Trust is the new currency
High-profile startups, particularly leaders in the “sharing economy,” trade in trust the way entrepreneurs in earlier centuries might have traded in natural resources. They identify high concentrations of trust that are being inefficiently distributed, and take advantage of a market opportunity. For example, with the right incentives in cost and convenience, it is well-established that consumers are willing to trust a private citizen with a ride-sharing app over a fully licensed, regulated taxi driver.
On-demand valet apps like Luxe and ZIRX continue to stretch the boundaries. As miraculous as they may seem to the busy city-dweller, the deep trust they require is palpably obvious to the outside observer.
“You drive up to some point in San Francisco and meet some guy you’ve never seen. He’s not even wearing a uniform. And you feel comfortable handing your car keys over to him and expecting you’ll see your car in one piece at the end of the day,” says Siddhartha Chatterjee, CTO of Persistent Systems. “If you have that level of trust, the system works.”
Trust is becoming increasingly important everywhere, as layers of outsourcers and subcontractors make manufacturing extremely difficult to audit. As much as contractors want to build trust, they also want to trust that their time is being used towards projects they have a fair chance of winning. Edward Price of PCI Synthesis, a biotech outsourcing manufacturer, is leery of his firm being used simply to pad out a list of bids with no genuine business opportunity. “I don’t want to tie up my technicians’ time studying an RFP unless there are very strategic reasons to place that project with us, especially if the client made Phase 1 trials at one company and is now looking at a Phase 2,” he says.
Because biotech customers incur high costs in moving projects from one supplier to another and costs are relatively inflexible around the industry, chances are high that a client with no real complaint is simply trying to meet an executive or regulatory requirement for more bids. In short, if Price’s competitors haven’t violated a prospect’s trust, they probably have no reason to switch providers.
“I’ll ask them if the previous supplier delivered on time, had good project management, met the budget and maintained a good relationship—and if the answers are yes, my advice to them is to stay where they are,” he says.
The double standard of trust
Many of the success stories in the trust-based economy succeed because of a peculiar double standard on the part of customers. Crowdsourcing services such as Uber and Airbnb routinely run afoul of state and local statues designed to control and regulate these services. Consumers and service providers are clearly willing to flout those laws, even as they clearly also trust in the rule of law to protect their property and personal safety from harm every time they surf a new couch.
For the trust-driven consumer, it’s a sign of greater faith in the power of transparent, peer-vetted data over the opaque workings of regulatory bodies which can be distorted by vested interests. “Consumer and companies are smart enough to see the difference between regulations designed to protect them, and something designed to protect the gross margins of an industry,” says Rob Biederman, co-founder of HourlyNerd. “They will ignore what is clearly rent-seeking behavior and rely on data, such as track records of safety and success.”
The ability to dig deeply and consider the source is a particularly important survival tactic in the new economy. That is particularly true for old-guard companies, which may try to pump the wrong metrics in order to take up a position of trustworthiness. Lasting and meaningful trust is built up through transparency and credible, detailed feedback, not by land grabs for social media activity. “Trust in the new social economy is often implied, merely from how many followers or likes a person or company has,” says Ryan Hulland, president of Netfloor USA.
Trust cuts both ways
Transparency and instant global sharing makes it virtually impossible to cover up misdeeds, and very difficult to combat half-truths told about a company’s mistakes. “When you set up a trusting, long-term relationship with customers and you break that trust, you suffer wrath like you never had when you were a transactional company,” says Robbie Kellman Baxter, founder of Peninsula Strategies. “Even organizations that zealously protect their brand and reputation are subject to negative feedback. You live by the sword, you die by the sword.”
Trust can’t be mined like a conventional resource, but it can be begged, borrowed, and renewed. Affinity and co-branding programs are a perfect example. The relationship with the university, professional association, or other entity on the card brings in the applications. The consumer’s trust in the issuing bank or payment network is of secondary concern.
When the well runs completely dry, or you’re starting from scratch, there’s still a chance to build trust from zero. “If I want you to trust me a lot, I would start by giving you something you valued. Then I would make commitments to you just so that I can honor them,” she says.
Be aware that relying on easy giveaways to build confidence is also a hallmark of the fraudster, who banks trust away in order to cash in with an inevitable betrayal. “Con men do three things to prove trust. Then they do the violation.”