Have you seen Joe Gebbia’s TED talk “How Airbnb designs for trust?“? It’s worth watching. Joe, co-founder of Airbnb, talks about the huge challenge they were faced with when they started their business - how to build trust between people who had never met before? Their entire business model is based on the need to overcome the natural social bias that people have towards strangers. Is it possible to design for trust? It is — as Joe explains with two principles that Airbnb has incorporated:
- A well-designed reputation system is key for building trust. Airbnb releases feedback only after both parties have submitted it to avoid overly-polite ratings
- They are guiding the users to provide the right length of disclosure by providing them with text boxes in the right size and with prompts to encourage sharing. The background is that the right amount of feedback matters, both too little or too much is not helpful
So, what does this all have to do with Chainium? With a very different market and a very different target group? Well, there are a lot of similarities between staying at a strangers home and someone investing money in a business. Trust is key in both scenarios. No investor would put his money into a company where he doesn’t feel well informed, well guided through the process nor supported by other investors positive reviews. So what have we learnt from the best and what are we implementing in our platform? Here are some of the things we’re doing:
- We encourage investors to provide feedback — after they have invested as well as in scenarios when an investor has shown interest but not completed the transaction. Both scenarios can lead to very valuable feedback for other investors when deciding whether to either invest or not. This feedback also helps business owners to improve their share offers. Unlike Airbnb, we won’t ask business owners to rate investors — otherwise it could become a very time-consuming process to rate what could be hundreds or thousands of investors ;-). Why is it helpful to rate business owners, when most businesses will not offer multiple share offers, unlike in the AirBnB model when they will rent their rooms/houses regularly? Well business owner feedback is useful both during the share offer (for the investors joining later who can look at feedback from early investors who bought shares before them) and at the end of the share offer (because investors could sell their shares on to other investors in future).
- A fair valuation of each company is essential to make a clear and transparent share offer to investors. As business owners are selling a part of their business, the cost per share depends on the total valuation of the business. We are mastering this challenge with a fully transparent approach. The business owner is required to provide essential KPI figures that allow the platform to create a business valuation range, based on various factors and calculations. The business owner is free to either select a valuation within the suggested range — or outside of the range if there are justifiable reasons (perhaps they are a start-up or launching into a new country, for instance). In order to provide full transparency to investors, our app will show both the business valuation range as well as the valuation defined by the business owner. This allows the investor to better assess the price per share
- KPI figures and business plans are important for investors to decide whether to invest in a business, no question. But it takes time to read and digest such information. We believe that it is essential for investment decisions, especially in the small to mid-size market, to establish a connection between business owner and investors. To cater for this, we’ll ask business owners to record short video statements where they introduce themselves as well as their business and their share offer. In addition to the factual information, a personal approach is a very important way to establish trust between the business owners and investors
To answer the question that Joe Gebbia has asked his audience — is it possible to design for trust? Yes. We strongly believe that we can design for trust and build a connection beyond the transaction between investor and business owner. Do you have more ideas? Please let us know using our Telegram channel or email us at hello@weown.com
Chainium has rebranded to Own. For more information about our brand change please read this medium post.
