On Tuesday, November 17th, I spent an hour on the phone with Jason Richards of BizXchange. We played 20 questions and here is what he had to say:
Tyler: So… let’s start with your experience with barter…
Jason: I was actually a client of BizXchange before I joined the team. I was a client there for about year and once I realized the value that they were providing businesses and companies and I’d kind of been with my previous employer for several years and was looking for a change and as such moved into BizXchange. That was my first foray, my first introduction to barter, was as a client to BizXchange. Once I joined the team I’ve served in many many different roles from outside sales to general manager of our Bay Area office to marketing director which my current role.
Tyler: You’ve been with BizX for how long?
Jason: Just shy of 5 years.
Tyler: 5 years… What were you doing before? What was the business that you were part of before?
Jason: I was the sales manager for a ski resort, about 50 miles outside of downtown Seattle. The ski resort was the client.
Tyler: That’s fun… Whistler?
Jason: No. Unfortunately. It was a property called The Summit at Snoqualmie.
Tyler: Ok… So give me just a quick history of BizXchange itself.
Jason: Alright… BizXchange was founded in January of 2002 - acquired its first client in February, so we actually use February as the founding date - but founded in 2002 by three owners, two of which who had previously been in the barter industry. We were founded with 2 offices both the Seattle and Bay Area office concurrently and over the course of the years and the growth of the company Seattle became our North American headquarters. And then since then we’ve an office in Dubai which is our international headquarters and that was opened in January of 2007.
Tyler: 2 years… So if you don’t mind me asking, what is BizX’s total client roster, number of clients?
Jason: Approximately 1,600.
Tyler: That’s fantastic… For 7 years? That’s good work… What sets you guys apart from the other exchanges because there are dozens and dozens?
Jason: You know I think the fact that we’re very targeted with the businesses that we look to bring on as members. We make sure that not only are we going to be able to provide them a service but that they will also be able to benefit from the use of BizXchange within their business model. We need to make sure that they have enough purchases available but just as well make sure that they’ve got a product or service that is in demand within our membership. We understand that the member experience is only as good as that client’s last trade and as such we are very selective on whom we bring in as a client.
Tyler: You’re not bringing in 15 massage therapists in one 10-mile radius area unless you had demand for that?
Jason: Exactly. So the supply and demand is definitely one thing to make sure that we do have the demand for a business before we bring them on because we want to make they get value from the exchange. This industry is far beyond just getting the membership fee to join. It’s actually the ongoing value that is the most important thing so we need to make sure we have demand for their services. We need to make sure they can use their BizX dollars to buy within the exchange. And also to make sure that they are a credible business. You know, we’re very selective to make sure that the quality of the product or service that the company provides is going to be to a certain level.
Tyler: If they don’t meet that level and you find out after they’ve joined, do you take measures to have them go away?
Jason: Yeah, I mean obviously we take an extra little step when we’re prospecting. We definitely make sure that the business provides a quality product or service.
Tyler: Do you check references?
Jason: You know, it’s more just research on them. We don’t check references for everybody, but we’ve got no problems not accepting a company as a member if we don’t feel as if they are going to represent the BizXchange membership to the level of our expectations. Everything transaction that goes through our company is a direct reflection on BizXchange. Every transaction that occurs with our currency is a direct reflection on BizXchange so it really doesn’t do anybody good to bring on businesses that aren’t of superior quality.
Tyler: What are you guys up to domestically?
Jason: Well, I think we’re going to continue to grow our current markets. We’ve got a lot of opportunity still in Puget Sound, the Seattle market, as well as the Bay Area. We are also continuously looking for expansion opportunities in other markets and we’ll likely be opening up new markets in the near future.
Tyler: Do you have anything in mind? Are you prospecting a specific area? Or just generally?
Jason: Yeah, we’re looking at several different west coast cities. That’s probably where we’ll start so we’re doing market analysis on a few different locations.
Tyler: Internationally, you’ve got this office in Dubai. What else is going to happen with BizX internationally?
Jason: Well, the same with Dubai - we’ve been in Dubai I guess it’ll be 3 years in the next couple of months - our growth rate there is really just starting to pick up exponentially so we’re going to continue focusing our resources on the growth of that market. There’s still a lot of potential there. But we’ve also been introduced to a lot of other potential not only in the United Arab Emirates region but also in other parts of the world surrounding that, so we’re definitely keeping our eyes open for good opportunities.
Tyler: Anything in the works or is that still too far off?
Jason: A little bit far off right now. Like I said, our primary focus is to focus on Dubai. I mean, we’ve got more potential and more opportunity than we really know what to do with right now. Once we can capitalize on some of the great opportunities there then we’ll start looking at other markets.
Tyler: So you’ve got 3 years now on the list of the fastest growing private companies. Tell us just a little bit about that and then, maybe is it a little bit scary to be on that list so many years in a row?
Jason: Well, you know, surprisingly, well first of all, we’ve been honored as the Inc. Magazine’s list of 5,000 fastest growing private companies in the United States and this is an accreditation that has been given to us for the last 3 years. Obviously we’re extremely honored to be recognized as such and surprisingly, our greatest growth occurred in the first 3 or 4 years of our company so to be honored in the last 3 years really says a lot about our growth path. And I think you know with a new business of course, back when we first started, you can have growth increases of you know, 200%, 300%, 400%, 500%. We’ve gotten our growth at a much more stable level but it’s still on an amazing incline. We definitely attribute this growth and we attribute the recognition that we’ve achieved for this from our commitment to providing our clients with business solutions that they’ve used to grow. We attribute most of this to the clients.
Tyler: Do you have any issues keeping the same level of service that you’re accustomed to with that kind of growth or are you managing that level of service pretty well?
Jason: That’s a great question Tyler and I think we’re managing it very well. Our client, our member to account manager ratio is probably one of the lowest in the industry. Our account executives, as we call them, manage anywhere from 75 to 120 members at any given time and so we closely regulate, we’re very concerned with the member experience, with the customer service that we provide our clients. As we grow in terms of new members then we hire additional staff to accommodate that growth.
Tyler: As an industry professional, what are your predictions for the industry over the next 5 years?
Jason: I definitely see this as a growing industry, there’s a lot of room for it to grow, especially in the United States. I think in the past barter has always been seen as a tool for either the large enterprise, the Fortune 500 companies, or the very small business, the sole proprietor. I think the biggest growth opportunity for the barter industry is within the medium-size companies, medium to large size companies. I think that’s where we’re going to see the largest growth potential for the industry as a whole. Not to say that it isn’t good for any size business. I think there’s a way that barter can be used for any type of company, but the largest room for growth definitely comes with medium size companies. I think this has been evident obviously with the recent economic climate and it’s becoming much more widely accepted.
Tyler: So you’re seeing an increase in the acceptance of barter. I remember when I owned an exchange here in Salt Lake for a lot of medium-size businesses it wasn’t even on their radar at the time. I’m thinking 2004, 2005, and 2006, in the real boom economy, medium-size businesses generally didn’t give us much attention. Is that changing right now with the downturn?
Jason: I definitely think so. As you know, barter has been a pretty hot topic as of late. It’s becoming more of a general business practice and I think that the void there was the medium-size and large-size companies didn’t ever see it as something that they could integrate into their business models. These business owners and business executives always just looked at barter as something for the large enterprises or for the very small mom-and-pop companies so that’s the biggest room, that’s the biggest market share right now for barter to use as a tool. And the more recognition the industry gets, the more recognition that the barter industry generally gets through mainstream media I think the more widely accepted it will be used as a business practice for all sized companies.
Tyler: Sure… So just to change the subject a little bit… a business outside of your areas of strength - Washington, Northern California, Dubai - would they want to join BizX and if so, why?
Jason: Well, Tyler, I think by the nature of the retail trade exchange business model, companies are somewhat limited geographically by what types of businesses that they can bring on as clients. However, I think especially with BizXchange, there’s thousands of products and services offered within the network that have no geographical boundaries. You know, these could be such things as graphic or web design, printing, media and additional marketing services and of course any type of travel. Though there’s a focus primarily around our geographical region, I think we are able to offer retail barter services to companies pretty much anywhere. Additionally we also can provide corporate barter solutions to the large businesses and providing corporate barter solutions is not market-dependent. You can service businesses anywhere.
Tyler: That leads me to my next question… What’s the coolest or biggest or both trade you’ve ever seen?
Jason: Well, in the both category, the most recent I think was a trade that we did in Dufai. This is probably the most notable transaction that we’ve done in any recent time. It was basically a $2.2 million trade that occurred between a media company and a luxury automobile distributor in Dubai. Basically what happened is the media company took a little over 30 brand new vehicles and in exchange provided media services to the automobile distributor. So just the size of the deal, being in the millions, and the service that we were able to provide both clients really just made it a very cool, notable transaction. On the one hand you had the automobile company with this inventory on their lot, not being able to be sold for cash, for the market so it was not necessarily distressed inventory but it was slow moving inventory that was sitting on their books. And then on the other hand you had the media company with a lot of excess capacity, so both businesses were able to find a solution to a challenge that they were having and receive dollar-for-dollar value out of the transaction.
Tyler: That’s a pretty amazing story. I mean, $2.2 million is a nice big trade.
Jason: Yes and the service and the value that both clients got out of it was really a tribute to what the barter industry can provide businesses.
Tyler: In your experience, what makes a great exchange compared to a mediocre trade exchange? I’m sure you’ve seen some of both in your experience.
Jason: Yeah, you know I think my biggest thing, what makes a really good exchange is the trade exchange that is concerned about the ongoing relationship. I think all too often trade exchanges look at it as a numbers game. They’re way too concerned about how many clients they have and they’re not concerned about the value that a business is going to get from an ongoing basis. Those trade exchanges that are really focused, they’re not so focused on the number of clients or how much money a company paid to join - not that there shouldn’t be some type of joining fee - but it’s those trade exchanges that really want to provide excellent product and excellent service for the life of the account. That’s what’s really makes the difference in my opinion.
Tyler: Are Internet start-ups like U-Exchange or BarterQuest or the classifieds like Craigslist, changing how you guys do business, I mean, is that model of internet trading forcing you to compete in different ways or is it just all about customer service?
Jason: Well, I think it’s great to see these companies be founded and watch them grow. They found a fantastic niche and they’re doing nothing but great things for the industry as a whole. We don’t see them as competition. We don’t see them as models that we’re trying to mimic or fall behind. They’re primarily focused on direct consumer barter transactions. They’re more of listings - I’ve got this, Can anybody help me with this? - they’re primarily for individuals, which is obviously very different from our model. I think from an industry standpoint, it’s good to see companies like these get so much attention whether it be in the media or just the amount of users that they have, but overall barter has so many uses for so many different types of people and organizations. The more widely it’s used and the more widely it’s practiced the better off the industry and all the companies within the industry will become.
Tyler: Are you seeing maybe an upswing in your visibility because of these kinds of direct Internet companies?
Jason: Absolutely. Absolutely. You know it’s one of those things, every time a U-Exchange or Craigslist gets attention, there’s always mention on how it can be incorporated with a business model. And if you look kind of at the trends of various products and services, you know, a lot of these trends have always started with the consumer. If the consumer can find value in using a particular service, then there’s got to be a way for the business to be able to use it. Where with our industry we started off with the business and the consumer wasn’t as widely accepted or widely used. Well now we’re kind of seeing that change again and consumers are looking for value in barter just as much as the businesses are and I think for any company within the barter industry, it’s going to be good for everybody.
Tyler: So again, we’re going to shift just a little bit… What problems do you face doing business overseas? Having an office in Dubai, I mean, besides the obvious time zone differences and perhaps language barriers, what are the more interesting problems you face doing business over there?
Jason: Well, we really haven’t seen any problems. We have infrastructure there. We’ve got an office with several employees and we’re hiring everyday, so in terms of, you know, obviously business practices vary from country to country, but we really haven’t come across any major difficulties. In fact, we find barter to be much more widely accepted in Dubai and other parts of the world than it is in the United States. So it’s actually, it hasn’t been that challenging outside of, like you said, the normal things when we need to talk, it’s late night meetings or early morning phone conversations but besides that, no real other difficulties.
Tyler: Is the business climate different from say your Seattle office to that of Dubai? What are the differences you see in clients or just the business climate in general?
Jason: Well obviously if we were to look at Dubai compared to Seattle or even the Bay Area, I mean we’re talking about two vastly different markets so there’s quite a lot of differences. In terms of the companies that we’re dealing with and the type of transactions that we’re seeing, we’re finding that our trade transactions are much larger in Dubai than they are currently in our North American operations. We attribute this to, one, the size of businesses that we work with over there, but in addition to that we also see as the vision of the growth of that region is on a much larger scale so I think just overall the numbers that are dealt with in Dubai is quite different than our North American offices right now.
Tyler: Are there the same amount of small businesses in Seattle compared to Dubai or is it more medium-size government sponsored, you know, I don’t know much about Dubai so is that demographic of business owners and businesses a little bit different?
Jason: You know, the businesses are all about the same. There are some similarities on the size of businesses, you know, you do have your large companies headquartered out in Dubai just as you do in Seattle or the Bay Area and you’ve got your small and medium-size businesses as well in that market. When we went in we intentionally went in with the target of working with the larger organizations so we’re finding most of our clients are falling into a larger category but that’s primarily because that’s who we were targeting when we went over there.
Tyler: Who else is doing it right in the industry? Do you think there are other companies that are really doing it right right now?
Jason: Well, I think there are several companies, I think there’s a lot of companies out there that are doing it right and unfortunately there are several out there that are doing it wrong too and my only words of encouragement would be for those business owners that have participated in a trade exchange and actually had a bad experience with maybe one of these companies that aren’t doing it as well to go ahead and try it again. They clearly understood the value the first time they joined a trade exchange and I would just highly encourage them to give it another shot with somebody that may be a little bit more established within the industry.
Tyler: On that note, what’s the one big change you’d like to see in the industry?
Jason: Well, as I kind of mentioned before, there’s a lot of opportunity for the industry to go. We’re at the tip of the iceberg. The potential market share is way beyond the amount of companies that are in the industry and all too often I see a lot of competition that may not be necessary. I would like to see a much more collaborative approach not only to the industry in general but also to the widespread education of using barter as a business tool. I think collectively even with the current players that we have in the industry, if we were all to work more closely together in education and getting the word out there, we can bring the use of barter as a business tool into a more mainstream business practice for all size companies.
Tyler: Right and that’s actually one of our missions at The Barter News Weekly is to provide more legitimacy to the industry. We think that it’s undervalued and it’s seen sometimes in a negative light and so I’m right there with you. We’d really like to see a legitimate use. But we used to go up against ITEX pretty frequently here when I owned my exchange and I had a great relationship with Tinamarie over at ITEX office in Ogden, so I’m with you. I think there needs to be more collaboration, especially the destructive competition that I see so much, people pirating each other’s lists and cutting fees and you know, in my opinion, there’s always enough business to go around.
Jason: And there is so much more business to go around. The market share is incredible. We’re only touching 1%, 2% of businesses.
Tyler: Maybe.
Jason: Yeah, exactly. Instead of focusing on that 1%, 2%, let’s go after the other 99% because there’s room there for everybody to grow and not be so competitive. Like you said, I really liked the words you used - destructively competitive - there’s just not a place for that right now, not in such a small industry.
Tyler: Yeah… Is there anything else our readers should know about BizXchange or what you guys are up to that we haven’t already covered?
Jason: Well, I think, the only last thing is I just want to commend you on everything you’re doing. You’ve got a true mission and if there’s somebody who’s doing it right right now, it’s you. You are bringing some legitimacy to the barter industry and we fully support you.
Tyler: Thank you. I appreciate that… Thanks for taking the time.
Jason: My pleasure. Thank you so much.
