Posted by: prataap | January 28, 2009

MONEY TREND 3: BARTER IS BACK


TREND 3:           BARTER IS BACK

                           WHAT’S YOUR CURRENCY?

                                        CREATE NEW WAYS OF TRADING VALUE.

 

Emerging Trends:

Before the concept of money was introduced, even cave men traded. A little wooly mammoth meat for a couple of spear heads. Millennia later, the silk route from Europe through Asia was based on barter; spices for silk, and diamonds and rubies for weapons. And centuries on, as the legend goes, the ultimate barter practically gave birth to our nation. The Native Americans, who didn’t share the same concept of real estate as the Europeans, traded the island of Manhattan for a few strands of beads.

 

America was created by a hostile takeover from the British, and in that same tradition companies buying companies based on the future value of their stocks is today’s ultimate form of barter. In 2000 AOL bought Time Warner with $182 billion in stock and debt.   It didn’t even have a single billion in real cash.  It was barely in the black, but AOL bartered its own highly valued stock against an agreed upon dollar worth of Time Warner.  And what a fiasco it has turned out to be. Value is fleeting and volatile.  Three months after the AOL take over was announced, its stock had lost nearly half the value it had before the announcement, yet nothing had changed in the tangible assets of the company. Today Time Warner can’t get anybody to take AOL off its books. How fast the world changes. It is now fodder for any number of B school cases for mergers gone wrong, and evidence of the inexact science of bartering against future potential in the age of the Internet.

 

Next one coming is Microsoft’s merge with Yahoo. That promises to be another doozy. Everyone is waiting to see what comes of the much anticipated hostile take over of Yahoo by Microsoft in its effort to fight Google. By the time the merger, the ensuing culture shock and the inevitable sell-offs are done, Google might not be the enemy but a partner in crime. But then, Microsoft can afford to write off a $10 billion mistake if Yahoo/soft winds up being another Time Warner/AOL.  

Increasingly, successful businesses will be ephemeral. Instead of being built to last, they are being built to be sold. They are built to yield value and once that value is realized they must be capitalized quickly or they will become redundant or vanish. To avoid this fate, even in today’s market number of larger companies continue to buy others out, or hold a stake in emerging companies that are developing competing new technologies. Some companies have even formed strategic alliances, even with arch enemies. Fiat, which announced a deal in early 2009 would give it 35% of Chrysler. It’s all about survival. Microsoft owns a significant share in former archenemy Apple. Microsoft and Sun are currently collaborating …. what’s next?  Joint EU/Russia/US military exercises?  Unthinkable as that might be, I say watch for that and many other unthinkable alliances and partnership as a new form of bartering power and market share.

Where does this leave you, Sasha or Te-Ming ?  Put on your thinking cap and put out your shingle at a web site like Kiva.org  that acts as broker for barter, or check your digital contacts list or your town, become part of the barter currency in circulation in your world. If not, start your own currency. Start with the obvious: fix a value to an hour’s worth of web site development, and in return get x-hours of electrical work by an electrician. By the way, just when you thought barter was fringe, the IRS wants to be in on this and considers barter taxable.

10 years ago, I bartered 6 months of coaching service to my first two business coaching clients for all the finish carpentry and flooring in my converted barn, and an antique wood stove.  It is a perfect way to build a network and get your feet wet in a professional practice or at a new trade.  Emerging Trends.Org has had multiple partnerships help pull it off the ground and keep it going. And some were barters and other less formal trades. None involved exchange of money.

This blog is being sent as I vacation on a hilltop overlooking the Bay of Bandares, 2 of the 9 nights at this exclusive resort of 10 cottages featured in Travel + Leisure and Calvin Klein ads was bartered for a painting done by my partner. What’s stopping you?

 

Next Opportunities:

What’s the next generation of barter opportunities? Barter has in part already replaced the dollar currency in trading value. In the present economy new concepts of bartering value will be BIG. It’s already happening when companies buy each other using stock instead of old fashioned cash.  We aren’t calling it what it is: barter.  Watch for familiar and less obvious forms of it to take hold. Check out DebtProofLiving.com, TradeaFavor.com, JoeBarter.com or SwapThing.com to get a flavor of this phenomenon that has been operating below the radar for the most part up till now.  In any case, the speed with which you realize the value of what you hold will be key. Be ready to move on if what you have to trade today is not worth anything tomorrow. Timing will be everything for the realization of maximum value. Riding it out may not be the best maxim for the New Economy. Do not be attached to what you own. Its value will change, that’s the only certainty. So the decision of when to barter a skill or a product will depend on where you feel you stand in the big picture. Are you a king, a knight or simply a pawn?  Each can create a check mate; it’s all in the timing. All kinds of new professionals will offer the opportunity trade real  value perceived value and so on.  The rules are being made up as we go.

Financial Planners provide some of this today, but a new breed of personalized life planning services will appear offering a menu of financial and estate planners, legal advisors, personal coaches, spiritual gurus, home/work balance consultants, and personal trainers. Mix and match your skills with that of others and partner and market it, or barter it. Best of all, if you’re in a start up with seed money from Cisco or Intel, then some of those professionals will barter their services for stock options. That’s already happened in the last 10 years with real estate agents and lawyers in Silicon Valley, where some law firms got as much as a third of their compensation in stock options.  May not be worth much today, but was worth a lot at the time of the barter. With barter the value is in the moment of the trade.

Think of yourself like a company, better still a company with a product, YOU.  Ask what your value is today and who needs it most.  Barter your value for whatever form of trade (stocks, cash, flex hours/benefits, wood work, car repair, massage) you want in return. Once again, in the New Economy keep in mind that you get old real fast, continually re-invent yourself, each time adding new value based on the currency you create.  Think two steps ahead, and think of your self as “built to flip” not “built to last”. That is the radical shift.

Regardless of age, you can be in demand, but only as long as you remain current, so keep that in mind. And if you are past 40 and are like James Clark (started Silicon Graphics, Netscape, Healtheon, myCFO and other companies) build the next new thing, sell or barter it while it still has value, and then do it all over again. You never have to grow old in the New Economy. Or if you are old, seek out a niche where you can barter your age, wisdom and skill, as a mentor, a personal coach, CEO, or simply as the company gadfly who sees all and has the permission to tell all that they see, at least to the CEO. There will be great demand for people who have been through the trenches and can make sense of the ever changing world for the 20 something founder who was in high school just yesterday and for whom everything is new. There is an equal demand for those who can show you value in hidden places like wisebread.com.

Find your value and leverage it now. Then do it again. Or reinvent the next form of e-money.  There will be many attempts at this that will take many forms for different purposes. Postbank of Netherlands is one such pioneer specializing in smartcards, the soon to be ubiquitous digital money that will serve on the Internet and in the traditional marketplace. There will be many attempts at creating the universal format for digital currency exchange; just as it has taken over 10 years from the old Palm to now i-phones to begin to fine tuning the new currency for ubiquitous digital communication. Yes, communication is a form of currency, and so are ideas!

Create your own currency, market it, barter it, and move on!

 

Let your imagination run wild.

Create the future and smell the roses, it’s your move!

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Responses

  1. another good bartering websitre is SwapAce.com @ http://www.SwapAce.com – it if free and you can swao anything for anything


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