The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

September 24, 2002

Written by Bob Meyer, Editor of BarterNews

CFO's May Avoid Barter Transactions

Chief Financial Officers are adjusting to today's new realities such as government's ultimatums (i.e. the Sarbanes-Oxley Act requiring CEOs and CFOs to vouch for the integrity of financial statements), investors who are skeptical, a less than robust economy, along with tighter financial conditions due to mountains of debt.

A shift and refocusing toward conservatism is now underway, back to the more traditional financial planning and analysis--taking less risk.

For those in the barter industry such thinking could have a dramatic affect. Although barter transactions make economic sense and are permitted under generally accepted accounting practices, if a CFO feels investors won't like it--which translates into stock dropping due to investors' wrath (which happened this spring with Verisign and others when barter transactions were disclosed)--then the gatekeepers may well be hesitant to move forward and sign off on a barter transaction.

Moral of the story: As a society we all will pay, in one way or another, for the unethical, deceitful, and criminal behavior of Enron, Worldcom, Tyco, Global Crossing and others. The entrepreneurial environment is still the driving force behind America's resilience, but an important ingredient for it to function and thrive is trust and honesty.

BarterNews Magazine—Issue #59—Now Available

Our "Focus On Excellence" section looks at Stephen Webster's Alliance Barter. Check it out!

Also in this issue we bring you some of the most insightful articles ever published in BarterNews, such as how one company achieved major profits for next to nothing and another (trade exchange named in the article) used this information to close a multi-million dollar deal with a major corporation. You won't want to miss the information and contacts in this issue!

Where Are We Headed?
Part II...The Future Of The Commercial Barter Industry!

Is consolidation dead? What goals and visions are to be shared? Will there be a push toward "no cash" fees? The industry's coming fourth generation is on the horizon—how will that affect you? Are the national trade associations (IRTA & NATE) harbingers of what's ahead? Will there be little progress ahead without a new attitude?

Those subjects and many more were expressed by the following industry practitioners...
David Johnstone, president of IRTA Global
Peter Korda, chief executive of BXI Exchange
John & Fran Madsen, founders of Interchange
Steeve Croteau, co-founder of BarterNet
Tom McDowell, executive director of NATE
Jacqui Macy, former director of Int'l Reciprocity for Universal Currency
Bruce Kamm, president of InterTrade Technologies
Alan Zimmelman, former VP of Ubarter.com
James Bolin, chief executive of Nighthawk Industries
Reiner Husemann, founder of Euro Barter Business

Here's The Amazing Story On How The World's Largest Privately Owned Software Company Traded For Its Product

Poor But Savvy Entrepreneurs Use Barter To Build Wealth

Fifty-nine-year-old Jim Goodnight owns two-thirds of SAS Institute, a company started twenty six years ago after developing a powerful statistical analysis program. (The United States Census Bureau and the Department of Agriculture both have used their services.)

Using the SAS system, a customer can integrate and organize massive amounts of data that are stored in incompatible computers--IBM mainframes, PCs, Mac's and others--and then view and mine the data on virtually any computer platform. Users can break down data and test up to 16,000 variables.

Goodnight was an under-graduate applied-mathematics major at North Carolina State University. He spent a year with General Electric working on the Apollo space program before receiving his doctorate in statistics.

Subsequently he joined the faculty at his alma mater. But the position was a "soft money" appointment, meaning Goodnight had to bring in enough outside funding to cover his salary and research.

At the same time Goodnight teamed with John Sall, a fellow university researcher who had worked two years at IBM developing the Pentagon's information system. Sall saw an enormous brainpower waste in having to write a new program each time they wanted to analyze data.

After conversations Goodnight and Sall decided to develop a uniform program that could be used over and over; one that could solve numerous kinds of problems. They dubbed it the Statistical Analysis System.

With their grant money running low, and their new working program developed, the two researchers decided to strike out on their own.

In 1976 they approached North Carolina State and proposed a trade...give them all copyrights to the SAS program in exchange for free upgrades. The proposal was accepted, though Goodnight admitted, "They didn't know what software was, so they didn't know how to control it."

Thus another entrepreneurial success story, and another creative use of barter. One which enabled Goodnight and Sall to join the ranks of the current Forbes 400...Goodnight's estimated worth is $3.1 billion and Sall's worth is $1.5 billion.

Iceland Consumer Spending Primarily Done Electronically

Two weeks ago we reported on the Visa network and its message for the commercial barter industry. As a follow-up on that story we wanted to share the following information, because it shows where we're headed.

The ideal incubator for the digital future is the tiny, monolithic and remote country of Iceland...inhabited by only 290,000 people. Yet they provide us with a look into the future, as nearly 70% of all consumer spending there is done electronically (versus 39% in the United States).

Paper checks are passé in Iceland. They pay their taxes with Visa, and use credit and debit cards to store money onto cell phone calling cards, using their phones to buy movie tickets, utility bills and the monthly rent. Visa has an incredible 70% market share in Iceland, well ahead of rival MasterCard Europe.

More Comments On Trade Brokering

Terry Brandfass (Tuesday Report August 20) is 100% correct if one expects to earn their living by being a traditional barter broker. She is not correct if one does not have to earn their living by being a traditional barter broker.

Bottom line? There are a lot of ways to conduct business. Barter. Cash. With brokers. Direct. The list goes on. There is a place for all of it. Position yourself where you want to be and go for it! If what barter-bay.com is doing scares you, then maybe one should take a look at what they are (or are not) doing and expand their horizons.

Reid Nunn
Barter-bay.com

How many back issues of BarterNews have you read? Did you know that the cover of every issue ever published is found on our "Issues Page?" Click Here

• Hoteliers are in a holding pattern and not expecting a turnaround until at least 2003. About 19% of hotels didn't generate enough revenue to pay their debt in 2001, according to an analysis of nearly 4,000 hotel financial statements by Hospitality Research Group.

  The November issue of The Competitive Edge newsletter will have a significant article on why savvy hoteliers would be wise to work with a local trade exchange.

  And on page 157 of FastStart Program I, a five page article reports on the dramatic results of a national survey--what hoteliers think about barter. (CFOs from 51% of the 100 largest lodging chains in the USA and Canada responded to the questionnaire.)

• Ibart believes that its Merchant Messenger will revolutionize the barter industry, in that one can send a request for purchase to anyone, anywhere, at anytime...and use barter dollars to buy those purchases. For more details: www.ibart.com.

• Two Stanford University researchers have written a scathing article in the current Academy of Management Journal. They argue that the deluge of MBA's, 112,000 in 2001 (35 times the number of 40 years ago), dilutes the degree's value. They also contend that most MBA programs mollycoddle students and teach ineffectual skills.

• Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of our Home Page (right hand corner) to sign up!

• Momentum is building for an international plan to make it easier for developing nations to declare bankruptcy and renegotiate their debts and stretch out payments. Top economic officials from the International Monetary Fund's 184 member nations are likely to give the plan a boost when they meet at the end of the month in Washington, D.C.

• GE Global eXchange Services (www.GXS.com) operates one of the largest B2B e-commerce networks in the world, with more than 100,000 trading partners. The network's 1 billion annual transactions account for $1 trillion in goods and services. (Note: This is a cash based business.)

• Last chance... One of the most desired clients within a trade exchange is a restaurant. The September issue of The Competitive Edge shows why restaurateurs in your community need the services of a trade exchange. (This issue could be worth thousands to you!)

  The article includes pie charts showing costs for full service and limited service restaurants. Powerful material for your sales efforts. So, check out the hottest marketing tool in the industry...click here!

This Issue's Glossary of Terms:

Feed:
The excess cash required to service a negative cash-flow property (eater).

Fixer-Upper:
A run-down property that needs to be upgraded.