I once wrote the tagline “Investing for the 100%” and “invest like a millionaire, even if you’re a thousand-aire” for a Vancouver-based fintech startup. This Gamestonk (Gamestop-Stink-Stock?) news cycle had me thinking about what I'd have done if my fintech bosses had been caught in the same no-win situation.
I can tell you this much. I have some sympathy for the Robinhood CEO that’s facing a perfect storm of criticism. It’s the public relations disaster everybody’s talking about. And I have a whole lot more admiration than usual (and most days of the week, I have quite a lot of that) for the richest man in the world, Elon Musk -- who effectively broke some of the most important details of this story wide open.
From my perch as a PR pundit, I see that the Gamestonk story has many narratives.
It’s Occupy Wall Street vs. the 1% and robbers vs. robber barons, people vs. tech, the Joker vs. Batman...
And they’re all true at once.
If you’ve been living under a rock, you may be unaware of Gamestonk - a phenomenon more fully explained in 10,000 places online, but I’ll deliver my own take here. The Reddit community WallStreetBets and more largely, retail investors have been in a long-overdue grudge match with an avatar of the so-called 1 percent. Certain hedge funds were shorting Gamestop (which owns a chain of stores few frequent, since everyone buys video games online now) - but then they got overleveraged.
The Reddit crowd figured they could crash the rich guys, just for the heck of it, by driving up Gamespot’s share price, using the perfectly legal and natural route of simply investing in stocks. It’s nobodies vs. the Masters of the Universe, with billions at stake. And billions were, in fact, lost - by the hedge funds that chose to throw in the towel. Many regular folks made out like bandits.
Then Robinhood, the platform the rebels were using to stage their revolution, prevented users from buying the stock. That’s when the chaos turned up to 11.
This has to be excruciating for Robinhood, a fast-growing platform meant to enable investing for regular folks who don’t work on Wall Street.
And yet… maybe the situation is still salvageable.
Amid the scorched earth of Robinhood’s reputation, Rocket Man appears.
The richest man in the world is also the finest reporter in the Clubhouse. Who knew?
Elon Musk is famous for building rockets, privatizing space travel and aiming to put people on Mars. (That’s when he’s not revolutionizing transportation or working towards enabling the next stage of human consciousness.) He seems to be a more-than-capable journalist.
First, a reporter’s job is to get access to people who are hard to get to -- and getting into a semi-private session with some of Silicon Valley’s biggest brains? That’s not nothing. Just being in the room and having the presence of mind to ask the hard questions and not let up -- that’s some fine reporting, Mr. Musk.
When Elon asks for the inside scoop and Tenev tries to deflect, going on a tangent about feeling like he’s in a computer simulation, Elon brings it back on track: “The people demand an answer and they want to know the truth.”
“You can’t handle the truth!” and other things Robinhood’s CEO thankfully didn’t say
To Tenev’s credit, from a PR perspective, the Robinhood CEO did what he had to do: provide just enough technical detail to seem credible, without complicating things so much that it seems like you’re trying to confuse your audience with techno-gobbledygook.
In under 115 words, he laid out their business model, before coming to why that context mattered: he got a phone call at 3:30 am, he got a call from the SEC and a demand to put up $3 billion to cover the Robinhood’s users’ investment positions.
Why was that a great move from a PR perspective? It came across as genuine and also genuinely scary. I mean, who likes to get woken up in the middle of the night by some scary entity demanding a ton of money that you don’t have?
Musk pushes back: basically, is this really so unprecedented? It’s a big figure, but as an investment platform that wants to play in a big ocean, can’t you handle it? Here, it’s not just Musk as an investigative reporter: he seemed to switch back and forth from CEO mode -- effectively trying to feel out whether Tenev was the leader he needed to be.
And again, Tenev held his own. He didn’t blame the SEC -- which would have given him no benefit from a PR perspective. When you’re the CEO of a big tech firm in Silicon Valley, casting blame can make you look small, weak and no longer in control.
Instead, Tenev steered the conversation to a place where he was back in control. A master-negotiator, with a steady hand on the tiller (I’m referring back to the TechCrunch transcription):
“So, at 5.30, or five in the morning, they [the NSCC] came back and they said okay, the deposit [should be] 700 million, which we then deposited and paid promptly.”
At this point, Musk, the intrepid reporter, keeps up the pressure -- but perhaps in a spirit of collegiality, he also gives him an escape hatch, if he wants it:
“So it sounds like this organization calls you up and they basically have a gun to your head. Either you put up this money or else. Basically, what people are wondering is did you sell your clients down the river? Or did you have no choice? And if you had no choice that’s understandable. But then, you know, we’ve got to find out why you have no choice. And who are the people that are saying you have no choice?”
Say your piece, take your lumps and live to fight another day
Tenev takes him up on it. “I think that’s fair. We have to comply with these requirements, financial institutions have requirements.”
And a moment later, Tenev adds this, critical from a PR perspective:
“Well I think there’s always going to be some theoretical limit, we don’t have infinite capital, right? And on Friday, there were limits. So, there’s always going to have to be some limit, I think the question is, will the limits be high enough to the point where they won’t impact 99.9-plus percent of customers. So if someone were to deposit $100 billion and decide to trade in one stock that wouldn’t be possible.”
Why is it so important? Because Robinhood as a company has committed a pretty unpardonable sin: being seen to do a 180-degree turn, even if just for a day, on their core stated mission. They’re supposed to be there to, if not rob from the rich, at least give (investment capabilities) to the poor -- or any American with an Internet connection. This Gamestonk thing stinks.
So the big question is whether this could happen again. Tenev gives the company an out with a seemingly crazy-high outsider possibility -- but also indicates they’re back on mission. In PR, as in poker, you play the cards you’re dealt. Tenev played about as well as could be expected.
Crisis PR doesn’t end with the crisis
The problem for Robinhood’s CEO, as he admits in this and other interviews: they are in uncharted territory. No one can know if and when the Reddit raiders will rise again.
But that’s a business problem. For now, he has at least temporarily dealt with his PR problem -- and he can keep fighting the next day and the day after that.
In fact, Robinhood may well come out ahead after all is said and done. It had 13 million users before Gamestonk -- and since last week, it gained 600,000 new users. It’s far outpacing Coinbase, WeBull and others.
That old line about there being no such thing as bad publicity? It holds true a lot of the time.
But public relations is not something you want to turn off and then turn on again whenever there’s a crisis. Unless you’re Elon Musk, mothballing your PR firm when the bad times go away is a bad move. Cultivating credibility in the media -- and thereby, to society in general, is a long game. You want to make hay while the sun is shining - because you never know when you’ll see a storm on the horizon.
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