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Profile of Peter Gustavson – CEO, Encore FX

Custom house founder returns to the competitive foreign exchange market
The founder of Custom House, Victoria’s largest privately held business, got his entrepreneurial start at the age of five when he went door to door selling wooden hangers he found in the trash | Photo: Chung Chow

It shouldn't come as a surprise that the founder of Vancouver Island’s highest-valued private company got his entrepreneurial start at an early age. Peter Gustavson, now a 20-plus-year veteran of the international currency exchange industry, had his first taste of business before he even started grade school.

“I found a bunch of wooden hangers in a garbage can behind my apartment block,” Gustavson said with a chuckle. “I cleaned them up and went door to door selling them for a penny apiece. I was five years old.”

Since then, the only time Gustavson hasn’t been his own boss was when he worked for another firm as part of the requirements for getting his certification as a chartered account.

After selling his charted accountancy firm in his native Winnipeg, Gustavson embarked on what he described as a well-worn path from Manitoba to B.C. and settled in Vancouver. While on a vacation in Victoria, he noticed a retail space for lease in the historic Custom House building, sparking that entrepreneurial spirit once again.

“I thought to myself, ‘Hey, it’s across the street from the busiest tourist information centre in Canada. A currency exchange would probably do well.’”

And so Custom House Currency Exchange was born as a 600-foot kiosk in 1992. Gustavson said the business took off in an unexpected way, and pivoted a few times since its inception. Those pivots took Custom House from a retail currency exchange chain with a few locations in B.C. to the single largest privately held company in Victoria.

Gustavson said he stumbled into the corporate side of the business, first servicing small Victoria businesses that needed foreign exchange services. It just took off from there as untapped markets revealed themselves.

 “You peel back the onion and you just find more and more opportunities,” he said.

Eventually, Custom House grew into one of the biggest non-bank foreign exchange companies, with corporate customers all over the globe and transactions amounting to more than $35 billion.

In 2009, Gustavson decided to sell Custom House Currency Exchange to Western Union for $370 million. A few months later, he made a hefty donation of $10 million to the University of Victoria’s school of business. Gustavson, who sits on its board of advisers, said he was impressed that the school offered students the option to graduate with a specialization in entrepreneurship and was excited that young people would be taking the same path that he has followed his whole life.

“I tell people university was the best investment I’ve ever made,” said Gustavson, who graduated from the University of Manitoba. “For an old person like me, there’s nothing more exciting than to listen to these kids who are really excited about a business and about their ideas. It literally makes my skin tingle.”

A formal education is still important for an entrepreneur, Gustavson explained. His formal training in accountancy and finance is what gives him the eye to recognize opportunities and the discipline to take advantage of them. He likened an entrepreneur without training to a wild horse that doesn’t know in which direction to run.

Gustavson is helping entrepreneurs in another way, having founded his private equity firm, Gustavson Capital Corp., after selling Custom House. The firm has invested in a number of businesses since its creation, including some that are still in the formulation stages without any cash flow. However, when it comes to his own resources, Gustavson isn’t sure whether investing in others’ companies is right for him.

“You’re in someone else’s playing field. There are people who live and breathe that industry. You have to know the nuances and immerse yourself before you invest, and to do that is a big investment of time and money.”

Instead, Gustavson is putting his time and money towards a project in his home field by starting yet another foreign exchange firm. Although this new venture was established less than a year after his non-compete agreement with Western Union expired, Paul Lennox, president of the newly founded EncoreFX, said that another forex firm wasn’t always in the cards for Gustavson.

“The original plan was to invest in payment companies,” said Lennox, a former Custom House executive who later worked for Gustavson’s private equity company. “As we started to look at investment opportunities in that space it just became apparent that there was a huge opportunity to start fresh.”

According to Gustavson, the foreign exchange market has changed since his exit, but not all of it has been for the better.

“The change we’re seeing is that there’s less time being put into getting to know a customer and their company’s unique foreign exchange requirements.”

Gustavson said he and Lennox had friends within the industry who were “pining for the good old days,” when customer service was top priority. A few asked jokingly if Gustavson would start another Custom House, and as he once again peeled back the onion, he asked himself, “Why can’t we?”

Thus far, EncoreFX has seven offices, and, according to Lennox, most of its staff are former Custom House employees.

“We just put the word out and our inboxes have been flooded,” Lennox said.

Lennox describes Gustavson as a hands-off kind of manager and said that before the dust even settled on EncoreFX’s new offices, he was off making new deals and looking for new opportunities.

“I’m really just there to develop a strategy and empower people to make decisions,” Gustavson said. “My job is to make sure the right people have the right tools, and then get out of their way.”•