一 信任的飞跃

从十一世纪的商人到阿里巴巴：信任是如何跨越障碍，平息恐惧，改变一切可能的呢?

Friday, 19 September 2014, was a historic day on Wall Street. From the moment the markets opened at 9.30 a.m. Eastern Standard Time (EST), the ticker rocketed for one company in particular. It was called Alibaba. By the end of the day, the Chinese e-commerce giant had a staggering market capitalization of $231 billion.1 It was the largest global public flotation ever on the New York Stock Exchange (NYSE), dwarfing that behemoth known as Facebook and even Alibaba’s giant rival, Amazon. Overnight, fifty-year-old Chinese businessman Jack Ma, the company’s founder and current chairman, became a very, very wealthy man. A massive crowd lined the streets and packed on to the floor of the New York Stock Exchange that day to get a glimpse of the legendary entrepreneur. He was greeted like a rock star. ‘What we raised today is not money, it’s the trust from the people,’ Ma told more than a thousand cheering admirers.2 It was not, however, the charismatic and dynamic founder who rang the famed opening bell at the Stock Exchange. Instead, Ma opted to have eight Alibaba customers, five of whom were women, to stand on the podium to start the day of trading. He wanted to show he was true to his mantra, ‘Customers first, employees second and shareholders third.’ One merchant–one of the millions of small businesses who trade on Alibaba’s sites–was Lao Lishi, a former Chinese Olympic diving gold medallist who sells wooden beaded bracelets. Another was Peter Verbrugge, an American farmer who currently holds the record for selling the greatest amount of cherries through Alibaba.3 The customers ringing the NYSE bell represented something very important to Ma–how Alibaba has transformed the way Chinese businesses of all shapes and sizes can buy and sell a bewildering variety of goods, from clothes and nappies to live pedigree dairy goats and frozen chicken feet, inflatable sex dolls and even ‘do-it-yourself abortion kits’ to people all over the world. But Jack Ma’s story is not simply a fascinating rags-to-riches tale of entrepreneurial persistence. It also represents a remarkable feat in the delicate business of building trust. It’s a challenge to build any successful online marketplace where two sides need to trust one another, but what makes Ma’s story extraordinary is that he achieved this in China. Traditionally, China is a society based on the concept of guanxi, loosely translated as ‘relationships’. Trust, in business as well as private life, exists between people in the same guanxi: family, friends and people in the same village. People they know well over time, in other words, not strangers on a far-flung planet called the internet. In fact, it is common to distrust people outside your own personal network. This can create a cultural impediment and business obstacle as people are more prone to avoid building new relationships where there is no close connection. I first went to Shanghai on business when I was twenty-five. I was part of a consulting project for a well-known brand looking to expand into Asia. Over the course of the first week, we shared an array of meals with our Chinese business clients. Lazy Susans spun, we ate delicious food at lunch and dinner, and we clinked beer glasses in toast after toast. The gatherings were warm and enjoyable but by day three I was wondering when we would get to the ‘real’ work. Rather insensitively, I didn’t realize how important it was for Chinese businesspeople to spend a considerable amount of time socializing and getting to know you at the start of a relationship. ‘In the West, we tend to reserve trust from the heart (affect-based trust) for family and friends and trust from the head (cognition-based trust) for business partners,’ explains Professor Paul Ingram of Columbia Business School, who studies social networks. ‘But in China, affect- and cognition-based trust are highly entwined even in business.’4 It’s especially true in China that people only trust you after you have invested a lot of time upfront in proving yourself to be trustworthy. That was what Jack Ma was up against. It was one of the rock-hard conventions of trust he would set about shattering. Ma Yun, as he was originally named, was raised in Hangzhou, about a hundred miles southwest of Shanghai, during Mao’s Cultural Revolution. The middle child of three, his parents were traditional musical theatre performers. Ma inherited their love of showmanship. He would later get a reputation for dressing up in elaborate wigs and leather gear, and belting out theme songs from the Lion King at company events. Ma wasn’t a great student at school, but he was canny. From a young age, he realized the importance of mastering English. After President Nixon visited Hangzhou in 1972, tourists flooded to the area to see the beautiful lakes, temples and gardens. Every day, Ma would set his alarm early, around 5.00 a.m., and ride his bike to the Hangzhou Hotel. He would talk to the guests in English and offer to act as a guide, giving tours around the city free of charge. He did this for more than nine years. ‘These Western tourists opened my mind because everything they told me was so different from the things I learned from school and from my parents,’ Ma has said.5 Over the years, Ma befriended many tourists including a young American woman who suggested he take on an English name. Her husband’s name was Jack, as was her father’s. And so Jack he became. Jack Ma would go on to become China’s richest man in 2014, worth more than $19.5 billion, hauling himself to that lofty position with the aid of a shatter-proof resilience in the face of failure, a good dose of raw ambition, and another vital kind of trust–trust in himself.6 He applied to Harvard ten times and was rejected on every occasion. (Who applies ten times?) He failed China’s national university entrance exam twice. When he did eventually graduate in 1988 with a degree in English, he became a schoolteacher.7 To supplement his modest $3 a week income, he would buy and sell plastic carpets on the streets of Hangzhou. At heart, he was a businessman. With China’s economy steadily improving and ideological barriers falling in the early 1990s, Ma decided to quit teaching. He applied for more than thirty different jobs but missed out on them all. When he applied to be a police officer, he was told in four simple words, ‘You are no good.’ ‘I even went to Kentucky Fried Chicken when it came to China,’ Ma told an audience at the World Economic Forum in Davos. ‘Twenty-four people went for the job. Twenty-three were accepted. I was the only guy who wasn’t.’8 It was in 1995, on his first visit to the United States, that his life took a fortunate turn. Ma had started Hangzhou Hope Translation Agency a year earlier, and went to America to help a Chinese firm sort out a financial dispute they were having with a US partner. It turned into a terrifying trip–the American he had been sent to see was a con man who flashed a gun at him. He made his way to Seattle to stay with Stuart Trusty, a friend who happened to run one of American’s first internet providers, VBN.9 Ma noticed a mysterious grey box with a screen sitting on his friend’s desk. He wondered what on earth it was. ‘Jack, it’s not a bomb,’ Trusty reassured him. ‘It’s a computer. Search for anything you want.’ Ma slowly typed in the word ‘beer’. He doesn’t remember why, possibly because it is easy to spell. A list of beers from Germany, America and Japan popped up, but noticeably no Chinese beers. Next, he typed in ‘beer’ and ‘China’. No results. Keep in mind this was 1995. Netscape had just launched and Yahoo was an infant. Google would not launch for another three years. It was still the days of achingly slow dial-up internet. Nonetheless, Ma sensed something huge waiting in the wings. Back home, he started China Pages, a kind of online Yellow Pages for Chinese companies. ‘The day we got connected to the web, I invited friends and TV people over to my house… we waited three and a half hours and got half a page,’ he says. ‘We drank, watched TV and played cards, waiting. But I was so proud. I proved [to my house guests that] the internet existed.’10 Ma eventually sold the directory business to the state-run Hangzhou Telecom for 1 million yuan (approximately $148,000), a very large sum of money at the time. Next, he headed to Beijing to advise the Ministry of Foreign Trade and Economic Cooperation on ways to get Chinese companies to take up ‘electronic commerce’.11 ‘My boss wanted to use the internet to control small businesses but I wanted to use the internet to empower small businesses,’ he says.12 What Ma really wanted to do was to start and build companies. Ma’s revolutionary vision was to help transform China’s entire export economy, connecting small- to medium-sized Chinese businesses to Western customers and Western companies to a myriad of Chinese factories. Amazon and eBay had launched in the United States but nothing like this existed yet in China. Today, more than 80 per cent of all goods bought and sold online in China are through Alibaba’s various online marketplaces.13 Its spider-like corporate campus, with its gardens and open-plan workspaces, spreads over more than 150,000 square metres in Ma’s hometown of Hangzhou. It houses tens of thousands of employees, and the other businesses Ma has since founded. There is Taobao (meaning ‘hunting for treasures’), launched in 2003. It is like eBay, enabling people to sell virtually anything directly to each other, but it is more like a local flea market where you might land on a bargain or find something bizarre, such as live scorpions or soap made from the seller’s own breast milk. There are hundreds of ‘Taobao’ villages scattered across China where a large proportion of their economy is based on people selling local goods on the platform. Then came Tmall in 2008, the online equivalent of a humungous glossy shopping mall, selling well-known global brands, from Disney to Burberry, directly to Chinese consumers. The Alibaba Group has 430 million annual active buyers, and one out of every three individuals in China has made a purchase from the marketplaces.14 On the day of Alibaba’s Initial Public Offering (IPO), in September 2014, the dynamic Ma was ebullient about his company’s historic milestone. In interviews he gave there was one word that stood out: ‘Trust. Trust us, trust the market and trust the young people,’ Ma said. ‘Trust the new technology. The world is getting more transparent. Everything you worry about, I’ve been worrying about in the past fifteen years.’ Ma continued without a pause. ‘Trust has to be earned, of course. Because when you trust, everything is simple. If you don’t trust, things get complicated.’15 He made no fewer than eight mentions of the word ‘trust’ within the space of a minute. Right from the start, Ma knew the importance of building trust, especially in a culture like China’s–it’s why he splashes the word about so generously. And we’ll come back to how he set about doing just that. But first, it’s worth unpacking the concept of trust itself. Like the rest of us, Ma would probably have trouble defining it–what exactly do we mean when we talk about ‘trust’? And what doors does it open? Trust is not a nicety, a kind of optional extra in life. We all depend on it in so many of our daily activities. How could we eat, drive, work, shop, get on a plane, go to the doctor, tell secrets, unless we trusted other people? ‘Trust,’ as political scientist Eric Uslaner says, ‘is the chicken soup of social life.’16 For instance, when I order takeaway sushi, I have to trust that the restaurant will use fresh ingredients, the kitchen will be clean, they will not abuse my credit card details and the deliveryman will not run off with my dinner. Trust enables small and large acts of cooperation that all add up to increased economic efficiency. ‘Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time,’ Kenneth Arrow, the American Nobel Prize-winning economist, once observed. ‘It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence.’17 Trust enables us to feel confident enough to take risks and to open ourselves up to being vulnerable. It means we can commit to people before we know the precise outcome or how the other person will behave. And that applies to something as minor as ordering sushi or as life-changing as marrying someone. If, before we bought or did anything, we thought we were going to be cheated or ripped off, then very little would get done. Social scientists, psychologists, economists and others view trust as an almost magical economic elixir, the glue that keeps society together and the economy ticking over. That much is agreed. The definition of trust, however, has been widely debated for years. In fact, there are more academic papers on its definition than on any other sociological concept. It’s odd that we describe trust as being built or destroyed when it’s not a structure or a physical thing (except maybe in the form of a handshake or a paper contract). Like ‘happiness’ or ‘love’, it’s one of those words that we tend to think of as a universal idea. And, the same as love, trust has many faces. It’s not like some kind of predictable engine that comes with a manual and only functions in one precise way. Trust varies from situation to situation, relationship to relationship. Put simply, trust is highly contextual. ‘So what does the word trust mean to you?’ It’s a question I’ve asked hundreds of people over the past five years–entrepreneurs, politicians, leaders of large companies, scientists, economists, bankers, designers, academics, students and even five-year-olds. Their answers are fascinating and remarkably different. The question usually elicits a pause and then a kind of mmm, I’m thinking noise. ‘It’s hard to define, right?’ they’ll say. Yes, it is. Trust means different things to different people. The most honest answer I have ever been given was, somewhat ironically, from an insurance broker. ‘Giving my wife my phone without clearing the history! That is trust,’ he said. For many people, it is about confidently relying on another person. For example, ‘Trust is being able to rely on my husband/doctor/friends.’ In this instance, trust is being referred to as an attribute that rests in someone specific, generally someone we are familiar with. The more we interact with a person over time, the more confident we become about how they will behave, that they are trustworthy. That kind of trust is known as personalized trust.18 Generalized trust is the trust we attach to an identifiable but anonymous group or thing. As one of the MBA students in my course at the University of Oxford’s Saïd Business School put it, ‘Trust is like a contract that guarantees an outcome.’ For example, I trust the postal service to deliver my mail. It is also common to mix the two different types of trust. For instance, I might have high personal trust in my bank manager but fragile trust in my bank as a financial institution. One of my favourite definitions of trust came from one of my son’s friends. He was five at the time and had come round to our house to play. My son, Jack, told him over tea that I was writing a book. They were disappointed it was not about Star Wars or Harry Potter but still asked fascinating questions. I asked them what trust meant to them. ‘Trust is when the ice-cream man says he will give you ice cream, he gives you the ice cream because he wants to, and I don’t worry about him not giving me the ice cream,’ replied my son’s friend in one breath. Wow, out of the mouth of babes. It is in fact very close to the definition given by the pre-eminent German sociologist Niklas Luhmann, who wrote, ‘Trust is confidence in one’s expectations.’19 I am on the board of the National Roads and Motorists’ Association (known as the NRMA), one of the most trusted brands in Australia. It’s like the AAA in the United States or the RAC in the United Kingdom, basically the people who will come and fix your car if it breaks down, wherever you are. Recently, a woman phoned into the NRMA call centre. She sounded very distressed. She was breathing heavily and was clearly crying. Turns out, she was driving down the motorway when she realized she had passed the exact spot where her son had crashed and tragically died a few years ago. She pulled over on to the side of the road and started to have a panic attack. The first number she rang was the NRMA. A roadside assist personnel got to her within minutes. He sat with her for more than two hours. They listened to the radio together. They talked about her late son. He didn’t leave until she felt ready to drive again. I was so touched by this story but also curious to find out, why did she call the NRMA? I mean, nothing was wrong with her car. Why not the police, an ambulance, her husband or a colleague? ‘I knew you would come,’ was her answer. That is trust. Of the hundreds of definitions of trust I have studied, most can be reduced to one simple idea: trust is an evaluation of outcomes, of how likely it is that things will go right. Or put another way, trust is fostered when the likelihood of an undesirable outcome is low. The five-year-old was right, sort of. Five-year-olds tend to be more naturally trusting than grown-ups, having had a lot less experience in being let down or in worrying about distant outcomes. For adults, trust becomes more complicated and it works in the heart as well as the head. As Morton Deutsch beautifully put it, trust is ‘confidence that [one] will find what is desired [from another] rather than what is feared’. Trust is a mixture of our highest hopes and our deepest worries.’20 If you look up images for the word ‘trust’, all sorts of graphics will come up, often with some kind of danger lurking in the picture. People swinging between trapezes, for instance. Two hands, reaching out to meet but not quite touching. A person in mid-fall relying on another person–typically with their arms stretched out–to catch them. A sleeping lion with a mouse prancing a few centimetres from his nose. The common element in all of these areas is a gap, a grey area where something unknown happens. The images are conveying the powerful elements of trust: vulnerability and expectation. Imagine a gap exists between you and something unknown. A stranger you need to rely on, a restaurant you have never been to before or your first run in a self-driving car. The gap between the known and unknown is what we refer to as risk. Indeed, risk can be defined as the management of uncertainty that matters. There are some uncertainties that are simply irrelevant. For example, if I am a farmer in England the possibility of heavy rain is an uncertainty that matters to my livelihood. But if I am managing a clothing factory in, say, China, the uncertainty about the weather in England is irrelevant. When there are no unknowns, when we can guarantee an outcome, there is no risk. For example, we know for certain the sun will rise in the morning. Trust and risk are like brother and sister. Trust is the remarkable force that pulls you over that gap between certainty and uncertainty; as the Nike tagline says, ‘Just do it’. It is literally the bridge between the known and the unknown. And that’s why my definition of it is simple: Trust is a confident relationship with the unknown.

When you view trust through this lens it starts to explain how it enables us to cope with vulnerability, place our faith in strangers or just keep moving forward. It shows why just enough trust is a critical ingredient of innovation and entrepreneurial success like that of Jack Ma. Companies such as Apple, Amazon and Netflix constantly challenge assumptions, take smart risks and allow their employees to dive into uncharted waters to discover new ideas. But they also know how to get customers to trust new offerings, so that the initial risk of trying something new becomes quickly irrelevant. Jack Ma realized the internet presented an opportunity to unleash the entrepreneurial spirit that existed in China but had been suppressed by years of Communism. What he spotted early on was how technology could enable trust–make unknown sellers seem familiar to people. But how to build a new kind of trust between strangers in a country based on guanxi? Aside from those ancient traditions at work, less than 1 per cent of the country’s population was online when Alibaba first launched. And of that 1 per cent, fewer still would even consider buying something off a website. People were unfamiliar with the concept of the internet, let alone e-commerce. Indeed, there was no history of e-commerce, no online payments system nor even a way quickly and safely to send goods. So how did Alibaba crack the trust code? When we are trading goods over the internet, typically neither party knows each other. We are wary of scams and products not being as promised. If I buy, say, a Fitbit from an eBay seller, is it really brand new or is it refurbished, fake or even stolen? A lot can go wrong. There is always the chance of an unwanted outcome or a risk. Ma realized that to create trust between buyers and sellers online, he needed to use technology to reduce uncertainties or lower the risk enough to allow transactions to go ahead. He also recognized that the bigger the trust problem, the greater the business opportunity. Ma was a bit like Steve Jobs; he knew there were enormous advantages to developing the solution to an obstacle that stood in the way of a market, rather than waiting for others to solve the problem. Take payments. How do I know you will pay? How do I know you will send what I paid for? It’s a classic chicken-and-egg trust problem. ‘For three years, Alibaba was just an e-marketplace for information. What do you have? What do I have? We talk for a long time, but don’t do any business, because there is no payment,’ says Ma. ‘I talked to the banks. No banks wanted to do it. Banks said, “Oh no, this thing would never work,” so I didn’t know what to do.’ Ma knew all too well that if he launched a payment system without the required licence, he would be breaking China’s strict financial laws. He could have gone to jail. But he decided to do it anyway. Why? ‘It is so important for China and the world to be able to trust the system,’ says Ma.21 In 2004, the company introduced an online system called Alipay ( , meaning ‘payment treasure’). Instead of a direct payment like PayPal, Alipay takes money upfront from buyers and puts it in an escrow account.* The seller then ships the product and the funds are only released after the buyer has inspected the goods and confirmed that they are satisfied. It’s a simple example of reducing uncertainties, in this instance over settlement. ‘So many of the people I talked to at that time, for Alipay, said, “This is the stupidest idea you’ve ever had,”’ recalls Ma. This was really stepping on the toes of China’s highly regulated banking sector. But Ma didn’t mind if people thought the idea was risky or even stupid, ‘As long as people use it.’ And use it they did. Today, more than 400 million people use Alipay to pay for goods.22 It is estimated to be worth more than $50 billion as a standalone business.23 In 2015, approximately 70 per cent of all online payments in China–whether it was for goods, rent, utilities, phone charges or tuition fees–went through Alipay.24 Ma always had big dreams. Payments aside, how did people know they could trust the unknown small businesses and individual traders Ma wanted to put online? Take thirty-eight-year-old Wang Zhiqiang, one of the sellers who rang the bell on the day of the IPO. Zhiqiang was once a migrant rural worker struggling to make a living. He had tried his luck as a vegetable street vendor, a construction worker and a takeout deliveryman. Despite being poorly educated, Zhiqiang had always been interested in computers and the internet. He moved to Beijing’s Zhongguancun area, known as China’s Silicon Valley, where he took on many manual labour jobs for more than six years. By 2006, he had saved enough money to buy a computer, which he took back to his hometown, a small rural farming village in north China’s Shanxi province. After overcoming the challenge of getting the internet installed in his home, he opened an online shop selling just a few local products such as rice and soybeans. His friends and family wondered what on earth he was trying to do. In 2008, while the Olympic Games were in full swing in Beijing, Zhiqiang got the break he needed. He opened ‘Farmville’, not the popular game but an online shop selling all kinds of fresh produce grown by the local villagers. Sales quickly soared to more than 200 products per day. Today, his monthly net profits are more than 80,000 yuan (approximately $13,000) and he has become well known online as ‘Wang Xiaobang’–in this context, ‘bang’ means a warm-hearted person who would like to help others.25 But how did so many people come to trust the legitimacy of this unknown vendor from a remote area? The answer is, at least in part, down to a service Alibaba launched in 2001, called TrustPass. For a seller to get TrustPass certification, they had to go through a third-party identity and bank account verification process. Alibaba also helped sellers create their own official-looking brands and virtual storefronts. Zhiqiang, for instance, would take colourful pictures of rural farm life and close-ups of the fresh products he sold as they were farmed or harvested. He wanted his store to feel ‘local’ and connected to the suppliers. TrustPass marked a breakthrough for Alibaba, not just in terms of trust but also money. On average, certified TrustPass sellers were receiving up to six times more genuine enquiries than non-registered sellers. This gave Alibaba the perfect excuse to start charging small businesses (most services had been free up until this point). ‘It made customers who paid for their status appear more trustworthy,’ says Porter Erisman, a close friend of Ma and long-time employee. ‘It made those members still clinging to their free accounts seem less trustworthy. After all, if they had such a good business, why weren’t they willing to pay up a little to prove it?’26 Alibaba’s liquid gold was not online shopping but trust. And that is why, when Ma discovered that it had been badly broken, he was livid. In February 2011, it became known that around a hundred members of Alibaba’s 5,000-strong sales team had been taking financial kickbacks in exchange for allowing fraudulent sellers to skip the verification process and set up accounts. The deceitful behaviour had been going on for more than two years. The impact? Two thousand three hundred and twenty-six high-volume sellers of low-quality or even fake products had been verified as ‘Gold Suppliers’.27 Ma knew he had a grave trust issue on his hands. He had to act quickly. He had to send a loud and clear message to protect his company’s reputation. So the salespeople who had knowingly set up the accounts and those employees who had looked the other way were all fired. David Wei, the then CEO, and COO Elvis Lee also resigned, even though they were not implicated in the fraud. Both were falling on their swords to accept responsibility. ‘One of our most important values is integrity. That means integrity of our employees and integrity of our online marketplaces as trusted and safe places for our small business customers,’ said Ma. ‘We must send a strong message that it is unacceptable to compromise our culture and values.’28 His actions were clearly validated. In 2016, the Alibaba Group overtook Walmart as the world’s largest retailer. Ma has proved in spades to the Chinese (and to the rest of the world) that trade does not require a prior or close personal tie in order to work. And strangers won’t, as a matter of course, betray you. The story of Alibaba is a telling illustration of how technology is enabling millions of people across the world to take a trust leap. A trust leap occurs when we take a risk and do something new or in a fundamentally different way. Trust leaps create new possibilities; they break down barriers and help us form new relationships; they enable us to mash up ideas and memes in unexpected ways; and, as in the example of Alibaba, to open up new markets, new networks and new alliances that would once have been unthinkable. Trust leaps carry us over the chasm of fear, that gap between us and the unknown.

Imagine the first time people switched from bartering real goods to using paper money. Bartering is intuitive–I give you a chicken in exchange for a metal pot. Money meant people had to trust that these flimsy pieces of printed paper had real value, and would retain that value. They had to trust that the institutions issuing the money, usually governments and banks, would determine the right value. That is a trust leap. Do you remember the first time you put your credit card details into an internet site? That is a trust leap. I remember a heated conversation I had with my dad when I was eighteen. I had seen a nice-looking second-hand navy blue Peugeot for sale on eBay. It was within the price range my parents had set me to buy my first car. From the photos, it looked in good condition. My dad, then a chartered accountant, asked me if I knew what ‘a market for lemons’ was. I didn’t back then. Over lunch, a mini lecture followed on George Akerlof’s economic theory about problems of uncertainty over quality of goods.29 To put it simply, Akerlof argued that in a market there are good used cars and defective ones (‘lemons’). The buyer of a car does not know beforehand whether it is a car or a lemon. Dad argued that this is what happens in spades on eBay because we couldn’t drive or inspect the car. He also pointed out that the seller’s pseudonym was ‘Invisible Wizard’, which did not exactly inspire confidence. So instead of using eBay, we went to the car dealer not far from home, the same dealer my dad had bought my brother’s car and three other cars from in the past. To my dad, eBay seemed like an irrational way to buy goods. It wasn’t a trust leap he was ready to make in 1999. The first time we leap, it feels a bit weird, even risky, but we soon get to a point where the idea seems normal. Our behaviours transform, often relatively quickly. And when others see that enough people have survived the leap and benefited from it, millions will follow. My father is now somewhat of an eBay addict. He would probably consider buying a car on eBay these days (then again, maybe not). Trust is the conduit through which new ideas travel. Trust drives change. Throughout history, humans have demonstrated a remarkable propensity to change the way we do things–bank, trade, travel, consume, learn and date. To understand just how good we are at taking trust leaps we need to go way back in time, way before the internet or even the printing press were invented. One day in the year 1005, a handwritten letter crossed the Mediterranean. It was filled with the troubled words of Sumhun ben Da’ud, an eminent merchant who lived in Sicily. He was furious with his business partner, Joseph ben ’Awkal, who had ignored Sumhun’s repeated requests to pay Egyptian creditors the hundreds of dinars they were owed. As the total monthly expenses of a middle-class family living in Egypt were no more than three dinars, these were very significant sums. Word was spreading to other traders across the region that neither of the business partners could be trusted. ‘My reputation is being ruined,’ lamented Sumhun. Sumhun and Joseph were part of a close-knit group called the ‘Maghribi traders’, Jews who left Baghdad during the political turmoil of the tenth century and settled in the Maghreb, the coastal region of north Africa. Around 150 years ago, more than 1,000 of their personal letters were discovered in almost perfect condition in the storeroom of an ancient synagogue in Fustat in Egypt.30 The letters provide an intriguing window into the lives of the traders and the role they played in transforming long-distance trade. Say a merchant based in Old Cairo wanted to sell his textiles and spices in Palermo in Sicily. He could travel long distances by boat–but sea voyages were treacherous and time-consuming. Or, instead of travelling himself, he could use overseas agents, and the agents could handle everything from unloading the ships to selling the goods in local markets, to settling the odd bribe on the merchant’s behalf. Today this sounds like a relatively straightforward idea, but at the time it required a massive trust leap. Possibilities for deception and corruption were high. An agent could lie about prices, skim money or simply steal the goods altogether. And when something bad happened, it could take months for the merchants to find out. Formal trade regulations and legal contracts, as we know them, did not exist. The Maghribi merchants faced a problem: they had no way of knowing what the hired agents were up to on the other side of the Mediterranean.31 When one party has less information than the other, economists call it information asymmetry. Economist Kenneth Arrow first described the concept in 1963, in the context of healthcare. Doctors generally know more about the value and effectiveness of a given medical treatment than patients do. They are in a powerful ‘expert’ position and patients will tend to follow their recommendations. Arrow noted how sometimes the doctor might manipulate the asymmetry to his or her advantage, for instance, recommending costly drugs or an operation that is not necessary. Information asymmetry is all around us because it is rare for two people to have perfect and equal information in any kind of exchange. The life insurance broker who knows what clause 221 of a complicated policy really means; the Alibaba seller Rakjuk Kft who knows if the top-quality Angora goats he sells really are ‘well-bred’ champions, ‘free from parasite’ and ‘fully red-blooded’, as advertised; the second-hand car salesman who knows the real history of a cute little Fiat 500; the Airbnb host in Cape Town who knows if their place really has two bedrooms (or if one is a sort of pseudo-loft in the kitchen only accessible by a precariously propped-up wooden ladder) and the sweeping ocean views shown (or has a postage-stamp view of something blue if you hang off the right-hand corner of the balcony and use binoculars); and the overseas agents who know if they are selling the merchant’s frankincense or olive oil for fair or dodgy prices. Information asymmetry creates future unknowns and the very need for trust. So how did the Maghribi traders get the agents in far-off lands not to lie, cheat or steal in the absence of direct supervision? The system they came up with was so ingenious that it opened the modern era of long-distance trade between strangers. The Maghribi traders had the same religion, common family ties and, most importantly, shared the same motive of ensuring their agents did the right thing. They were living in the era of local trust and had high levels of social capital. It’s an idea that has fascinated sociologists for centuries, notably Pierre Bourdieu, Robert Putnam and James Samuel Coleman. ‘Whereas physical capital refers to physical objects and human capital refers to the properties of individuals, social capital refers to connections among individuals–social networks and the norms of reciprocity and trustworthiness that arise from them,’ Putnam explains in his influential book, Bowling Alone: The Collapse and Revival of American Community, first published in 2000.32 Putnam argues that close-knit suburbs have given way to ‘exurbs’ and ‘edge cities’–vast anonymous places where people spend more time commuting to work, at the office and watching TV alone, and less time socializing with friends, neighbours, community groups and even family. Social capital–shared values, bonds and support–can be found in a whole array of networks and communities. For instance, a group of neighbours who keep an eye on one another’s homes to make the street safer. A school that holds a garage sale to raise money for a local homeless shelter. A stranger who drops your wallet into the police station after finding it left on a bus. A former colleague who helps you land a new job. ‘Out of such shared values comes trust, and trust has a large and measurable economic value,’ writes Francis Fukuyama in his 1995 classic book Trust.33 The merchants formed a coalition with a system of collective sanctions. The tight-knit group would frequently write and talk to each other, openly sharing information about good agents and those up to no good. However, they couldn’t just rely on shaming the cheaters. Merely identifying them was not enough to discourage bad behaviour. Rewards for acting honestly and responsibly were needed as an incentive against the short-term gains cheating offered. The Maghribi traders designed a simple reputation-based system where the most trustworthy agents were rewarded with the most business. If one agent ripped off a merchant, the entire trading network subsequently shunned him. All the merchants were required to take a collective vow never knowingly to employ crooks. The agents knew their success in the long run depended on repeat business. The traders were able to set aside their fears of getting scammed because both parties knew honesty would pay. (That was why Sumhun ben Da’ud was so upset with his business partner.) What’s more, it turned out that it didn’t matter if the merchants weren’t aware of every wrongdoing; the threat that they could find out was enough to make the agents behave honestly. If people believe they are being observed and judged, it makes them behave better, even if they are not actually being watched all the time. Just like Jack Ma would do a thousand years later, the traders created a system to reduce the unknown enough for people to take a risk and do things differently. Through simple accountability mechanisms, they were able to expand their local network into international trade across geographic, language and cultural boundaries. Trust leaps expand what is possible, what we can invent and who can be an inventor. Trust leaps extend the reach of our collaboration and creations, opening up new horizons of opportunity. That is why trust matters so much and why establishing confidence in the unknown has been a central part of innovation and economic development over the course of history. Just ask Jack Ma, the boy who was told he was no good for anything, who took a trust leap on himself and persuaded a nervous nation to leap with him.