Episode 21 | Former Netflix Exec on Managing a Crisis (‘HIT’ Can Help) March 06, 2022

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GUEST: Steve Swasey, former Netflix vice president of corporate affairs; career communicator (Netflix, Kabam, Oracle, Red Ventures)

As former vice president of corporate communications for Netflix, our guest Steve Swasey had a front-row seat to Netflix’s near-disastrous decision in 2011 to split its video streaming and DVD services. The backlash was swift and threatened to sink what, to that point, had been a highly successful company. In this episode, we talk about the missteps and miscalculations that led to that decision, the subsequent reversal of that decision, and, ultimately, the measures Netflix took to get back on track.

Those measures largely reflect a set of principles Steve believes help businesses succeed over time. He calls it HIT (Humility, Integrity, and Trust) and has seen it work across multiple companies and industries. We also talk about the decades he’s spent counseling senior executives on ways to better connect with their employees, customers, investors, and the marketplace, as well as how to weather professional crises. Does he believe there are CEOs willing to follow the three principles he espouses in his HIT approach? The simple answer is yes. For the longer answer, we delve into what happens when they commit to that course of action and what happens when they don’t.

GUEST BIO:

Steve Swasey is a longtime communications specialist who has helped companies large and small shape and share their corporate narrative. He is a senior communications adviser with the media company Red Ventures and is a mentor for Road to Hire, a program that connects underrepresented youths to high-earning careers through paid technical training and college access. From 2005 to 2012, he helmed corporate communications at Netflix, and provided guidance and communications expertise during the company’s challenging transition to streaming services. He has worked with the mobile game developer Kabam, and earlier in his career held roles at Oracle’s PeopleSoft, Tri-Valley Growers, E&J Gallo Winery, and PR agency Ketchum.

LINKS:

No Rules Rules, by Netflix Chairman/CEO Reed Hastings and co-author Erin Meyer

Silicon Valley’s Culture Clash, by Jonathan Knee, The New York Times

Full Transcript

BRAD PHILLIPS, HOST, THE SPEAK GOOD PODCAST:

For many years in the 2010s, I was a daily blogger. We eventually published more than 1,300 blog posts, through which we attracted millions of page views, through which we became the world’s most visited media training website. I take pride in what we accomplished during that time – but with the benefit of hindsight, I also know that I wish I had done a few things differently.

As an example, let’s go back to the autumn of 2011. At the time, Netflix was still licking its wounds from what had then been two recent announcements – one that involved a 60 percent rate increase, and another that had Netflix splitting its physical DVD and streaming services into two separate companies, requiring two separate subscriptions for customers who wanted both. In the wake of those poorly received announcements, the company’s stock plunged by more than half, and Netflix lost hundreds of thousands of subscribers.

When company CEO Reed Hastings offered an apology that many thought came too late, I published a blog post titled Six Reasons Netflix CEO Reed Hastings’ Apology Failed. Here’s an excerpt from that post, published on Sept. 19, 2011, which provides a sense of how I approached the topic:

“Despite the outrage, Netflix CEO Reed Hastings declined to apologize to his customers for two months, arrogantly adopting a crisis communications approach toward his customers that can be best described as: ‘Deal with it.’”

Now, my critique had some truth in it, and Hastings himself later called those two decisions to be the “the biggest mistake in the company’s history.”

But what I’ve learned over the past decade when working with companies in crisis is that there’s often a lot more to the story behind the scenes – and not all of it is apparent to the general public. Dozens of times in my career, I’ve prepared for a client meeting by reading news articles about the challenges their company was facing and the decisions that had led them to that point. I’ve walked away from those articles wondering how they could be so clueless, so oblivious – at least until the moment I walked in their offices, and started talking to them, and began to learn the background that they wouldn’t or shouldn’t share publicly.

One telling case study comes from one our clients, which had fired an employee for breaking his company’s social media policy by sharing sensitive details about other staff members. Yet, other employees rallied around their suddenly unemployed colleague and castigated the company for firing him over what they perceived to be a relatively minor infringement. The angry employees went public – and, as in so many David-and-Goliath-type stories, the company looked unfeeling and cruel, while the dismissed employee was cast in the more sympathetic role. But when I spoke with the company leader, what emerged was that the employee had actually broken the policy multiple times, had been offered coaching and additional training, and was told how he was putting other employees at risk, even potentially exposing them to physical harm. But the leader decided not to say any of that publicly in response to the criticism, concluding that sharing that employee’s personnel file would only do more harm than good, even if the information it contained was exculpatory. The leader decided it was best to take the hit and let other employees and the public draw an incomplete conclusion.

That experience, and others like it, have slowed me down before assuming incompetence or indifference on the part of companies or leaders in the news. Today, I try to ask myself certain questions that I didn’t always ask myself a decade ago: “What am I missing? What might explain their actions in a more rational way than is apparent on the surface? What fact set are they privy to that I am not?

Because, when you ask those questions, sometimes you learn that Reed Hastings didn’t view customer service through a “deal with it” mentality. You learn that he wasn’t acting out of arrogance or indifference, even if he made very real mistakes along the way. And you also learn that when the dust settled, he indeed saw the future correctly – and played a key role in shaping it.

My guest today is Steve Swasey, the former vice president of corporate communications for Netflix, who had an insider’s view to those decisions. Steve has served in many senior communications roles for fast-growing tech companies and digital properties, including the aforementioned Netflix, the mobile gaming company Kabam, and Moovit, the world’s No. 1 urban mobility app. Today, he serves as a consultant for Red Ventures, which owns companies including Bankrate, CNET, Lonely Planet, and TV Guide.

In addition to his time at Netflix, we’ll discuss his communications “HIT philosophy” – that’s an acronym he lives by that stands for Humility, Integrity, and Trust. That’s an antidote for much of the ethos in Silicon Valley –  where Steve has spent much of his career – which, too often, is more about posturing and pretending than humility and trust. In an October 2021 New York Times article, entrepreneur Eric Ries said this about Silicon Valley’s culture:

“It’s a thin line between a start-up and a Ponzi scheme. Generally speaking, you are asking people to invest in something that doesn’t yet exist on the basis that you will bring it into existence.”

That, Times journalist Sarah Kessler wrote, “requires a certain amount of bravado, optimism, and experimentation, a combination that has often been rewarded. Zappos bought shoes from a shoe store before it shipped them from its warehouse, Apple announced its first iPhone before it had figured out how to mass-produce its prototypes, and Reddit populated its site with fake users to demonstrate desired behavior.”

How do you retain humility, integrity, and trust in that type of culture? Here’s my conversation with Steve Swasey.

(MUSIC PLAYS)

Steve, thank you very much for joining me. You have worked in senior communications roles for many years. I’m wondering if the place to start is by just giving us a sense of the types of companies you’ve chosen to work with, and maybe a little bit about your career.

STEVE SWASEY:

Brad, first, thanks for having me. I enjoy talking about communications. It’s essential in our world that we communicate clearly. Every job I’ve taken, (either) I’ve been recruited to, or those that I’ve found on my own, it’s been to a company that makes a difference in peoples’ lives. I want to work for companies that have relevance, that have products or services that help you live a better life, whether it’s entertainment or eating well or being healthy. So, the companies I’ve worked for in the past 20 years or more have been Netflix, Healthline, a mobile games company Kabam, and these are companies that were early risers. They were oftentimes the first company in their class to create a product or service – disruptive companies – but always with the intention of working for a company that’s doing well in the world and doing good for consumers.

PHILLIPS:

I mentioned to you when we spoke offline a few weeks ago, that to me, Silicon Valley is a place I don’t know a whole lot about. I was born on the east coast, have lived most of my life in Washington, D.C., New York, and for a short time in the Boston area, but certainly never out in Silicon Valley. So, for those of us who are like me, who almost see it as this kind of alien place, how do you describe what the culture of Silicon Valley feels like?

SWASEY:

Well, one thing, Brad, and this is a nomenclature thing, but, locals call it Silicon Valley and I’ve heard it both ways, but I’ve always referred to it as Silicon Valley – actually I kind of run it into one syllable Silicon Valley. It really comes from being the hub of where people gravitate. Big thinkers. Early adopters. Not that this suggests that other parts of the United States don’t have that characteristic, but two great universities here in the Bay Area, Stanford University, private university, and then the best public university, for specifically grad school, the University of California, Berkeley, are engines for ingenuity and for celebrating entrepreneurialism. It’s kind of taught; it’s kind of expected. And, I think it comes from California itself being a place of risk and potential high reward going back to its early days as the Gold Rush. People flocked to California to become rich in the gold mines and many didn’t, but they did other things like create pants like Levi Strauss, or create housing or other services for the miners.

So, here’s California, this kind of end of the rainbow, this ultimate utopia, and then giving birth to the technology industry because great companies were based here (such as) Lockheed, Hewlett Packard. Then, those gave birth to the new companies which gave birth to new companies, which gave birth to the tech boom of the eighties and nineties, which gave birth to the internet. So again, there are pockets of internet and innovation development outside of Silicon Valley, but it really is the hub because of, I think, the type of people that it attracts and retains.

PHILLIPS:

You’ve painted a pretty impressive picture of what Silicon Valley is. And in your first answer, you said that you like to select working with companies that are doing good in the world. And yet you’ve described the culture of Silicon Valley as having a lot of “bad bro” behavior. How do you reconcile that? You’re a guy who chooses great companies to work for, and yet the culture is so often kind of that bro culture.

SWASEY:

Well, two responses to that, Brad. One, I think, you know, the bad apples stick out in the batch. When you go to the grocery store and you’re picking out your fruit, the vast majority is beautiful, but when there’s one rotten orange, you see that. So, I think, by and large, most companies set out to do well. Then there are some that have what I call bad bro behavior. And that is the old bro kind of thing. that slang jargon for the brothers in the workforce. And we’ve seen it and we’ve seen it across the board in entertainment, particularly, but everywhere there is bad behavior. And, it needs to be ferreted out and it needs to be ameliorated. It needs to be gotten rid of. But as I say, the vast majority of companies are led by decent good people who want to do well. And those are the ones I gravitate to. Of course, I’ve seen, and I’ve actually been recruited to, companies that as soon as the recruiter and I talked and I learned who the company was, they said, I’m not your guy. And, other people have gone and left, but I think, by and large, most companies have a have a charter to do well. And when led by ethical and moral leaders, people who embody what I call the HIT mentality – humility, integrity, and trust — those are the companies that succeed over time. And when they go astray, either they reconcile or they don’t, and, and then they have the price to pay.

PHILLIPS:

I talked in a recent episode of about Elizabeth Holmes, who has been convicted on four counts of fraud. And The New York Times had a sub-headline in an article they wrote about her verdict, and it said in Silicon Valley’s world of make believe, the philosophy of fake it until you make it finally gets its come-uppance. What I gather from that article and others like it is that it’s a very fine line in, I think a lot of startup entrepreneurial cultures, portraying this sense of having a high appeal product to important external state holders. But the lines between that and faking it sometimes get blurry. And I saw some of Elizabeth Holmes’ defenders basically saying, look, she wasn’t doing something terribly different from what a lot of other founders did. She was touting a product. They hadn’t quite gotten it right yet, but it’s part of the thing you have to do in this startup mentality. First of all, have you observed that to be true, or is that a vast overstatement? And how do you think about that line between that culture of portraying a great product to the world, but staying short of that line of faking it.

SWASEY:

You know, the truth always comes out in the end. It may take months. It may take years or even sometimes decades, but the truth always does come out. And you have to stay that with your north star. And you have to stay on that with your north star. The fake it to make it mantra was a thing, and I would say it may still be a thing in Silicon Valley and elsewhere. I mean, major outlets had programs called fake it to you make it led by big thought leaders from major universities. That’s wrong. And, a friend of mine, in fact, Sabrina Horn, has written a book. I think she’s a guest on your podcast.

PHILLIPS:

Yes, she was a previous guest on our podcast.

SWASEY:

She wrote a book, Make It, Don’t Fake It, and that should be required reading for every aspiring business and current CEO. I’m touting my friend Sabrina’s book, but, she’s going to do that herself. But the point is you cannot fake something like a product that is ostensibly saving lives. You cannot fake something that is a convenient, I don’t want to suggest any other specific products that have been faking it until they make it. You have to have the goods that deliver what you say they’re going to deliver to consumers. The most important things consumers should have in you are trust and credibility. And when you lose those, you’ve lost them forever. And you can’t regain. Unfortunately, in the past, in Silicon Valley particularly, there has been this mantra that we’ll get it right. Here’s the vision, here’s the promise. And so many people gravitate to the vision and the promise and the new shiny thing that they lose fact that they lose the idea that there is, in fact, smoke and mirrors here. There’s not a real product. We used to call it vaporware. When I worked in the enterprise software industry, we’re always asking, is this vaporware, or is this a real product? And, unfortunately, the atmosphere, the environment enabled this fake it to make it until it didn’t. And then, the house of cards falls. You never want to be on the receiving end of either of those, a product that isn’t living up to its billing or the aftermath of a product that failed and the company failed. That’s why I always say, go back to the heart of it. The CEO embodies the culture of the company. The CEO should be embodying the humility and the integrity and the trust of the company. And when that’s the case, then you want to work for that company. If the CEO is somebody you say, I don’t really buy great vision, but where are the goods? And, I know that the graveyard is full of the bones of great ideas that never really came to fruition.

PHILLIPS:

You know, what’s so interesting is that it’s very easy to point at the company that touted itself as something larger than it was, and suddenly demonize them. But I believe it was the CEO, or somebody else higher up, in Regus, the big real estate company, that said publicly that he kept looking at WeWork, and looking at the numbers that they were touting, and he couldn’t figure out how those numbers added up. He saw that something was wrong with WeWork’s business model before the rest of us did – years before the rest of us did. And it does make me wonder if part of the problem is that we, the general public and also members of the press that put Elizabeth Holmes on the cover as the next Steve Jobs, is that a lot of this is partly our fault. That we like that story of the entrepreneur who starts this magical company that suddenly has billions in valuation. And we don’t really look under the hood of whether they actually have the goods there or not.

SWASEY:

There’s a lot there, Brad. I don’t want to start pointing fingers and casting aspersions at individuals, or even entities like the media, but you’re right. There were front page cover stories on Elizabeth Holmes, and we all got sucked into that. There are those who are now coming out and being very present saying I wasn’t one of them. And I’ve been in that situation in my career where there’s popular appeal of something, there’s a groundswell of support. You know, it takes a skeptic to step back and say, now is this real? There were those within Theranos, there are those within other companies that are coming forward – the term is whistleblower – and good for them. That takes a real strength to say, I’m staying by my conviction and standing on truth. If we had had that more, I don’t think we would’ve been as swayed and as impressed as we were. There was a recent article by Ashley Vance in Bloomberg about the VC community not getting behind Theranos. That was largely funded by wealthy individuals and not the scientific community and not the VC community. So, there were those that weren’t as impressed and, and putting it in such a shining light as others.

PHILLIPS:

I do wonder if, because there is this media love for the entrepreneur who is doing something very disruptive, if it makes it harder for the person sitting in your position, putting the brakes on those kinds of stories internally, when you almost have to deliver something larger than life in order to just get noticed at all, because they’re sucking up so much of the oxygen. Have you faced that kind of pressure, whether or not you’ve acted on it, have you kind of faced that pressure from executives who are wondering why can’t you get us that kind of coverage?

SWASEY:

Sure. Always. There are executives who want no media visibility. They want to run their company under the radar and do really well. And then there are companies that want to have lots of media visibility and regard themselves as a visionary. And then there are those companies that have a great product or service that has a CEO who is willing to be the spokesperson for the product or service. That middle zone is where you want to be, because if you’ve got a great product or service, it’s easy to talk about it. You don’t have anything to hide. If you are working for the ego of the CEO who wants to be on covers of magazines and every blog and podcasts there is, but the product or service doesn’t live up to the billing, that’s not where you want to be as a communicator. And if you’re working for a great company that wants to stay under the radar, then you’d be well to really love internal communications or other things that aren’t as publicly faced.

PHILLIPS:

I’d like to take you back to 2011, perhaps a time, a moment in time that you would like to forget. This was when you were the vice president of corporate communications for Netflix. It was then that CEO Reed Hastings has subsequently said that Netflix made the biggest mistake in the company’s history. I’d like to read for you a short excerpt from his book, No Rules Rules, and this is what he wrote: In early 2011, we offered one service for $10. That was a combination of mailing DVDs and streaming, but it was clear that streaming video would become of increasing importance while people would watch fewer and fewer DVDs. We wanted to be able to focus on streaming without DVDs distracting us. So, I had the idea, I being Reed Hastings, I had the idea to separate the two operations. Netflix would stream while we created new company Qwikster to handle the DVD market. With two separate companies, we would charge $8 for each service separately for customers who wanted both DVDs and streaming, it meant a price hike to $16.” I remember that moment, I think on our late defunct blog, we wrote about that at the time. There was huge consumer backlash, a lot of media backlash. Just in general terms, what do you remember about that time?

SWASEY:

First, I’m going to say that I think Reed Hastings is a brilliant visionary. I don’t think he gets the credit in the media that he should. Jeff Bezos, Elon Musk, others get the credit for being brilliant visionaries. I think Reed Hastings is right up there. Reed was absolutely right. The DVD business was on its way to decline ,ultimately to be obsolete. It’s not obsolete yet, but it certainly has declined in the past decade. Streaming was the future. He saw that. He knew it. And, we had two individual unique products, a DVD that went into a mailer and was sent to you via of the United States Postal Service and then push-play on your electronic device, TV, laptop, iPad, whatever, and watch instantly. That’s two entirely different businesses and Reed had the right idea that they needed to be run separately. Unfortunately, being a brilliant visionary, he was way ahead of his time, and it was all too soon for the consumer, especially in that economy. What we essentially did was slap our consumers and say, you have this choice of splitting or nothing, and we didn’t give the option to do either. And, of course, we reversed and came back to providing both services for a while. And ultimately, the DVD business was spun out and runs as I think dvd.com now, and Netflix is all streaming. So, 10 years later, 12 years later, Reed’s proved, right. Unfortunately, it was a marketing error that we did it too quickly. And it insulted a lot of our consumers. We lost about, I think about 800,000, subscribers on base of about 20 million. That’s a big chunk. The market value of the company crashed about 70 percent in three months. It was a catastrophic time for Netflix, but because Reed’s an honorable guy and a very thoroughly decent guy, he said, we made a mistake. I made a mistake. He owned it. And we rebuilt the company, and the company has done extraordinarily well, ever since.

PHILLIPS:

He said in his book, that one of the things that happened after that announcement was that dozens of people who worked for Netflix at the time came to him and said, you know, we had doubts about this. And they hadn’t expressed them for a variety of reasons. Some just said, Reed, you seem so excited about it, we didn’t want to get in the way. And he realized he needed to make changes in his management style, so people didn’t fear coming forward and talking to him. What did you take away from all of that? And especially in your role as the head of corporate communications back then, what did you need to do to right the ship internally, to make sure that employees and other executives felt comfortable speaking their minds?

SWASEY:

Well, I will say that a lot of folks did speak up before the decision was made. It wasn’t afterwards. There was a lot of afterthought, of course, but there was robust discussion in anticipation of making this change. This was not done overnight. This was a very, very thought out considered strategy. And when you have a dynamic leader who’s a brilliant visionary and honorable and trustworthy, who everything he touches turns to gold, you go along. This one case, and it was not this one only, there were a couple other things in that time period where we made decisions that were too rushed for the consumer, and some of us were saying so. But because everything Reed touched turned to gold, mind you, he was on the cover of Fortune magazine as businessperson of the year in December of 2010. This was a guy who was just very progressive and very successful in making a company that had never been made before. There’s no textbook on the shelf that you pull down and say, how do you make a DVD-by-mail company that becomes a streaming company. Reed wrote that textbook and it’s in his book, but there were those of us who were saying, wait a minute, this is too soon. But, because prevailing wisdom was OK, we’ll all go along and you execute and you do the video and you try to promote it, and then you get the backlash. And so that was a very, I think, eye-opening moment for Reed. To answer your question about how did the company regroup, it started with Reed. He fessed up to his management team and to the whole company, and then, ultimately, to consumers that this was a mistake and here’s how we’re going to make it right. And in the last 10 years, the last decade, I think he’s been well exonerated. And the company has received tremendous growth because of his leadership.

PHILLIPS:

It seems like what you’re articulating is really a two-step thought process that one in that situation we go through. The first question is, are we right? And the second question is, are they ready? And, the first question, are we right, meaning, are we going to have to split this into two separate businesses because streaming is the future. Yes, we’re right. Are they ready? No. And it sounds like Reed asked the first question and didn’t sufficiently answer the second one.

SWASEY:

That’s a new way of looking at it. And, the fact that we’re talking about this a decade later shows the importance of this. And I know Harvard business school has written a case study on this or two. And that this has been discussed and the fact that we’re talking about it in January of 2022, makes it relevant. Yes. You have to make the decision that is right for the consumer, right for the company, which is both its employees and its vendors and its suppliers and its shareholders, or its financiers if it’s privately held. You’ve got to make decisions that are right for everybody. But ultimately the consumer is the one who needs to win because they’re the ones who are paying for the product or service. They’re the ones that are returning money to the investors. They’re the ones that are getting employment opportunities to the employees. So, consumers need to be first, if you have a consumer product or service, and you have to do right by them and be honest with them. And if you make a mistake, you have to own the mistake quickly and readjust. And I think that’s what Netflix did very well. Now, that was a big mistake, so it took a long time to readjust, and Netflix stock was depressed for about a year. But, I knew at the time that if Netflix made it through that six- to eight-month period, it would be off and running. And when they lost 800,000 subscribers, Netflix, in that period, there was no place for those subscribers to go. There was no competition back then. And that’s when I knew Netflix is going to be just fine. And it has been. Now, if there is a mistake like that by a company like Netflix now, there are lots of competitors. So, you have to understand what your tolerance for risk is, but your tolerance for risk should never include how we can wrong somebody and then hope to make it right. Your tolerance for risk to be how aggressive should we be, while still staying true to the consumer.

PHILLIPS:

And my last question about that, without relitigating the events of a decade ago, it’s just what your takeaway was. And I’m sure that you went through the mental conversation of what should I have done differently. It sounds like you expressed your concerns in advance, but is it a function of speaking up even louder? What have you, in the past decade when you considered that event, thought, you know, if I had that one to do over again, I might have done X a little bit differently?

SWASEY:

I was being recruited from Netflix in 2012 to a mobile games company called Kabam, not a household name, but if you’re in the mobile games business, you know that company.

PHILLIPS:

You know who they are.

SWASEY:

Kevin Chou is the founder and (former) CEO of Kabam. That was his first question to me when we met for breakfast and the very first interview I had with him, he said, where were you in the Qwikster discussion? And I said, what I learned then Kevin is leaning forward and speaking up sometimes isn’t enough. Sometimes you have to jump on the table and shout. And fast forward a year or two later and then we were making a decision I just knew my heart was not right. And I said, in a meeting of a group meeting, I said, Kevin, you remember when I told you leaning forward and speaking up, isn’t right.

I’m about ready to jump and put the soles of my Haans on this table. And he knew what I was talking about. Nobody else knew what I was talking about. They thought I’d lost my mind. But Kevin said, come back in 24 hours of the recommendation. And then I went and did research. Spent about 24 hours putting together a recommendation that he ultimately took to the board of directors. And it was the right decision. So, you’ve got to sometimes jump on the table and shout. And I think if enough people had done that, we might have made a different decision on the timing of the DVD and streaming split. But again, revision is history 10 years later. You really can’t say.

PHILLIPS:

You said something a moment ago that contrasted Reed Hastings to more public CEOs, people like Jeff Bezos and Elon Musk. And I’m wondering how you think about positioning a CEO as the public face of a company, which comes with blessings and curses. I mean, certainly when you have somebody like Elon Musk, who is not what you might call the most disciplined media spokesperson, and you have Jeff Bezos whose public life is in some ways pretty messy. Just over the new year’s 2022, there’s photographs of him, well, people were comparing him to the Miami performer Pitbull because he was dressed in a pretty unusual way, let’s say, for a Fortune 100 CEO. So, when does it make sense from your perspective to position somebody as the single face of a company and maybe it’s to Reed Hastings credit that he isn’t as well known, but Netflix is?

SWASEY:

I think the answer to that is what is the objective you’re trying to serve with putting the CEO in the media? Is the objective to aggrandize the CEO, or is it to position the product or service to the CEO is responsible for? And I’ve always defaulted to the latter. I want to work for a company whose products or services are beneficial to the community, to consumers, to society. And that doesn’t have to be beneficial in an altruistic way. It can be great entertainment, like Netflix, or great food and wine. But the point is, if your objective is to put the CEO out there for their self-aggrandizement, then I wouldn’t be interested in that. That would be the role of a publicist, a personality publicist. And thankfully, that’s not what many CEOs I’ve worked with have wanted. They’ve understood that the engagement with media is a marketing function to enhance the brand in the eyes of the consumer. Earned media, getting news coverage, is a part of the marketing function. In fact, every CEO I talk with when I interview with them is I’m looking to join their company, I ask what is your commitment to the public relations function or the earned media function, or the marketing communications function, whatever term we’re giving it at the end of the day? But what is your commitment to this function? And in my opinion, the right answer is what you tell me it needs to be. I had one CEO once say I will do 10 hours a year, and I didn’t go work for that company, because you can’t promise 10 hours a year to a function like this. Sometimes the CEO has to be front and center for days at a time. If there’s a crisis, you want the CEO to be front and center. If it’s an earnings call, you can have the CFO fill in, but the CEO, at the end of the day, is the leading spokesperson for the company. Having said that, I think it is important to have that personal publicity if you have other desires. To promote a book, for instance. Reed wrote a book. It came out in the pandemic, and we didn’t see Reed on the airwaves as much as we would have had it not been in the pandemic. And that’s just the reality of the pandemic. Doing everything virtually didn’t get the exposure for his book that it probably would have if we weren’t in the pandemic. So, sometimes you do need that personal publicity, but most of the time my orientation is to do it when you’re promoting a product or service.

PHILLIPS:

You made me think of something else. Earlier in our conversation, I said something about the media, and you rightly seized on that term and said, well, I don’t want cast aspersions on the media. And the media is such a kind of nebulous, almost meaningless term, because it’s so broad. But, I appreciated that because one of the things with our company, Throughline, is we will not accept business from somebody who wants us to do media training when part of their strategy is to gratuitously criticize the media or set the media up as an opponent, as part of a political strategy. And I know that in Silicon Valley, there are companies that do exactly that. And I would imagine in that conversation that you’re having with the CEOs, you might work for, that those are the kinds of things you’re listening out for.

SWASEY:

You know, I’ve got a lot of gray hairs. So, I started many years ago. One of the guys I used to know, a long-time PR person, once told me, and it wasn’t his original quote, but it stuck with me, don’t pick a fight with somebody who buys ink by the barrel. And that’s an antiquated legacy comment now, because, obviously, print is very slowly dying but dying. But the media, what was print,  is now forms like this podcast and blogs and social media. There are so many channels, but the function is the same. It’s conveying information from one source to an end user who is a consumer of that product or service. When you bite the hand that feeds you, then you can expect to be treated poorly and not get dinner the next day. So, I’ve always counseled to keep the media. and it’s such a broad pervasive term, but keep those channels as allies, knowing that there is potentially going to be trip wires, they’re going to be pits you’re going to fall into. You’ve got to be very disciplined and trained in media training companies, such as yours, and I do that a lot myself, prepare people for media interviews. You have to know the rules of engagement, but never go out and castigate members of the fourth estate. It doesn’t get you anywhere because they have the final say on their pages or on their channels or on their broadcast network.

PHILLIPS:

I’d like to move on to something that you brought up a few minutes ago, the HIT approach, and you wrote: “It is no coincidence that none of the companies for which I’ve worked have been embroiled in a salacious scandal. I have chosen companies whose CEOs embody humility, integrity, and trust, H-I-T. I want a big HIT, humility, integrity and trust, when I select a company to join.” Two questions about that. First of all, can you just talk about the HIT philosophy? And two, I would think that the HIT philosophy is in contrast to its opposite, which unfortunately is the pervasive culture in too many companies.

SWASEY:

HIT, really, that just came me one day, actually at Kabam. We were using that integrity, humility, and trust. And I said, let’s turn it around and call it HIT and it just stuck with me. But it’s been embodied in me all my life. I grew up in a family, middle-class family that had strong values. I couldn’t get away with anything. When I was a little kid, everybody in the town knew my grandma. Everybody in the town knew my dad. You know, small town and they were both leaders in the community. And I just was always honest, and I couldn’t get away with anything. So, I didn’t try and realized there was a reason that I was honest, because my parents instilled values of honesty and integrity, and wanted me to be trustworthy. And, and I think now this is in vogue. You want to own your vulnerability. You want to own your credibility. It was a little more difficult 15 years ago, 10 years ago, again, in the height of the internet boom, when companies were putting out a website and, and getting valuations and funding without really having a product. But I think now, the pandemic, I think on top of everything else, it’s really led us to more humble core values that we have to abide by. And I, I think that’s a good thing. There’s very little good that’s come out of the pandemic, but one of the good things I think, is a little more humility. And, I hope more integrity and trust. Now, that said there’s a whole faction of society that is being led by what I consider to be lies mistruth, mischaracterization, misrepresentations of truth. And that’s a big concern and I’m not sure I’m going to figure it out. I think that the one that’s going to figure it out is that the outfit, the company, or the firm that creates the best of The New York Times and the best of Facebook and puts them together. Because, you’ve got the biggest community in the world on Facebook. But through that, there are a lot of groups that are passing misinformation and The New York Times, and I have a high esteem for that publication, but it has its detractors. And some of the opinion columns are very leaning in one direction, so, you don’t have the universal trust in The New York Times as you would. But if you have the best of the Times and the best of Facebook, if there’s a company that does that, whatever that looks like, however that feels, but people both believe it and trust it, then you’ve got a winning combination. I hope we get there soon.

PHILLIPS:

So, I want to leave maybe on a hopeful note that is borrowing your experience. Presently, you’re the senior communications adviser for Red Ventures. I know that now, and through the years, you’ve had an opportunity to mentor many people who are junior in their career as a communicator. What advice would you offer to those folks, both in terms of companies that you think they should align with, but also how to operate in environments that aren’t necessarily as clean and binary as the ones we’ve been describing? That they’re either great companies that are ethical or bad companies that are unethical. There’s a lot of companies composed of people who are trying to do their best, who sometimes face tough decisions and don’t always make the right ones. So how do you coach those junior folks to operate in those types of moments?

SWASEY:

It’s pretty simple and it’s simply said not simply done, but No. 1 to work for a company that does embody the best interests of consumers, that has a trustworthy and honest management team and is doing what it says it will do. It could be tempting with big money or big stock options or both to go to a company that is skirting laws or deviating. But if you’re working for one of those companies, see if you can impact change internally. And I will say, right now, the opportunity for grassroots organic change is higher than I’ve ever seen in my career. Employee groups are able to change boards of directors. Now that never happened earlier in my career. So, you do have a voice and your voice matters. I always say, do what is in the best interest of the company, if the company is doing what’s in the best interest of the community. Do what is the best interest of the company, and that will set you up to succeed. If every time you speak honestly, you’re doing it for the best interest of the company. If your guiding north star is what is good for consumers and good for the company to serve those consumers, then you should speak up and don’t be timid about being honest. And I, again, think now is the best time. We are more enlightened now and more empowered now, and there are those who say even too much, but that’s a different discussion. The fact that we can have this discussion now, and anybody has an equal seat at the table, at least in the discussion, certainly not in the earnings, there’s terrible inequities in healthcare and there’s all kinds of inequities still that we have to address, but at least people have a voice through podcasts like this, through their own blogs, through social media. People have a voice and use it, but only when it’s in the best interest of your community and that community is acting the best interests of a whole. So that’s easily said. It’s much more difficult if you’re surrounded by miscreants who are joking, and you’re being bullied. But if we all, again, if we all do the right thing, it’s a community effort – maybe  this sounds altruistic – but if we all can take a step back and a breath and say for the best interest of us as humankind, let’s look at this problem and address it together with humility, integrity, and trust.

PHILLIPS:

Well, hopefully your career serves as an example that it is possible to stick close to your ethics and still succeed, and still ascend to top levels of your industry. So, Steve, I’ve enjoyed this conversation greatly. Steve Swasey, the senior communications adviser with Red Ventures.

SWASEY:

Brad, thank you for having me.

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