Ep. 110: Failure is always an optionRafe Needleman, with guests Owen Thomas and Brooke Hammerling, looks at how different tech companies have dealt with failures and errors: Apple, Google, Facebook, Airbnb, and, most recently, Path. How can you recover from a public drubbing? How do you...
Hi everyone welcome to reporters' roundtable -- -- Cleveland San Francisco. And that today on the show we are discussing. One of my favorite topics failure. Failure as it turns out is always an option lease 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 turns out that they work. Absorbing their iPhone user's address books into their servers in order to match path users -- another -- users. Not necessarily such a bad thing but path didn't tell its users that they were doing it. And then followed a rather as -- when my -- called it a supine apology. And a further accusations about what path had been doing in the past. But this -- thing happens all the time companies are always making -- are all moving so fast they're gonna make mistakes the question is. How do you prepare for these mistakes and how to respond to them once they happen and what. What can we all learn from what path FaceBook Google Twitter Zynga on Netflix have done in the past when they've fallen on their faces. To date to discuss this really interesting topic I've got two old friends with me. First -- both dialing in person several Cisco here Owen Thomas who is founding editor of the daily dot you can follow his great work -- -- It's great to have your own and gained some notoriety himself after he worked for me red Herring. -- working at valley way he was -- -- like blogger for a while I'm very entertaining and insightful stuff over there. And quite controversial. I -- -- off -- anyway thanks -- for joining us. Also joining us from New York. And -- girlfriend -- camera Ling who is a communications professional extraordinaire. Who has built her own business. Doing exactly that to brew is the founder of brew PR which counts as its clients and big companies like next week -- -- And one kings lane which is just exploding -- thank you so much for joining us. -- me of course your companies have never made any mistakes happen. Well you know I did I mean we can talk about inserted -- mistake and that it's not how you handle it. So let's get into a -- into this today by talking about the one -- in the news right now we're of course which is passed. Why I just explain what path did -- Is this a tempest in a teapot or is this really a big deal. Brooke you first what -- think about the path flat. Well I think you know I think and I -- on -- -- cocker uncovered something trainee. Crucial air which if it's true then we have a problem because it's things that. The -- -- on the -- and that is. It looks like he had told. Valley -- cocker and whatnot that this had actually not they did not keep in date and that they deleted -- nothing has kept on and on their servers and not turn out to not be true so that's even bigger issue -- -- -- -- -- in the past and then approving in guy writing which they have -- need now. Absolutely not how -- that answer your question we don't save it and then boom and -- engineered shows that that's not true that's a real problem. So. You lose trust -- not. But ultimately anything -- people who have very short memory and it -- not I do think it's it's a -- and Nina -- -- burner. Shiny veneer of half a -- -- -- -- neighbor already Weathers. In terms of as the design -- not the first rounds on the version to resist their rebirth. And then -- you know thing knocks at that -- it. On what do you think about though the path -- fortunes -- than what's right now. Well I think. What's interesting is that the -- change so when they want they weren't keeping this information on their servers. Then very quietly before they launch -- -- -- -- welcome again. In March 2011. If -- if I understand correctly he started retaining. This data on their servers to develop a new technology -- -- -- -- which helps you find. You're critical real friends -- close friends the ones you actually want to share your you know your. Daily moments with. -- that's what app lets you do that's you know what's great about patents it's it's 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 knew we said in November 2010 that we're not keeping this on. Our servers we decided you know -- now -- 2011. We decided we're gonna keep it on our servers now because it helps -- -- cool things for you. Mom and you get it you're gonna have to click a button when you -- and the latest version or when you download the latest version and give us permission to do that. That's what they should've done in March 2. House and T didn't understand I don't understand is so easy right Amy indeed mean this big apology and then they've now made it opt in. But why we need in the history of how these things work when they know these things had a tendency to come out eventually why they wouldn't have done that at first it's a Brooklyn. That's -- it. It is. They can do this -- they didn't have to do this -- -- Sorry that's what you're gonna use dogwood Wednesday to comment on this is reloaded is very upset about this whole brackets -- Considering how it did -- -- user then it. They had another chance that it could've done this in March they also could have. Two weeks ago. They were preparing a new version this is -- sorry they said. We have this new version with the -- -- it was ready to go it's already submitted to the App Store. And -- missing work so why I like if they knew that they were going to do this that they were indeed create this new version. Why didn't they announce. You -- before and -- -- them. Eight we made a mistake that's what they're -- -- that we're sorry we made a mistake. But -- new they'd made a mistake already -- the moment which they realize they made a mistake the moment at which they realized they -- they had to revise their software. To make it opt and that's when they should have and 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 -- over CEO of path and his whole crew -- what was going on this -- you know we've got a craft a response to this that is appropriated and has this right emotional tone etc. And yet while they're working on that you've -- com enters all over the Blogosphere. Saying I'll never trust these guys are a bunch of scum they deserve to -- I -- I saw up -- like that pop up immediately after this thing happen and immediately after that gawker story which by the way it was. True but at a different time at a different time so that's that's how do you -- how -- -- council. Your companies to prepare for the incredibly. Fast and uninformed and emotionally violent stuff that comes out -- -- and anybody makes even the small also slip ups. Right well in that particular case -- I -- surprising that I started hearing about it Fat Tuesday me. Afternoon not early evening in that I don't think it came out -- eating -- any comment and how the following day. If you started to spread overnight but I mean that's something that they -- -- -- -- should have been mostly they should've addressed and immediately. I'm I'm not sure when the timing of the apology announcement you know there's there's some -- -- his steed storage. One accepts and acknowledges mistake and and then kind of goes into NASA's jet goes after the different audiences might not come but I I -- immediately I would have done a vehicle box. And in in you know there's certain levels of correct -- this is a big. -- mean there -- certain ones that people are gonna get all up in arms about. We can talk about current aren't even that that then direct the customer that company has eventually -- -- change I think Netflix and degrading MacBook. And you know so they didn't move very fast but then when they did it when they engage teens and they didn't make me -- call plug. It it turns people's impressions. Are sure yeah I but I I didn't. I don't -- apology. Was absolutely right you know I I I. Teased him what I -- -- -- this supine apology but that's what you have to do you have to roll on your back and just hunters -- Yup and just say I I I surrender I. Total total score you know you can't be defensive you can't beat even the slightest bit -- engine slightest bit defensive. On people will just tear you apart again. And I think that's what air Greenpeace -- like they were not. They were not fully apologetic enough they were a little bit defensive -- there are higher. Yeah and I mean. And even even -- widget defensiveness is enough to give your you know. Your critics even your -- your hands and feel betrayed his or even worse than the critics. -- something to it you know something to latch on to. It sounds like a very interesting emotional state to -- in for a CEO who I mean the air -- -- That the CEOs of of all these small companies in order to get to where they are they have to be extremely aggressive extremely. Arrogant to a point. -- got to raise lot of money hire people based on a promise. Put product out there that's not fully baked -- tested and instate of the world this is great and I'm great and were great. And you the users are great and it and then when they make a mistake which is gonna happen right. They have to go to this completely different emotional state and -- -- how do you deal with the CEOs who are. There -- there -- and every possible way and then they've got to roll -- Owen says which is right about the gonna roll over and say oh. I'm so so so so very sorry -- -- how to that you get them into that state. And every CEO and I don't -- -- 25 year old CEO Eric Harris sixteen -- CEO and I it's. Going to be difficult -- And there are -- -- are are better -- -- and -- I will say you only have one chance certainly in -- in in this economy in this sort of you know. Traps heat some of the Internet world you only have one chance to say I desire to -- commend you can't keep doing this isn't like -- when you're kidding you. Screw up an -- your parents over and over again you only get one shot at this. And I think you you know you -- -- -- it absolutely is and does not offensively but but but. Incredibly. Delicately so wearing your your your -- -- -- situation. Speaking ahead. Doing -- vehicle but also making clear that moving toward -- happen again. The problem is that you get these situations during -- press I think that's what happened an arrogant and beating -- one person complaining -- -- ironically all this happen. And -- thing while it if we go after it's fine for that means -- to address every single person not scalable I guess is what they're thinking. And then it has split up and and they should have addressed it right then and there and they need to figure out what that means. -- -- -- -- -- -- -- -- So -- in mid air indeed there were all these other actors like the you know they were worried that the bad publicity. Around this was doing you -- Was deleted on destroy their upcoming funding like you know investors would walk away at the sun. Bug but they can't behind us but if I need it works so what has happened with. What has happened with their being -- -- and I think we're Green here that. In the gawkers story notwithstanding that Dave mourns apology while perhaps twenty for hours late was appropriate. But done. The air being be CEOs names -- -- of whom forgive me ask Brian -- -- apology may be was a little too defensive. -- what effect has that had on the air being beaming Brooke he said that -- you only get one chance but if you look at Apple. An antenna gate and then -- and -- looked at FaceBook in the ongoing privacy flaps. What we and ink in in the in the journalism world in the in the commenting world say you know our apologies our. Being angry at these companies will -- them down but then they just keep coming back and its Apple over and over again. And relies on there I declare I think -- I -- company matter is I mean I want it I think that Apple and or whether it's Oracle or FaceBook or whatnot these guys they have the ability and that. Flexibility to make a mistake and they're not gonna go -- after not a target that the startup -- on the start up that. Are building -- main base that is so crucial like an air VP NB. It's you you can't meet those mistakes over and over again it's just that they give people will stop using the service there -- -- such -- each year. That -- -- but I think. Affected by actually but others sort of moved on it -- letting it happen and see if the experience it -- them -- it's -- You know something they continue to use and -- happens. -- we we were all driven by fear agree rate job in in almost any sue. Often we over Clinton as journalists -- united. Over -- fear and under estimate -- and Green you know by greed I don't I don't just mean like Wall Street let's make a lot of money reached readers I want something. With FaceBook. For example it's I didn't want. More connectedness with everyone humans touching my life. On and -- the fear of like -- somehow exposed. Is much smaller than that desire. For connection. On and I. I think the same thing is true with happily. Okay yet we're we're we're at sharply -- -- this idea that you know a copy of our address book is on -- servers. But really were much more greedy for that you know -- that ability to share. Every little moment in this really beautiful interface on -- you know on our guns to their friends. It what is -- CEOs to do I mean again to balance between these two worlds. How oak brook do you teacher a CEO. To listen to the the zeit text of of what's happening. It's really important I mean one of the things we have to find a balance that is -- I've always called it an end to the -- -- -- -- -- under 35 world over thirty I don't CEO. The one that are under that if I ever reading the comments will read comments and blogs will be the -- will read all these English and they will. And I and -- not and grand generalization I see this a lot of our our younger CEO and they understand and it wraps. In the -- -- even if it's negative if they move and there are incredibly. Diligent about responding to each and every person and I just they can you'll see I can -- Apple do that. When when -- communicating with people on a via Twitter wrapped -- Spotify. They'll all other is very emotional -- see those comments -- -- -- reactive they get very emotional response and that's a more difficult situation so we have to help -- that -- not. Not react quickly not -- knee jerk reaction not fire opera comment on her blog goes I'm sure you seen it. People do -- at -- -- now you know clean you out meaning -- in a comment and not something we really need to control. Because it even if somebody's in you know we think he should go after Aaron and say let's and I think -- wrong in this article. Here's a better way of doing and it needs to be interacts. You don't last offensive noncommercial. Reaction. Speaking of that -- wanted to throw this and if you rip off -- that and -- you are our Cathy -- our friend in the in the chat room and it is asking what role does the media have in. Either. Educating -- fomenting. These issues what's the responsible take of of any of our our business is when one of these things blows up. Well you know I think I I think that -- The interplay between gawker and techcrunch on -- On the issue of what it passe and when did when did they say it about about -- -- data. -- -- That is a great example of what people call entered journalism. Now a lot of people -- on this because it means you make -- you correct things as you go. On. You know in the media but it gets more facts on the -- and I think that as the number one. Duty loads of media -- is to put new facts out there you've got to and you -- store. The fact it's kind of a loose phrase at this point. -- mean that's the thing in this is if -- any agents we know I mean. A small little rumor that may never have even been a problem -- small crisis which never would've gotten out beyond the you know the walls of a company. Now in in social media is out before the person has even -- on the phone. -- so that in -- getting out there and there's so much information and as you say -- people are writing and writing and writing but the thing is now. The right to mean one and it may be wrong go back and exit it goes -- -- -- -- go -- -- -- a correct -- -- -- a lot of -- -- Out there and it just becomes you know -- in that's why it's so important for the company to get -- it so quickly. And and not wait that opportunity to get in front of their users not released this. As it as a time to -- then stepped forward and and yet there's eight out quickly so intimate information stops. A market eleven markers who is a former. Communication program -- and now -- and recent Horowitz partner -- -- Has this great line which you she repeats -- I don't think she made it up its what -- was -- her about the she said. Never waste a crisis. Discuss that what what does that do is that something you agree with and how does a business like a path or interest which also had a flat this week. Or FaceBook or any of those guys how -- -- Not weeks. The attention that comes from being in a crisis. What. -- jump in interest is absolutely wasting a crisis here because they've just been absolutely silent and this is entering -- of the in in in in ten words or less or -- a bring -- up to speed on all that well it presents this. Which interest crisis I mean there are you are there's the job -- affiliates. The affiliate links are best this week's scandal -- and the latest one though is. -- so the first one up interest takes links. Bob and and -- not as far as I know. Up interest -- not come out of publicly acknowledges the -- statement but they're partners in -- has said yes we do this for interest interest takes links and adds a bit of code. So that they get a cut but not a kickback from Amazon or other e-commerce sites. I'll whenever someone clicks on a link in buying some -- this seriousness business model like whether it is very common and I don't know anyone -- I didn't think it is shocking but they buy it -- a lot of people what was shocking is that they did this without telling anybody again -- the under disclosure issues so you're going back to the topic. How is interest wasting this opportunity to commute to edit and at and let me tell you why actually this is more sensitive than people understand interest core community. Is designed blogs its people in creative industries 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 that -- to. -- interest is locked -- and said this is actually better place for you to do -- -- your blog. All but now interest news making money the way they used to make money and no one's really talked about that and its its. You know I I would be very disturbed by realist though this is happening. -- interest has a great. Wait you know you wanna talk about not wasting crisis I suggested that -- in my dot dot dot columns interest should say you know what we are -- in all of our Anders. 50% on affiliate -- anything -- of your hands you get 50% of the affiliate money we end their business would explode. And -- they would get a lot of. -- While whether or not they can do that I I certainly agree in that they have weeks and suddenly come out to connect with their users into opera -- eight -- in Vernon meanings based malware. People can connect where the users consumers -- this this emotional connection. To the company's -- they are participating in that's why everybody reacts as rainy duke we have received inquiries act you know lately that car company or. You know any of the brick and mortar companies meager upgrade now we have eight CEOs date we feel this connection -- -- we know Mark Zuckerberg we feel we know would be more until we know. -- people and this is an opportunity. And when you don't use that opportunity you lose that can actually during his next. Out of that Ben -- such as sniper. Like he needs to be out there are much more and -- You know my my -- -- he might be -- but. That is you know not anti science. -- can't be shut com finally when -- ask you guys and I. Many of our viewers and listeners. Are starting their own businesses how do you evaluate your exposure your risk profiles to a blow up like this how do you know. I mean. Path should have known interest should have known that they have this exposure. How do you audit your own. Exposure to this. While from a communication and dragons and sometimes you know the communications people -- if it's a start up -- -- I haven't heard of people they won't know. So it's not like they're even advising them to do not hope that the company about -- -- -- needs to stay on and realize that. In nifty names we have to be transparent there's mean something is going to get uncovered -- it's a road engineer and it's like as it pulls it. Or whether something accidentally gets out he just at least six -- these games I'm sure you know there's a lot going on -- we are now everywhere by. But a lot of the dirty -- has -- getting out there and you need to be incredibly transparent either little things that -- Me as soon get bigger and you may think oh it's going to be you're gonna roll it out a couple weeks its timing if everything's got to address it. Be opened each has -- from the get. -- -- -- I I think you have to pretend that you are eighty -- you know a blogger ad blocker or. You whichever site is your worst nightmare and ask yourself what would you write about his company -- -- all of its secrets. I listened carefully follow and then plan accordingly she is is I'm gonna have nightmares at night -- -- an outline. Cocker and I had. Do that aren't well -- -- -- scary note. Owen Thomas. Is that writer at the daily -- founding editor of that site prepare drilling is founder -- are really good communications company. I say they can be reached out cedar Twitter handles are not at Brooke with -- -- the end and at Owen Thomas and for notes and all that go to the reporters' roundtable. A site blog on a on CNET. -- Owen thank you so much for making time really appreciate it -- -- -- for watching Stephen thanks so much for producing. And we'll see bezel next week to carry one.