Out For Blood: Theranos Orchestrates Bold PR Coup in the Face of Damning Allegations The $9 billion blood-test startup is facing allegations that it's struggling with its ostensibly groundbreaking tech. But is it taking the right approach to responding to the crisis?
By Geoff Weiss
Opinions expressed by Entrepreneur contributors are their own.
An explosive Wall Street Journal exposé last week about Theranos seemed to unceremoniously yank the rug out from under the $9 billion blood test startup.
The 2,700-word story, reported over the course of five months, alleged that Theranos has struggled with and neglected to use its proprietary blood test technology, which purports to perform a wide range of tests with the mere prick of a fingertip.
In response, Theranos has come out swinging, taking an approach that has raised more than a few eyebrows.
From a strategic perspective, the actions that CEO Elizabeth Holmes has taken thus far to quell the onslaught have been both bold and brilliant, says Juda Engelmayer, who oversees crisis communications at 5WPR, a New York-based public relations firm.
"If Holmes knows deep down that most of what Theranos is doing [technologically] is sound, then she is responding brilliantly," Engelmayer says. "If her gut is telling her to do this knowing that it's wrong, then that's a different story, because these are people's lives on the line."
Related: Are the 'Wall Street Journal's' Claims Against Theranos Accurate?
The day that the article broke, for instance, Theranos published a rebuttal on its website. And later that evening, Holmes sat down for an interview on Mad Money. "First, they think you're crazy," she told Jim Cramer with her characteristic gravitas, "then they fight you, and then all of a sudden you change the world."
Given that the company's website likely turned into a "ground zero" of sorts on the heels of the exposé, Engelmayer says that the company blog was shrewd placement. And promptly hitting the media circuit afterwards shows that 31-year-old Holmes -- who dropped out of Stanford to found Theranos and become the youngest self-made female billionaire in the world -- was "not backing down, not shying away."
But communications expert Tor Constantino argues that having Holmes go toe-to-toe with the media straight out of the gate was a risky move. Initially, it would have been preferable to have a third-party clinician or patient publicly vouch for Theranos' services, he says. "What you're saying is "Listen, here are individuals that have benefited. Let them tell their story.' It's much more meaningful and it comes off less like marketing speak."
In a curious turn, Holmes was scheduled to appear at a conference hosted by the Journal long before the story broke, and many wondered whether she would ultimately show. Both Engelmayer and Constantino agree that she made the right decision in attending. "Her showing up into the lion's den shows she's holding her head up and saying, "You guys are wrong and I'm gonna call you out right at your own event,'" Engelmayer says.
Constantino counters that the fact that Holmes likened the Journal to a "tabloid" -- one of the most buzzworthy soundbites to emerge from the appearance and one of the lowest blows one might deal a paper of record -- was unnecessarily incendiary. "It's never a good idea to pick a fight with the media," he says. "By constantly doing this tit for tat, they're keeping it alive in the news cycle."
Most recently, Theranos posted a point-for-point rebuttal of the Journal's allegations, citing the date in which it says it provided reporter John Carreyrou with each counterargument. When crafting such a statement, Constantino says, it's important to consider "what you're trying to solve for and who your audience is." Therefore, the protracted and highly scientific nature of the entry may have been ill-suited for a consumer website.
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Nevertheless, Engelmayer is confident in the company's ability to ultimately weather this storm. "This is not the response of a company that doesn't believe it's in the right," he says. "And if she's not in the right, then what she is is incredibly, incredibly ostentatious."
At the end of the day, given that Theranos is providing a product that could mean life or death, any PR strategy pales in comparison to the veracity of the tech itself. And because this can be ascertained via testing, Engelmayer says, the truth will ultimately prevail.
"If she's not in the right on this, then it's going to have serious implications. Because not only is she begging the Wall Street Journal and other papers to come after her and start scrutinizing even more, she's opening it up to health agencies, like the FDA and other regulators, to be extra careful when they're examining the company."
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