The currency of Trust

We live in a capitalistic world…

Actually, it probably is the most capitalistic world that ever was. Of course, one can talk about the Middle Age, when a privileged bunch of monks and warriors concentrated the nation’s wealth into their greedy hands, but:

a)      I wasn’t there, so I cannot know for sure how things were back then

b)      When things went south – and they often did – these guys were actually the ones to deal with the problems… sometimes at the price of their own lives.

So, what about the world we live in today? Well, let’s talk about a couple of iconic examples from our modern days to shed some light on the matter:

a)      Russia – once the banner of hammer and sickle – is now home to some of the richest “entrepreneurs” on the planet and Moscow stands as one of the most expensive places to live

b)      China – still the world’s largest communist country – is also the world’s largest investor and produces more billionaires per year than any other nation before…

 And it is getting worse…

Of course we know that developing BRICS are showing huge inequities within their social classes, but the USA have some scary figures of their own, too. Here are stunning numbers about how wealth is distributed there:

a)      the richest 1% of folks accumulates over 40% of the nation’s total wealth

b)      the next 19% richer control around 53% of it

c)       the poorest 80% of the population are left with 7%

In the corporate world, the average CEO makes in one day what his/her average worker makes… in a year.

Don’t get me wrong: I am neither a North-Korean spy nor a socialist activist… actually quite the opposite. I am an entrepreneur with the will to succeed and a taste for expensive stuff. But I have a conscience too.

 There are other ways…

I believe the current concentration of wealth in the hands of a very, very restricted number of people worldwide is not the solution: it is not sustainable in a planet gone global. Luckily for us, a growing number of individuals and organizations are trying to build a new path for the sake of most (all?) of us, away from the traditional distribution networks.

Sharing economy, collaborative consumption, peer to peer, collaborative economy… various terms for one same message: we can learn to consume in a different way. Whether it is by sharing providers, re-distributing second-hand goods, buying in bulk, through crowd-funding or micro-financing, we can make a difference in the way we use the resources we need… together.

New companies, new challenges

So what is the next step? Why are these companies thriving nowadays? For starters, more and more people have come to realize that you don’t necessarily need the latest, dearest, heavily promoted item to fulfil your existence. Years of publicity and higher education eventually got us … educated. We learned to make the difference between what we know and what we need.

As it turns out, we probably just need… what suits our needs. It might sound stupid, but this is the real deal: people are increasingly getting out of the marketing vortex and focusing on what they actually, really need. Less bling-bling. Less show-off. Oh, and they want more for less, too!

How do you achieve this? This part is easy to answer: you cut the middle men, you get rid of unnecessary expenses, you buy second-hand, you learn to… share! Easy answer, though quite difficult to put in place (at least if you want to do it in a sustainable way) as no one likes to get out of business.

About trust and efficiency…

Truth is you need two factors for the sharing economy to be prosperous:

a)      Efficiency

b)      Trust

Efficiency – not to be confused with availability – refers to the ability for a company (or a person) to offer to their customers the right product at the right time in the right place and at the right price. A complex yet feasible process to implement, as numerous business success stories can tell.

Trust is far more complex to achieve: companies often spend millions to that end, with uneven results. Imagine then the challenge for the sharing economy – mostly start-ups with little or no funds – when trying to connect individuals with others, strangers with strangers… How can you trust someone you don’t know?

What comes next?

The frontier between real and virtual worlds is quickly fading. Facebook, Twitter, Linkedin… all major modern social networks bring overexposure to friends and strangers alike. Your privacy is a long gone dream. Anyone can access pretty much any information about you anytime… let alone the NSA.

Who can we trust, then? This question is relevant – though futile – to us individuals; yet it is a matter of life or death for modern companies, especially online. In order to create a viable business, you need customers to repeat. Engaged customers. Customers who trust your product. Customers who trust you. Customers who trust others.

How can you buy trust?

AirBnB – one of the most famous pioneers in collaborative consumption – has a solution to the challenge with its Host Guarantee that provides a protection of up to 1,000,000 $ for damages to covered property. Yet it also relies on social referrals for its business model. You simply cannot buy trust: you can only learn to build it, patiently.

So how would companies achieve this goal in the promising fields of Sharing Economy? Some bet on tools. Some rely on money, insurances and policies. Some use the latest technologies. Some try to build relationships through their customers’ existing circles of trust: family, colleagues and friends…

Who will become a Sharing Economy champion depends on a number of factors no one fully understands today. We only know that trust, hard work and mobile solutions are part of the answer. Which ingredients are necessary to blend the magical potion of success will only be revealed in time… so I will try to keep you posted.

Ever heard about Taskrabbit, Yerdle, Lyft or Fajoya? If not… you soon will.

My biggest thanks to…

Written by:

Dave Cardon

CMO of Fajoya