Bruce Kamm, founder of VirtualBarter, built his technology company based on what he learned in the jewelry business. “I joined my father’s jewelry business and grew it to multiple locations, manufacturing, and selling to jewelry stores around the country,” he said. “In the jewelry business, I learned about bartering because we would trade jewelry for advertising and other business products and services.”
Barter exchanges have existed for many years but were slow to adopt new technology. Barter exchanges enable a web developer, for example, to design a website for another business in return for barter dollars in the amount that the developer would charge on the open market, which the web developer can then spend in the exchange at any participating business like a restaurant, hotel, printer, or perhaps for advertising.
An important benefit of bartering is that a business can purchase products or services at that company’s wholesale cost of their own product or service. For example, it only costs hotels $20-30 to put someone in one of their unsold rooms with the cost of the maid service and amenities, so they’re better off accepting barter dollars at full value to offset other cash expenses, instead of selling at a discount or getting no value for perishable inventory.”
“After 18 years, I had enough of the jewelry business and started a barter exchange in New York City that grew to 700 companies trading over 16 million in barter dollars per year,” Kamm explained. “Barter increased participants’ sales by 15 to 20 percent, and improved their bottom line profit.”
Kamm saw an opportunity to leverage technology to improve barter exchanges, which at the time he launched Virtual Barter in 2002, was a $15 billion industry for retail barter. “VirtualBarter develops software and alternative payment platforms for barter exchanges, business networks, associations, universities, and communities,” he said. “My favorite story of the power of barter exchanges involves a non-profit that received a $1.4 million triple A rated office building in New York that the teamsters union donated. Because that area had some challenges, the cash sale price was only $6-700,000. Through my barter exchange, we found a buyer willing to pay $1.4 million barter dollars, while the wholesale cost of their service might have only been $400,000.”
Kamm’s advice to aspiring entrepreneurs is to harness the power of commercial barter exchanges. “Monetize your intellectual and alternative capital into currency,” he said. “Every entrepreneur has a product, service or excess capacity that can be utilized as alternative currency to pay for business or personal expenses.”