How an entrepreneur struck gold in Japan's FX market

Jim Gow is a lanky Brit with the distinction of being a successful entrepreneur, an especially small group in Japan, whether Japanese or foreign. There is something unusually engaging about his story. Perhaps it's the English gift of not taking things too seriously. Gow does not come across as your usual suited-and-booted, MBA-brainwashed, capitalist foot soldier. Rather, he candidly admits to being not very good at maths, and to having been fired from several jobs. A classic case of a rolling stone who ended up in Japan and made it big -- although one hasn't heard that kind of story since the 1980s.

Gow, who knew he had hit it big on his 40^th birthday (or so his superstitious girlfriend told him after he was struck by a falling coconut one night in Goa), has a background in money brokering and advertising. Both of these have helped him in his current business. Brokering has an obvious connection, while advertising gave him a keen sense of marketing.

He bartered some broken-down Japanese into a job with a UK money broker in the early 1990s, and they sent him to Tokyo within six months. That was a decision he was happy with, having always been keen to move around and explore the world. He worked as a money broker in Tokyo from 1992 to 2000, when he moved to ING as a sales-trader. "At that point, I woke up to the fact that I was actually really quite ignorant about finance," he said. However, he made up for that with what he reckons was an unusual degree of empathy with the Japanese.

"Me and my then-partner also got on with the Japanese, and had Japanese friends. I think that was important in getting things done, especially once we had started our business. We avoided all those disastrous faux-pas that foreigners fresh off the boat so often make," he said.

It was in 2002 that Gow decided to make the step to founding his own business. Bizarrely, he was on the point of getting on to a boat and setting off for Vancouver, where a friend had suggested setting up a Japanese-style pub. But his crony from his money brokering days suggested he set up an online FX brokerage instead. "I was not far from being 40 and pretty desperate to have something sorted out. So this venture was very important for me," he recalled.

But the first two years were not encouraging. The industry was largely deregulated, the upside of which was that the team did not have to cope with a strict regulator. The downside was that the industry had a bad reputation from the presence of numerous dishonest operators in a fragmented market. Spreads were wide, and high trading commissions were routine. FXOnline was signing up customers at a pitiful rate -- less than two per week, on average. In addition, Gow did not pay himself a salary for two years. In the end, the situation grew so dire that he went back to work for somebody else -- and that first pay-check was very welcome. That apart, going back to work for someone else was an uncomfortable experience: "It was like going back in time to what I'd been doing years ago -- not a good feeling. The only good thing was that I was able to work on FXOnline in my spare time," he says.

By 2005, the time was ripe for some bold decisions. The firm could either struggle on, or it could look to what was happening in the West and adapt it to Japan. It was this cultural arbitrage that proved the key to Gow's future success. "Even when we first set up, the Japanese brokerages seemed blind to what was going on overseas. They were developing their own electronic trading systems from scratch. We looked oversees, found some great technology, and became a franchisee. So we got a top-of-the-line system, which gave us a major first-mover advantage over the local players," he recalled.