Bartering is a business practice brilliant in concept, but limited in practicality. If the accountant doesn’t need a new suit, the tailor is out of luck at tax time.
Now take the age-old concept of bartering and bring it into the Net world. What if bartering no longer had to be one on one? Then the tailor could offer his services to a caterer, collect virtual credit, then “pay” an accountant active in the same bartering community with the credit.
Los Angeles-based LassoBucks.com is blazing the virtual way for a new bartering dynamic. In doing so, it has created a new resource for small and mid-sized companies notorious for being short on cash but big on needs.
“We offer a very direct value proposition to our members: We make their wallets bigger by creating a new type of currency,” explained LassoBucks CEO Timothy Fong. “The concept of bartering may seem old-fashioned to some, but the concept is incredibly intuitive to small-business owners.”
LassoBucks members currently offer computer and legal consulting, gourmet gift baskets and stays in bed-and-breakfast establishments, to name just a few goods and services. As the virtual marketplace continues to evolve, Fong expects services rather than physical goods to become the dominant type of exchange.
Anna-Bella Inc., an upscale woman’s clothing manufacturer headquartered in Northridge, has used the barter site for about four months now. In exchange for garments sold for “lassobucks,” the company has received Web design consulting, directory advertising and window cleaning services.
“We estimate that we’ve gotten many thousands of dollars worth of services while saving thousands of dollars through the bartering process,” said Desiree Zuckerman, Anna-Bella’s director of marketing. “LassoBucks has given us more flexibility. It serves as a great resource, it lets us get rid of our product and it gives us a major discount on the work we want.”
The revenue stream comes from charging a small percentage of the value of each exchange, much like eBay. The company received its seed funding from Zone Ventures, and is currently looking for its second investment round.
Analysts haven’t studied online barter companies closely enough to comment, except to say that there is no proven track record. Forrester Research Inc. expects online exchange to help boost business-to-business commerce to $1.3 trillion by 2003.
Other types of online barter exchanges exist, and Fong expects several LassoBucks-like constructs to soon hit the Web. The company presently has about 10,000 members and adds a couple hundred more every day.
As the first site of its kind, LassoBucks has had to tackle the tough task of educating the market. To stay one step ahead, it will soon launch a variety of notable strategic partnerships with such entities as small-business expert Jane Applegate and her DigitalWork.com portal, small-business-centric iNeed.com, and the Women’s Economic Development Corp.
Idealab Going Bi-Coastal
The Internet incubator has acquired Washington, D.C.’s first pure Internet incubator, VenCatalyst Inc., for an undisclosed amount in order to replicate its Pasadena operations on the East Coast. VenCatalyst itself is a startup, launched in September 1999.
Company founder Andrew Stern first approached Idealab chief Bill Gross a few months ago to seek a minority investment, but negotiations quickly took a different direction.
Idealab East won’t remain in the nation’s capital. Instead, the new offices will be in more cyber-hip New York.
Meanwhile, there has been much speculation as to how Idealab pegs its own valuation as it gears up for a much-anticipated initial public offering. A recent deal with a Japanese telecom company gave a good indication: Tokyo-based Hikari Tsushin acquired a 1.34 percent stake in the incubator for $100 million, suggesting that the incubator’s total valuation is likely to be in the ballpark of $7.5 billion.
Hikari Tsushin and Idealab’s Intranets.com are collaborating on a business portal for Japan expected to launch in March.
News & Notes
Gemstar International Group Ltd., the Pasadena-based developer of the VCR Plus programming technology, has entered into a joint venture with French electronics company Thomson Multimedia. The venture will develop advertising and e-commerce opportunities for interactive TVs via Gemstar’s two-way wireless paging technology. A small transceiver will be attached to TVs that can be used to send and receive real-time information.
Santa Monica-based eToys has dropped its trademark-infringement lawsuit, filed in L.A. Superior Court, against a group of Swiss artists over the domain name etoy.com.
International Rectifier, the El Segundo semiconductor manufacturer, will soon introduce new power converters that have the potential to revolutionize the converter design market. The new products will, among other things, promote maximum power efficiency.
Contributing columnist Sara Fisher can be reached via e-mail at [email protected].
