To Trust or Not to Trust
Why you should trust a Ukrainian (even if they don’t trust you back).
I was recently listening to a great podcast with renowned researcher and author Jim Collins. One of the topics that resonated with me was a lesson Jim received from his mentor and legendary Stanford professor, Bill Lazier, regarding a decision we all make regarding whether our default position when we interact with the world is trust or mistrust. Meaning when you meet someone new, do you start by assuming they are trustworthy and grant them the full benefits of that trust until they lose it, or do you assume people are untrustworthy until they earn your trust. As I reflected on how this decision has shown up in my life thus far, I was struck by a childhood memory of my mother explaining why it was so hard for some immigrants from the USSR to be trusting. What I learned from her, and what Jim learned from Bill, is that you should default to trust as the consequences of mistrust are insidious and long-lasting.
Jim, who had recently graduated from Stanford, had approached Bill on this topic because after leaving the relative safety of the Stanford ecosystem, had found himself ripped off by someone who had taken advantage of his trust. Thus far he had been a lifelong “default-truster,” but was that sustainable in the real world? Bill’s stance was that the benefits of defaulting to trust far outweigh the costs, even if those costs are extremely painful when they happen. The unintuitive part of the tradeoff is that the downsides of defaulting to trust are highly visible and acute, like losing money to a con artist. Whereas the costs of defaulting to mistrust are diffuse and less obvious, despite being much greater in the long run.
For example, Bill shared that the very best people will not want to earn your trust. You will never recruit a top engineer for your startup if you require candidates to sign an NDA and submit a background check before you tell them what the company does. The same goes for founders asking investors to sign an NDA before sharing a deck. Ultimately, these examples are illustrative of the principal cost of mistrust which is that it impedes interpersonal relationships — it makes any action between two people less efficient.
Complex transactions like investments are a great example of this dynamic. Negotiating an investment in a low-trust environment is a nightmare. You can expect it to be slow, involve lots of lawyers, and counterparties will be posturing vs being direct with their requests. Whereas investments in a high trust environment can be done with a simple handshake. The costs of defaulting to mistrust are all the things that never happened because of that inefficiency — friendships that weren’t made, candidates that weren’t hired, deals that didn’t close, etc.
Another layer that I find extremely interesting is that it only takes one side to be mistrustful to create massive inefficiency. It can be a self-fulfilling prophecy because an otherwise trusting counterparty will often respond to the suspicions they encounter by becoming mistrustful themselves. In other words, mistrust can be highly “contagious” and spread through an ecosystem, which I’ve experienced in pockets of the immigrant community I grew up in.
As I’ve mentioned in previous posts, I was born in eastern Ukraine, part of the USSR at the time. When I was 3, we immigrated to the US and started a new life in Boston amongst a large community of Ukrainian expats and other immigrants. As a child, I remember noticing the different ways that my parents interacted with strangers amongst our fellow immigrant community vs how they acted with Americans or fully-assimilated immigrants. There often seemed to be more negotiating, more heated conversations, and a greater likelihood for unpleasant surprises — in retrospect, there appeared to be less default trust.
At one point I remember asking my mother about why this was and she shared an insight that has stuck with me since. She explained that the final period of the USSR was not a pleasant time — long ration lines to get food, empty shelves, massive economic and social uncertainty, and so on. All of this led to an environment where people were forced to look out for themselves and their families and for some, that meant doing so at the cost of others (corruption, lying, etc.). Now despite being in a very different situation in the US, many found it difficult to change their viewpoint, leading to this environment of higher mistrust than was warranted. Sadly, the result for me is I formed very few friendships within the community. To be clear, I’m not trying to make a sweeping generalization that all immigrants are mistrusting or untrustworthy. My point is simply that my perception of this life experience acts as a cautionary tale of the potentially long-lasting effects of defaulting to mistrust.
Later in life, when I started my first company in San Francisco, I was thrilled to see an example of an ecosystem that was based around and self-reinforced by trust. Easily one of my favorite parts of working in tech is the inherent trust baked into the system between founders, investors and employees. Of course, there are plenty of examples where people have taken advantage of this but generally speaking, people act in good faith and with good intentions. It makes it incredibly easy to work together in extremely complex ways.
There’s no better example of this than early-stage angel financing. Deals aren’t quite done on a handshake anymore (YC may disagree) but it’s pretty close. Even though someone could fairly easily lie about their metrics and financials to raise some money, 99.99% of people understand that it’s not worth torching your reputation (and risking jail time) for those short-term gains. As a result, deals happen quickly and at a scale that wouldn’t be possible if they required intensive legal processes.
For me, this podcast was a great reminder to be even more explicit in my personal choice of defaulting to trust. Of course, I can and will change my position on a given person based on new information but I know where I want to start from and what ecosystem I want to generate around myself.
Prime Movers Lab invests in breakthrough scientific startups founded by Prime Movers, the inventors who transform billions of lives. We invest in companies reinventing energy, transportation, infrastructure, manufacturing, human augmentation, and agriculture.
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