Elizabeth Holmes and media coverage: subconscious bias at work

First, a full confession: I used to write about tech startups in the dotcom boom. I met hundreds of internet entrepreneurs, financiers, self-styled tech wizards and gurus. Some were brilliant and deserved their eventual success, while others I thought were ‘fake it till you make it’ pretenders still managed to extract funding from desperate venture capitalists before their businesses went belly up.

I know better than most what goes wrong when journalists are trying to write in boom times. As in all gold rushes, media coverage can veer from the excited to the positively breathless. I’ve seen reporters get carried away. And, after the bubble bursts (which they all do), everything changes, the media sharpens its claws, and everyone associated with the boom gets a kicking, all of them tarred with the same brush, whether they deserve it or not.

So far, so dotcom boom.

Back in the UK in 2000 after the ‘correction’ in tech company valuations, things soured to the point that Lastminute.com’s founders Martha Lane Fox and Brent Hoberman, who I interviewed several times, briefly became totemic figures for public and investor disillusionment with the tech sector.

Once, mid-way through an interview some time after the oversubscribed Lastminute IPO and the subsequent crash in tech stocks, a weary Hoberman told me he wouldn’t have minded so much if journalists just slagged off the company. Much of the media animus directed at him and Lane Fox, however, was so personal that it was as if reporters thought there was something wrong with them as individuals.

Unquestioning coverage helps no one, fair coverage does

How things changed over the following years. Media coverage of tech startups resumed its previous unquestioning stance. In the US this trend was particularly notable. Partly driven by their owners’ demands for page views and that other all-important commercial driver, ‘reader engagement’, journalists outdid each other in their glowing coverage of the people and companies coming out of Silicon Valley.

Elizabeth Holmes rode this wave like a pro. In 2003 the then 19-year-old founded the company that would become Theranos, eventually raising more than $700 million from investors and commanding a heady $9 billion valuation within a decade. It took till 2015 before the Wall Street Journal (behind paywall) published the first damaging revelations about Theranos’s technology, leading to legal challenges on all fronts and the company’s eventual collapse.

With Holmes’s conviction yesterday on four charges of fraud, including conspiracy to defraud investors, the question has to be asked: why did it take so long to uncover what the US Securities and Exchange Commission described as a “years-long fraud”?

Puffing up Elizabeth Holmes

The media has a lot to answer for. It puffed up Elizabeth Holmes. Hailed her as a guru. Lapped her up and promoted her as the great fresh face of tech entrepreneurs. She became one of the most idolised, most revered female entrepreneurs in the tech industry.

Her image graced the covers of business magazines and fashion titles alike. Even her dress sense, which aped Steve Jobs and his signature black turtleneck jumpers, was somehow seen as a sign of excellence.

Now, post Theranos, journalists seem to be belatedly regaining their credentials as people who realise they have to hold companies and their leaders to account. Critics will say this is no more than ‘doing a reverse ferret’, journalese to describe an abrupt reversal in an organisation’s editorial or political line on a particular issue

The media does now seem to acknowledge that the tech industry is not a just a world populated by aspirational and well-meaning geeks who run startups from the spare bedroom of their parents’ houses. But it’s a very late-in-the-day realisation that some of these people do wield real world power, whether it’s through commercializing our personal data, facilitating those who undermine elections, or what some might paraphrase as ‘doing stupid stuff’.

Many of the journalists who wrote flattering articles about Holmes back in the day clearly regret it now, even if they don’t say so. Fortune Magazine, to cite just one culprit, wrote this generous profile back in 2014 and published this creditable and lengthy mea culpa a year later. Wired did this one – but try finding their mea culpa or those of others.

So why did the media swallow Holmes’s hype? I’d argue subsconscious bias may have been at work.

Did male journalists just get carried away with this female CEO?

The male/female dynamic is far too simplistic an explanation.

Holmes certainly looked the part. She dressed the part. She talked the talk. She had big name investors. She amassed a star-studded board of directors. She did also tick a lot of the boxes for the many male, often middle-aged business journalists out there looking for a ‘good story’: Blonde. Female. Charismatic. Dropped out of a prestigious university to launch her business. Dressed like Jobs. Had a deep voice (honestly, even that’s been questioned). Made journalists feel special by maintaining extraordinary eye contact (seriously, there are even articles about how she likely taught herself to do this). Oh, and the technology her business did sounded sort of cool and game-changing.

But the reality is that at one time all journalists, whatever their gender, were gushing about her.

Some argue that Holmes’s ought not to be the only conviction here. The media is also guilty – of monstrous hype. Of misleading its audiences. Perhaps even of overlooking a fraud through its failure to probe sufficiently and ask hard questions.

Will it learn any lessons? Could the media make the same mistake again? We could be charitable and hope some lessons can be learned from the Theranos saga. Maybe, then, the next time a big investor wave comes along the media won’t just sweep us along in their excitement. We can but hope. But there are few signs to be all that confident.

Image: TechCrunch, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons


How to fight claims you’re just ‘blah blah blah’

Imagine being a public relations adviser and having to combat Greta Thunberg. She has truly mastered the art of the soundbite.

Her criticism that COP26 was just ‘blah blah blah’ was a clever cover-all response to combat any of the advances claimed by the politicians.

COP26’s last-minute stitched together final agreement underlined Thunberg’s view that big dirty industrial polluters and countries with poor environmental records will only respond to a big stick and that the stick isn’t nearly big enough yet.

A bigger regulatory stick for the big polluters

The public’s appetite for using a bigger stick is growing, however. Which is bad news for the big polluters. Especially those who spent so much time in the run-up to COP26 talking up their green credentials and and sustainable practices and products. Phrases like ‘clean coal’, ‘net-zero carbon flights’, ‘sustainable mining’, even ‘clean-burning natural gas’ swilled around like so much greenwash.

Those who invest in big polluting industries face a similar challenge.

Why? Because the lack of transparency is hindering consumer choice. For example, consumers know that switching to a sustainable pension could be 20 times more effective in cutting their carbon footprint than giving up flying, eating meat and driving a car with an internal combustion engine. Yet few know what to do about it or whether they can believe the sustainability claims of the companies their pensions are invested in.

An end to greenwash?

Regulators agree this is unacceptable. So tough new guidelines to tackle this are coming. Guidelines that will curb the ability of big industrial polluters to make sustainability claims that don’t stack up.

Regulatory changes will address claims that too many companies readily use terms about their environmental ‘impact’ and ‘zero carbon’ products that are either hard to verify or just cannot be true. In future, they’ll have to prove these claims.

Just one example, here in Switzerland, the main financial market regulator FINMA has issued draft regulations to tackle greenwashing in collective investment schemes at fund and institutional level. It hopes to end some of the worst abuses that it sees, mostly as a result of a lack of transparency in products offered to investors.

Claims about sustainability must in future be backed by evidence: proof that a sustainable investment strategy is actively being pursued or implemented, and that in any collective investment scheme a large share of assets must be allocated in line with that strategy.

FINMA is one of several significant regulators to be turning the screw on funds that can’t back up outlandish claims of their sustainability with hard evidence. ESG claims will have to be justified. Unwarranted ‘sustainability’ labels for products will have to be dropped.

A new global framework for sustainability reporting?

Underpinning all this regulation will be globally accepted sustainability reporting standards and a single internationally recognised framework for sustainability reporting.

The recently announced merger of the Sustainability Accounting Standards Board and the Climate Disclosure Standards Board (CDSB), to form a new International Sustainability Standards Board (ISSB) will help. It paves the way for a new global sustainability disclosure standards body to oversee the introduction of more transparent and globally comparable sustainability disclosures compatible with companies’ financial statements.

Proving deliberate mis-selling is hard when precise definitions of words like ‘sustainable’ or ‘green’ are a matter of debate. But new regulations mean this day is coming.

More transparency, less PR?

Greater transparency will ensure everyone understands how to make informed decisions about their pensions and investments. Fighting claims that what they say and do is all just ‘blah blah blah’ will require companies to change, and to show clearly that they have done so. That’ll good for investors and good for the planet.

What Greta might describe as a ‘win/win’ rather than ‘blah blah blah’.

Photo by Carlos Roso on Unsplash

5G and Covid fuel Swiss digital media transformation

A newsstand in Bern, the capital of Switzerland

One of the features of the Swiss media market that first strikes foreigners is the apparently robust health of its print media. Newsagents seem packed with titles and relatively high levels of newspaper and magazine readership sit at odds with the experience in other major European countries.

This is all changing – and the shift from print to digital is accelerating, however, according to a major new entertainment and media industry analysis by PwC.

Pandemic problems

The pandemic has emphasized the rate of change, hitting both print circulation and advertising as lockdowns cut the numbers of people buying papers on the journey to and from work.

Newspaper industry revenues are expected to fall from CHF 968 million in 2020 to CHF 842 million by 2025, a drop of -2.3% annually.

While major media owners are moving over to new platforms this is not without difficulty. Publishers are running into the age-old problem that users think digital equates to free content. Finding new ways of monetising digital audiences will be key if publishers are to survive.

Competing with TikTok and Snapchat

Media companies are shifting to digital models, producing more audio and video content, but even so they will have their work cut out to compete for revenue and reader attention from established rivals such as Google and Facebook to emerging forces like TikTok and Snapchat.

There have been some successes: The free German-language tabloid Blick launched in francophone Switzerland in June. Its owner, Ringier, has also launched an online TV channel. Meanwhile, the biggest online news site in French – http://www.20min.ch/fr – increased audiences across its various channels (print newspaper, app and website) in 2020 to reach nearly 3.0mn readers each day.

That’s pretty impressive when you consider the country has a population of just 8.7 million, though it reflects traditionally high level of news readership and the fact that trust in traditional news sources here remains high at 44%.

Online advertising is the place to be, however. Switzerland’s Internet advertising market is already the sixth biggest in Western Europe, with total revenue of CHF 3.2bn in 2020. This is expected to increase at a combined annual growth rate of 6.5% to reach CHF 4.4bn by 2025, making Switzerland the third-fastest growing market in the region.

The impact of 5G

While online advertising continues to grow, PwC sees a surge in mobile ad revenue following the increasing take-up of 5G between now and 2025.

Switzerland is something of a trailblazer for 5G in Europe. It is now available to most of the population through two major providers, Swisscom and Sunrise. Revenue from mobile ads overtook that of wired for the first time in 2019, when it accounted for 54.1% of total revenue. By 2025 mobile will make up 64.4% of total Internet advertising revenue in Switzerland.

It adds up to a huge challenge for traditional media companies, who must adapt their business models quickly, or die. Those packed news stands in Switzerland may soon become a thing of the past.

Photo by Claudio Schwarz on Unsplash

Return to work? But I was never away!

Commuters pictured at a major railway station in London

My clothes don’t fit. I spent too much time looking in the fridge when I was working from home during the COVID pandemic and now I’ve got a ton of weight to lose.

If this is you, I sympathise. I’m sure you are not alone.

Working from home certainly has its advantages – no commute, more time for yourself and no need to dress up beyond an appropriate top.

But there is a significant downside, and it’s not the extra pounds you may be carrying thanks to the magnet-like appeal of a well-stocked fridge. The real problem is the tyranny of the ‘always-on’ culture of home-working, which has increased pressure on those who feel they need to ‘show’ bosses that they really are working by exhibiting a level of presenteeism that even Gordon Gekko* would frown on.

Years ago I worked for a major organisation where home-working wasn’t just frowned on. It was actively discouraged. “If you’re not ‘at work’, you’re not working,” said my then boss as she insisted I took a day off when I asked to work at home so a technician could come and service my boiler.

I see this very organisation now says working flexibly can be a permanent option for office-based employees and that they just have to inform their manager of their intention to work remotely rather than request permission to do so.

That’s great, so long the downside isn’t having to be ‘always-on’, though I find it hard to believe my old boss will have changed her tune all that much.

For me, as the head of a communications agency, having colleagues I can rely on is essential. But I don’t expect 24-7 service. If I happen to be banging out emails at 11pm on a Friday, it doesn’t mean I want – or expect – them answered by return. I try to respect boundaries. I don’t want to impinge on colleagues’ home time.

At the same time, I trust my colleagues to know when a client needs their urgent response. I also know that the flexibility of home working means one of them doesn’t work in the afternoons for childcare reasons but instead logs on in the evenings to finish stuff off. I tailor my expectations accordingly.

All of which is why I grimace when I see headlines that talk about the big ‘return to work’. Honestly, what do they think everyone has been doing for the past months?

My colleagues have been hard at work, just not ‘at work’.

* Gordon Gekko was a fictional character in the 1987 movie ‘Wall Street’. Played by Michael Douglas, who won an Oscar for his portrayal as the hard-working, hard-talking financier, he famously declared ‘Lunch is for Wimps’.

Photo by Anna Dziubinska on Unsplash

The greatest gaffe ever – 30 years on

Gerald Ratner Tweets his regret about making 'that' speech 30 years ago to the Institute of Directors in the UK

It’s exactly 30 years since Gerald Ratner, Chief Executive Officer of the eponymous jewellery business stood up at a conference of the UK Institute of Directors and made a few jokes at the expense of some of his company’s best-selling products.

He described a set of cut-glass sherry decanters that Ratners Group sold for £4.95 as ‘total crap’ and joked that while a set of earrings was ‘cheaper than a prawn sandwich from [the UK retailer] Marks & Spencer’…‘I have to say the sandwich will probably last longer’.

Hundreds of millions of pounds were wiped off Ratners Group’s market value as shoppers deserted the company – and Gerald Ratner’s remarks became a classic in the reputation management genre.

Ratner, who now works as a motivational speaker, amongst other things, said his remarks weren’t meant to be taken seriously and blamed the media for over interpreting his words.

As I’ve reminded executives many times when delivering communications training, the media are not to blame here.

Many is the executive who’s slipped up by trying to be too clever or, worse, trying to be funny. Leave the jokes to the comedians, is always my advice.

The story is whatever the journalist decides it is. I tell clients, ‘Don’t expect them to see past your joke. Or to overlook a remark that is inadvertently funny.’

‘I want us to be as well-known as Disney,’ declared the then head of the Institute of Management Consultants as he spelt out his marketing goals to members at the organisation’s annual dinner a few years ago.

‘IMC President wants institute to become Mickey Mouse Organisation’ read the headline of my diary column that week.

I was standing next to the institute’s public relations adviser as I wrote his remark down. I saw her cringe at his words. Either she hadn’t advised the President properly or, much more likely, he hadn’t listened to her advice to take that comparison out. Big mistake. Huge.