Ozy and Carlos Watson are in trouble
Ozy Media CEO Carlos Watson at the company festival in 2018.
Photo: Getty Images for Ozy Media
It was the business equivalent of a teenager getting caught on the phone with a teacher trying to pass off his friend as his parent. Sunday, New York Times Media columnist Ben Smith reported on a bizarre Zoom call last February between Ozy CEO Carlos Watson and the asset management division of Goldman Sachs. As Watson tried to convince his former employer to spend $ 40 million on his digital media company to create more celebrity Q&A videos, he called Alex Piper, a YouTube executive, who told them that Ozy was generating solid ad revenue and solid views – but only after Piper said the group should go from Zoom to a phone call. When a Goldman employee reached out to Piper after the exchange, it became clear why the person on the call wanted to rotate the video. Piper was actually usurped by Ozy’s co-founder and COO, Samir Rao, who quickly apologized for the deception.
The report has plunged the events and editorial company into a crisis-management mode, as executives face a whirlwind of negative attention. Although Ozy’s board chairman (and Milwaukee Bucks co-owner) Marc Lasry told the Times that “we fully support” the way the “unfortunate one-off event” has been handled internally, others have been less generous, considering that the company has essentially ignored the mess from when it happened in February until it was reported this week. Goldman Sachs took no further action, but Google’s security team discovered that a crime may have been committed and reportedly alerted the FBI. “You’re just not going to get a securities fraud case any easier than this,” wrote Matt Levine, former Goldman and Bloomberg Opinion columnist.
Until Tuesday, Ozy’s board of directors felt satisfied without opening a formal investigation into a big investor pitch in which their COO allegedly changed his voice and provided a fake email to a potential investor because Rao was going through a “mental health crisis”, according to the Times. (If charges of securities fraud or wire fraud were to arise, federal authorities are unlikely to accept this adoption of therapeutic language as an alibi in an attempt to deceive investors.) It wasn’t until after that that the report became public that the board of directors formally asked Samir Rao to take leave as part of an investigation – led by law firm Paul, Weiss – into the “business activities of the company” .
Will the internal calculation be bigger than just looking at YouTube’s switcheroo? Amid the fallout, Ozy has come under increased scrutiny for its opaque handling of web traffic since its inception in 2013. While BuzzFeed News reported in 2017 that the company bought traffic by showing its articles behind the a reader’s browser, several reporters noted that Ozy has questionable engagement numbers, such as social media accounts with hundreds of thousands of subscribers that only get a handful of likes or comments on each post. Then there’s the practice of awarding commendations on Ozy’s talent to other publications – “best interviewer on TV” and “Anderson Cooper meets Oprah” – which in fact comes from the company itself. Due to apparent inflation, some ad companies are now reportedly digging into whether Ozy has delivered on the promise they were promised. Meanwhile, Watson has stepped down as host for the Documentary Emmy Awards scheduled for Wednesday night. Others distance themselves from the company. Axios announced on Tuesday that one of Ozy’s first investors, Ron Conway, had sold his shares. And on Wednesday longtime BBC News presenter Katty Kay, who recently started as editor-in-chief and executive producer at Ozy, resigned of his post.
With all of these issues plaguing the company’s reputation, in hindsight, it might not have been better to name it “Ozymandias,” Percy Shelley’s 1818 poem on the statue of a great man. king whose legacy has been lost over time. (Ozy’s website says they read the work as “a call to think big while remaining humble.”) Perhaps a reference to a line from the poem would have been more appropriate, especially the penultimate involving a “colossal wreck”.