Cambridge Analytics proves loss of trust is very, very expensive.

The controversial data analytics and political consulting firm Cambridge Analytica declared bankruptcy yesterday. After the furor it faced from revelations the firm had illicitly used data about friends and connections from 87 million Facebook users, customers fled in droves. Investors - including a family of billionaires - and employees were left holding the bag. Facebook users are left questioning how much of their private interactions with friends and family and children were used to create profiles for sale to the highest bidder by Cambridge Analytica.

What killed Cambridge Analytics was a rapid and profound loss of trust. This is not surprising because, from day one, the company was not built with customer trust in mind.

But the rapid and public demise illustrate that companies who don't build with customer trust in mind face grave risks every single day based on what the media might say about them and how customer sentiment might turn on a dime.

Businesses need many things to thrive and earn money. Trust is the most important and most basic ingredient. And a loss of trust is the most dangerous crisis a business can face. For Cambridge Analytica, the death came quickly. But what other businesses don't realize is that the crisis is never over after the initial wave.

Wells Fargo, Equifax, and other businesses that have lost trust are paying high fines or, in the case of Equifax, may face harsh scrutiny from the U.S. Federal Trade Commission. In both cases, the CEO's lost their jobs. Wells Fargo, as well, is now on the radar of consumer advocates who are watching it like a hawk. Any additional missteps will likely exact a stiff price both in the court of public opinion and on the balance sheet via fines or share selloffs.

Facebook, too, is paying a slow-motion price for loss of user (and advertiser trust). During the course of the scandal, Facebook lost $80 billion in market capitalization. A number of voices have called for CEO Mark Zuckerberg to resign and prominent advertisers have pressed pause on Facebook ad campaigns. Its executive team was diverted from normal tasks to damage control in Washington D.C. and the United Kingdom. Facebook is now squarely in the sights of legislators around the world. And with new laws coming on the books in Europe mandating better protection of consumer privacy, Facebook could soon face government legal action in the European Union.

Far harder to measure is the long-term impact on employee morale. And what is the future cost to Facebook of losing WhatsApp founder Jan Koum, who provided a necessary counterweight to the company's constant drive to vacuum up more user data and sell more ads? Would he have left if he still trusted Zuckerberg and COO Sheryl Sandberg?

Businesses need to build a DNA and culture that puts customer and user trust at the center of their models and processes. Not doing so is foolish and, eventually expensive. Just ask Cambridge Analytica.

Alex Salkever is the co-author of "The Driver in the Driverless Car" which was longlisted for the McKinsey / FT Book of the Year Award in 2017. His next book "Your Happiness Was Hacked" is coming out in June 2016.

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