Startups That Fail to Invest in Trust Will All Die

Web startups need access to talent. Often they need capital too (and a smart strategy for managing it). But I am going to argue here that their most essential currency is trust. However, a lot of emerging companies in particular tend to ignore it.

Here's a great example. Coding Horror (via Read/Write Web) has a tale about a downloadable software application that should send a shiver down any consumer's spine.

The story goes like this. Allegedly the developer hard-wired malicious code into the software that harvested the Gmail username and password of every single one of the application's users and forwarded it to his own email account. Whether this is true or not, I can't confirm. However, it's as good as time as any to re-raise the trust issue again.

This is what scares me about the wonderful Twitter API. A lot of these little applications may have access to your Twitter username, password and (in some cases) cell phone number. But how do you know they are trustworthy? You don't.

In a mashup world where web services and APIs rule, if you're going to create a business that in some way or another touches data you must invest in building trust. Every gaffe like this one raises the bar for the rest of the boat. B2B companies that hope to court firms to store their data in the cloud have an even higher wall than most consumer-facing sites.

No startup should launch without at least three things: a) deep insight into how people feel about the particular data they plan to collect, b) a clear strategy on how to build trust (often this includes following certain third-party guidelines) and c) a plan for dealing with company-specific issues and macro industry blunders.

VC Fred Wilson argues that an expensive PR firm may not be worth it. He's right - sorta. It depends on lots of factors. However, often you do get what you pay for and a talented group of PR people who know how to work with the media and the community can help you build trust by factoring in all of the above. Larger firms have deep access to insights, data and relationships that can help here, but obviously working for Edelman I am biassed.

For more on the subject, check out the 2008 Trust Barometer - an annual study conducted by my employer.

Comments

[marhal sandler]

I totally disagree with Public Relations being a waste of time ! Many firms have built a better mouse trap, but no one knew about it ! The internet is emerging as a very large marketing tool ! Brand Identity will become an integral part of a company being profitable on the net !
Mr Wilson may be right, but try and invent a New Coca Cola just walking thru the streets with a Pushcart and asking a fair price ! You will very rarily get Public Trust with out proof ! If you are out front and up front you can maintain Trust ! The WWW is based on using semantics,general semantics and mathematics to achive a goal, this talent is not for free !

[Forumistan]

Thanks for the helpful information.

[Soumitra]

Ditto for all those Facebook/myspace and flickr apps...

[Jacob]

Hi Steve,

I definitely agree with you. Trust is a key factor in the success of any business. However, if a business does not have the foresight to invest in trust, then that business deserves to die.

jacob

[Charles H. Green]

I tend to agree too, with one caveat.

Regarding the use of public relations, it's useful to remember the two most trust-destroying words you can use--"trust me!" They're trust-destroying because real trust creation depends on some underlying reality. Being trustworthy is critical--the act of claiming you are trustworthy can undercut the very fact.

Is it really the norm (honest question, I don't know the answer) that large PR firms, e.g. Edelman, spend a lot of time on generating "a) deep insight into how people feel about the particular data they plan to collect?" I think that would be a good thing, if true.

My concern is that the industry spends proportionately more time on your third point, "a plan for dealing with company-specific issues and macro industry blunders."

Clients, of course, are willful co-dependents in this dance of trust as short-term course correction; but that shouldn't lessen the burden on PR professionals to ensure the steak precedes the sizzle.

[Melanie]

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[Kris Beldin]

Steve,

Great post. I think this article not only speaks to the CEO, investor or entrepreneur but also those of us in the PR/Marketing industry. As technology evolves and companies spread into new "frontiers" we have to become knowledgeable too.

Often the criticism is that we, PR people, don't understand new media from a publicity stand point, but this post illustrates the need to understand the implications of our clients' business ventures just as well.

[Paul Chaney]

In an effort to overcome spam and increase trust, the email marketing industry created bonded sender programs and SPFs. Similarly, the ecommerce world created SSL certification and validation programs. I wonder if some type of industry-wide "trust" mechanism could be developed for those who develop APIs and web services.