Ozy Media has changed course and will not shut down, founder Carlos Watson said Monday, the latest twist for the digital media startup that quickly collapsed after being exposed for misleading Goldman Sachs in an attempt to raise money.
“This is our Lazarus moment,” Watson told the Today schedule Monday morning, a few days after announcing it would close. Watson said conversations with advertisers and investors over the weekend had inspired him to keep Ozy up and running.
“I think Ozy is part of this moment,” he said.
Ozy’s downfall has mesmerized the media and entertainment industry for the past week as it exposed Silicon Valley investors’ willingness to pour money into a trendy online media brand with little to back up its claims.
Watson claimed the backlash went too far and rejected comparisons with Theranos founder Elizabeth Holmes, who is currently on trial for allegedly defrauding investors and patients by making false claims about her blood test technology and financial projections.
“When you saw people start putting my name on Elizabeth Holmes, that she never had a real product, that raised billions of dollars,” Watson said. “We have five newsletters that go out to millions of people, a dozen television shows, including one that won an Emmy. That is not a house of cards. “
Watson introduced Ozy in 2013 as a youth-focused digital media startup, like Vice and BuzzFeed, that would disrupt the journalism business. It raised more than $ 80 million from investors, including billionaire philanthropist Laurene Powell Jobs, German media group Axel Springer and Marc Lasry, the hedge fund manager and co-owner of the Milwaukee Bucks basketball team.
Watson provided a charismatic public face for investors, having attended Harvard and Stanford, worked at McKinsey and Goldman Sachs, and created a black-owned media group that would rock the news business.
However, a New York Times report last week revealed that Ozy co-founder Samir Rao had posed as a YouTube executive in an effort to raise $ 40 million from Goldman Sachs. The newspaper also raised questions about the true size of the company’s audience. Ozy in 2019 said it reached 50 million unique users a month, but data from Comscore, which measures online engagement, showed numbers at a fraction of that level.
Within days, investors, advertisers and board members fled, seeking to distance themselves from the ruined brand. On Friday night, the board said Ozy would close.
Former BBC journalist Katty Kay resigned amid the allegations, which she called “serious and worrying”. Lasry left the board after just three weeks as chairman, though he said Thursday that he was still an investor in the company.
Before Ozy announced its closure on Friday, Axel Springer said he had not held a board seat since 2019, but that a company executive, Jens Müffelmann, attended the meetings as an observer.
“In light of current events and the allegations against Ozy, [Müffelmann] has decided and informed the CEO of Ozy yesterday that he [is stepping] of this function, ”the company said.
Another early investor, Laurene Powell Jobs’ Emerson Collective, also 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.