Lessons Of Theranos: Sex, Lies, And PR

Like many in tech PR, I’m fascinated by the Theranos story because of what it says about Silicon Valley, public relations, and the press. Now that the trial of its disgraced founder Elizabeth Holmes has started, media and pundits have updated their hot takes on her spectacular rise and fall. Theranos claimed to have devised a technology that offered ultra-sophisticated diagnostic testing based on a single pinprick of blood. The implications – and potential PR angles – were irresistible. It would revolutionize diagnostic testing, making it easier, cheaper, and more accessible. It would disrupt the legacy companies in the field. It would be a boon for needle-phobics. Most appealing to the media, it was started and run by a woman. And Holmes wasn’t just any woman; she was young and blond, a Stanford dropout with a fascinating backstory who channeled Steve Jobs. Is it any wonder that Theranos was valued at $10 billion at its pinnacle?

Fake it ’til you break it?

Its breathtaking success and subsequent crash tells us a lot about the sexism that persists in startup circles, how investors see women in tech, and how females try to cope with the perception.

Still, I was surprised to read that in the years following the collapse of Theranos, female entrepreneurs in life sciences and biotech say they’re constantly compared to Holmes. The Theranos case, according to a piece in The New York Times, has “left behind a seemingly indelible image of how female founders can push boundaries…. they faced the additional hurdle of fighting assumptions that they were like Ms. Holmes, they said, something their male counterparts have generally not had to contend with.” One female founder of a health testing company said that she was linked to Holmes so frequently that her advisors suggested she dye her naturally blond hair a darker color, presumably to stop the damaging comparison.

Wow. But even more remarkably, some women founders have weighed in with a degree of sympathy on the circumstances around the Holmes disgrace. Entrepreneur Beth Esponnette posted on Medium that, while she fully recognized that Holmes was wrong, “I still believe that she thought she was doing the right thing taking the universal advice of Silicon Valley: ‘Fake it till you make it.'” Esponnette claims that in her own struggle to get funding, she was encouraged by investors to overpromise and exaggerate even to the point of lying.

Can confidence turn to criminality?

I take Esponette’s point that female founders are seen and treated differently than male counterparts. And I doubt that the next brash young male techpreneur is worried that he’ll be compared to Adam Neumann, the WeWork founder who dazzled investors and media, only to leave in disgrace (albeit with a $1.7 billion parachute.)

Yet her view that women in Silicon Valley are held to unique and inappropriate standards is a double-edged one. It’s clear that Holmes was lionized in part because she was female. Anyone who works in PR with high-growth technology businesses knows that the media are eager to cover women founders. There are so few of them, and what’s different naturally makes news. Holmes would have been the first self-made woman billionaire in tech, and everyone was rooting for her. Of course her sex was a factor. And “fake it til you make it” is about projecting confidence, not an excuse to engage in criminal fraud.

Journalists missed red flags

Of course, the Theranos debacle also tells us something about journalism. As someone who has spent a career in PR, where we basically try to build up business leaders and tech entrepreneurs in the media, it feels weird to criticize the media who took a good pitch and ran with it. But there’s no denying the Theranos story is about the credulity of journalists in the tech sector. They were thirsty for a female Steve Jobs, so they didn’t question Holmes’s claims. What’s more, reporters often work in packs, especially in sector bubbles like Silicon Valley. Media coverage begets more media coverage. Even as reporters compete fiercely for the story, they’re influenced by what colleagues and competitors write. As soon as Holmes’s PR team cracked one top-tier business publication, the rest clamored to cover her with fresh angles and updated quotes. Few questioned the culture of secrecy or the absence of peer-reviewed research on the Theranos technology. No one asked why there wasn’t a single physician (except Senator Bill Frist) on its board. It took a couple of sharp professors and John Carreyrou, with his investigative background and outside-the-bubble pedigree, to bring down the house.

A PR-first culture can’t work in healthcare

Finally, even if you attribute Holmes’s dishonesty to the self-aggrandizing ethos of Silicon Valley, that ethos doesn’t translate outside the tech industry. It’s one thing to promote “vaporware” by exaggerating a product’s readiness or overpromising on features. But in medical diagnostics, the stakes are high. The consequences for mistakes can be fatal. It’s the main reason why I can’t ultimately swallow the “fake it til you make it” mores as an excuse here.

The tragedy of Elizabeth Holmes is that we’re still clamoring to make her a symbol – of sexism, of journalistic laziness, investor gullibility, or even imposter syndrome and the pressure to succeed. She may be all those things, but in the end, a lie is a lie and a fraud is a fraud. Even in tech, a great PR campaign will only take you so far.

How To Protect Reputation In The Age Of Leaks

Most companies hire PR agencies to help them get out positive news. But what happens when the juiciest stories about a business aren’t flattering? What, if anything, can a PR or corporate communications expert do to turn things around?

Consider Uber’s rough ride of late. First, a video of founder Travis Kalanick arguing with a driver made the rounds on social media, prompting Kalanick to issue a rare and soul-searching admission that he needs to “grow up.” Then The New York Times reported that Uber has been using a secret app to deny rides to regulators in areas where its service is banned.

This comes after Susan Fowler, who spent an eventful year as an Uber engineer, wrote a blog post detailing a culture of relentless sexual harassment, gender bias, and cutthroat competition at the company. And of course, Uber started the month in a storm of controversy after it was accused of crossing picket lines by drivers striking in protest of the president’s immigration order.

Each of these incidents is distinct, but all except one resulted from information supplied by Uber employees (or a contracted employee, as with the video posted by the Uber driver) and all are symptomatic of a corporate culture in dire need of change.

And Uber’s not alone in grappling with the impact of information supplied by its own people. Serious problems at one-time technology highflier Theranos were exposed by a series of investigative reports by John Carreyrou of The Wall Street Journal. It wasn’t until months later that we learned (through Carreyrou’s own riveting account) that his original tip had come from a whistleblower employee.

Whistleblowers erupt when corporate culture is toxic

Institutionalized whistleblowing is typically about a serious and systemic problem. Last year the Securities and Exchange Commission announced it passed the $100 million mark for the payment of whistleblower awards, leading to $500 million in financial remediation paid by companies. So, incentives and protections for those with the courage to speak out about unethical or illegal business practices is enormously valuable.

But for ordinary organizations, trivial leaks of internal conversations or information can be problematic. Look at the White House. It can’t hold a meeting (especially one about leaks) that isn’t immediately leaked to the D.C. press. Journalists routinely feature their contact information on confidential app Signal or other secure platforms number on their Twitter feeds. In some ways it’s a healthy sign, but there’s also reason for an ordinary business to fear the reputation damage resulting from a leaked claim by a disgruntled employee or competitor.

What’s an honest company to do? That’s where internal communications and a culture of openness come into play. The more open you can be in the workplace, the more loyal employees are likely to be. Here are five ways to maintain a culture of transparency that can help prevent or minimize leaks, rumors, and misinformation.

Communicate regularly

Regular staff meetings are a simple step toward transparency for a midsized organization. They don’t need to be gatherings where questions on every topic are invited; in fact, that should come in a different venue reserved for airing concerns. But the simple fact that rank-and-file employees are in the know on things like new clients or projects, pending business, and other positive developments will make them feel connected. Some entrepreneurial companies fear weekly updates because they don’t want to open up on financials or other details of the business, but total transparency on financials isn’t necessary.

Share bad news honestly and quickly

If the news isn’t all good, it’s better that staff hear it from management directly, to quell rumors and distortions. Resist the temptation to sugar-coat bad news; mixed messages will not help the situation. Above all, after explaining why the client was lost or the employee was let go, focus on goals for the future to ensure everyone understands that management is committed to moving forward, and that they have a role to play.

Use feedback tools

These are valuable for everyday issues that may not warrant a complaint to HR, or for sensitive matters where anonymity will encourage honest responses about problems. Many companies find a weekly or quarterly feedback survey an invaluable tool for assessing morale, worker engagement, and overall satisfaction over time.  But it can also be an early warning system to help stem a problem before it becomes systemic. Check out these employee survey tools as a starting point.

Mean what you say and say what you mean

A common stereotype in the PR business is the boss who hypes everything so that problems are glossed over, or the executive who promises the world but delivers nothing. It’s a far better internal communications strategy to be generous with positive feedback and open with business information, but stingy when it comes to promised improvements. Commit to only those changes or perks that you know are feasible. If a group of employees speaks up about a difficult or ongoing issue, promise that it will be addressed or discussed, and stick to that schedule, but don’t commit to any fix that you can’t deliver.

Show, don’t tell

Well, do tell your employees what your company values are, and make sure every new hire understands your business code of ethics, but don’t stop there. Use small examples of your values in action to show them how they contribute to the business. It might be the staffer who gave credit to a colleague, or the accounting clerk who caught an error in your favor. Continuous communication of the daily decisions that represent an ethical culture is one of the best ways to self-police.

The Biggest PR Disasters Of 2016

2016 had plenty of the kind of the kinds of news-making crises that public relations people dread. It was a year of surprises, setbacks, and scandals. Here’s our list for the top stories that damaged brand reputations, wrecked careers, and kept media and PRs working overtime.

Samsung’s product recall gets heated

Samsung’s Galaxy Note 7 showed every sign of being the blockbuster it needed to challenge Apple. But shortly after its launch, the Note 7 had to be recalled after reports that the devices overheated and even caught fire. Samsung’s swift decision to pull the product at first looked smart and proactive, but things didn’t cool off. Replacement devices had to be recalled after they, too, showed defects. Worse, Samsung bungled the management of the product recalls by failing to coordinate with the Consumer Product Safety Commission. and its customer communication was slow and inconsistent. Research shows that Samsung still commands a loyal following, so the damage is likely to be temporary. The communications lessons, on the other hand, will be covered in crisis management classes for many years.

Lochte loses luster

For a 12-time medal winner, U.S. swim team star Ryan Lochte was a loser when it came to his behavior at the 2016 Olympics. His drunken vandalism of a Rio gas station might have been overlooked if he had ‘fessed up to the bad behavior, but Lochte chose to concoct a nutty, self-aggrandizing story about being robbed by gun-brandishing bandits, which particularly outraged the image-conscious Brazilians. Then he fled the country, leaving his teammates to answer to authorities. After he was busted for lying, Lochte admitted the truth and formally apologized for “not being more careful and candid.” As of December, his reputation was recovering, thanks to a crowd-pleasing turn on “Dancing With The Stars” and the announcement that he and fiancée are expecting a baby next year.

Theranos’ falls victim to its own PR

Talk about bad blood. For the once-promising biotech startup, 2016 was the year that things fell apart, following fresh repercussions from revelations that started late last year with an investigative report in The Wall Street Journal that questioned its claims. The fall of Theranos was particularly dramatic because it was in many ways a victim of its own hype. The story of a new blood-testing technology for clinicals that needed only a single drop of blood was irresistible to media, and founder Elizabeth Holmes was a PR dream. But as it turned out, many things about the secretive startup were just too good to be true. Until the Journal‘s John Carreyrou started digging, the press was too dazzled by Holmes’ youth and accomplishments to spot its flaws, and even the company’s Board of Directors, which was packed with boldface names, failed to see trouble. After Carreyrou filed 12 more stories about Theranos in 2016, it became the target of criminal and civil investigations by the Securities and Exchange Commission.  The ultimate account of the insider who blew the whistle on the company is riveting – part suspense novel, part Shakespearean tragedy.

Wells Fargo’s phony accounts exposed

After it came to light that millions of fake customer accounts were set up by Wells Fargo staff to pad their sales figures, the bank agreed to pay $185 million to settle claims, and CEO John Stumpf apologized and vowed to do better. But Stumpf at first seemed to blame rank-and-file employees, 5300 of whom were fired over the scandal. He then shifted gears and communicated his own sense of accountability for the situation, telling members of the Senate Banking Committee, “I accept full responsibility for all unethical sales practices in our retail banking business, and I am fully committed to doing everything possible to fix this issue, strengthen our culture, and take the necessary actions to restore our customers’ trust.” That was the right move, but for Stumpf, it was a case of too little, too late. He retired in October, and Wells Fargo is still grappling with the reputation impact.

EpiPen price causes outrage

Move over, Martin Shkreli! Heather Bresch, CEO of pharmaceutical company Mylan, became the poster child for industry greed in 2016. After public outrage over Mylan’s 400% price increases for its flagship product EpiPen, Congress launched an investigation, and it wasn’t satisfied with Bresch’s answers. Mylan swiftly responded to the crisis with favorable pricing for those without adequate health insurance, and a plan to launch a generic version of EpiPen, but the backlash continues. Mylan’s stock has dropped from $54 at the beginning of the year to $36.60.

Vulgar comments on a bus nearly derail the Trump train

Beware the hot mike. The lewd boasts that Donald Trump made 11 years ago during a taping of “Access Hollywood” were probably the biggest reputation story of 2016, and that’s saying something. When Trump bragged about kissing and grabbing women without their consent, it sparked a national reaction and for a few days at least, threatened to derail some key endorsements. But the Trump campaign insisted it was “locker room talk” and responded with help from a team of surrogates and a (perfunctory and defensive) video apology by Trump. In a second wave of crisis response likely devised by Steve Bannon, it counterattacked by dredging up Bill Clinton’s sexual history. We all know how the story ended.

NC business goes down the drain with “Bathroom Bill”

When North Carolina Governor Pat McCrory signed HB2 – legislation to regulate use of public facilities by transgender individuals, he unleashed a torrent of controversy – and ultimately, his own electoral defeat by one of the slimmest margins in history. The governor tried to frame the “Bathroom Bill” as protecting individual privacy, but a coalition of LGBTQ rights groups and big business, including major technology companies, eventually prevailed against the spirit of the law. HB2 gave rise to serious and prolonged economic boycott of the state by major corporations and sports organizations, flushing away an estimated $600 million in revenue. McCrory’s narrow defeat helped clear a path to the bill’s repeal or modification.

Email hack bedevils Democrats 

The Democratic National Committee grappled with its own surprise leak earlier in the summer of 2016 when private emails became public. The DNC moved quickly to limit the damage; Chairwoman Deborah Wasserman Schultz and other key party officers promptly resigned in the wake of the scandal. But the problems for other Democrats were just beginning. Clinton campaign director John Podesta’s emails were obtained by Russian hackers and released by Wikileaks, and although the material lacked a bombshell, the slow drip of embarrassing material was a repeatedly picked up by the press. It distracted the Clinton team from its message and placed it in an awkward position when questioned about the resulting material. All in all, the hacks were a reminder to all of us that employee behavior needs to adapt to the security risks we all run every day.

Fake news is big news

Fake news made some of the biggest headlines in 2016. The many false stories that went viral leading up to the election fueled concerns that we’re entering a “post-factual” era when trust in legitimate media will only decline. The good news is that some of the smartest technology and journalism minds are working together to offer solutions. First, Google and Facebook announced they won’t support the ad technology for fake news sites, and Facebook has said it’s devising a range of countermeasures to flag false articles. More recently, Upworthy ‘s Eli Pariser and others have started The Truth Project, which is looking at Chrome extensions, fake-news-blocking-apps and even blockchain technology to rid us of the fake news plague.

An earlier version of this post ran on MengBlend.

Theranos: Triumph Of PR Over Science?

The suddenly sober mood of 2016 is extending to Silicon Valley. The tech sector’s experiencing a sense of caution and maybe a renewed commitment to diligence after much exuberance. Part of that is something Fast Company calls the “Theranos effect.”

The rise and fall of the once-promising health technology startup is a warning for investors chasing the next unicorn. But it’s also a lesson for PR practitioners and journalists. The Theranos narrative is about the triumph of PR and optics over substance and maybe even science.
Through its telegenic founder Elizabeth Holmes, Theranos articulated a bold vision: it would completely upend the traditional diagnostic laboratory industry by offering over 200 medical tests at a fraction of the price of established labs, and with far less discomfort and blood – just a fingerprick’s worth, in fact. In 2014 Fortune put Holmes on its cover. She was featured in a lengthy profile in The New Yorker, interviewed by dozens of women’s and lifestyle publications and lionized on the women-in-technology circuit. Time magazine named her one of the 100 Most Influential People of 2015.  Theranos was valued at an impressive $9 billion.

But the story started to fray after the Wall Street Journal reported that, in contrast to the innovative promise of the fingerprick, Theranos was using the same technology as conventional labs for all but one of its blood tests. Other doubts came to light, and the media, smelling – well, blood, began to pile on. Holmes responded to the challenges, but skepticism persists, and the company still hadn’t opened its scientific methodology to outside scrutiny.

Things may yet turn, but it’s safe to say that the Theranos story grew out of proportion to the reality. One factor is the recent frothy environment for technology startups. Many think there’s simply been too much money chasing deals.

But there are other reasons – a lack of media diligence, a PR strategy that ignored science in favor of personality, and our desperate need to believe in the next technology hero – or heroine.

Holmes was great PR because she seemed right out of central casting. Her emergence as a 30-year-old, newly minted billionaire (on paper); her story (well-connected Stanford student drops out of school to pursue her word-changing idea); and her role as disruptor of the healthcare status quo and champion of personal healthcare empowerment was irresistible to media. She was the Silicon Valley version of a triple threat.

Connections led to more connections. Holmes happened to be a friend of the daughter of Tim Draper of legendary VC Draper Fisher Jurvetson, who kicked in the first $1 million of financing. And with the cash came credibility, and more contacts. Holmes ultimately assembled a Board of Directors with boldfaced names like ex-Secretaries of State Henry Kissinger and George Shultz, among others. With such heavyweights, no one seemed to notice the relative absence of scientific experts or practicing medical professionals. 

Media follow media. It’s a dirty secret in PR. When it comes to a hot story, sometimes all you need to do is crack that first feature. Journalists can have a herd mentality even as they scramble for a fresh take, coverage begets more coverage, and the hits just keep rolling in. Although some details seem odd in hindsight, there were few tough questions. The story was just too good, and there was something for everyone, from Holmes’ lofty idealism to her closet full of black turtlenecks.

Finally, there’s gender. You can’t underestimate the influence of Holmes status as a young, blonde woman at the helm of a technology company with a sexy story. 
She was the sole female chemical engineering student in her class at Stanford University. She took risks that led her to the rarefied air of so-called unicorn founders, where women are more than scarce. As Fortune – which has done plenty of post-mortem coverage as Theranos has fallen – points out, “the media is desperate for a woman to hold up as a model of success at this level.”

And it’s true. Anyone with a female tech-company founder as a client knows how hot the demand is for speaking opportunities, profiles, and board memberships for women in tech. Silicon Valley has been justly criticized for female-unfriendly policies, and the Theranos story was an inspiring change to the drumbeat of recrimination.

For its part, the women’s media are equally hungry for stories about brilliant, ambitious young females who are breaking barriers. As Elle magazine’s Mattie Kahn says, “feminists need CEO Elizabeth Holmes.” Everyone needed her, because everyone benefited from the Elizabeth Holmes that the PR machine created. So much that they were willing to ignore the science (or lack of it), defer the hard questions, and overlook the unusual degree of secrecy around Theranos. As annoying questions about the “stealth research” and lack of peer-reviewed literature arose, the company doubled down on the personal narrative and the challenge to the status quo. That’s a defense that works only if the scientific underpinning is in place.

Now the backlash has begun, and the press will scrutinize every move at Theranos from here on. That’s okay. But there’s a danger that they’ll overreact and demonize Holmes, not because of her gender, as some suggest, but in their embarrassment and haste to do what they should have done in the first place. In cases like these there’s always the risk of a media pile-up because they feel they’ve been duped.

A better approach by the company would have involved a positioning informed by science, a communications approach more in line with reality, and a narrative reflecting the inspiring potential of the technology instead of one dominated by a cult of personality. The right role for journalists is to hold Theranos to its commitment to disclose its data as promised, not to crucify it.
It will be unfortunate if Theranos crashes and burns, because it could still be a great narrative and a successful business. And I’d like to think that there are many future Elizabeth Holmeses in waiting, and that, one day soon, one of them will go all the way.