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


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

Pre-Leveson Blair: “The press is a feral pack”

Tony Blair came to the Reuters HQ in London’s Canary Wharf today [June 13, 2007] to vent his spleen on the media and finally tell it how it is. His speech, billed as being about public life and leadership in the media age, turned out to be a 35 minute blood letting as he savaged the modern 24 hour news media as a ‘feral beast’ which just wants to tear people in public life apart.

He did pause to admit some responsibility, acknowledging that New Labour had assiduously courted the media and spent rather too much time worrying about what the papers said. Continue reading