H- whats KP smokin lately? E.Bartering??
>>January 17, 2000
E-Business: First E-Shopping,
Now E-Swapping Is Getting Hot
By GEORGE ANDERS
Staff Reporter of THE WALL STREET JOURNAL
Bippy Siegal has sold boats in Saudi Arabia and installed cash machines in shopping malls across America. Now the 32-year-old entrepreneur believes he has the next big Internet idea: forming a giant barter exchange online.
To most people, the word "barter" evokes images of medieval peasants. But Mr. Siegal wants to bring it into the 21st century on a huge scale. Born Robert Mark Siegal, he says he legally changed his name a decade ago to Bippy because he likes it more. He speaks of creating a new economy in which almost everyone swaps goods and services online, using a trade currency that he informally calls "Bippy dollars."
You may snicker, but Mr. Siegal already has 130 employees and $50 million in venture capital backing from patrons including American Express Co., Kleiner Perkins Caufield & Byers and Kohlberg Kravis Roberts & Co. His Redwood Shores, Calif., company, BigVine.com Inc., plans to launch its Web site Monday (www.bigvine.com). BigVine's goal: to make its site the place to swap everything from pest-removal contracts to auditing services.
Meanwhile, another start-up, San Francisco-based BarterTrust.com Inc. (www.BarterTrust.com), has acquired a string of traditional barter exchanges and is about to relaunch them as a nationwide Internet market. It has raised $55 million in venture financing and is likely this week to line up more cash from investors including a General Motors Corp. affiliate. And Seattle-based uBarter.com Inc. (www.ubarter.com) last month agreed to be sold to another Seattle electronic-commerce company, ShopNow.com Inc., for $45 million.
Does this barter revival make any sense? "My first reaction was quizzical at best," says Laura Tyson, dean of the University of California, Berkeley, business school and the former chair of President Clinton's Council of Economic Advisers. "We have a working cash economy. That's how goods and services flow." When Internet barter advocates began talking to her last summer, she recalls, the idea of swapping goods without using cash seemed almost like a pagan relic.
After scoffing last year, though, Ms. Tyson has joined the advisory board of BarterTrust. That gets her stock options in the closely held company, and a chance to probe a corner of the economy that she never had examined before. "Once you find out that there is a significant amount of legitimate barter going on already," she says, "you start to think that Internet technology should enable it to become even bigger."
Officially reported barter totals an estimated $16 billion a year, or 0.2% of the total U.S. economy. Barter is used most commonly by radio stations, print shops, resorts and small businesses seeking extra customers that otherwise wouldn't pay cash.
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Bar Stools and Body Wraps
A sampling of goods and services available for barter online at BarterTrust.com.
Category Inventory
Advertising specialties Flashing strobe nite-lites, engraved awards, trophies
Animal removal services Commercial and residential rodent control
Art galleries & dealers Original oil paintings, specializing in velvet art, etc.
Automobile sunroofs Pop-up and power sun roofs
Breakfast nooks & booths Restaurant booths and bar stools, new and used
Ceiling cleaning Cleaning of accoustical ceiling tiles
Christmas trees & wreathes Artificial Christmas trees and wreaths
Costumes: masquerade & theatrical Octoberfest costumes from Austria, Germany
Gift baskets Baskets with candles and accessories
Massages Day spa offering massage, facials, body wraps, etc.
Mat rental Entry mat rental -- many years of fine service
Mulches Hardwood mulch delivered by the truck load
Oral surgeons Tooth extractions and gum surgery
Screws Gift sets of screws and fasteners
Tire dealers New & used tires for large trucks only
Making barter appealing on the Internet is no small task. Even a well-run barter system forces participants to buy goods and services within its network -- creating the "church-raffle" risk, in which sellers belatedly discover they can't spend barter proceeds on anything useful to them. What's more, some traditional barter exchanges have collapsed in recent years amid allegations of fraud.
Online barter enthusiasts think they can lick all those problems. "The Internet makes information cheap and fast," says William Hearst III, a Kleiner Perkins partner who is on the board of BigVine. "The premise here is that we can create a kind of Nasdaq for barter goods, where members can instantly see enormous numbers of listings."
Mr. Hearst's venture firm has backed Internet stars such as America Online Inc. and Amazon.com Inc. He had some first-hand experience bartering ad pages in his previous career as publisher of the San Francisco Examiner.
BigVine plans mailings to two million American Express card holders at small businesses. "We think this is a great service to bring to our customers' attention," says Eileen Serra, head of American Express's small-business card-holder unit. American Express has invested about $10 million for a 10% stake in BigVine.
So far, BigVine and BarterTrust mostly have attracted accountants, contractors, restaurants and other local businesses. But BigVine's Mr. Siegal hopes to get some high-profile airlines, hotels and long-distance phone companies into his program as well.
Officials at Delta Air Lines and Starwood Hotels & Resorts Worldwide Inc. say they are in talks with BigVine but haven't yet signed deals. Offering plane tickets in a barter network might help Delta target small-business customers, says Ed West, the airline's chief financial officer. In return, he cautions, "we don't want 200 haircuts in Chicago."
BarterTrust says it plans to charge buyers and sellers a 5% commission each. BigVine says its overall fees will be 4% to 8%, and both companies may offer discounts to early users. Both companies also pledge to report all barter income to the Internal Revenue Service.
In effusive moments, BigVine's Mr. Siegal portrays his company as "both a central bank and a commerce site." He likens himself to Fed chairman Alan Greenspan, "spending money to stimulate the economy." Mr. Siegal says his currency's informal name of Bippy dollars is likely to change soon to something more serious, such as "Trade Dollars."
At BarterTrust, Chief Executive Officer Michael Edelhart adopts a more cautious stance.
"We have a large evangelical challenge," he says. "We've got to get the word out that barter deserves a new look. This is a complex project, and it takes more than a slogan to change behavior."<< |
