Ozy Media has reversed course and will not shut down, founder Carlos Watson said on Monday, the latest twist for the digital media start-up that rapidly collapsed after it was exposed for deceiving Goldman Sachs in a bid to raise money.
“This is our Lazarus moment,” Watson told the Today show on Monday morning, just days after announcing that it would shut down. Watson said conversations with advertisers and investors over the weekend had inspired him to keep Ozy running.
“I think Ozy is part of this moment,” he said.
Ozy’s fall has mesmerised the entertainment and media industry over the past week as it exposed the willingness of Silicon Valley investors to pour money into a buzzy online media brand with little to back up its assertions.
Watson claimed the backlash went too far and rejected comparisons with Theranos founder Elizabeth Holmes, who is currently standing trial for allegedly defrauding investors and patients by making false claims about its blood testing technology and financial projections.
“When you saw people start to put my name with Elizabeth Holmes, who never had a real product, who raised billions of dollars,” Watson said. “We have five newsletters that go out to millions of people, a dozen TV shows including one that won an Emmy. That is not a house of cards.”
Watson pitched Ozy in 2013 as a youth-focused digital media start-up, such as Vice and BuzzFeed, that would disrupt the journalism business. He raised more than $80m from investors, including billionaire philanthropist Laurene Powell Jobs, German media group Axel Springer and Marc Lasry, the hedge fund manager and Milwaukee Bucks basketball team co-owner.
Watson provided a charismatic public face for investors, having attended Harvard and Stanford, worked at McKinsey and Goldman Sachs, and pitched a black-owned media group that would shake up the news business.
However, a New York Times report last week revealed that Ozy co-founder Samir Rao had impersonated a YouTube executive in an effort to raise $40m from Goldman Sachs. The newspaper also raised questions about the company’s true audience size. Ozy in 2019 said that it reached 50m unique users a month, but data from Comscore, which measures online engagement, showed figures at a fraction of that level.
Within days, investors, advertisers and board members fled, seeking to distance themselves from the crumbling brand. The board on Friday night said Ozy would close.
Former BBC journalist Katty Kay resigned amid the allegations, which she called “serious and troubling”. Lasry stepped down from the board after just three weeks as chair, though he said on Thursday he remained an investor in the company.
Before Ozy announced its closure on Friday, Axel Springer said it had not held a board seat since 2019 but that one company executive, Jens Müffelmann, attended meetings in an observational capacity.
“In light of current developments and accusations against Ozy, [Müffelmann] has decided and informed the CEO of Ozy yesterday that he [is stepping] down from this function,” the company said.
Another early investor, Laurene Powell Jobs’ the Emerson Collective, similarly sought to distance itself from the company. “Emerson did not participate in Ozy’s latest investment round and has not served on its board since 2019,” the company said last week.
Ozy has two remaining board members: Watson and Michael Moe, a venture capitalist.
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