New Berlin, WI-Bartering is the world’s oldest form of doing business. As in: I’ll give you my saber tooth tiger pelt in exchange for your wooly mammoth meat.
But now in the age of currency—not to mention debit cards, credit cards, stocks, and PayPal—has bartering gone the way of the mastodon?
Hardly. Barter, like business, is continually evolving. And thanks to one man—Don Mardak, CEO of International Monetary Systems—the industry is in the midst of an unprecedented transformation. Stock Symbol: INLM.OB
A Crash Course in Bartering
Today’s bartering should not be confused with swapping. Now, companies trade through barter organizations, receiving trade dollars or credits in exchange for goods and services.
Bartering yields many benefits. It allows companies to unload excess inventory more profitably than liquidation, receiving up to full wholesale value. It allows them to purchase virtually any business necessity, even advertising space. It’s also a powerful marketing vehicle that brings buyers and sellers together. No wonder some actively bartering companies conduct 5 to 10 percent of their business through trades!
It’s estimated that the industry generates nearly $3-4 billion in annual sales. There are about 250 barter exchanges in the U.S. and another 150 abroad.
The Department of Commerce estimates that 20 percent of world trade is accomplished through bartering…yet there is enormous growth potential in the U.S., where only one percent of total commerce is conducted through barter.
Why? Because until recently, barter exchanges have been small, locally-based organizations—many with fewer than 100 members.
Enter Don Mardak.
From Accordion Champ to CEO
Today, IMS is the largest independent trade exchange, growing 350% in the last five years under Mardak’s leadership. But his first brush with fame occurred as a teenager, when he was crowned Wisconsin’s accordion champ. At 20, he partnered with the state’s #2 player and opened The Accordion School of Champions. But, alas, the Beatles invaded…and overnight, the accordion became obsolete.
Mardak nimbly transitioned, teaching himself the electronic organ. He began selling organs, then wrote the first easy-to-play method. Suddenly, manufacturers like Hammond and Baldwin were clamoring for it. Suddenly, he was in the music publishing business!
He and his brother convinced Hal Leonard Publishing—now the largest U.S. music publishing company—to open a division in Milwaukee. While his brother would stay on to become CEO, Mardak left four years later to open an organ store. But history repeated itself in the 1980s, as organs were edged out by computerized keyboards.
So—in his first barter transaction—Mardak traded the retail store for real estate, then used his investment to launch his barter career.
The First National Bartering Network
In 1985, Mardak founded the Continental Trade Exchange, a modest barter organization located in the Milwaukee area.
His business model: go door-to-door signing up local businesses, exchanging merchandise for trade certificates. His office: the trunk of his car. His showroom: the family garage. At night, his wife Judy—who remains involved in the management of the business—would type the day’s certificates.
Initially, the business was small. But in 1989, they made their first acquisition, a small trade association in Green Bay.
“It was a revelation for me,” recalls Mardak. “I spent four years growing our business to 300 members, then doubled our size with the stroke of a pen.”
Shortly thereafter, he created a holding company, International Monetary Systems, Inc. (IMS). His thinking behind the then-grandiose name: “I didn’t want to be perceived as just a barter network. I wanted room to expand.”
Expand he did. Capitalizing on the fragmented market, Mardak has since acquired 22 other trade associations, creating a first-of-its-kind national bartering network. IMS spans 14 states, from New York to California, and even includes some Canadian members.
A Publicly-Traded Trading Company
In 2000, Mardak did the unheard of, making an initial public stock offering. IMS is one of two publicly-traded barter exchanges (the other one operates under a franchise model).
“Years ago, I read that the difference between the Rockefellers and the rest of us is one thing: buying power,” says Mardak. “The very wealthy deal in ‘super money,’ the currency granted by Wall Street. I knew I wanted that.”
Because IMS charges members a small monthly fee, it generates a monthly income stream from every client, whether they’ve traded or not. As the network grows—and its 30-person sales team is adding hundreds of new members every month—it’s becoming what Mardak calls “a money-making machine.”
“This is a great opportunity for investors. Everything we do is geared toward being a successful public company and enhancing the price of our stock.”
More to Come
But Mardak is only getting started. He is already in the process of moving away from printed trade certificates, replacing them with electronic swipe cards.
He’s mulling other ideas, too, such as leveraging his membership into a clout-heavy buying group and creating a reward program for his members’ retail customers.
He plays a leadership role in the industry’s two trade associations, IRTA (International Reciprocal Trade Association) and NATE (National Association of Trade Exchanges). He has served two terms as president of NATE.
“We’re not talking about a barter system anymore,” he says. “We’re talking about a payment system—a cashless payment system.”
“Cash may be king, but not for long.”
