Crisis Communications 101

Sonal Choksi: In this evergreen episode from April 2017, we dig into the basics of crisis communications with A16Z's longtime operating partner for marketing, Margit Wennmachers, and Kim Milosevich, the chief marketing officer of A16Z Crypto, in conversation with me, Sonal Choksi. This hallway-style discussion covers everything from making a plan before a crisis happens to what actually constitutes a crisis, who needs to be in the war room, how to involve or not involve the media, and more. Because ultimately, every crisis is an opportunity for companies to change their cultures and become a better business.

Sonal Choksi: Hi, everyone. Welcome to the A16Z podcast. I'm Sonal. Today, we're talking about the tricky topic of crisis communications. This episode builds on a previous podcast we did around the why, when, and how of PR or public relations for startups. Joining us are Margit Wennmachers, who heads up marketing at Andreessen Horowitz and previously co-founded the OutCast agency, and Kim Milosevich, who is also at OutCast and is on the communications team here, and was formerly at Skype.

Sonal Choksi: In this episode, we're doing one of our hallway-style conversations because it's one of those topics that's seen through the outcomes only, but the process behind those outcomes matters a lot. While it may seem obvious to those of us who are on the inside, it's a bit of a black box for those who aren't familiar with Crisis Comms 101. Both Margit and Kim are longtime veterans of PR and have observed and participated in crises with companies of all shapes and sizes. But since the first golden rule of crisis management is to never talk about what happened, we can't share specific examples. So instead, we focus today, especially given recent news and political events, on the nuances and mindsets behind getting through a crisis. From identifying one to fact discovery, to making a statement, to what happens after.

Margit Wennmachers: The golden principle is to never waste a crisis because something is happening at or to the company that's not for customers, employees, or whatever the case may be. And then it's an opportunity to make the company better as a result. Yeah, there is the layer of what are the articles and what do they say today? But there's the deeper layer. It's like, okay, so what can we do to improve the company so that it doesn't happen again and so that we come out better on the other side? And I think people think of a crisis often as a press thing versus a business thing. And they're both. Oftentimes when companies think they may have a quote-unquote crisis, it is more of an internal situation that needs to be handled. Of course, you always have to think about how you'd handle the situation should it become public. But it's many times all the things you have to do before it becomes public. What got you in that situation in the first place, right?

Kim Milosevich: Definitely want to think about that. And in addition to thinking about, well, if we get sued and it goes public, what do we say? So what you guys are saying is it's not just something you kind of make go away. Also, so that's kind of hard to do, make stuff go away. Right. There's media and people that hold you accountable. But the goal isn't just to like contain it, but to actually turn it to opportunities, what I'm hearing you guys say.

Margit Wennmachers: Yeah, I mean, I would be cautious about saying what opportunity can we make out of this? Because in some cases, there's maybe not an opportunity. So I know, Margit, you talk a lot about what's the brand opportunity here. I think it's more like your brand is defined by how you handle these situations versus you taking a moment to say, how do we turn this into a brand opportunity? Yeah, I wasn't trying to be opportunistic. It's like, what is happening at the company that got us into the situation? And what can the company do to become a better company? The way you handle yourselves is very much determines how people feel about the company overall and also this situation.

Sonal Choksi: Well, this is great context because I would actually like to break down what is a crisis. I know that sounds like a very existential question, like what's a crisis? But how do you define a crisis? I mean, is a crisis that just because your CEO is freaking out about something and you're in charge of comms and you've got to worry about it and that's good enough of a reason? Well, it's anything and everything that negatively impacts your business and how people perceive your business. So it can be getting negative press because of something, but it can also go all the way down like an oil spill, right? All of those are crises. It's not like your CEO or somebody having a bad day or somebody being annoying on Twitter.

Margit Wennmachers: I think the thing that's often overlooked in a crisis that's very important is like, what's the culture around crisis? Because what happens is the proverbial S hits the fan, then there's fight or flight and people often want to hide stuff. So you want to create a culture around when you're in a crisis moment, honesty and being transparent is prized and highly valued because you're not going to get to the truth otherwise. What you're saying here is that you have to have this baked in before there's an actual crisis. And that's also baked into your culture. Like you can't just suddenly manufacture out of the blue these values of transparency and openness.

Kim Milosevich: Yeah, and I think urgency is another really important one. Having that baked in before you go into a process like this or have to face a tough situation. It's like how quickly we're all going to get a room to figure this out, move forward, respond to emails, get together and do meetings. Who needs to be in the room? That needs to be sorted out beforehand. And then what level of urgency are we all holding ourselves to to quickly come together and take this seriously and make those decisions? Because that right there could really make something a lot worse.

Sonal Choksi: I actually think there's a tricky bit beforehand. Sometimes people don't actually know when they have a crisis on their hands. So how do you actually know this is a crisis? Oftentimes when the communications folks get involved, like, you know, there are 13 people who have been watching something. Yeah, before it actually happens. A large oil spill is fairly obvious, but there's a large gray area of what constitutes a crisis. And that's why I think it's important to have all the key players, your executive team, have an antenna for, oh, this could be bad and call it so that the process can kick in. So you're right. People might silently be observing things for ages, but they don't speak up. They don't think it's big enough. There's not enough coordination. Like what's the right place for that conversation to happen? Well, hopefully, the comms person is a first-class citizen and is part of the management team and you bring awareness. You overhear things like this could actually be a really bad thing. Let's dig into that. And you just, you know, constantly make a part of the conversation.

Margit Wennmachers: I think just staying fairly paranoid is probably a good thing in this situation. Stay paranoid. You know, a lot of companies may discount how high profile something could get. Like, hey, nobody cares about us. We're really small. This is something every company goes through. This reporter who's asking these questions will go away if we don't respond. Look, we live in a fairly heightened environment now, especially in tech. And just to break it down for why, why do you think that is? Tech has become a power center. And it has a big impact on the world, however you view that. And I think that invites more scrutiny and rightfully so.

Kim Milosevich: Yeah, and a lot of these, you know, you look at Facebook, for example, Google. I mean, these are communities that are much bigger than countries. People are saying Facebook's bigger than the Vatican, the Catholic Church probably. And some people even argue they have more power than governments. Right. It's something that we're all using every day. So incredibly important. Look, these young companies, they're raising a lot of money. These founders are getting an immense amount of responsibility very quickly and very early, a lot of times before they have a chance to build their leadership skills and handle a lot of these situations. It is often sometimes difficult to distinguish signal and noise, but regardless of whether it's coming from media or, you know, the blogosphere or other sources. Your employees, your customers. It could be anywhere. If there is a signal, that's what I'm hearing.

Margit Wennmachers: Recognizing it. But then from that point on, take it seriously and get those right people in the room. My mantra, never waste a crisis, often is the impetus for people to actually build the crisis plan and the process and whatnot. Ideally, you do that before. And you have the right culture in place. So if a crisis happens, like, what will we do? They're sort of like modeling out what are the different scenarios? What is the process? You want all that predefined. So you're not coming up with like who needs to be included and this, that, and the other. So let's talk about the very first moment. Like there's a crisis. It could be a really bad media article that's slamming your marquee product line. It could be whatever you define as a crisis. What's the very first step? Kim, you mentioned a room. Like do you actually book a room and talk about it? You might not be able to get all those people in the same room. And it might not all be people within your company. And is it a war room? I mean, like people call it a war room. But oftentimes it's a dedicated phone number because everybody lives virtually. Legal, you got to have legal. That's incredibly important. Isn't it dangerous to have legal in the room? No, that makes the conversation privileged, which protects you.

Kim Milosevich: Okay, so explain that to me. If there's a lawsuit, for example, and you get deposed, right? If you're in the conversation with your lawyer present, that's a protected conversation. That also means any email conversations that happen, there has to be a legal person on those emails. I mean, first, it should be a phone call to legal to help them understand, brief them on what's going on. Bring them into the loop and also get their advice on how we should be handling this. Some of these companies are still fairly young and maybe they don't have a general counsel yet. So you're also bringing in external counsel. And sometimes it's a combination of both. Sometimes you need a particular legal expertise, let's say in a patent case or whatnot, right? So there's legal, there's the key stakeholders. And who do they typically consist of? Well, it kind of depends on what it is. If it's a personnel matter, for sure HR is involved. Right. If it's a customer matter, the person in charge of customer success for sure is involved. But that kind of depends on what the flavor of it is. And then it's very important that the people in the room can actually make decisions. Can this should the CEO be there? Yeah. Unless the CEO wants to outsource the crisis. Or unless the CEO is the problem. Well, there's that. OK, so the other people in the room are usually decision-makers. They should be empowered to have decisions. Or the people who like fixed the problem or were first aware of the problem or the technical expertise to understand the problem and present it, right?

Margit Wennmachers: Yeah, but what if people, I mean, come on, these guys are building startups. What if they're too busy? Like can't they initially outsource some of that information-gathering phase? Look, if it's a crisis, it's something that fundamentally impacts their business. So you need to have the most senior decision-makers involved. Of course, this is going to change if you're talking about a Google-sized company versus a 200-person company. Right. It could be like the person that runs AWS versus, you know, the CEO. But let's say Netflix went down. I think Reed Hastings would want to know and care and do something about that. Right. And then you have to be able to move very, very fast. So even things like what is the first response that we put out? Let's say we put out a quick thing on Twitter acknowledging that we're working on it. Like that needs to be done pretty quickly. There's a whole other audience there that you have to be considering, which is policymakers. You know, are we in a highly regulated industry? So that puts a whole other spotlight on you and you have to be incredibly buttoned up. You know, people are watching you. Maybe we need to communicate to them before we communicate to the public.

Sonal Choksi: The question I have is there's a lag often between when you have the facts and when you know what the truth is and when you're just information-gathering and you have an initial response and then an actual response. So kind of walk me through the micro and macro of that. The fact-gathering phase can often be more complicated than you would think. Sometimes people are not, you know, you don't get the full version the first time around. Some people don't know because they've been told something by someone else. And then it can take a long time to actually gather all the facts because in some cases, there are lots of different parties involved. Sometimes the parties aren't speaking to each other. Everybody has sort of their agenda or a hurt feeling. So it's just hard to figure out, okay, what's the actual truth? Sometimes when you're in our position, it feels a little bit like you're being handed a bowl of yarn and then you start pulling and you gotta unravel it and then figure it out. Other facts come out and you have to sort like what's actually true versus not, and it's sort of this long drawn-out process where if you are on the other side handling out information, just hand over the entire sweater, like share everything that could possibly be relevant. If you have all of the facts, then you have all of the good, all of the bad, all of the potential problems. And then you can really do a comprehensive job of improving what is wrong, either culturally or legally or product-wise or whatever else. Right. So just put it all out there and then the business can do what the business needs to do. The people can move forward the way they need to do. And then the PR person can represent the right level of information correctly.

Kim Milosevich: But the underlying values that I'm hearing is first, like first to really trust your PR person, like your comms crisis person, like tell them everything, even if you don't think it bears on it or doesn't, because they're the ones who have to knit it together. And they're often going to be your voice publicly too, because PR folks are the ones who are taking all the calls from the media. They're representing you and they can't represent you well or accurately or fairly if they don't know what the facts are. And the other value besides trust is this openness I'm hearing, because I think the instinct, what I think of therapy as an analogy, what's the point of hiring a therapist if you're not going to tell them the truth and you're just sharing the same lies you lie to yourself without talking to them about it. No, I'm serious. Like if you think about it, like a crisis feels like a moment of therapy with you and the CEO. And not to minimize it. If there's a problem at the company, you know, I think people assume that people lie, but people do also sometimes lie to themselves because what is really going on is sometimes very hard to face. It's a psychological thing.

Margit Wennmachers: Well, they often are feeling attacked. You know, it starts with, let's say, a claim somebody's come out to make about your company. It could be a lawsuit from another company. It could be a story that's coming out and, you know, trying to do an expose on the company or make a claim. And so, you know, you immediately are put on the defense. These founders, these CEOs, it's their company. It's their baby. So, yeah, I think it's normal for it to become a heightened emotional situation. And with that, it's going to come some therapy. And there's a bit of detective work that needs to get done. And some of the folks involved may not understand what information is most relevant to what you're dealing with. And so you have to ask really smart questions. Our job is to ask all those paranoid questions to figure out, okay, that's normal to you, but that's not normal to the regular world. Isn't there sort of a phenomenon here? And I've noticed this in particular with tech folks. And I've worked with those kinds of folks for a long time as well. Is that there's this sort of belief of truth is what's in code and what sort of like the sort of neutral idea of facts. There's a surprise that perception can be reality.

Sonal Choksi: Well, you also have to think about the current environment and what's going on. Like, what are the media paying attention to, chasing? So, you know, we all experience Theranos. We all experience sort of what's been going on with Uber recently. There was Zenefits last year. There are, you know, these companies that go through these big media cycles. And so that's very much on people's mind. And so when you can see maybe similar patterns or... Yeah, they become reference points, right? Is this like that? Sometimes these comparisons, you just get lumped in and it is unfair. Where companies, they're just mostly very specific situations. I find it most often happens to maybe companies that are misunderstood or maybe haven't done as great of a job with their story. They might get lumped in because people just don't understand it as well. So it's like spotting that. And then the process kicks in. And there was this other loop that you identify the crisis, you do the quick huddle, and then you have these daily or hourly phone calls. And just know that usually every one of those calls, they spin up another set of activities.

Margit Wennmachers: Yeah. So for example, you have a product problem. Well, should we do a recall? Right. And then somebody has to go into like, well, what's our inventory? How many products are affected? How much will that cost us? Right. And do we have all the right people together to help us figure this out? So in some cases, you may need to hire a crisis firm. These types of folks are very accustomed to actually jumping in very quickly. What are some of the tips you have for thinking about crisis firms versus regular PR firms? Like, what's the difference? I mean, do you do a Google search like crisis PR firm? How do you find these people? If you do a Google search, yeah, names would pop up. But that business is so discreet. It works purely by referral. Yeah. And if you work with them, then you know, like, oh, they handle this and they handle that. But like, they can't talk about their work. So it's purely a referral thing. They can't put all their clients on their website necessarily. So there's the identification of the crisis, a quick huddle with all the key stakeholders to quickly figure out if there's an initial response. And then there is the getting everyone together to actually talk about the what and the fact-gathering phase. Right. And then there's how do we respond after we've done the fact-gathering? What happens if fact-finding takes too long and you need you feel this urgency to respond?

Kim Milosevich: Crises are schizophrenic because you do need to show that you're on it. But I think people often over rotate on having the statement. I actually think the way to think about it that's more important is, okay, so people have a certain understanding of your company before the crisis. And when it's all said and done, what do you want them to think about the company after the crisis? And you do get some time. And then can you put it behind you where people go like oh that VW, they cheated on their emissions testing. And this is what happened. And now I can buy that car again. That's the, that's, and that can take a while. Yeah, I would say though that a big claim is levied or a big accusation is made. There is, I think, a kind of a reasonable time in which the company needs to respond. So strike the just right balance of response and urgency. Yeah, it was more of a yes and. It's not like you go quiet in the time that I'm just saying in the arc of history, do you actually get to end or does it permanently tarnish your organization? People just don't think about that. Right. Don't over rotate on the response at the expense of actually trying to figure out what it is.

Margit Wennmachers: I'd love to get your guys' thoughts on the right way to do this, because you guys have said in the past, like, own it, own your narrative. And I agree, that's a good thing to do. But it feels like people are now sort of automatically playing this playbook. Like you just automatically issue an apology. I just totally freaking disagree. VW did none of that. They went through the legal process of how much they need to give their customers back. They could have saved themselves some time. So you're saying apologies are actually not as obvious as I think they are. I don't think that every company just automatically apologizes. I mean, I think some companies wait for like bad cycle number five to go like, all right, I may have to, you know, and then some apologies are just shitty, right? So I think Ben, I forget where this quote originated, but like when you eat shit, don't nibble. That's a Ben quote. So if you're going to own it, which if you actually screwed up, you should. And I think that is actually one of those things you do need to take time to understand what the facts are. Yeah. Because what are you apologizing for? And what are you apologizing for? You don't want to, I think, rush that too much because, number one, you want it to be thorough. You want it to be accurate. And you want it to be genuine. You want to apologize for the right thing?

Sonal Choksi: Yeah. Because if you don't have much of that, you're going to be in a much, much worse place because people are coming from a lack of understanding and they're probably going to assume the worst. But not everybody has access to top-notch PR and comms people. I mean, they might be starting out, they might have a very junior person working with them. How do they sort of get that sort of trust and currency if they don't already have it? You know, it might just be trust with their community. It doesn't necessarily have to be like through PR or media, but how much are they talking directly to their customers? Like what is that language that they're using directly through that product to handle things? So when we talk to people about building their brand, it's also like, how do you build yourself a really strong brand that can withstand some of these crisis situations where you can maybe come out on the other side, like better for it versus like even more in a deficit? Yeah, the analogy that I think we've talked about internally is like karma points. Yeah. You know, the bank. Yeah, that's sort of in my head. Like you basically have a bank account of goodwill, right? You have credits and debits. And if you don't build up any credits with your community, whether they be customers or employees or investors or press or whatever, and then you actually screw up. You're instantly in the red. And that's just really hard. That's a much bigger hole to dig yourself out of. I mean, honestly, the recurring theme that keeps coming up over and over and over again is it really does go all down to culture. So I heard you on the apology. What are some other things? So somebody's got to be monitoring what's going on. Like, what are your customers saying? What's happening on Twitter? If you have a big community on Reddit, what are they doing? How do you do that in a constructive way, though? Because I can't imagine it's very constructive while you're trying to figure this out. You already have all this information, these information streams coming to you. Do you have like an hourly report, a daily report? Does everyone look at it at once? Do you send a report to the people, all the stakeholders? Does someone gather it? If you're in the middle of a crisis in a war room, you can barely check your phone. How do you, I mean, kind of break it down for me, like tactically. That's why you have to have this core team that are in your either virtual or real war room who are, you know, all communicating with each other very clearly on here, what our touch points are going to be. So in this situation, we need to check back hourly or we're going to get back on the phone all at four. And here's what we're going to have figured out by then. And then here's who's in charge of this monitoring. Here's how these reports are going to be going out. We're going to come back at this time and figure out, OK, based on that, here's what we're going to do. There's also this element of some people do really well in a crisis and some people do not well in a crisis. And some people look very good at listening to like this is what the community is actually saying. And some people need to put their blinders on. A lot of the ability to manage through is sort of the ability to deftly manage, read the room, read the signals, understand who is good at what, who can handle what to get to the outcome that you need to get. One of the most important parts of this whole crisis scenario is what happens on the internal communication side. It is so important to be talking to the employees about what's going on. Ideally, they know if it's a big story that's going to break. They know about that story before it breaks. And they understand, you know, where it's coming from, maybe background, the real story, if it's different, what have you. How do you guys feel about balancing this tension between communicating and then leaks? So, like, what's the right level? Depends. There's so many situations. It's situationally very, very specific. I will also say you ought to start an internal communications cadence very early on. Don't wait for the crisis. You want to have built trust with the employees because let's say there's a lawsuit. Your company all of a sudden is in a lawsuit. You feel it completely unfair but like you are very much shackled. The lawyers are telling you this pending litigation. You can't afford it. You can't afford a leak. Even if you are doing an all-hands meeting and there's nothing written down, you know stuff could be recorded. People could leak it anyways. You just can't say anything. If you have established trust with the employee base beforehand, they will have faith that you're doing the right thing for the company and that you would be more forthcoming were you able to. That's great. So that is just important to establish way before you hit a problem. It's also, quite frankly, a baseline, like a truth barometer. It's like a lie detector test. Is this person telling me the truth from the previous conversations or are they talking really weird all of a sudden? How do we normally do those all-hands meetings? How do we normally email? Who do those things come from? What is the culture of our company and how is that so far shown up in how we communicate? And there is very much a reason to do the opposite. If you want to signal to the company, look, this is a big moment for the company. This is a make-it-or-break-it moment. You might want to use the opposite tactics. Which is? If you do an all-hands meeting, you might want to do an email and saying like, everybody drop what they're doing and show up right here to signal shock and awe. You just need to understand what the regular framework is and whether you want to use that regular framework or you want to counter program and signal a big moment that way. What's the point of that, though? Not hiding. We may not be able to answer all of your questions, but we at least want to hear them. We want to bring people together. It feels like a rumor mill, fertile ground for a rumor mill because everyone then peters about and just like you spoofes about it afterward. People are going to talk. Do that anyway. And then you can say like, like, I can't comment on this part, but like that doesn't mean you have to hide. Right. And it's also just like you said, just that you care about them. You care enough to bother. Exactly. So let's say you've done this, you know, there's two phases we've described. You have this information-gathering phase of fact-finding. You've been updating either publicly or internally all these different factors. And now we're in the actual response phase, like the formal response you might issue. So let's just go back now to the last phase, which is after the crisis. I think you divide this up in phases and I'm not even sure that actually worked because it's all one sauce from beginning. And sometimes you don't even know that it's over because there's always one other shoe that can drop. You think you're done, but you're not out of it. Morphs. There's more revelations. You get a new phone call and you're like, oh, shit, really? I mean, is there a way, though, where you kind of get all the information on the front end of it? No, no. You guys are just both like vehemently. That's not possible. That's not how it works. It's impossible to control. And that's why, to Margit's point, some people are better in those situations than others. Communications people are very comfortable in those situations because we're used to not being able to control. I was about to say, I would drive editor. We're in the ultimate. You're in the grayest of all gray zones, yet in the public light. And honestly, if it's public, sometimes you don't still know yet what all the facts are and who all the players are. I mean, stories get written and they can be wrong. They can be missing half the stuff. They can be really an inaccurate focus. It's just, it's a gray area. So there's no phases. And then there's the story that is out there externally and really trying to understand, okay, so this is how it's being perceived based on the information that they have. So how do we handle that part of it? And how do we factor that in? And how do you factor that in? Like, then do you then think like, OK, now we need to correct the record and give them the reality or that's OK? Well, there's a part of like, yes, you got to get the facts out there. You have to make sure you have all those facts first. And then you also have to figure out, like, what's your argument? Like, how do you piece it all together? What are those important facts to piece together for people? So what do you tell the reporter on the other end? More importantly, the question, this is the question I wanted to get at. What do you think about going off the record and telling the real backstory and then certain things on the record off the record? How do you manage that well? So it takes two to tango. Some folks are very open to off-the-record commentary. Some folks are not. Um, do you advise it though? I, I do, particularly when I have a trusted relationship. Here's where we're coming from and also here is why we are not commenting publicly. Right. Lots of very legitimate, very ethical good reasons not to go on the record. There are a million shades in every story worth reporting has a million shades of gray in it. So what happens if people don't believe you? You've got a problem. When you get arrested, something like that, your lawyer doesn't actually want to know kind of whether you did it or not, because their job is to defend you. I actually like to know really what happened, because once you lie to the media, you're basically fucked. So never lie. Just don't. Ever. Don't. Because better not to say anything? What do you do then? Do you say no comment? You can decline to comment. You can say like, I can't help you with that one. If you lie, you've just screwed yourself because the whole point is to get through this crisis and have customers, employees, and media believe that when you say something that they can buy the product or take the job. And once you break that, like with media, it's basically irrecoverable. Well, and they're just going to find out. Right. Also, there's an ethical component to it. Obviously, right? There comes a point when you're in our jobs, I was just like, you know what? You guys do that. I have to be out of here. And that is in tension with the other component, which is equally important, which is loyalty. Because you don't want to ditch, you know, a friend or a company or a brand just because the going got tough. That happens to everyone. But there is a line and every person has to decide for themselves, what is that line? Is there such a thing as a difference between a personal crisis and a business crisis? No. When you work for a company, you're just like, I don't know. I think this is like the biggest thing that I think founders in particular have to go through. If you're a CEO of a large company, you get it. You know, there's no separating you from that company. It's maybe harder for some of the earlier stage tech founders to have to go through and realize is that they think, okay, this is this very personal thing and I don't want it to affect the company. So I will go deal with this personal thing on my own. And they don't necessarily treat it like a company crisis early enough. And then they have to learn the hard way when it becomes a full-blown. Right. Because you're saying there really is no division between the two. There is no division. And especially if you're a founder CEO, you and the company are essentially the same. And even if the focus, let's say, of the stories are on the personal issue, guess what? Your company is going to be mentioned in every single one of those stories. So it becomes a brand issue for your company regardless.