Excerpts: How entrepreneurs can build trust

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In the 1970s, as an impressionable preteen in India, I saw a tearjerker of a Hindi movie, Toofan aur Deeya, loosely translated as “Candle in the Storm.” The title song of the movie stayed with me over the ages, and I internalized its allegorical message of a lonely candle flame spreading light and hope, however minimally, while being engulfed by a raging storm that threatened always to snuff it out. The movie’s message was somewhat hackneyed, I admit.

Yet, it was nonetheless effective. Over the years, it has reminded me that we shouldn’t underestimate the power of individual initiative, even against insurmountable odds. And the odds surely seem stacked against a creative individual seeking to solve a problem while enveloped by an institutionally weak and low-trust environment.

But better than pointing accusatory fingers at incompetent governments, or blaming the venality of corrupt individuals, we can take a page out of the actions of so many right around us in the developed world.

Craig Newmark, for example, founder of the eponymous and now hugely popular online classified ads site Craigslist.org, remarked recently, uncannily echoing my childhood memory of a valiant candle flame: “Better to light a candle than to fight the darkness.”

He used an old saying to reflect on the general problem of how we can find credible information in society. Craigslist started when Newmark, having lost his job in 1995 just as the internet was taking off, decided to use his severance money to create a website that connected folks who were buying and selling things in the San Francisco area. Today, on his site, you can post ads for nanny services, jewelry, trucks, music gigs, and virtually anything else that occurs to you. It’s mostly free, though the few services for which one pays are sufficient to make the enterprise insanely profitable.

Of course, Newmark must always have been obsessed with the idea that offers hosted on his site should have some authenticity to them so that transacting partners would come to trust it viscerally.

This idea of trustworthy information appears to have stayed with him in the two decades since the site’s launch. Today, his philanthropy is directed to backing entrepreneurs combating fake information, such as organizations that call out fake information in the news. Indeed, it certainly stays with you when a speech is rated “Liar, Liar, Pants on Fire” or labeled as maximally false with “Three Pinocchios,” referring to the wooden puppet whose nose lengthens when he lies in Carlo Collodi’s tale from the 1880s, The Adventures of Pinocchio.

Fake news has acquired new salience in the era of current US President Donald Trump, who subscribes to his own alternate reality while accusing mainstream media of misrepresentation. Yet poor information is a societal problem, not only a Trump-era problem, and demands a societal response. And I think Newmark, with his support of creative entrepreneurs, is on to something. What, after all, are the alternatives? Moral exhortation? Of course, we should take every opportunity to remind ourselves of “thou shalt not lie” type of mandates, but one would not have to be cynical to question whether this action is enough. We can police lies, but there are simply too many being uttered these days to sanction by using laws, ostracism, fines, and so on.

It helps that organizations in the business of verifying the credibility of information have often become viable. In other words, entrepreneurs can succeed by explicitly compensating for the absence of trust. Think of financial analysts who routinely grill executives when their companies put out overly optimistic plans and cause capital to be moved from those making less-plausible assertions to more-credible entities.

My favorite example of organizations in this genre is the Consumer Reports magazine and website, go-to places for millions of Americans to ascertain the quality of something, anything, they’re about to buy—whether it be a dishwasher or a car or services of contractors to check out the quality of a new house.

Consumer Reports runs fifty state-of-the-art laboratories nationwide to test products and services they identify, free of any influence from the producers, since they’re funded by subscriptions to their reports.

It then issues no-holds-barred recommendations about the pros and cons of various offers, which are completely trusted by the market.

Like Craigslist, the magazine’s origins go back to the entrepre- neurial efforts of two individuals, in this case an Amherst College economics professor back in 1936 and his partner engineer with a background in product testing. The organization’s success today in harnessing the trust that consumers have in it to police mischief is the result of decades of evolution and experimentation. Today, other than its core service of testing, it also engages in extensive research and even advocacy. It has lost some sway to newish organizations such as Yelp, an online website that reviews local businesses via crowdsourcing, though the lessons of Consumer Reports’ trustworthy assessments remain.

Ironically, during the hysteria in the United States against communism, starting in the late 1930s, Consumer Reports, seen as favoring the little guy against corporations, was even investigated by the US House Un-American Activities Committee. How ironic!

But what could be more American than its entrepreneur founders’ provision of reliable information to support free markets.

These few examples from the developed world suggest that the solution to the problem caused by mistrust usually lies ultimately with the insights of an individual entrepreneur. After all, even celebrated entities began as the actions of an entrepreneur. Take the iconic entrepreneur Sam Walton and his founding of Walmart.

Walton sought to compensate for the missing retail infrastructure in what was then small-town America—indeed, very much like the developing country settings I consider here. Ultimately, he earned the trust of tens of millions of Americans who could reliably find affordable merchandise in thousands of hitherto inaccessible locations. Today’s Walmart-like behemoths are, ultimately, the results of a brilliant entrepreneurial insight, magnified by problem solving over decades by Sam Walton’s teams, which have amassed a track record of exhibiting admirable grit and persistence. It is time, I believe, for such entrepreneurs to step into the voids of the developing world.

These days, most of the developing world lacks such credibility enhancers. One solution is to encourage their creation. They could then ensure would-be and rightly skeptical buyers that a seller’s representations are credible. There’s a lot of room for creativity in this endeavor. Such an entity can be specific to certain needs or can be all-encompassing. It might make money for its owners or simply run as a social service. And it will usually employ technology.

Creating such an organization is the perfect task for a would-be entrepreneur.