November 21, 2004    Business

Systematizing Trust

Our world functions like a gigantic brain. In this analogy, each of us is a brain cell. There is no scientific evidence that we ever forget anything; we just lose access to the cell that contains a specific piece of information. Once the connection is lost, that cell is useless even if it contains a valuable piece of information. Likewise, no matter how intelligent, talented, and skilled you are, if you have no connections to anyone else, you are useless. In many cases, it is better to be connected with less to offer, than to have a lot to offer but no connections. We humans are designed to accomplish great things by connecting and collaborating with one another, just like our brains do.

We’ve all felt a sense of frustration when having to explain our own capabilities in job interviews. There is so much that cannot be explained and proven verbally in a short period of time, or on a single piece of paper. We feel that there are many people who look great on resume, but are actually incompetent. In many occasions, I wished, and I’m sure you did too, that there was a definitive way by which my competency, skills, knowledge, leadership, managerial skills, trustworthiness, sense of responsibility, intelligence, creativity, talent, and professionalism could be accurately and fairly evaluated and proven. If there were such a system, I could spend much less time selling myself and more time actually getting things done.

Business networking websites like LinkedIn, Ryze, Ecademy, and OpenBC might be the beginnings of such systems. I’ve recently discovered them, and I haven’t yet had the time to explore them in depth, but from what I read of them, I find them promising. The core concept behind these systems isn’t new. It is very much like that of eBay and Google; they are designed to systematize trust. Google measures its trust based on two factors: for any given page, how many people link to it and who links to it. In other words, your PageRank goes up when a lot of people link to your page and/or when a high-profile website (say links to your page. Google figured that if a lot of people refer to you, or if someone proven to be trustworthy refers to you, you are worth trusting. Don’t get me wrong here; by “trust” I don’t mean accurate, truthful, or objective. I simply mean trustworthy in terms of having relevant information. The more people find your page relevant, the higher your PageRank would be.

I’ve always felt that this concept could be extended to business networking. If your site has a Google PageRank of, say, 9 out of 10, you’ve said it all. No further explanation is necessary to convince someone that you have achieved something great. Even if that person has no idea what a PageRank of 9 means, you just have to explain how few websites in the world have it, and give a list of other sites with a PageRank of 9. Wouldn’t that be great if a similar system can be implemented for business networking?

Currently, eBay’s Star Chart rating system is a version of that. Building trust is no easy matter on eBay. Most people bend over backwards to avoid negative ratings, which I think is a good thing as long as the integrity of the system can be trusted. Without knowing someone personally, you can feel safe to do business with that person. This sense of security opens up a lot of possibilities. Here are some of them:

1. Most of us end up socializing with others who are just like ourselves, people with similar income level, age, race, culture, location, intelligence, profession, and even gender. Without a system to help you break outside of your immediate circle, you are stuck with opportunities available within it. This is particularly true in the dating scene. Ever since online dating became popular, we started seeing couples with very different backgrounds, whose paths would have never crossed if it weren’t for the online dating system. A business networking system could do the same for business. Suddenly, you have access to a huge pool of people whom you could have never met in real life.

2. A business networking system would allow you to bypass the middlemen such as brokers, salesmen, and agents. These people exist largely to weed out untrustworthy and to find trustworthy. If we have a system that can prove the degree of trustworthiness, we don’t need these people in the middle. This will save us a lot of money.

3. Advertising will be unnecessary. Given any product, if there is a way to measure the greatness of it, and if there is an efficient way for people in need of it to find it, we would not need to advertise. Some of the articles I’ve written and posted on my website have been read by tens of thousands of readers in a year. Although, it might not be a great achievement by the standard of the Internet, that would have been impossible without the ability of search engines like Google to send relevant readers to my site. I made no effort to advertise these articles; the readers found them. The same can happen to products. As long as they are good, buyers should be able to find them without advertising. Imagine if we eliminated the need for advertising!

4. Furthermore, as we improve ways to make appropriate connections—whether between people to people or people to products—there will be less need to push information in general, because people can easily and accurately pull information. There will always be people pushing information on us because most of us actually want certain types of information to be pushed. (Pulling can be a lot of work.) But, it is hard to deny that less pushing would be good for everyone, given the current state of advertising.

There is a downside to networking systems too. As happened with Google, there is a good chance that people who started using the system early have an unfair advantage. (Some would argue that this is a payoff for being a visionary.) People who started Weblogs in the 90’s received a lot of attention because there weren’t many of them then. Many people linked to them and their PageRank went up. Once you have a high PageRank, you receive more traffic from Google. It has a snowball effect. The quality of your content cannot be poor for your site to receive a high PageRank, but it does not have to be great either. The same quality of content offered on a site with a PageRank of 9 would get disproportionately more traffic than it would on a site with a PageRank of 5. In this sense, the earlier you get in the game, the better. If the same logic goes for business networking system, the more trusted you are, the more trusted you would become. It would have a snowball effect, and the latecomers will have a difficult time competing. Even if you are just as trustworthy as your competitor, if he already has 100 working relationships with other members, your chance of beating him in getting a gig would be slim.

I have a feeling that business networking systems will be a big success in the near future. Initially, only a small circle of people will be doing business with one another, but that might be enough of an incentive. And, within this circle, people will attain the degree of efficiencies and qualities others would not be able to match for the same price, for they would be paying their fees to the middlemen, and spending more time to close their deals and to find their resources.

Even if you receive sales pitches from others on the network, there would be good reason to keep your gate open, because, unlike cold-calls, Spams, or general advertising, they are more likely to be relevant. Besides, early-adopters tend to get along with one another because they share the same enthusiasm for something new, risky, and uncertain.