the time collapsed as did the property market and the stock market,” Dorfman recounts. “So as a young guy I got the most incredible apprenticeship in terms of seeing the business and financial community reeling with its back against the wall. It was a great learning experience looking back at it,” he adds. The result of these remarkable events was the formation of Travelex in 1976 and for the first few years the business grew slowly. Trade took a knock when the UK’s high-street banks started opening on Saturdays and Dorfman was stumped as to how to get Travelex into Britain’s southern ports where he thought the next opportunity would be. The first break came, however when he stopped at a service station and saw hordes of foreign coach-party tourists stopping off to stretch their legs. Today there are Travelex bureaux in motorway services all over Europe. Dorfman’s really big break came in 1985 when Travelex won the bid for an outlet in Heathrow’s new Terminal Four. British airline authorities were initially less than impressed with his repeated requests to be considered for a unit and Dorfman had to campaign hard just to be allowed to tender a bid. He had to persuade Hambros Bank to provide the heavyweight financial backing and the credibility that the clearing banks, with which he was competing, categorically refused to give him. Toughest of all, he had to make a bid based on a percentage of turnover with absolutely no previous airport trading experience and no way of predicting how much traffic the new terminal would carry. But this is where his cunning entrepreneurial talents came to the fore. “I got a gang of boys and girls and sent them down to Heathrow to pick up discarded receipts off the bank’s floors and bring them back to the office. The finance director sat down with this enormous pile of receipts and then totalled them all up and we got our number,” Dorfman remembers. “As it turned out, the estimate was quite accurate.” Another milestone was the US$800 million acquisition of Thomas Cook Financial Services business in 2001 — an acquisition which added a huge slice of corporate trade to Travelex’s more tourist-focused operations. The deal more than doubled the size of the business and was a move, which Dorfman admits was rather overwhelming. “For a private company to be making an US$800 million acquisition of a 160-year old company, which is three times its size and is its closest and fiercest competitor was pretty daunting,” he says. “But when these situations arise you dig deep down into yourself and think ‘if I’m up for any challenge I’m up for this one’ and that self-belief is a vital ingredient of any business person looking to build and grow any sort of business,” he adds. Another component of any successful entrepreneur is the ability to take risks, says Dorfman. However, he is quick to acknowledge that not everyone is comfortable gambling — especially in business. “Risk-taking is not everyone’s cup of tea, that doesn’t mean people who don’t take risks are any lesser for it,” he explains. “I’m a great believer that everyone should play to their strengths and recognise their weaknesses and some people are comfortable taking risks and some people prefer not to take risks,” he says. Dorfman made a less risky move last year by selling part of Travelex to private equity group Apax Partners for just over US$1.75 billion. Apax beat off competition from the private equity arm of investment group Goldman Sachs to buy a 63% stake. Dorfman retains 30% and continues to act as chairman and chief executive of the group — talk about a gamble paying off. “My first customer changed 300 French francs. And after 28 years, it was an opportunity to take some cash out,” he jokes. After netting such a huge payout you would think that Dorfman would be content to sit back on his millions and play a few rounds of golf or take a nice holiday. But having travelled around the world nearly all of his adult life being at home is a luxury for him these days. “I don’t play golf, I’m not into horse racing. I travel a lot so for most people travel is a treat but for me to stay at home is a treat,” he explains earnestly. “I’m a really boring bloke,” he says. But with the rags to riches roller coaster ride that has been his life — I, for one, really don’t believe him.||**||

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