When COVID-19 shut down the world in March 2020, it brought with it a sea change in how the world thinks about work. Everything that could possibly be done remotely shifted that way abruptly. People who used to spend 40+ hours a week together no longer saw each other in person at all. And some still haven’t.

At Permanent Equity, we were back in the office together within 6 weeks. People thought we were crazy. With so many unknowns about the pandemic, why on earth would we take such a risk?

Of course, it should go without saying that coming back was optional and anyone who had concerns could work from wherever they wanted to. Heck, I came back to the office, but paranoid as I was spent months working out of the studio nee garage with the overhead door wide open to make sure there was lots of fresh air (fortunately we had a stretch of nice weather). 

But the important point is that people came back because they chose to, and I think the reason for that (after some very awkward Zoom happy hours) is that we collectively came to believe that the world was undervaluing trust capital. 

Trust capital is the currency of relationships. You earn it through positive experiences with others. At work, in small amounts, this takes the form of showing up on time, working hard, and doing what you said you were going to do. Larger paydays look like sharing the blame (or acclaim) for something you might have credibly blamed on (or not attributed to) a teammate.

But you can also spend trust capital, which is what you’re doing when someone thinks you are doing the wrong thing but you ask them to trust you and so they let you do it.

Another thing that’s true about trust capital is that different jobs require different amounts of it. On one end, for example, is software development. Because code is objectively transparent, if someone says she wrote good code, you can trust but verify. In other words, if you’re in charge of a software engineer, you don’t need to trust that she’s putting in the work because you’ll be able to tell if she is or isn’t by her output. Business development, though, is different. It can take years in that world for leads to become prospects and then customers, so a lot of trust is needed.

But the most important thing to recognize about trust capital is that it’s impossible to move fast without it. Because without trust, you need contracts. And contracts need lawyers. And lawyers are slow precisely because they exist to not trust one another. 

A reality of what we do is that we often need to move fast without easily observable outputs, which means our job requires high trust. That’s true in and among the Permanent Equity team and also with our portfolio companies. Yet a funny thing about trust capital is that while it is depleted at roughly the same rate regardless of the medium (if you spend it on the phone, over email, or in person it has roughly the same value), it is earned at a significantly higher rate in person than anywhere else. 

This is why we felt it so critical to us back in 2020 to get back to the office. We recognized that, in a remote setting, in jobs that require a great deal of trust and whose work product was not immediately verifiable, we were spending trust capital at a far greater rate than we were earning it back and feared what might happen when we tipped into a deficit. This isn’t to say that we made light of health risks or didn’t take precautions, but rather that the risk of losing trust was similarly real and significant.

-Tim

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