Lessons about trust, from a book about Silicon Valley that I read a few years back:

“Rainforests cannot thrive without trust among strangers. The hard part is having the courage to take the first step. It means being willing to suffer the occasional knife in the back as part of the cost of doing business. This type of thinking would be considered radical in many places. Giving trust first is what fools do, it might be said. In business, there is constant temptation to violate trust for short-term economic gain. The common saying “business is business” implies that taking advantage of the other side is an acceptable action. This behavior, however, would kill a Rainforest. Business is not just business in the Rainforest; business must be suffused with trust. … Michie Slaughter, the former head of organizational development at Marion Laborartories, recalls: “Our founder Wing Kauffman used to say, ‘Trust everybody that you work with. You’ll ge screwed every once in a while, but … people will want to do business with you.’ Similarly, venture capitalist Kevin Fong has observed the role of trust in deal-making in Silicon Valley over the past decades:

‘The friction of getting deals done here is faster. You don’t lawyer everything to the nth degree. If you negotiate with a New York law firm, they want to negotiate every detail. They are probably right on the legalities, but you can spend hours and days to get everything right. But here, basically, you get it mostly right and then move on. Everything is done with a handshake in the Valley. If it’s a failure, no one cares. If it succeeds, then everyone is happy.’

“The underlying importance of trust applies in all human systems. Fukuyama describes how conducting business in systems that are low on trust tends to be expensive and inefficient.

“The economic function of social capital [read: trust] is to reduce the transaction costs associated with formal coordination mechanisms like contracts, hierarchies, bureaucratic rules, and the like … No contract can possibly specify every contingency that may arise between the parties; most presuppose a certain amount of goodwill that prevents the parties from taking advantage of unforeseen loopholes. Contracts that do seek to try to specify all contingencies — like the job-control labour pacts negotiated in the auto industry that were as thick as telephone books — end up being very inflexible and costly to enforce.’

“Although trust has a cost, the absence of trust in Rainforests has an even higher cost.”

I would say this is true in general, across the board in life: Although trust has a cost, the absence of trust has an even higher cost. So even if you’re not trying to build the next Silicon Valley (as the authors of this book were setting out to offer a blueprint for people who aspired to do), this is superb wisdom for all of us to live by. I have certainly found it true in my own life.

(Quotes from THE RAINFOREST, THE SECRET TO BUILDING THE NEXT SILICON VALLEY by Victor W. Hwang and Greg Horowitt) (As a bonus for you, I’ve chosen a link that leads to a slideshow highlighting some of the core ideas of the book.)