When people hear that I’m an expert on trust—researching, writing, speaking, and teaching about it—they’re usually not surprised. But when they learn that I’m also an adjunct professor of entrepreneurship at SMU, the question I get often is: What does trust have to do with entrepreneurship? The answer is straightforward: trust is more than just important in entrepreneurship—it’s essential. It’s the foundation that allows startups to succeed in the high-stakes world of building a business from scratch. Here’s a look at why trust matters so much and where it’s most crucial in the entrepreneurial journey.
Trust Between Co-Founders
One of the first and most important places where trust needs to be strong is among the founders. Having more than one founder can significantly increase the likelihood of success in a startup, because each founder brings unique skills and perspectives. However, this benefit only works if there is deep trust between co-founders.
As co-founders, you need to trust each other enough to have what I call “constructive disagreements.” When trust is high, founders can openly discuss tough topics, address the hardest issues, and even raise their voices without it getting personal. These kinds of conversations aren’t about egos but about what’s best for the business. In fact, research shows that constructive disagreements are 141% more likely to happen when there’s a high level of trust between founders. This kind of trust allows each person to feel safe being vulnerable, which goes up by 240% when trust is strong, and to give and receive feedback openly, with receptivity to feedback rising by 76% when trust is high.
So, if you’re launching a business with one or more co-founders, start by building a foundation of trust. It will allow you to leverage each other’s strengths, support each other through the highs and lows, and ultimately make better decisions together.
Trust with Advisors
As a professor, I have a steady stream of former, current, and even future students coming to me for advice on their startup ideas. And one of the reasons they seek me out is trust—they know I won’t just tell them what they want to hear.
Entrepreneurs rely heavily on advisors, whether they are mentors, professors, or industry experts. For that relationship to be truly valuable, you need to trust that your advisors will give you honest, objective feedback—even if it’s hard to hear. If an advisor thinks your business idea needs improvement, but they sugarcoat their feedback, they may lead you down a costly path. That’s why it’s essential to choose advisors who are both competent and trustworthy.
There’s also a flip side here: your advisors need to trust you to take their advice seriously. My willingness to give feedback goes up by 106% when I trust that the person on the receiving end will take it constructively. For founders, this means being open to feedback, even when it’s tough, and building relationships with advisors who trust you to handle that feedback well.
Trust with Investors
If you’re building a business, at some point, you’ll need investors, and the foundation of any investor relationship is trust. Investors need to trust that you are capable, reliable, and committed to seeing the venture through. A critical factor in building this trust is what I call “transferrable trust”—the idea that trust from one party can extend to another based on shared connections or experiences.
This is why so many investors, especially angel investors, work in networks. When one investor trusts a startup founder, others are more likely to join in. For entrepreneurs, this means that earning the trust of one investor can open the door to further investment. To build this initial trust, always meet investors in person for your first encounter if possible. Your business plan may be impressive, but a business plan can’t answer questions, show passion, or convey body language. And if investors sense that you’re not serious enough to meet face-to-face, why should they trust you with their money?
Trust with (and Between) Employees
Trust doesn’t stop once you have a team in place. As a startup founder, you’ll depend heavily on your employees’ creativity and productivity to push your business forward. In fact, studies have shown that there’s a 47.4% correlation between employee creativity and productivity and the amount of autonomy they’re given. But giving autonomy isn’t possible without trust, and my research has found that the correlation between trust and the willingness to provide autonomy is as high as 67%.
Hiring trustworthy employees is just the beginning. You also need to trust them openly and visibly. If your employees feel trusted, they’re far more likely to deliver their best work. However, trust among employees is also essential. You may need to help foster this trust, especially if your team is working on highly interdependent tasks. Take time to build a culture where team members feel safe sharing feedback, communicating openly, and relying on each other.
Trust with Customers
Trust with customers is crucial for any business, but it’s even more critical for startups that don’t have a well-known brand. Established companies benefit from “transferable trust”—customers know and trust the brand, which lowers their hesitation to buy. Startups don’t have this luxury, so they need to establish trust from scratch.
Customers are more likely to buy from brands they trust, and they’re even willing to pay a premium for it. This is what I call the “trust premium.” But when customers don’t know you, you may need to offer a “distrust discount” to get them on board. This doesn’t necessarily mean you’re untrustworthy; it simply reflects the reality that they don’t have a reason to trust you yet.
Building trust with customers can be done through reviews, testimonials, and referrals. Positive customer experiences and word-of-mouth recommendations are invaluable, especially in the early stages. In fact, satisfied customers provide “outbound transferable trust” that can attract new customers.
Trust with Suppliers
One often-overlooked area where trust is crucial for startups is in relationships with suppliers. As a startup, you’re likely to face challenges like tight budgets and limited resources, and your suppliers’ willingness to work with you can make a big difference.
For a successful supplier relationship, trust needs to go both ways. Not only do you need to trust that they will deliver on time and to the agreed-upon quality, but they also need to trust that you’re a reliable client. If suppliers trust you, they may offer better payment terms, prioritize your orders, or extend credit when needed—advantages that can be critical for cash-strapped startups.
Building Trust as a Competitive Advantage
Trust is essential in every aspect of a startup, from founding partnerships to customer relationships. When you build a culture of trust, you create an environment where constructive disagreement is possible, feedback is freely given and received, and everyone feels secure to do their best work. Trust with customers and suppliers can open doors and create opportunities that wouldn’t otherwise exist.
For entrepreneurs, trust isn’t just a “nice-to-have”—it’s a strategic asset. Without trust, even the best business idea can fail, but with trust, a business gains a powerful competitive advantage. So, wherever you are on your entrepreneurial journey, prioritize building trust. It’s the best investment you can make.
Want to hear the whole story? Listen to the podcast episode at: https://podcasts.apple.com/us/podcast/s15e4-trust-as-your-startups-secret-weapon-why-every/id1569249060?i=1000674853079
Dr. Yoram Solomon is an expert in trust, employee engagement, teamwork, organizational culture, and leadership. He is the author of The Book of Trust, host of The Trust Show podcast, a three-time TEDx speaker, and facilitator of the Trust Habits workshop and masterclass that explains what trust is and how to build trust in organizations. He is a frequent speaker at SHRM events and a contributor to HR.com magazine.
The Book of Trust®, The Innovation Culture Institute®, and Trust Habits® are registered trademarks of Yoram Solomon. Trust Premium™, the Relative Trust Inventory™, and The Trust Show™ are trademarks of Yoram Solomon.
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