Remember when trust actually meant something?

originally appeared in USA Today:


The company that I would like to start — or at least patronize — sells trust.

That's its product. It gives you a good feeling. It reassures. It lets you rely on it. It overcompensates for your anxiety. It leaves little room for doubt.

Trust was, at a certain point in consumer history, what most successful brands were selling. Trust was the ultimate scalable asset — once you established it, you could keep producing it at no further cost. Some brands could even extend their own trust levels to other products. Famously, the Good Housekeeping Seal of approval, a marketing brainstorm if there ever was one, let you feel good about anything with its imprimatur.

Now, most major brands have implicit trust problems, to say the least. Most are on a terrible treadmill, having to grow ever faster to make up for their constant loss of public trust.

The other day, The New York Times ran a story about Amazon's efforts to purge its user reviews of untrustworthy reviewers — members of an author's family, for instance. This naturally gave way to a larger issue of trust: How does Amazon know who's related to whom?

Would you trust Amazon? Do you trust any company whose main mission is to collect your data? You might acquiesce to it, but do you trust it — or anyone whose central activity is to keep tabs on you? Google, founded on a do-gooder credo, is now the leviathan of data collection and opacity.

And the entire financial industry? That trust, once the very essence of its business, is certainly gone.

Politicians? A reasonable definition of partisanship may be that for anything you do trust, there is an equal and countervailing force that you distrust more.

The very concept of a brand used to be something that grew up over many years on the basis of dependability, or at least habit, which is a form of trust. But then there evolved a branding industry, whose skill was to create fake trustworthiness — or anyway the illusion of it.

Possibly that indicates unrealized value in old brands. Oh, but the private-equity industry figured that out already, bought the brands, and fired the people who had previously created the trust (which, by the way, added to Mitt Romney's personal trust deficit).

Twitter and other forms of social media have grown up in part as an antidote to the lack of trust — a constant populist monitoring of public life. But then social media itself became suspect, a feeder of rumor and inaccuracies, not least of all in the Newtown, Conn., school shooting. And recently Instagram, part of the increasingly suspect Facebook leviathan, announced it was selling the pictures people had entrusted it with.

The only thing it seems that we do really trust are bubbles, which, naturally, explode, further reducing our trust and demonstrating that trust is, as often as not, a form of stupidity.

Now, this could suggest a bottomless existential hole, a profound crisis for capitalism and democracy. Or it could indicate an obvious moment for a cyclical turnaround. Since there is so little trust in the marketplace, its value grows ever greater. How can anyone miss the signs? Trust should be the next big thing.

I wonder if there is a grand old man play. A company formed of the eminent and reliable, assuming there are such people, who command a vast team of researchers monitoring the actions, values, methods, measures, principles and expectations of every public person and entity.

Possibly there is a 1-to-100 scale, wherein, like a health code rating, you can strive for improvement. The business model here is critical mass. Companies, politicians and media pay to be rated, because to be unrated is to be outside the circle of trust and because, as in therapy, paying indicates a willingness to help yourself.

And yet, I feel an inevitable heavy hand here, a new notion of conformity, a chill of sanctimony. Also, old men (old white men continue to overshadow the others) have among the lowest trust quotients these days.

So instead, make this a social platform. Everybody rates everything. Data itself is put in service to trust. There is a constant tabulation of everybody's experience. Trust is expressed as concisely as the stock market expresses value. Trust is an algorithm. Of course, that begins to sound like polling and the overflow of data that leads to mistrust. Indeed, it may be information itself that leads to mistrust.

After so many millennia of not knowing anything, perhaps human beings can't handle knowing so much. Alas, the more we know, the more we shudder.

This could be then an opening for traditional media. We don't need more information — we need more context. This, to me, seems like it ought to be CNN's comeback opportunity. CNN already has a brand that people want to trust. After all, when something bad happens in the world, people go to CNN.

But then that trust wilts. CNN is now lost in the slipstream of partisan cable television, insisting that because it does not identify itself as right or left it should be trusted more by everyone. Large corporate entities tend to equate trust with the wishy-washy, instead of with consistency and rectitude. But, come to think of it, audiences tend to equate consistency and rectitude with an off-putting remoteness.

Are there any true models of trust anywhere anymore? It may be that nobody quite knows what trust is anymore. Hence, even people who think they are selling trust are so often selling phoniness or duplicity.

On the other hand, people know it when they trust something.

Or do they?

Trust itself may have to be redefined and rebranded. And its business model would need to be refined: Who pays whom for trust?

Still, is there a bigger opportunity for brands, politicians and financial institutions? Is there a bigger challenge for technology to help restore ease of mind?

Trust, that wasted and neglected asset, has got to be an incredible gold mine.

Rethinking the Corporate Crime Spree

By The Wall Street Journal

One of the pleasures of government is the opportunity occasionally to do justice. Team Obama has two such opportunities before it.

Yesterday, a federal appeals court overturned the landmark backdating conviction of former Brocade CEO Greg Reyes on grounds of prosecutorial misconduct. His case has been remanded for retrial, but this was a Bush-era prosecution and the Obama Justice Department should feel no pride of authorship for a case about which it's impossible to feel much pride. Mr. Reyes should be allowed to go in peace.

In court, the government insisted over and over that Mr. Reyes had misled his own finance department about the use of "lookbacks" to grant employees "in the money" options without having to expense them (a senseless accounting rule at the time). Never mind that this story flew in the face of the publicly known facts or that the government's sole witness, a junior finance department official, later recanted, saying she had been bullied by prosecutors. Hilariously, even as Justice argued in one courtroom that Brocade's finance department had been kept "in the dark" about backdating, the SEC was simultaneously impaling two former heads of Brocade's finance department for aiding, abetting and benefiting from backdating.

In a final indignity, after Mr. Reyes's conviction, the government admitted it knew its central contention was false, thanks to numerous, immunized statements from finance department officials. As Justice official Amber Rosen told the appeals panel in oral argument this past May: "Defendants aren't entitled to a perfect trial. . . . Misstatements happen."

We won't belabor the media's own role in making a mountain out of this particular molehill. Hundreds of executives and companies have been implicated in backdating, but Mr. Reyes was singled out for criminal prosecution on the grounds he'd concealed the practice from his own staff. In fact, all the evidence shows backdating was a routine, accepted, mostly uncontroversial practice at Brocade and dozens of other Silicon Valley companies whose CEOs have not been subjected to criminal prosecution.


The second opportunity for Team Obama to render an act of justice concerns the cases of two former Merrill bankers, Daniel Bayly and Robert Furst, who just learned the government will try them again in February, in what amounts to mindless harassment after their previous convictions were thrown out. A miasma of prosecutorial misbehavior hangs over this case too.

The Merrill bankers were charged in their original trial with participating in a "sham" transaction by which Merrill bought some barge-mounted power plants from Enron in Nigeria in 1999. Allegedly, no risk was transferred because, in a phone call, Enron CFO Andy Fastow had promised to protect Merrill from loss and guaranteed a reasonable return. In essence, if so, the sale was a disguised loan to Enron.

However, the government's case on this vital point consisted of hearsay from Enron employees and emails between people who weren't party to the phone call. Kept from the defense, it later emerged, were FBI notes with Mr. Fastow in which he explicitly denied making such a promise. As Mr. Fastow explained it, he only later fibbed to Enron colleagues about such a promise in order to "light a fire" under them to find a permanent owner of the barges.

All this may still sound fishy, but fishy is not the same as illegal. The $12 million profit generated by the sale was not material to Enron's books, despite the government's claim to the contrary. At the time, Enron was a squabbling, chaotic company torn between Jeff Skilling, who favored an "asset-light" trading model, and Rebecca Mark, who ran its international operations and favored what proved to be disastrous investments in fixed infrastructure, such as the barges and a related Nigerian power plant, commitments that Mr. Skilling promptly began dumping after Ms. Mark left in 2000.

Why it was so urgent that someone, anyone be found in 1999 to take the barges off Enron's hands may be hard, after the fact, to fathom. But then hard to fathom after the fact are the company's internal dynamics and how it might have served Mr. Skilling's purpose in moving Enron in a new direction.

In any case, if sin there was, it was on Enron's part, not the Merrill bankers, even more so given evidence of prosecutorial misconduct in withholding the Fastow notes.

From day one, both these cases were dubious attempts to make crimes out of business judgments and misjudgments in the heat of battle. The ethical culture of the plaintiffs' bar is clearly infiltrating the prosecutor's sanctum. Facts were deliberately distorted to make criminals out of everyday citizens. Nor are these episodes mere ancient history. Similar temptations will surely arise from the subprime meltdown. Let's hope Team Obama draws the right lessons.
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Correction: Ford Motor Co. says I misinterpreted a footnote in its 10-K as meaning that, in the event of bankruptcy, for every 50 cents that goes collectively to the common shareholders, holders of the Ford family shares are entitled to $1. Ford says the rule, as fully spelled out in its Certificate of Incorporation, actually means each family share would collect $1 only after each common share collects 50 cents. I defer to Ford's reading.