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

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.