MOSCOW — German Sterligov is well known here, but unlike Roman Abramovich, Oleg Deripaska, and other publicly flamboyant Russian billionaires, he is little known abroad. Sterligov neither sails the Caribbean nor drinks in London’s Mayfair district; most of the time he lives a traditional peasant lifestyle deep in the Russian countryside with his wife and five children. In winter, their farm is accessible only by horse-drawn cart, and the nearest house is seven miles away. Sterligov’s way of life makes a strong Russian Orthodox statement and amuses Moscow’s public.
Sterligov made his fortune in the 1990s running a large barter business. He founded a mercantile exchange where Russians traded products they were unable to buy or sell for cash. He lived the luxurious life of a billionaire and owned properties in Moscow, London, and Manhattan. In 2004, after an ill-fated bid for Russia’s presidency, Sterligov sold everything and moved to the countryside.
However, the financial crisis forced him to put on a suit, get in a car, and find his way back to Moscow. Today, when not milling his own flour or hatching his turkeys and chickens, he occupies the Russian capital’s newest skyscraper in the trendy Moscow City district. He rented “B” Tower’s entire 26th floor and injected $50 million into the new business.
Sterligov is an economic mastermind who’s helping Russians overcome their country’s lack of financial liquidity. His barter business model has been applied across Russia, particularly in Moscow. It may be the main reason why today, despite economic turmoil, Moscow’s roads get paved and its skyscrapers continue to rise.
Sterligov’s
business model may appear confusing, but it’s basically simple. If a provider of goods or services cannot find a client with money, they can offer their product in exchange for other goods or services. But since straight-up exchanges are the exception rather than the rule — my company might need your goods, but your company might not accept my company’s services as payment — additional participants have to join the circle of exchanges in order to satisfy everyone’s needs. Stergilov uses an advanced computer system to match product with consumer.
Often the series of exchanges begins with a debt. When Sterligov described the process to the
Moscow Times, he used a steel company’s debt of 1 billion rubles to a coal company as an example. The steel company might not have the money to pay its coal bill, but it will soon be able to put 1 billion rubles’ worth of steel into the exchange. The coal company can provide a list of goods or services it will accept to fulfill the steel company’s 1 billion ruble debt. Eventually, a company — or a whole chain of companies — will be able to bridge the gap, taking the steel and providing products or services either directly to the coal company, or that can be bartered or sold to its eventual benefit. When all is said and done, every player has made a fair exchange, and Sterligov’s business has taken 1 percent of each transaction’s value.
These proceeds are shared evenly between Sterligov’s corporate center and the local outlets where participants sign up. Currently, there are 30 exchange offices in Russia. Sterligov’s goal is to have 1,000 offices in Russia and then go international, so that Siberian condos could be paid for with the cash received for African bananas.
Russia’s barter tradition comes not only from medieval history but also from the Soviet Union’s latter days and the early 1990s, when workers wouldn’t get salaries for months or years at a time and had to become creative to feed themselves and their loved ones. Factories paid workers with products, and babushkas from toy factories could be found at train stations exchanging stuffed animals for stuffed cabbage.
Modern Russians have witnessed several financial defaults and were naturally prepared for another crisis. Every Russian family lost its savings in 1991 during the Soviet Union’s implosion. In 1998, the banking crisis swallowed the savings that Russians had accumulated after the painful rebound of the mid-1990s. Centuries of war and hardship seem to have prepared Russians for another economic “inconvenience.”
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