How Not To Handle A PR Crisis: Learning From FTX And Other Calamities

There are some special human beings who move through the world effortlessly. Behind them, they leave a silky wake of smiles and ease. Misunderstandings are rare. And, when they occur, they are deftly defused, all parties eloquently pacified with diplomacy, tact and charm. 

This is what good PR does.

Consider those who can communicate well enough, but who lack that extra something, some panache or elan. Or those who perpetuate misunderstandings when meeting a crisis, rather than dispelling them, leaving behind only mistrust, ruffled feathers, and a bad atmosphere. 

The lesson should be clear, especially in the corporate sphere where public perception is as important a currency as money itself.

The Collapse Of FTX

Even the best PR would find it impossible to have fully defused and dispelled the debacle that was the collapse of FTX. In normal times, a good PR team would help a company like FTX to navigate the complex regulatory landscape and communicate to stakeholders on matters of compliance and relevant regulations. But when crisis hit in November, its liquidity drying up and customers demanding withdrawals, damage limitation seemed a forlorn effort. Nevertheless, there are lessons here.

Running counter to the received wisdom, in the immediate aftermath of the crisis FTX CEO Sam Bankman-Fried gave a flurry of interviews to media outlets, even launching his own Substack newsletter. These efforts have proven ineffectual against the momentum of perception, and they may even work against him in court proceedings. 

Generally speaking, at such times, “less is more”. But it can be tempting for famous and charismatic founders, who have had great success in the past, to remain in the spotlight when a more measured approach is paramount.

Crisis Management Planning

It is intelligent practice to develop a crisis management plan ahead of time, to ensure a rapid and effective ability to respond. This includes preparing and practising crisis scenarios, determining key stakeholders, establishing clear and consistent communication channels, and the preparation of messages and designated spokespeople. Successful crisis management is founded upon preparation and positioning. While some crises can be anticipated, most cannot. A crisis might entail product recalls, security breaches, corporate miscommunications, bad press and so on. 

Today, just one negative article can have a devastating snowball effect, as seen with the CoinDesk article that initiated FTX’s fall from grace. Handling a crisis revolves around timing. Immediately leaping into action should be resisted, until all the facts have been gathered, as backtracking and contradicting previous statements can further damage reputation. Equally, delaying too long is corrosive to public perception.

Repairing Reputation In The Aftermath

So now we are witnessing the cascading effect of the FTX collapse upon the wider crypto industry. As damaging as the narrative has been, there are PR opportunities. There are almost always PR opportunities. Now is a time to build credibility with journalists, for example, and to help them navigate the aftermath and shifting landscape. 

Trusted relationships with journalists are an ongoing win/win for PR and media outlets. Good PR involves intricate familiarity with, and responsiveness to, relevant journalists and outlets, understanding their specific beats, target audiences, and preferred communication methods. This can also include providing insightful commentary and thought leadership on industry topics, and availability for interviews and quotes.

In such a time as this for the crypto industry, good PR can aid the creation of strong messaging with which to cut decisively through choppy waters. In crisis management, this is where PR shifts its efforts from damage limitation to recovery. Focus switches to repairing reputation, restoring stakeholder trust, and making changes to prevent similar blow ups in future. 

During this time, rival exchanges to FTX, such as Bitstamp, have appeared in the media, distancing themselves from FTX’s practices while assuring customers of how differently they deal with their money. This is good, even essential, messaging.

Others have rightly countered the narrative by focusing on lessons the industry must learn, not least in returning to the roots of blockchain technology, and pushing for clearer regulation and more transparency. This is part of the phase that entails taking responsibility, key in the aftermath, demonstrating also a concern for aggrieved parties and a willingness to learn and improve.

Responsibility, Trust And Sincerity

In January, cloud-based software company Salesforce CRM told 1,000 employees via email they were losing their jobs. The following day, the company's CEO, Mark Benioff, held a two-hour meeting, the details of which were leaked and circulated widely online by disgruntled employees. According to this, Benioff dodged questions, blamed staff and even likened the terminations to deaths. 

This PR disaster smacks of yet another headstrong leader eschewing communications guidance on how to handle himself. To recover, crisis mode must once more be deployed, limiting communication to a carefully honed message centred upon immediately recognising the mishap and taking responsibility. This should be delivered by a single, well-briefed spokesperson, addressing those affected with empathy, and sincerely demonstrating the lesson to be learned.

It goes without saying that you don’t want your brand connected with the “worst” anything “of all time”. But this happened to Yahoo in 2015 when it suffered the “biggest cybersecurity breach of all time”, affecting more than a billion accounts. However, that label wasn’t immediately applied as the company initially conducted a cover up. Two years later, the hack was finally disclosed when Yahoo was in the middle of an acquisition deal with Verizon. The ill-timed revelation resulted in $350 million being scrubbed from the price to cover the potential impact of the breach. This might have cost a lot less with honest and effective PR handling earlier.

Trust and sincerity are watchwords in public relations. If trust is damaged, only sincerity can repair it. A crisis which was deemed handled without sincerity was Facebook’s META Cambridge Analytica scandal that broke in 2018, raising serious data privacy issues. While Facebook admitted to it, they stopped short of taking sufficient responsibility. Too light a PR touch can give the impression of sweeping the issue under the rug, as if to hope the public will forget. A good PR team will gauge the right amount of messaging at such crucial times. In this instance, the crisis changed the way many viewed Facebook and its attitude to user data. 

In Conclusion

It is well-planned and skilled PR that can enable a company to convey itself with the sang-froid of a smooth operator. Forewarned is clearly forearmed. Knowing oneself - or one’s company, in this case - and one’s audience, are also requisites for that special level of communication necessary for achieving and sustaining success.

As in the best interpersonal human interactions, it’s all about honesty ultimately - with oneself, one’s responsibilities, and the waiting world. Honesty improves everything and everybody around because there is no hiding place. It’s what we want from each other, and what all of our publics want from us, too.