The Trust Manifesto

I had a dead remote control for my DVD burner. This is not a DVD
burner on a computer, but a combination DVD burner/player which
connects to our Tivo and television. The user interface is preposterous,
which doesn’t suprise me, because I used to work for the manufacturer
of it. But aside from the complexity, it was just as dead as a doornail.

So I searched on eBay, and Googled, to see if I could find a replacement
remote. Not surprisingly, someone on eBay was selling the entire DVD
player with a remote for less money than the remote alone. (I once
bought an Apple Laserwriter and toner cartridge on eBay for less
than the toner cartridge alone!) But I don’t need more stuff laying
around the house right now.

Finally I found out about remotes.com from Google.

They had a factory new replacement for just $31, with a very reasonable
shipping cost. I could easily spend an hour looking for a replacement elsewhere,
so I was pretty psyched when it took me just a few minutes to complete the
whole deal.

But after my receipt displayed, I saw a link on their site that said “fix any remote”.
Intrigued, I clicked on that, and it said “1 in 3 remotes can be repaired just
by pulling out the batteries, and pressing every key and sliding every switch,
and replacing the batteries”. That seemed pretty crazy, but I had nothing to
lose. I tried it, and my remote came back to life!

I just wrote to remotes.com and asked them to cancel my order AND to
charge my Visa for $10 anyway, because that advice was well worth it to
me. $10 is probably their profit on the sale of a remote, so they make
their money off of me with no effort on their part, and in the meantime,
I am so happy that I tell all my friends about them.

That is pretty trusting of your potential customers to give them
advice of how that can avoid becoming your customer. I still
need to think about this one. It is certainly good karma, but there is
no equation that can show they are maximizing profit by doing this.
Anyway, if you have a dead remote, forget eBay. That’s the place
to go to.

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There is a great musician named Geoff Smith who has made jingles for podcasts such
as The Daily Source Code, Pacific Coast Hellway and many more. Most, if not all of his
full length songs are in free podcasts, so there is really never a reason to pay a penny
for his music. One of the songs has self referential lyrics, and says You can play this,
but not on the radio. I made this, just so I could let it go…

The song is so damn catchy that you will not be able to stop listening to it, and you
will buy it in iTunes just for convenience, or to reward the composer. Here’s the link to
Not on the radio.

Geoff Smith trusts his audience, and he trusts his talent, and he’s probably making
far more than he would with a traditional recording contract.

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Whenever the people are well-informed, they can be trusted with their own government.
— Thomas Jefferson

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A person who trusts no one can’t be trusted.
— Jerome Blattner

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I imagine there are traditions at all universities, but there are pretty strange
ones at Carnegie-Mellon University, including the Fence. (I can’t believe that
someone took time to write about the Fence in Wikipedia.

Say what you want about Encyclopedia Brittanica and its accuracy; Wikipedia
is mighty comprehensive if it has articles about something as obscure as
the Fence!)

My favorite part of the Wikipedia entry is “The original wooden fence was
replaced in 1993 when it collapsed under its own weight. Today, a concrete
and steel reinforced fence stands where the original one stood imitating the
size it would be today. Students still paint the fence in a hope to break the
record held by the original as the world’s most painted upon object.”

In a nutshell, the Fence serves as sort of a campus billboard, and
people are allowed to paint it as long as they do it at night and guard
it until morning. Also, campus security frowns upon messages that
are racist or obscene, and will paint over your swastikas if you are
stupid enough to paint them. (Plus someone else might kick your
ass while you are doing it, and you’d have to call campus security
for your security instead of the fence’s).

Now most students at CMU in my era did not have access to a
car, or tons of spare cash to buy paint with (although the average
net worth in my dorm was pushed up a bit by having the son of
a Forbes 400 dude living there; most of us didn’t have enough
money to make macaroni and cheese for dinner but one guy’s father
had a few hundred million dollars, back when a few hundred million dollars
was real money .

Home Depot hadn’t been invented yet, so I don’t even know where
I would have bought paint if I had a car and some cash.

So where did all the paint come from? Well, the CMU housing office had
a policy that if you wanted to paint your room, they would give you
the paint to do it for free. I doubt I need to fill in the blanks for you,
dear reader.

There are probably ways they could have controlled what happened
with all that paint. Maybe they could give out only colors A, B, and C,
and demand that the fence be painted anything but A, B, and C. But
CMU had one of the best fine art schools in the country, so people
would probably be able to blend up colors D, E, and F from A, B and C
pretty easily.

In the end, it was worth it for the university. We can easily assume that
two gallons was stolen every school day, except when the weather was
extreme. So let’s figure 200 days a year, 2 gallons a day, $15 a gallon
(when you are buying hundreds of gallons, that’s probably a fair price).
That’s $6,000. In the meantime, hundreds of dorm rooms were also
being painted by the students for free, with no labor charge whatsoever.
Where would the university find someone to paint hundreds of dorm rooms
for $6,000?

Other universities probably have animals as mascots that have $6,000 worth
of food and vet bills per year. CMU’s mascot is the Fence, that is mostly
made up of paint that the university trusted students to use to paint
their rooms. A great deal for everyone.

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So throw off the bowlines. Sail away from the safe harbor. Catch the trade
winds in your sails. Explore. Dream. Discover.

– Mark Twain

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I’ve listed many cases in my blog where a seller maximizes overall profit

by extending trust. There are many situations where the extra revenue

from trusting more than offsets the losses from those violating the

trust. But today I thought of a business where the more the customers

lie, the greater the potential profit!

This is not a business that many people are involved in, and the extra

profits are pretty small, but it still is a counterintuitive result, and I

wonder how many other businesses share this property.

Imagine a miniature golf course (called “putt putt” by you Midwesterners!).

Many of them have a feature where if you get a hole in one on the 18th

hole, you get to play again for free.

Imagine the most extreme case, where no one actually gets a hole

in one on their own, but everyone lies about it and gets an extra

free game. The actual cost to the golf course of that situation is

pretty darn slim, because they usually have tons of extra clubs,

golf balls, and extra capacity on the course. Oh sure, people

may put some extra wear and tear on those little stubby pencils,

but that’s about it. Now a few people probably didn’t have enough

fun going through the course once, and want to play a second time

and would be willing to pay if they were not allowed to lie about their

hole in one. But if you are like me, by the 18th hole, the last thing

on earth you feel like doing is playing more minature golf.

A more likely scenario is that the golfers play in groups of two or

more, and one or a few of the players actually get a hole in one,

or lie about getting a hole in one (it doesn’t really matter in this

analysis). In that case, the rest of the people in the group might

feel compelled to play again, and they’d cough up another $5 or $8

instead of going for ice cream like they really wanted to do.

Today I played minature golf, and an 11 year old with us was

an outstanding player and beat everyone. But a few times,

including the 18th hole, he redid his shot and got a better

score, and kept yelling “mulligan”. I’m not much of a golfer

but I know that means being allowed to redo a messed up

shot. I’m guessing that Tiger Woods is not allowed to do those

in the US Open, and I’ve heard that Bill Clinton is famous for

taking too many of them.

So our 11 year old pal got a “hole in one” on the 18th hole using

his mulligan tactic. Thank goodness this course did not have a free

game policy, or the rest of us would have been pressured into

coughing up a total of $24 more to play another round with him.

(A more likely outcome is that the adults would have bought

$8 worth of sodas and sat in the shade while the other kids

played another $12 worth of rounds to go along with the “free”

game.)

Simply put, the way for the course to maximize revenue is to

trust everyone, AND hope that there is at least one liar or mulligan

afficianado in every group where no one actually hits a hole in one

on their own.

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