What can the Robinhood debacle teach founders about crisis communications?
Written by Jennifer Janson, Director, Communications, OMERS Ventures
Whenever I see PR people jumping in to criticize a company’s handling of a crisis, I tend to give the company in question the benefit of the doubt. I’ve been on the receiving end too often, where there were nuances to the situation that simply couldn’t be shared for one reason or another. As company outsiders, we never have the full story. And in my experience, strong communicators will always do the best they can with what they have to work with in the moment.
So, it was very on brand when I tweeted this on Friday:
Yeah, I was giving Robinhood the benefit of the doubt. Like many of us, I was glued to the news of GameStop as the drama unfolded. I also watched this car crash of an interview that Robinhood CEO Vlad Tenev did with CNN, knowing it will be used in media training sessions for years to come. Side note: when your CEO is going on air to talk about a major crisis unfolding, remind him (or her) to be human. Remind him to think about the message he wants to send to your most important audiences. The average viewer won’t react well to someone robotically parroting key messages. Be human. Apologize. Recognize and acknowledge what those affected by the issue might be feeling.
I gave Robinhood the benefit of the doubt until, that is, Tenev went on to Clubhouse to chat with Elon Musk in front of a group of more than 5000 people on Sunday night and he apparently said this:
Now, I am certainly no expert in capital markets but I have had my fair share of experience in crisis communications. And the level of info shared on Clubhouse (a new audio-only social platform that is still invitation-only) went well beyond what was shared openly in real time with its own users as the crisis was unfolding.
The biggest negative news stories are triggered when there is a difference between what a company says is important (its values) and how it behaves.
And Robinhood fell into exactly this trap. The company has built its reputation on putting “financial power into the hands of everybody — not just a select few”. But its actions last week were perceived as taking financial power away from the very audience it claimed to serve. And without good explanation.
A good PR person knows that in every crisis there is always a villain, a victim and a hero. Through poor communication, Robinhood actively positioned itself as the villain. The mishandling of this crisis is being reported everywhere as an own goal because Robinhood was so perfectly positioned to be the hero in this story. So how did this happen, you ask? Well, at risk of being one of those armchair critics I called out above, it would appear the company simply didn’t follow the cardinal rules of strong crisis communication:
- Be honest — don’t lie. Ever. You will be found out.
- Be transparent — if you tell people what you are doing you will set their expectations. You may not have all the answers right away, but tell people what you can, even if it’s only when the next update will be.
- Keep it simple — don’t try to muddy the waters with technical details. If you do, you create an opportunity for others to incorrectly decode whatever it is you are trying to say (or to assume you are trying to hide something).
- Be respectful — even towards those who are disparaging.
- Work fast — keep the communication channels open and updated.
On a more positive note, yesterday Robinhood addressed its customer-base directly, but it feels very much like the horse has already bolted on this one.
I’m not writing this in order to pile on to the anti-Robinhood bandwagon right now. Like I said, there will undoubtedly be a PR person somewhere who did what they believed was best with the information they had at the time. But let this be a cautionary tale for founders everywhere.
Crisis fundamentals exist for a reason. Many others have been down this path before and we can learn from their mistakes. Familiarizing yourselves with the guiding principles above (and having even the most basic of crisis comms plans) long before a crisis hits is the best advice I can offer. Oh, and then letting your values guide every decision you make. It’ll be hard to do in the heat of the moment, but if you can minimize the gap between your values and your behaviour you will get through it with the least possible damage to your reputation.