Two Dogs Sniffing: The Economics of Trust

John Newman heads a highly successful turnaround management company, focused on medium-sized companies. He’s a transplanted New Yorker, a UCLA MBA, with a CPA to boot. He lives in Fayetteville, Arkansas.

And he defines the economics of trust beautifully.

This story is taken from his website. Make sure you read the punchline at story’s end.

TWO DOGS SNIFFING

Commentary by John Harrison Newman
Northwest Arkansas Business Journal – September 16, 2002

A few years ago, we bought 160 acres of woods about 20 miles south of town. It was cheap because it had no legal access, but we had taken a risk. If we could not get a neighbor’s permission to drive through their property, we would not be able to use our land.

We approached each of several neighbors whose land bordered ours. They all had the same answer. The best way into our property was always through a different neighbor’s land. It was a polite way of saying no.

I talked to a lawyer. Yes, there was a way to obtain access by suing, but it was slow and costly. It was not a practical option. Besides, I did not want to start off by antagonizing the neighbors.

I thought, "Let’s take one last try before we give up." So, we spent some time looking at topographical maps and walking around the land. We determined that the best route into our woods was a private road owned by two brothers, Herschel and Tom Villines. They controlled access to the road with a locked gate.

I phoned each of the Villines brothers. They didn’t return my phone calls. I wrote a letter to them, asking if they would just simply meet with us, suggesting that perhaps I would sue if I could not get access otherwise. Three weeks went by, and still I had no response. Then one evening I received a call from Herschel, asking us to come down and talk with them. Finally, getting access seemed possible.

It was a warm August evening when Darla and I drove down the dirt road to Herschel Villines’ home in the mountains. Upon arrival, we were greeted by a pack of mangy but friendly dogs. They escorted us to the house, and Herschel invited us to come have a seat on his front porch. It was a large porch crammed with old junk. He led us through a maze to a rickety table, and offered us some iced tea.

Seated at the table, surrounded by old car parts, rusting appliances, and the dogs, we had a beautiful view of the wooded mountains. We sipped our tea and talked with Herschel and his brother Tom. We talked about the weather. We talked about the cows. We talked about the new highway. We talked about the chickens and the snakes.

I held my wrist under the table and peeked at my watch, discovering that we had been there for nearly two hours! Of that time, at most five minutes had been spent talking about our land.

Now, I grew up in New York, and that just isn’t how things are done back east. New Yorkers don’t waste time getting down to business. I would likely have been asked "Whaddaya want? and "What’s in it for me?" within the first minute of the conversation.

I thought to myself, "What the heck am I doing here?" The conversation seemed to be going nowhere. Nevertheless, I sat politely as we spent the next fifteen minutes sharing our expert opinions on when it would next rain.

Then Tom drawled, "If y’all ‘ll excuse me, ah gotta get back to the house. Mah wahf is holdin’ supper."

And I thought, "Oh hell. That’s it? He’s just going to leave and go eat? Not even give us an explanation on why he won’t give us access?"

Then he stood up. As he did, he reached in his pants pocket, pulled out a key, and tossed it across the table to me.

I was flabbergasted, but just smiled and said thank you.

We said our good-byes and headed back to the car. As we drove home, I was feeling excited and confused. "What was that all about!" I asked Darla.

Her reply was short: "Trust."

I thought about it a lot in the days that followed, and came to see that perhaps the whole conversation was very much about business. It was their way of getting to know us, of deciding if they could trust us, whether we would likely be good neighbors.

And today, as we read about fraudulent financial statements, when hype seems to be the norm, the business issues surrounding how you can build trust with someone are as relevant as ever. If you are just going after the quick buck, if your goal is to build the next Enron or WorldCom, then perhaps this is not for you. Long term success, though, is built on solid relationships. And they are built on trust.

And in the course of only two hours, the Villines brothers decided that, yes, they could trust us. Back east that might have taken several years.

Indeed.