December 8, 2016

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Theranos and the media: a cautionary tale for PR

Theranos and the media: a cautionary tale for PR

A lot of digital ink has been spilled chronicling the rapid rise and equally quick fall of Theranos and its founder, Elizabeth Holmes. This tale is instructive from the perspective of how changes in the media business have altered the relationship between PR and the press, particularly in technology.

Background

When she dropped out of Stanford in 2003 at the age of 19, Holmes started Theranos, a Silicon Valley company that was developing technology that would allow hundreds of different blood tests to be run using a simple finger prick of blood, rather than a needle. The blood-testing market is a large one, and this technology suggested it could turn that entire market on its head.

Tech press created a sense of legitimacy

Holmes and her company were the recipients of enormously positive press at the outset. Gushing articles talked about the bright young founder and entrepreneur. She secured a deal with Walgreens to license the technology to use in their stores, and within a short time became the youngest self-made billionaire in the United States. She was compared to Steve Jobs and Bill Gates, and the tech press seemingly couldn’t get enough of her or her story.

It was the perfect package. Holmes is young and photogenic, and the Stanford drop-out angle evoked comparisons to other famous and brilliant dropouts—the aforementioned Jobs, Gates, and of course Mark Zuckerberg. She had an idea that was potentially revolutionary within the field, and the backing of powerful names on her board of directors.

The unravelling

When the story began to unravel after the Wall Street Journal published an article questioning the accuracy of the company’s technology, Vanity Fair ran a piece in early May that focused not on the tech, or the founder—but on the role the tech press played in bolstering the image of the company by publishing largely uncritical pieces.

The Vanity Fair piece is a cautionary tale and is a must-read for anyone in PR. Regulated industries like finance, pharmaceuticals, healthcare, and insurance must be cautious about what they say to the press, and how they say it. Anyone who has worked on these types of accounts knows this quite well—it’s challenging to get clear messaging right when there are tight restrictions on the language you are permitted to use. Holmes repeatedly stressed how secret the technology was, so much so that it couldn’t even be peer-reviewed.

Page views and access: a changed media business

What the Vanity Fair piece highlights is how this type of restricted messaging combined with a dynamic that they attributed to the tech press, but is probably more widespread than that—the notion that critical coverage would lead to having a publication’s access cut off. In a cutthroat world of page views and clicks that drive advertising dollars, the tech press chose to preserve access. This fundamentally alters the balance that previously existed between the media and companies.

It wasn’t until the story hit the mainstream media that veteran reporters like the WSJ’s John Carreyrou felt something was off and began to investigate—and he was repeatedly stonewalled by the Theranos PR team, and then had to face their lawyers.

On July 7, 2016, Theranos was notified by the Center for Medicare and Medicaid Services that its Newark, California lab had been sanctioned, and the company is prevented from operating labs for two years. Holmes is reportedly staying on as CEO, which is certainly interesting from a crisis management perspective, just to add another interesting PR angle to this story.

An attempt at damage control

Holmes’ efforts at crisis management aren’t going very well. At a recent convention, she unveiled a new technology called the “miniLab” rather than addressing concerns with the company’s existing “Edison” blood testing machine, which is the technology that was under fire. Instead of reassuring the market by showing that the company is still innovating, Holmes managed to instead convey that she and the company would continue to obfuscate and deflect questions surrounding their technology. The presentation was widely derided as a “bait and switch.

Where this company and this story go from here is anyone’s guess, but it is probably safe to say that the Theranos PR team will have a very different relationship with the media from this point forward.

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About The Author

Jennifer Zingsheim Phillips is the founder of 4L Strategies, and has worked in communications and public affairs for just over 20 years. Her background includes work in politics, government, lobbying, public affairs PR work, content creation, and digital and social communications and media analysis.

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