Interview with Ron Whitney of IRTA

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A couple of weeks ago I had the opportunity to spend an hour on the phone with Ron Whitney, Executive Director of the International Reciprocal Trade Association. What I found is a man and an organization tirelessly dedicated to the growth and well-being of the barter industry. Topics ranged from the history of barter to who is doing social media best in the industry. For your reading pleasure, below is a transcription of the entire interview.

Tyler: Give me a brief history of your experience with barter.

Ron: Well, I’m a former barter exchange owner. I got into the barter business in 1993. Prior to that I had legal experience and higher education experience but I had my own marketing company in the early 90s and I got involved in some one-on-one trading, advertising for $3,000 of scrip at a restaurant or what have you and when I did my one-on-one deals I just thought it was the neatest thing in the world. I thought I was like Donald Trump, you know. So I was really enjoying the one-on-one transactions and then I learned about these things called barter exchanges and I was very skeptical at first like many people. I just assumed it was people sitting in basements and garages with companies that weren’t too savory. So I set out and did a lot of due diligence and traveled around the country and met with some of the finest barter exchanges in the world and was frankly blown away by the sophistication of the business model and the quality of the individuals that I was talking to that I went back to my wife and said, “Guess what honey? I’m going to start a barter exchange.” To which she replied, “You might want to think twice about that. You need to get a real job.” But I took the plunge. I took the entrepreneurial plunge and started a company called Delaware Barter, which is still around, with no capital, lived on the commissions from sales for the first year, like many people do in this business, and was able to build it up to one of the top exchanges on the East Coast within 6-7 years.

Tyler: Fantastic… So how did you get involved then with IRTA? And give us just a quick history of IRTA (International Reciprocal Trade Association).

Ron: IRTA, as you know, has been around for 30 years – we’re actually celebrating our 30th anniversary in 2009.

Tyler: Happy Anniversary!

Ron: Yeah, yeah. We had a big huge convention in Dallas that was well attended and everybody had a good time and learned a lot. But anyway, I, like everyone else in the industry learned of NATE and IRTA and felt that to be an informed and prudent and wise exchange owner I needed to know what was going on outside of my own little market so I participated in both associations. I was a board member of both associations in the late 90s and early 2000s and was a board member in IRTA, solely in IRTA, in the mid-2000s. In 2007, when we were at our Savannah conference, my predecessor, Krista Vardabash, reminded us in that board meeting that she would be departing in a month and we weren’t sure what we were going to do as a board. I actually was negotiating the sale of my stock in my company to my protégé. And I was only 3 weeks away from settling on that sale so I quickly raised my hand and said, “Look, I don’t want to sit around and watch Oprah all day so I’ll be happy to step in. I’ve been on the board and I think I understand some of the dynamics. I’d be happy to step up and help on a temporary basis until we decide what else we need to do.” So I took it, the board agreed that made sense and I was offered the position on a temporary basis for 3 months. The 3 months came and went. They extended me to a year and that was 2 years and 2 months ago. So, I’ve enjoyed it. It’s been a lot of fun. There certainly are challenges but I believe to the bottom of my toes in terms of what the modern trade and barter industry is all about and what it tries to accomplish and so I am very comfortable in my role.

Tyler: Fantastic… If you don’t mind, what’s the current membership scope of IRTA?

Ron: We’re up to 75 members right now, IRTA members. There were, I think we were in the high 30s or so when I took over in October of 2007, so there has been a significant increase in membership in the last 2 years.

Tyler: So what sets you guys apart from the competition? What sets apart IRTA?

Ron: I think any association regardless of the industry that you’re in is focused on education and networking and the creation of equitable standards of practice and operation. I think what we focus on mainly that separates us apart is the ethical standards and practices that what we preach to our members and every member has to in fact sign onto that code of ethics when they join IRTA. And the other piece is that, or couple of pieces, are that we believe that through something like the ethics code there needs to be some form of rational and prudent self-regulation of the industry and so we try to provide that. And lastly we feel that the governmental relations piece is very important to our industry. It’s one of the things that IRTA was responsible for in terms of the creation of the TEFRA Act back in 1982 that legitimized the barter industry by mandating that barter exchanges were categorized as third party record keepers and had to send out 1099-B reporting requirements to the IRS. So we feel that our industry needs to be proactive on the government relations level because you don’t ever really want to be in a position where any government winds up dictating to the industry the terms and conditions of their conduct so by taking a proactive position we help to co-author and co-design a government’s approach to the industry which we were successful with in the United States with TEFRA. And as the barter industry grows internationally and new countries, or old countries that haven’t had barter systems, look at the barter industry they realize, “Gee, is this an industry that the government should be involved in or should not?” So there’s a lot of issues that evolve out of that dynamic and it’s important that the industry have a proactive association that can step in and work with those various governments and walk them through the various options that are available that are in the best interest of our industry and certainly in the interest of the various governments as well. So that’s a very hot topic around the globe and certainly other countries look to the U.S. because we have set the precedent with our special situation with the Internal Revenue Service here in the TEFRA Act that we helped create.

Tyler: So domestically, what are you guys up to? I know that you have talked to me before about meeting with the IRS directly in relation to tax identification numbers. What else is IRTA doing domestically for the barter industry right now?

Ron: Well, as I’ve said, IRTA has been involved in the IRPAC Advisory Group to help shape and deal with the barter industry tax reporting requirements pursuant to TEFRA. The non-matching TIN issues that we see out there are extremely serious because very substantive penalties have been proposed by the government that can virtually cripple a barter exchange.

Tyler: What kind of fees are we talking about?

Ron: You see penalties out there anywhere between $2,000 on the low end and $50,000 to $100,000.

Tyler: And this is for incorrect tax identification number reporting?

Ron: Yes, because the system penalizes $50 per transaction. You might have a sole proprietor that did 300 transactions in any given year – that’s $50 times 300 – the numbers can add up pretty quickly.

Tyler: So it’s not per tax identification number, it’s actually per transaction?

Ron: It depends on the entity. If it’s a corporation it’s an accumulative number, and interestingly, if it’s a sole proprietor, it’s per transaction.

Tyler: Wow.

Ron: Yes. So the numbers can be staggering. I mean, I travel around and I give lectures on this issue and I always tell people in the very beginning when I got in the barter business in 1993 we might have grossed $40,000 or $50,000 that first year which, you know, isn’t bad for a start-up barter exchange. Come September of 1994 I received the first penalty notice from the IRS for non-matching TINs for $40,000. It represented virtually the entire gross of the company for the prior year. So how was I as a small businessperson to pay that? So that got my attention very early and every single year thereafter I had to deal with that issue. So when I say the fines can be crippling, it’s not an exaggeration. So I had a couple of choices – I could ignore it or address it or be proactive and try to fix it – and I chose the latter. And so that got me appointed to this information reporting advisory group of the IRS and for the last 3 years I’ve spent a month every year working on this issue to try to take the pressure off of the barter exchange industry on this non-matching TIN issue and there are 2 very important studies that the IRS is conducting right now that hopefully will be finished this year that if the reports come in on our favor may result in them basically removing their approach to penalizing barter exchanges for non-matching TINs.

Tyler: Sounds to me like any barter exchange owner could benefit from a membership in IRTA, just for that – just for that.

Ron: It’s important to understand that on this issue we consider it an industry-wide issue and I help all barter exchanges on this issue whether they are IRTA members or not. Obviously, is it a benefit? Yes, but the reality is we feel so strongly about this issue that we reach out and help anybody that needs it in the industry.

Tyler: All the barter exchanges are going to have to deal with the IRS so whatever work you’re doing directly with the IRS is going to benefit the whole industry.

Ron: And that goes back to what on the macro level I was saying about our philosophy regarding governmental relations. I mean, we believe it’s better to maintain an excellent dialog with the governments and have excellent relationships with them. As a result of my work with IRPAC, I can pick up the phone and talk to some of the top people in the various departments of the IRS whenever I have a question. That’s remarkable.

Tyler: It is remarkable.

Ron: That’s tremendous benefit to IRTA, to every member of IRTA, and anyone in the industry that we have those kinds of relationships right now.

Tyler: So, what’s going on in the industry internationally? As the news source for the barter industry, or the attempted news source for the barter industry, I’ve noticed a lot of interesting things going on internationally. What are you seeing?

Ron: Well, I think some of the most interesting things in the modern trade and barter industry are happening internationally because as we all know the economic crisis is global and what you’re seeing now is an unprecedented openness to the modern trade and barter alternative as a potential answer to these severe economic and financial issues that are confronting governments, countries, municipalities, cities, you name it, right? I mean, pick up the paper today and on the first 2 pages there’ll be articles about a given state in the U.S. that’s how many hundreds of millions dollars short on their budgets. What’s the latest one now? Dubai, right? So there’s this enormous financial pressure to try to make ends meet. Not only in personal households, but governments and states and cities and counties, so we’re seeing literally countries looking at creating some form of nationalized barter system. China is looking at that as a possibility. Ireland is looking at that as a possibility. Now, clearly when entities of that magnitude are looking at it seriously as a possible solution, you can imagine what the rest of the world is doing. So there’s been an enormous up-tick in interest in our industry, by entrepreneurs, by businesspeople, by government officials. And internationally we expect that to only increase.

Tyler: How are you guys participating in that realm internationally?

Ron: I’m glad you asked. I’m glad you asked Ty, because in 2 days, Paul Suplizio, who’s the founder of IRTA, is hosting a European conference in Istanbul, Turkey, and Paul has worked tirelessly to contact every single possible barter exchange company in all of Europe and Asia to come to this conference and the purpose of it is to bring the European groups together to get them trading more, sharing ideas and unify them as a collective group that can do some meaningful trade for each other but also for the members in their exchanges and benefit the various countries that they’re in. So there’s tremendous excitement about that. Paul was handling that himself and we’re very excited about it. We had another meeting in Europe in Norway in June. We’ll have another meeting in April. We’re very focused on building and bringing together the skills, expertise and knowledge of the international marketplace to compliment what we are doing and have done in the United States. About 30% of our membership is internationally based. It’s a very important segment of IRTA.

Tyler: When you were talking before about domestically the barter industry has been pretty flat, do you think there could be a shift there now that the U.S. dollar is finally weak?

Ron: I think if you go back 2, 3, 4 years it was maybe flat, but ever since this economy in the last couple of years has nose-dived, barter activity has significantly increased. The existing, mature exchanges are seeing more trading. There’s been an enormous amount of new start-ups, and start-ups in terms of the traditional bricks and mortar regional-based exchanges.

Tyler: Seems like I see a new one every day.

Ron: Yes, and the pure Internet-based type exchange. Part of the reason we brought in 40 some plus members in the last 2 years is because of that enormous increase in start-up activity. So no, we believe that certainly that domestically the barter activity has increased in the last 2 years.

Tyler: Absolutely. Absolutely… So what’s the future of IRTA? The 5-year plan, so to speak?

Ron: Well, a couple things. We obviously want to increase our membership. We want to spread the good word of what we’re doing in terms of equitable standards and practices of operation. We also have something that we haven’t discussed which is called Universal Currency, which is our own trading platform for trade exchanges. It’s been around since 1997 and anyone in this industry who looks forward to the future envisions a day when there will be one currency or only a few currencies that exchange operators deal in. Obviously one of our goals is to make Universal Currency, our system that’s been around for 12 years, to be one of those absolute, top-lead currencies and we’re well positioned to do that.

Tyler: How does the UC, how does that currency system work for an exchange owner? Can you walk us through what it would take?

Ron: It’s virtually a trade exchange for trade exchanges. It’s designed so as to allow a trade exchange owner to eliminate those one-on-one reciprocal accounts that they’ve had for many years with other exchanges. So when a trade exchange joins UC they have the opportunity to list selected goods and services on UC that they so desire and earn UC trade dollars, UC currency, when they make their sales. Typically we don’t offer credit lines in Universal Currency. A trade exchange has to earn their credit line based on their sales activity and we have a very sophisticated credit matrix that we apply to grant that credit line. So the whole idea is to allow a seamless platform that exchange owners can trade amongst themselves, thereby allowing them to offer a vaster array of goods and services to their own members. And interestingly of course start-up exchanges find it very valuable too because it helps them have a presence of goods and services to offer in their very young exchange. I mean when I started my barter exchange in 1993 the Internet was virtually non-existent so I went out to the 11th person after signing up 10 people and said, “Will you join my barter exchange?” and he would say, “What do you have?” and I showed him a list on a legal pad with 10 companies names. Nowadays I could have joined UC, taken my laptop, pulled up UC on my laptop and UC has 1,250 postings on it and shown my prospect, “Gee, if you join my barter exchange here locally in Philadelphia, you have access to all of this.” That’s a powerful sales tool, right?

Tyler: Absolutely.

Ron: Beats the heck out of a legal pad with 10 names on it.

Tyler: Or even with a nice printed list it’s still better to have volume on there.

Ron: Right. So involvement in a third-party platform like Universal Currency for a young exchange is just a wonderful thing to build your credibility right out of the gate.

Tyler: So are the exchanges that participate in the UC bound by the same code of ethics that members of IRTA are bound by?

Ron: Well, first of all Universal Currency is a separate company and it’s 100% owned by IRTA and UC has its own separate membership agreement that has its own separate rules and regulations that pertain to day-to-day operations, trading, rules and whatnot. And they’re extremely strict in terms of what is allowed and what is not and again, each new UC member has to sign off on that agreement. So all the typical things that you see in a normal barter exchange agreement between a barter exchange and a member are included in the UC agreement that protects the members and provides very stringent trading rules.

Tyler: So they reflect the heart of the IRTA code of ethics?

Ron: Well, yes, no price puffing, cash and barter mix issues, all the typical things you’re concerned about in a pure trading setting. They even sign off on an arbitration clause in case there’s a dispute between the parties. Like I said, it’s been around for 12 years, so we have been able to perfect the agreement very well.

Tyler: Sure… Just to change gears just a little bit. What golden nugget of advice would you give a new exchange owner?

Ron: Well, I guess I touched on it indirectly in the beginning when I was talking about my own experience, but the first thing is, and this isn’t specific to the industry here, it’s all just talking about business, you have to believe in what you’re doing. And if you do you’re going to have passion for what you’re trying to build and your prospects are going to see that passion and believe in you as the quarterback of this new entity that you’re trying to build. So you have to go into it, do your due diligence, understand what this industry is about, understand what the benefits are that we’re trying to provide, believe in it. Now, after that, because that’s a philosophical answer, on a more pragmatic level, building a trade exchange from the bottom up is a difficult challenge. So on the selling side you and whoever you bring in have to be very good salespeople. But again, if you have that belief, your success in sales is going to increase. Now let’s go back to what I talked about with the legal pad versus having a laptop with UC’s 1,200 accounts on it. It’s still hard, even with the laptop, to convince those early people to join your exchange because you just don’t have a lot of members.

Tyler: Locally. You’re right.

Ron: So rather than walk out the door with your head hung low, saying, “Oh, gee, he’s right. I’ve only got 22 members,” turn it around and create a positive paradigm where you created a structure that allows you to get the “yes” from the prospect based on your performance. In other words, you tell the prospect, “You’re right. I only have 23 members, but tell me Mr. Drycleaner, how many members does constitute a comfort level for you? Is it 50 members? Is it 100 members?” If he tells you 100 members, you write it in your book and you come back to him after you’ve signed up the100th member. You call him up and say, “Mr. Jones, I got the 100th member. When can I come by and get a contract and a check?” I did that. It worked.

Second thing is, you say, “You’re right Mr. Jones, 23 members isn’t too much. I’ve only been around for 6 weeks. But tell me 3 businesses that you’d love to see in the barter exchange and if I get 2 of them, will you join?” I guarantee every prospect will tell you, “Sure.” So he’ll tell you, “I want a plumber, an electrician and an Italian restaurant.” So you go out and the next week get that plumber and electrician. You call him back in a week and say, “Mr. Jones, I just signed up ABC Plumbing and XYZ Electrical Company. When can I come by and pick up a check?” They will admire your entrepreneurial zeal and they’ll sign up. In other words, just create a structure that allows you to get the “yes” rather than accepting a “no” in the very beginning. And that same paradigm goes on, even when you get to 400 members. You’ll think, “Oh my goodness. I have 400 members. Everybody on the planet wants to be in my barter exchange.” You’ll still go out and see the 401st prospect and he’ll say exactly what the person said to you back 3 years ago.

Tyler: “You only have 400 members?

Ron: “You only have 400 members.”

Tyler: “There isn’t anything I want in there.”

Ron: “There’s nothing in here that I need.”

Both: <laughing>

Tyler: Isn’t that the truth.

Ron: “Alright. You know what? I’ve got electricians and plumbers and I’ve got 50 restaurants. Obviously, you must not eat out much and your pipes in your house are fine. So tell me 3 businesses you’d like to see. If I get 2 of them, will you join?”

Tyler: Yeah, that’ll work. Same story.

Ron: Yes.

Tyler: So in your experience, what’s the difference between a mediocre exchange and a great trade exchange? What are some key things that really make the difference there?

Ron: Well, first thing clearly is customer service, i.e. the brokering component that you’re providing. As you know, anyone knows in this business, members are going to earn trade dollars in your system, they’re going to have positive balances, some members are going to have negative balances. You have to work with those people with the positive balances on a regular basis to get them what they need. So some exchanges have no brokers and when the printer who has a $20,000 balance calls he gets an answering machine. And after he’s got an answering machine for 3 weeks in a row, what does he think of the exchange? Not much. Now, another exchange has invested in 2 brokers in their exchange and every time that printer calls he’s talking to a live person. Now, any barter exchange is limited by the scope and breadth and number of members it has, A barter exchange, no matter who it is, no matter how big they are, they don’t have everything all the time.

Tyler: Unless there’s a shortage of something.

Ron: They’re not Wal-Mart. So invariably you have to tell your good member with the positive trade balance, “I’m sorry, Mr. Jones, I don’t have a 1972 TR6 navy blue with beige interior. However, Mr. Jones, could you please tell me 6 other things I can help you with? I can probably get 4 of them for you.” Now, any client is going to be very happy with that response because he knows you’re trying. Clients aren’t upset with the word, “No, we don’t have it” if they know you are making an earnest, good faith effort to get them something else. But if you don’t have the brokering component to even have that communication, to have that phone call, your system isn’t going to work. So it’s the customer service that sets the great exchange from the mediocre exchange.

Tyler: I remember hearing about an exchange in Georgia – they didn’t charge any monthly or sign-up fees and the transaction fee was very low, and their thing was “We’re just the record keeper. We’re not going to do anything else for you.” All they did was keep track of the transactions. My experience is that that’s not going to produce a ton of volume or happy clients.

Ron: No. Well, barter is a quid pro quo, is it not?

Tyler: Yes.

Ron: In other words, it is something for something, correct?

Tyler: Uh-huh.

Ron: And it is based on a level of trust, is it not?

Tyler: Yeah, absolutely.

Ron: Because when that printer, in the beginning, does his first job, when he does some letterhead for a law firm, and he earns 1,000 trade dollars in your new exchange, he trusts you’re going to get him what he needs. Now, the industry has seen many examples over the last decade of high financed attempts to do a pure Internet-based    exchange with no brokerage component.

Tyler: The one I’m thinking of is AllBusinessBarter.com.

Ron: The most famous one is BigVine.com. BigVine.com was funded by $75 million of venture capital from Kleiner Perkins and American Express and it was in 2000-2001. They looked at the eBay model and they looked at barter and they said to themselves, “This is simple. We’re just going to create the eBay of barter online. It’s going to be called Big Vine.” And it failed miserably. They plowed through $75 million in 2 years. Gone. Because they believed, just like you were suggesting about this company in Georgia, that all you had to do was put it on the Internet and it would take care of itself. Didn’t require any human customer service component at all. So it was all clicks and no bricks. It failed. Now, what happened was the hardware store owner in Atlanta would sell 2 chainsaws to a landscaper in Houston and he’d earn $1,500. So then he’d go online, he’d say, “I’ve got $1,500, of these Big Vine dollars. This is great. I’m going to get something good.” And he would call up a men’s suit store in Washington, DC that was listed on the site, or email them, “Gee, I’d love 2 suits for my 1,500 dollars.” And he’d get an email back that said, “That sounds great. Send me a check for $1,400 cash and I’ll barter the $100.” Now what does the guy in Atlanta think? “This system’s no good.” So it was an unmanaged, online system. Now, barter is a quid pro quo. I’m that printer and I just did a $1,000 of that letterhead. Why do I have to do another sale with you? Do I have to do another sell with you? I don’t have to, do I? I have a positive balance. I did your letterhead and you owe me $1,000, your exchange owes me $1,000. Now, are you going to help me buy something or not? If he gets a call from a broker and says, “Mr. Jones, thank you so much for doing that letterhead for Muckitymuck Law Firm. They are so happy. We really appreciate it. Now, what can I help you with? We got a new paver in. We’ve got a roofer. Does your wife like Chinese food? We’ve got a beautiful new beach house down in Rehoboth, Delaware. What can we help you with?” Maybe the printer doesn’t want any of those things, but he’s kind of impressed by the service he got.

Tyler: And the nice list of things that he may want.

Ron: So now when that broker calls him up a week later and says, “Mr. Jones, I know you’ve got a $1,000 balance and, gee, I know you haven’t purchased anything yet, but we have an accounting firm in the same county as you that is really looking for some business cards for their new staff. Could you help us with that?” Well, he heard your list of options you gave him the week before. It was a perfectly nice gentleman he talked to.  “Sure, I’ll take on that additional $500 job.” And he does it. But after that, he gets a phone call again, “Thank you for doing those business cards. We’ve got to get you to spend some of this $1,500 you’ve got now.” And son of a gun, yes, he buys a $1,500 leaf blower. So he feels pretty good. “Son of a gun. I got new business. I got something I really needed. I needed a new leaf blower.” So the following week when he gets a call from the broker and the broker says, “You know what, I’ve got a company that has a magazine that needs a $10,000 print job. Can you do it?” Well, he’s probably going to say yes because his confidence level just increased, his trust in the exchange increased because you were able to get him what he needed in that first step. So he’ll do that $10,000 job. Now, with proper brokering in place we’re going to help him spend that $10,000 down in a reasonable amount of time, 6 weeks, whatever, and now 2 months later when you come to him and say, “Holy mackerel, I’ve got a humongous client here who wants a $20,000 4-color brochure done, 100,000 pieces of it. Can you do it?” You’re going to say, “I will.” You, the printer, were so impressed that that company took care of you on the customer service brokerage side that your trust level just went from, in a couple of months, doing $1,000 to doing $20,000. That is the critical piece of barter because barter is a quid pro quo. If I have positive balance, I don’t have to do anymore work for you. And I will do it if I have trust in you, in other words, I’ll take on more of your credit, or I’ll do it because I have a negative balance and I owe you.

Tyler: Right. But if I have a negative balance I owe you because I already got something.

Ron: Right. “I’m a good businessman. You told me you don’t charge me any interest on my negative balance so I’m going to use as much of that credit line as you possibly will give me because of the time value of money. I’m a good businessman then.”

Tyler: Sure. So what’s one small thing an exchange owner, let’s say a baby exchange owner, could do today to strengthen their exchange?

Ron: Well, it may sound self-serving, but joining IRTA and you see it sure as heck would help, right?

Tyler: Sure… Outside of that.

Ron: Outside of that… A baby exchange we’re talking about?

Tyler: Yeah, a brand new exchange owner. What’s one thing he could change today that would make his exchange stronger?

Ron: Make sure that when the good products come in, he immediately turns them around and makes them available for all of his members, all right?

Tyler: I like that.

Ron: Don’t be tempted – just because you had a bad month in sales, just because you’re under some financial pressure personally because you started this new company and you went through your savings to build it – do not be tempted to take that good product or merchandise for yourself or any of your staff. Put it back out into the system.

Tyler: When I talk to exchange owners, I tell them to take the long view. Don’t look at the short term. Look at the long-term view, the health of the exchange.

Ron: Let’s go back to the TR6, the navy blue TR6 with beige interior. It’s worth $15,000. You just had a meeting with a guy in your town who happens to have one in his garage that he’s willing to barter. Wow! What an exciting thing. Well, you always wanted a TR6. You’d look good in it. Your wife would be thrilled for you to come home with it, right?

Tyler: You could give yourself a big credit line and buy it.

Ron: Yeah, sure!… No, no, no. Why? Because you have that printer sitting there with a $15,000 balance. And just like you said, think long term. Put that into the system properly. Let your printer buy it. What’s going to happen? Your printer is going to be the best PR person for your new company. He is going to get on the phone and tell 35 of his business owner friends, “You won’t believe what I got on trade from this new barter exchange! Holy mackerel! Tommy, Jim, Betty – you need to get in this barter exchange.” The benefits that you derive from that will build your exchange faster than you believe.

Tyler: Absolutely. When I owned my exchange for 5 years I kept track of everything – how people signed up, where they came from, how much they paid. I ran across that data the other day and I noticed that 40% of my new members over 5 years, cumulative, were from member referrals. Forty percent was not work that I had to do. So it all rests on your reputation as an exchange owner… So what’s one great change you’d like to see occur in the industry?

Ron: Well, I think it would be great if – it’s a request that may be a tad ideological – but it would be great if participants in the industry could be able to look outside their own markets, their own self-interests, to what the larger, macro needs of the industry are that if we could all, in other words, if we could cooperate more, work together more, we all would benefit from that cooperation. I think we’re in a very entrepreneurial-based industry so it’s easy for people to go back to their various geographic regions and just focus on their exchanges on a micro level. But there are tremendous gains and macro level benefits can be realized by all of us if we can just look at the larger picture and try to work together in a more cooperative fashion.

Tyler: I like that…. Two more questions… What’s the coolest thing you’ve ever seen bartered?

Ron: You know, you get asked that a lot when you’ve been in this business and the answers kind of come out oftentimes the same – the boats, the cars, the neat vacations, the incredible travel and those kinds of things, but I guess I’d like to flip it a little bit and answer it in terms of the most exciting feeling that I’ve ever gotten and continue to get in this business, from this business, is seeing the very real benefit that this industry provides to our business clients. And part of that is in the form of the credit extension that we’re able to offer. It’s a huge, huge benefit to small businesses, any business, and especially in this economy.

Tyler: Sure. Interest-free credit.

Ron: And so over the years, I’ve always told a very simple story of I had a woman, a European woman, I think she was from Hungary or something, come into my office one day years ago, walked into the office and said, “I want to join the your barter exchange.” And I said, “Gladys, that’s great. What do you do?” She goes, “I put together gift baskets.” Well, gosh, all of us know gift baskets are a real good, feel-good item in a barter exchange. They work well, right? So I sat her down and I signed Gladys up to the membership and I said, “Gladys, I couldn’t help noticing when you drove in you have kind of an old, mid-90s Chevy and the tail pipe is falling off.” I said, “You need a new muffler.” She goes, “Oh, I know, Mr. Whitney, but, I cannot, no, I can’t afford a tail pipe.” I said, “Yes, you can, Gladys, because I’m going to give you a $500 credit line coming in because you sell gift baskets and I’ve got a pile of people that would love to have your gift baskets.” So I picked up the phone right in front of her and I called this guy Art from the muffler store down the street. I said, “Do you have a muffler for a 1996 Chevy Impala?” or whatever it was. He says, “Sure, Ron, send her down.” Hung up the phone right in front of her and said, “Gladys, just go down 4 blocks, turn right, it’s right there.” She started crying right in front of me. I said, “Gladys, what are you doing?” She goes, “I can’t believe you helped me. Nobody has helped me like that when it comes to business.”   “What do you mean?” I said. “That’s what we do. We’re in this together.” So you can magnify that simple little story and permutate it out a thousand different ways. And all of us in the business have those stories.

Tyler: Yeah.

Ron: We really are an alternative financing mechanism for businesses. We really do have the ability to save thousands of companies from going to bankruptcy. I mean what’s the difference between bankruptcy? Five, ten percent of overall sales? That’s the number we’re always trying to help people with in barter, right? So we can make an enormous difference in economic recovery, credit extension, job creation and we just have to get the message out to the world of all these benefits. Any barter exchange has 15% or 20% of their members who get it, right?

Tyler: Yeah. Maybe 20%.

Ron: And they’re the ones who give you 80% of your transactions.

Tyler: Continually.

Ron: Right. So how do we get the other 80% to understand involved? If participants in barter are less than 1% of the businesses out there, imagine where we’d be if we could have 10%, 15%, 20% of the marketplace involved in this industry. That’s where we need to get to. That’s where the excitement is. That’s what we try to do everyday.

Tyler: Yeah… Last question… Of the members of IRTA that you interact with on a regular basis – you know, there’s a lot of talk about Web 2.0, Web 3.0, and Twitter and Facebook, and these mediums of communication – who is doing a great job utilizing the Web to communicate with members and with prospects?

Ron: Well, we did a really good seminar on this whole social networking piece and how it applies to the industry at the Dallas convention, but to answer your question specifically, I think BizX in Seattle, IMS/International Monetary Systems and NuBarter are some of the tops, top companies in terms of being ahead of the bubble a little bit and utilizing all of those dynamics in a very successful way.

Tyler: Yeah, I’d agree with all 3 of those choices. We all interact on Twitter. Its kind of fun… Well, thanks for taking the time, Ron. I really appreciate it.

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