But Watson did something different: “We’re going to open for business,” he told anchor Craig Melvin. He likened his decision to Lazarus rising from the dead — a reference as grandiose as those that seem to have gotten Ozy into trouble in the first place.
Even in the brazen self-hype culture of Silicon Valley, where the mantra for many start-ups has been “fake it till you make it,” Watson appeared to be taking the art of the bluff to an entirely new level: Fake it even after you’ve tanked it.
In its eight years of existence, Ozy Media never achieved prominence as either a practitioner of high-impact journalism or an innovator of multimedia content. But over the past week, it has achieved a kind of infamy, rising from being a relatively small player in the overall digital media market to a megawatt example of dubious business practices and inaccurate marketing claims, as exposed in a series of reports by the New York Times.
Its downfall has also pulled back the curtain on some open secrets of the digital media industry that Ozy managed to exploit — and Watson, the charismatic figure at the center of it, seemed to revel in the attention.
When Melvin asked him whether Ozy had ever “paid for digital traffic,” Watson lit up. “Like everyone, 100 percent," he enthused. “This is such a good conversation to get into because guess who else pays? NBC!”
Watson was right, in part. It’s not uncommon for digital media companies to pay to promote content on platforms such as Facebook in an effort to generate more views of its articles or videos. However, in a sustainable business model, that kind of paid promotion shouldn’t make up the bulk of a site’s traffic. Potential investors and advertisers value media companies that are able to attract audiences in more organic ways without having to subsidize it.
What Ozy seems to have done was rely heavily on paid promotion — creating a mirage that its content was far more appealing to readers than it actually was.
Despite holding an annual festival, Ozy Fest, that attracted a bevy of celebrity guests, the company existed on the periphery of broader cultural awareness before New York Times media columnist Ben Smith revealed on Sept. 26 that Ozy’s chief operating officer, Samir Rao, had allegedly impersonated a YouTube executive to tout the popularity of the company’s social media videos during a meeting seeking an investment from the banking firm Goldman Sachs.
Watson decried the column as a “ridiculous hit job” and downplayed the impersonation incident as a “very personal mental health issue” that had since been resolved.
From there, however, reporters started digging into the company’s past claims and looked under the hood of the company’s business model, which relied on major corporate advertisers and sponsors.
The fingers pointed at Watson — but the episode says even more about the investors who buoyed Ozy from the beginning.
Media investors are eager to find products that attract young consumers, an advertiser-cherished demographic that remains notoriously difficult to reach. Some investment firms have been inclined to hand out seed money to a wide array of media properties, knowing that many will fail but that a small number of successes could outweigh the losses.
Still, “the fact that no investors seemingly asked for reliable [traffic] numbers or got reliable numbers makes me wonder what investors are doing when they invest in a company like Ozy,” said Chris Roush, the dean of the School of Communications at Quinnipiac University and an expert on financial journalism.
Laurene Powell Jobs, the billionaire widow of Apple founder Steve Jobs and the founder of Emerson Collective, met Watson in the 1990s when both were involved with tutoring students in East Palo Alto, Calif.; as an early backer of Ozy, she lent the company an air of credibility. She served on the board, as did other high-profile backers, including hedge-fund manager and co-owner of the Milwaukee Bucks Marc Lasry, who became the company’s chairman. Powell Jobs stepped off the board in 2017 and Lasry resigned last week.
On Friday, Robin Reck, an Emerson spokeswoman, told the New York Times that the organization “is troubled by the alleged actions of Ozy Media’s senior leadership,” and noted that Powell Jobs “did not participate in the company’s latest investment round.” Reck said that Emerson supported an independent review of the company for which Ozy’s board hired the law firm Paul Weiss.
That investigation, though, has been canceled, after the board members who had called for it resigned. When contacted by The Washington Post, Emerson reiterated its statement but did not offer a comment on the review and said the firm’s representatives would have no further comment. Lasry did not respond to a request for comment.
Warning signs had long surrounded Ozy, though, for anyone who cared to look. In 2017, BuzzFeed News reported that Ozy was among the digital media companies that purchased “fraudulent” readership for its articles — rather than attracting interested readers organically — in an effort to meet targets that had been promised to advertisers like JPMorgan Chase. “We’re committed to only working with reputable and brand-safe publishers, and we don’t take this sort of thing lightly,” a bank spokesperson said at the time.
Craig Silverman, who authored the BuzzFeed News story and now serves as a reporter for the nonprofit journalism organization ProPublica, said on Sunday night that Ozy was never able to generate a genuine, sizable audience without resorting to paid-promotion techniques that were not sustainable long-term without a continuous flood of investment. And yet, for most of the company’s history, the investment money kept flowing. To date, the Silicon Valley-based company has raised more than $70 million, according to Crunchbase.com.
Those investors were drawn to the company’s mission-driven orientation and stated commitment to telling stories for, by and about a millennial audience. Watson, Harvard-educated and media savvy, promised to deliver a “modern media company.” Ozy billed itself as “a diverse, global and forward-looking media and entertainment company.” That message was attractive to both investors and corporate advertisers looking to get in early on whatever young people were seeking in digital media, particularly at a time when early entrants into the market like Vice Media and BuzzFeed looked like they would become multibillion-dollar companies, poised to swamp legacy brands in newspaper journalism and traditional television.
“I think there’s a lot of institutional investors that have some hubris and are overconfident about their gut ability versus their analytical ability,” said Keith Hernandez, a digital media consultant who worked as a business-side executive for such companies as BuzzFeed and sports website Bleacher Report. “You don’t want to miss the next big thing.”
But, he said, potential investors have the opportunity to inspect a company’s finances and business model before forking over any money. The question, he said, is: “Are you actually reading into that and digging into that and doing the follow-ups and asking the questions?”
Brandon Ross, a media and technology analyst at LightShed Partners, which also invests money in media and tech companies, said the digital media business is a particularly challenging one. But, he argued that people shouldn’t draw too many lessons from the Ozy fallout: “You have bad actors in every industry. I don’t think it necessarily is a statement about where digital publishing is right now.”
Last week, some Ozy staffers shared stories of the relentless culture that Watson built, including long working hours and an erratic, controlling and sometimes punitive management style from Watson.
Eugene Robinson, an early employee and a former editor at large, offered perhaps the most charged critique of “a smiling, ingratiating, nervous and dead-eyed” Watson cajoling millions from venture capitalists eager to support a minority entrepreneur. (Watson is Black.) “This glad-handing bon vivant, like the Black sidekick in an action flick, made them feel good about whatever passes for ‘wokeness’ in the Valley.”
In an interview with The Post, Robinson said that Watson’s fundraising robbed other minority entrepreneurs seeking investments: “There are real people out there doing real things with minority publishing and they are not getting the same funding,” Robinson said. He added that when he was at Ozy, he found himself explaining what the organization was even after nine years of employment, a sign to him that the publication was not reaching a real audience. “How is it possible that no one I know or have talked to has heard of the company I’m telling them about,” he said.
On Monday, fund management company LifeLine Legacy Holdings filed a lawsuit against Ozy Media in California, claiming that it was misled when it made an initial $2 million investment in the company earlier this year. The fund had relied, it said, on “direct assurances concerning Ozy Media’s strong business performance, investments by high profile institutional investors, high viewer metrics, and competent and honest company management” to feel confident in the investment. In the suit, the fund demanded its money back, in addition to compensation for “punitive damages.”
On Monday night, Watson sent a lengthy email to the Ozy “family.” It was part-apology, part call-to-action. It lacked specifics but included a promise to improve the culture of Ozy. He admitted that “we have often marketed hard. Sometimes too hard, with bold claims and improper attribution.” Watson expressed contrition: “it was not ok and we can be better.” He invited employees to contact him and said he looked “forward to building OZY back stronger.”
When asked by The Post to provide specifics, a spokesman for Watson declined.
Toward the end of Watson’s “Today” appearance, Melvin asked him to identify his latest funders. Watson repeatedly declined to answer, pivoting instead back to the opportunity NBC had just given him:
“If people now know the name Ozy, O-Z-Y, I hope they’ll sign up for our newsletter,” he said with a knowing smile.