Paycheck Protection Loans Bring Reputational Risk

PPP Loans and Reputational RiskIf you took out a paycheck protection loan from the government, be prepared to defend your reputation.

The Paycheck Protection Program, known as PPP, is a major part of the government’s efforts to stimulate the economy. It slates hundreds of billions of dollars in forgivable loans for small businesses around the country and provides valuable financial relief for many desperate and struggling companies. The first round of these loans was completed last week by the U.S. Small Business Administration (SBA), and the second round will start soon. Some companies that are not in distress have received these loans, and the court of public opinion might soon rule against them.

Last week, major news outlets discovered that several public companies, most famously the Ruth’s Chris Steakhouse chain and the Shake Shack restaurants, had received millions of dollars in forgivable loans. The backlash was swift as many voiced their displeasure with “big companies” getting money that was meant for “small businesses.”

I’m not debating the technical aspects of PPP, and I do not begrudge any small business owner from taking out the loan. Uncertainty in the business world is palpable, so even if your business is OK now, it might crater next week. So if you qualify, you qualify (and figuring out the forgiveness part is between you and your accountant.) It’s most likely a prudent move to get the loan if you can, but others might vocally disagree with you.

Last week Shake Shack announced that it would give back its loan. And yesterday, Ruth’s Chris relented and announced that it would be returning its loan as well.

I watched the uproar on social media with great interest. Personally, I think that these companies got a bit of a bad rap, mainly because for most of us, a job is a job. The loans are supposed to be used for payroll and to keep people employed. So if you are a line cook who was laid off, it doesn’t matter if your parent company is publicly traded or owned by “mom and pop.” To me, we should be in favor of all ways to get relief to the line cooks of the world.

But as the treasury secretary pointed out, public companies have access to capital that mom and pop do not. So, while the affiliates of public companies technically qualified for PPP loans, the marketplace of public opinion said loudly that they were taking money that “belonged” to small businesses.

So far, the only big companies we have heard about that took-out the loans are publicly traded, but that’s not for lack of effort from journalists. I saw social media traffic before the loan program was even gaining steam, and journalists were saying things like: “If your business is not really hurt by the coronavirus, you better not take these loans because we will find out.” Prepare to be shamed.Read More

Will you fly on a Boeing 737 Max?

Will you fly on a 737 Max? | David PRBooking flights for summer travel is in high gear so here’s a question: Will you fly on a Boeing 737 Max, assuming its anti-stall problem gets fixed to the satisfaction of the FAA? For a couple reasons, I don’t think I will; but more importantly, I question whether the 737 Max will ever fly again.

For those who don’t know the backstory, the 737 Max is the latest iteration of Boeing’s 737 aircraft which first started flying in the late 1960s. Its stabilization system, and perhaps a flawed iterative design, have been blamed for two crashes that killed 346 people. The planes have been grounded until further notice, and American Airlines, for example, has cancelled all 737 Max flights through August 19. (If you are looking for more details about the system/design issue, I found this article interesting, Is the Boeing 737 Max Worth Saving? )

When planes crash, we eventually learn what happened (black boxes and the like), and in most instances the crash is caused by something specific that has little to do with the plane itself. Birds fly into engines as happened during the Miracle on the Hudson, improperly stowed hazardous materials catch fire and a Valuejet plane plummets into the oblivion of the Everglades, or some form of human error leads to a catastrophe. Most of the time, it’s weather, terrorism or pilot error – but not a flaw with the plane itself. And even in the case of TWA flight 800 which exploded in 1996 after faulty wiring ignited the plane’s fuel, that was a problem on one aircraft that wasn’t detected on the whole fleet of then 747s.

Boeing’s problem impacts 344 planes operating around the world, and the issue affects all the planes due to the overall design and the systems that keep them in the air. When planes fall out of the sky because of a flawed design or a botched system, consumers will rightfully panic and it’s hard to imagine the flying public embracing the 737 Max, even if it gets the thumbs up from the FAA.Read More

Weaponization of Reputation

Weaponization of ReputationThreats are part of life, and we learn about them at a young age. Profanity earns soap in the mouth. Bad grades and your phone is taken away. And my childhood demon, failure to eat vegetables means no dessert. The internet has taken threats to another level as some folks have taken to threatening your reputation as a means to an economic end. We are witnessing the weaponization of reputation.

Last week, attorney Michael Avenatti, famous for representing porn star Stormy Daniels, was arrested and accused by federal prosecutors of trying to extort Nike for $25 million. From CNBC:

Prosecutors said Avenatti threatened to hold a press conference accusing the company of being involved in bribing amateur basketball players. Avenatti allegedly timed his threats to coincide with Nike’s quarterly earnings call and the kickoff of the NCAA basketball tournament. According to a criminal complaint, Avenatti offered to refrain from that press conference “only if Nike made a payment of $1.5 million to a client of Avenatti’s in possession of information damaging to Nike … and agreed to ‘retain’ Avenatti and [the co-conspirator] to conduct an ‘internal investigation’ — an investigation that Nike did not request — for which Avenatti and [the co-conspirator] demanded to be paid, at a minimum, between $15 [million] and $25 million.”

So if you believe the allegations, Avenatti was trying to shake down Nike, but the muscle was not that he would turn-in the swoosh company to legal authorities but rather that he would use his media platform to ruin the reputation of the Nike brand. He threatened a virtual whack to the reputational kneecaps, allegedly.Read More

Trump Administration Sets PR Back Years

Melissa McCarthy is Sean SpicerSince the election, I have discussed President Donald Trump’s communications style and practices with dozens of people, from fellow public relations and communications pros to friends and family members.  While I don’t want to get into specifics about his foreign and domestic policies, I am comfortable discussing how Trump’s communications practices have the potential to set back the PR profession years.

Sure, my profession doesn’t itself have the greatest reputation.  I have been called a flack, a spin doctor and probably worse (actually, I know there’s worse), but I believe the example being set in Washington for the future of public relations is more damaging than mere name calling.Read More

Disruptive Technology Merits Disruptive PR

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One of the big stories of the summer is the rise of ridesharing services. You may have heard of the major players (companies Uber and Lyft) or seen one of the Lyft cars — distinguishably marked with a rather undistinguished-looking pink mustache.

For the uninitiated, ridesharing offers an alternative to traditional taxis. Read More

Lessons from an Online Lynch Mob

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Last Friday night, I took a peek at my Twitter feed and noticed that a marketing guy who I follow named Peter Shankman was pleading for some Internet sanity regarding a woman named Justine Sacco.  Said Peter: “Yes [Sacco’s] tweet was awful.  But she’s landing to death threats.  Come on, Twitter, let’s be better than that.”Read More