Gadgetory

hi everyone welcome to reporters roundtable I am Rafe Needleman in San Francisco and today on the show we are discussing one of my favorite topics failure failure as it turns out is always an option at least it appears that way for all the if you've been following technology Apple has its failures Google Facebook most recently path had a big failure of communication where it turns out that they were absorbing their iphone users address books into their servers in order to match path users up with other path users not necessarily such a bad thing but path didn't tell its users as they were doing it and then followed a rather as a one of my guests called it a supine apology and further accusations about what path had been doing in the past but this kind of thing happens all the time companies are always making flubs they're all moving so fast they're going to make mistakes the question is how do you prepare for these mistakes and how do you respond to them once they happen and what what can we all learn from what path Facebook Google Twitter Zynga Netflix have done in the past when they've fallen on their faces today to discuss this really interesting topic I've got two old friends with me first are both dialing in first from San Francisco here Owen Thomas who is founding editor of The Daily Dot you can follow his great work there Owen it's great to have you here own gained some notoriety himself after he worked for me at red herring by working at valleywag he was the chief valleywag blogger for a while very entertaining and insightful stuff over there and quite controversial taking it all from you Ray ah shucks anyway thanks Owen for joining us also joining us from New York another old friend Brooke hammerling who is a communications professional extraordinaire who has built her own business doing exactly that a brew is the founder of brew PR which counts as its clients big companies like Nets week NetSuite and one kings lane which is just exploding Brooke thank you so much for joining us thanks for having me of course your companies have never made any mistakes have a well you know it is I mean we can talk about it sure they've made lots of mistakes it's all how you handle it so let's get into let's get into this today by talking about the one that's in the news right now of course which is path why I just explained what path did uh is this a tempest in a teapot or is this really a big deal Brooke you first what do you think about the path flap well I think you know I think Owens alma mater of Gawker uncovered something pretty crucial here which if it's true then we have a problem because it seems that the founder hasn't told the truth and that is it looks like he had told valleywag Gawker whatnot that this had actually not they did not keep the data and that they deleted it nothing was kept on on their servers and that turned out to not be true so that's the even bigger issue if they were asked this in the past and then they've proven in right writing which they have an email saying absolutely not i hope you that answered your question we don't save it and then boom and a rogue engineer shows that that's not true that's a real problem so you lose trust in that but ultimately i think people have very short memories and it moves on i do think it's it's a crack in the the shiny veneer of path though for sure oh and they've already weathered a storm so in terms of just the design it felt for the first round so the version 2 is this sort of rebirth and then this sort of you know thing knocks that that shine off of it Owen what do you think about what path is fortunes pastor than what you doing right now well I think what's interesting is they they did change so when they launched they weren't keeping this information on their servers then very quietly before they launch path to point o before everyone loved them again in march two thousand eleven if I if I understand it correctly they started retaining this data on their servers to develop a new technology they're calling friend rank which helps you find your quote-unquote real friends your close friends the ones you actually want to share your you know your daily moments with that's what path lets you do that's you know what's great about path is it's this really small tight community the the thing is though that they didn't tell anyone that that had changed they didn't say hey I know we said in november two thousand ten that we're not keeping this on our servers we decided you know it's now March 2011 we decided we're going to keep it on our servers now because it helps us do cool things for you and you're gonna you're going to have to click a button when you upload the latest version or when you download the latest version and give us permission to do that that's what they should have done in march two thousand eleven they didn't understand I don't understand is it's so easy right they make and Dave made this big apology and then they've now made it opt-in but why when they've seen the history of how these things work when they know these things have a tendency to come out eventually why they wouldn't have done that in the first place so that's the other thing is they do have to do this in they didn't have to do this in March sorry that's what you're not your dog was a comment on this is Ramona is very upset about this whole fracas considering Owen is the biggest path user so David say they had another kid so they could have done this in March they also could have a two weeks ago they were preparing a new version this is her story they said we have this new version with the opt-in it was ready to go it's already submitted to the app store and then this thing work so why like if they knew that they were going to do this if they were going to create this new version why didn't they announced you know before anyone caught them hey we made a mistake that's what their blog has said we're sorry we made a mistake but they knew they'd made a mistake already so the moment at which they realized they made a mistake the moment at which they realized they had to they had to revise their software to make it opt-in that's when they should have been how do you possibly act fast enough to stay ahead of the vitriol that spread so quickly over the web though I mean I'm sure that when path when Dave Morin overt CEO path and his whole crew saw what was going on they said oh you know we've got a craft a response to this that is appropriate and has this right emotional tone etc and yet while they're working on that you've got commenters all over the blogosphere saying i'll never trust these guys are a bunch of scum they deserve to die i mean i saw clothes like that pop up immediately after this thing happened and immediately after that Gawker story which by the way was true but at a different time at a different time so that's true how do you Brooke how do you cancel your companies to prepare for the incredibly fast and uninformed and emotionally violent stuff that comes out and I'm anybody makes even the smallest of slip-ups right well in that particular case what I found surprising is that I started hearing about it that Tuesday late afternoon early evening in I don't think it came out they didn't make any comment until the following day I guess the new started to spread over night but I mean that's something that they should have attacked they should have been no sleep they should have addressed it immediately I'm not sure when the timing of the apology went out but you know there's there's something to be said for the speed for which one accepts and acknowledges a mistake and then then kind of goes and finesse is it and goes after the different audiences and whatnot but I would have done it immediately I would have done a Mia culpa and and you know there's certain levels of crisis this is a big one I mean there are certain ones that people are going to get all up in arms about and we can talk about some of those that that then the customer the company has to eventually go and change I think Netflix is a great example and you know so they didn't move very fast but then when they did and when they did change it and they did make Mia culpa it turned people's impressions of them for sure yeah i do think i doing Dave's apology was absolutely right you know I I teased him a little I called him the supine apology but that's what you have to do you have to roll on your back and just hundreds but yeah and just say I I surrender I told total screwup you know you can't be defensive you can't be even the slightest bit defensive fiction slightest bit defensive um people will just tear you apart again and I think that's what Airbnb saw is like they were not they were not fully apologetic enough they were a little bit defensive they were entirely defensive yeah I mean and even even a squidge of defensive pneus is enough to give your you know your critics even your fans your fans who feel betrayed those are even worse than the critics something to you know something to latch on to it sounds like a very interesting emotional state to be in for a CEO who I mean the air B&B the CEOs of all these small companies in order to get to where they are they have to be extremely aggressive extremely arrogant to a point if going to raise a lot of money hire people based on a promise put a product out there that's not fully baked or tested and then say to the world this is great and I'm great and we're great and you the users are great and then when they make a mistake which is going to happen right they have to go to this completely different emotional state and Brooke how do you deal with CEOs who are there they're alpha in every possible way and then they've got to roll over as Owen says which is right about they've got to roll over and say oh I'm so so so so very sorry I mean how do you how do that you get them into that state and every CEO is different and I don't care if you're a 25 year old CEO or if you're a 65 year old CEO it's going to be difficult to do and there's some that are better at it than others I will say you only have one chance certainly in the in this economy and this sort of you know fast pace of the internet world you only have one chance to say I'm sorry or to make a mistake you can't keep doing this this isn't like you know when you're a kid and you screw up and apologize your parents over and over again you only get one shot at this and I think you you know you have to play it absolutely as Owen says not defensively but but but incredibly delicately so where you're you're you're explaining the situation taking a hit doing a Mia culpa but also making it clear that moving forward this will not happen again the problem is that you get these situations where you might set precedent I think that's what happened with Airbnb they have one person that's complaining saying they got robbed saying all this stuff happened and they're saying well for you if we go after this one work that means we're going to address every single person and that's not scalable I guess is what they're thinking and then it just blew up and and they should have addressed it right then and there and they need to figure out what that means from from from procedure moving forward so with Airbnb there were all these other factors like the you know they were worried the bad publicity around this was going to was going to destroy their upcoming funding round like you know investors would walk away if they saw but they can't becoming a mess but they made it worse so what has happened with what has happened with Airbnb I mean I think we're agreeing here that the Gawker story notwithstanding that Dave morons apology while perhaps 24 hours late was appropriate but the Airbnb CEOs name slips my mind at the moment forgive me Francesca Brian yeah Brian's apology maybe was a little too defensive what effect has that had on Airbnb me and Brooke you said that you only get one chance but if you look at apple and then tena gate and then Foxconn and you look at facebook and the ongoing privacy flaps we in in the in the journalism world and in the in the commenting world say you know our apology are being angry at these companies will tear them down but then they just keep coming back and swung up over and over again and why I clarify i should clarify i think its size of company matters i mean i think that apple and whether it's oracle or facebook or whatnot these guys they have the ability and the flexibility to make these mistakes and keep they're not going to go anywhere after them I'm talking about the startup world the startups that are building a base that is so crucial like an Arab a B&B it's you can't make those mistakes over and over again it's just that the people will stop using the service there will be such a fear that Seth in but I think what I've seen from airbnb is that some people are affected by it truly but others sort of moved on and are letting it happen and see if the experience is good for them then it's gonna be you know something they continue to use until it happens to them so I mean we're all driven by fear and greed right in almost anything so often we over play as journalists Rafe you and I overplay the fear and underestimate the greed and greet you know by greed I don't I don't just mean like Wall Street let's make a lot of money greed greed is I want something with Facebook for example it's I want more connectedness with everyone who's touching my um and so the fear of like oh I'll be somehow exposed is much smaller than that desire for connection on and I think I think the same thing is true with half like okay yeah we're we're abstractly afraid of this idea that you know a copy of our address book is on path servers but really we're much more greedy for that you know for that ability to share every little moment in this really beautiful interface on our you know on our phones with our friends well what is the CEO to do I mean again to bounce between these two worlds how Brooke do you teach a CEO to listen to the zeitgeist of what's happening it's really important I mean one of the things we have to find the balance of is and I've always called it and I've said this publicly sort of the under 35 year old over 35 year old CEO the ones that are under 35 are reading the comments well read comments and blogs will read the tweets will read all these things and they will and I know not meant to the grand generalization but I see this with a lot of our younger CEOs and they understand it in a rationalize and they understand even if it's negative they move and they're incredibly diligent about responding to each and every person as much as they can you'll see like a Daniel Eck will do that when when talk communicating with people and spoke via Twitter around Spotify the older CEOs get very emotional they'll see those comments they'll get very reactive they get very emotional response and that's a more difficult situation so we have to help them sort of not not react quickly not do the knee-jerk reaction not fire off a comment on a blog post which I'm sure you've seen rave people do when they get mad at you and they'll you know flame you out an a in a comments and that's something we really need to control because even if somebody is you know we think they should go after and say listen I think you're wrong in this article there's a better way of doing it and it needs to be a direct you know less defensive not emotional reaction speaking of that oh and I want to throw this riff off of that and throw the two hour Cathy Brooks our friend in the chat room is asking what role does the media have in either educating or fomenting these issues what's the responsible take of of any of our businesses when one of these things blows up well you know I think I think that the the interplay between Gawker and TechCrunch on on the issue of what did paths say and when did when did they say it about about address book data uh that's that is a great example of what people call it of journalism now a lot of people rip on this because it means you make mistakes you correct things as you go um you know in the media but it gets more facts on the table and I think that is the number one duty of of media is to put new facts out there you've got to you that's a story but the fact is kind of a loose phrase at this point but I mean what's the thing in this in this day and age as we know I mean a small little rumor that may never have even been a problem or a small crisis which never would have gotten out beyond the you know the walls of a company now in social media is out before the person is even you know hung up the phone and so that and it's getting out there and there's so much misinformation and as you say oh and people are writing and writing and writing but the thing is though the right coming once and it may be wrong and they'll go back and fix it but those eyeballs may not go back and read the correct version right so a lot of work information put out there and it just becomes you know and that's why it's so important for the company to get ahead of it so quickly and and not waste that opportunity to get in front of their users not least this as a time to then step forward and get their statement out there quickly so the misinformation stops market ven mockers who is a former communication pro over at outcast and now at Andreessen Horowitz a partner over there has this great line which she repeats it I don't think she made it up it's when I was talking her about that she said never waste a crisis discuss that what is that is that something you agree with and how does a business like a path or Pinterest which also had a flap this week or Facebook or any of those guys how do they not waste the attention that comes from being in a crisis well I'll jump in Pinterest is absolutely wasting a crisis here because they've just been absolutely silent and this has been bringing with it in 10 words or less bring us up to speed on well crisis which pinterest crisis I mean there's there's the the affiliate the affiliate links I so that's this week's scandal and the latest one though is is accusations of Facebook and email spam um so the first one pinterest takes links and and they've not as far as i know pinterest has not come out and publicly acknowledges in a new statement but their partner skin links has said yes we do this for Pinterest Pinterest takes links and adds a bit of code so that they get a cut a kickback from amazon or other e-commerce sites whenever someone clicks on a link and buy some frickin serious business model is is it's very common and I you know everyone does I didn't think it was shocking but they but a lot of people what was shocking is that they did this without telling anybody again it's the under disclosure issue so going back to the topic how is Pinterest wasting this opportunity to communicate and and let me tell you why actually this is more sensitive than people understand interest core community is design blogs it's people in creative industries and a lot of these people have their own blogs where they are actually making money off of affiliate links and that's big you know that's you know not insignificant revenue source for them okay so Pinterest has co-opted them and said this is actually a better place for you to do this then your own blog but now Pinterest is making money the way they used to make money and no one's really talked about that and it's it's you know I I would be very disturbed if I realized oh this is happening pinterest has a great way you know you want to talk about not wasting a crisis I suggested this in my column pinterest should say you know what we are cutting in all of our pinners fifty percent on affiliate fees anything off of your pins you get fifty percent of the affiliate money we make and their business would explode and they they would get a lot of goodwill well whether or not they can do that I I certainly agree in that they have wasted this opportunity to come out to connect with their users and to offer up a statement i mean we're an amazing space right now where people can connect where the users consumers feel this this emotional connection to the companies for which they are participating and that's why everybody reacts his way they do we didn't have the same thing with you know with a car company or you know any of the brick-and-mortar companies we grew up with now we have a faith to CEOs or we feel this connection we feel we know Mark Zuckerberg we feel we know Dave Morin we feel we know these people and this gives them an opportunity to connect and when you don't use that opportunity you lose that connection with your users that Ben Silbermann is such a cipher frankly like he needs to be out there much more and I you know my senses he might be shy but that's you know know if you shy in this business you know can't be shy um finally I want to ask you guys how many of our viewers and listeners are starting their own businesses how do you evaluate your exposure your risk profile to a blow up like this how do you know I mean path should have known pinterest should have known that they have this exposure how do you audit your own exposure to this well from a communication standpoint i can say that sometimes you know their communications people if it's a start-up they may not even have internal people they won't know so it's not like they're even advising them to do or not to do I hope that the companies out there learn from these mistakes and realize that in this day and age we have to be transparent there's I mean something is going to get uncovered whether it's a rogue engineer that's like this is or whether something accidentally gets out you just can't play these tricks in these games I'm sure you know there's a lot going on that we don't know everywhere but a lot of the dirty laundry has a way of getting out there and you need to be incredibly transparent these are little things that may may soon get bigger and you may think oh it's not a big deal we're going to roll it out in a couple weeks its timing is everything so you have to address it be open be transparent from the get-go own innate no words I I think you have to pretend that you are a you know bloggers at Gawker or you know whichever site is your worst nightmare and ask yourself what would you write about this company if you knew all of its secrets and are that's a terrifying phone and then plan accordingly Jesus I'm gonna have nightmares at night now just on that one cocker in my head yeah all right well on that scary note oh and Thomas is a writer at the Daily Dot and founding editor of that site Brooke hammerling is founder rupee are really good communications company I they can be reached Seether Twitter handles are at Brooke with an e at the end and at owen thomas and for notes and all of that go to the reporters roundtable site blog on on cnet Brooke Owens thank you so much for making the time really appreciate it thanks everyone for watching Steven thanks so much for producing and we'll see you guys all next week take care of