Ozy Media: After the hype, a very sharp fall
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Trendy online media brand Ozy Media was supposed to be a “disruptor” to Silicon Valley, Anna Nicolaou told the Financial Time. He always seemed to have “little to back his claims” apart from the magnetism of its prominent founder, Carlos Watson. Then last week it all fell apart. First of all New York Times Media reporter Ben Smith wrote about how an Ozy co-founder tried to impersonate a YouTube executive to trick Goldman Sachs into a $ 40 million investment. Further allegations were made about how the company inflated viewer stats and even lied about an investment by homophonic rock star Ozzy Osbourne and his wife, Sharon. As some of Ozy’s top backers sought to distance themselves, Watson announced that Ozy was shutting down. But a few days later, he reversed course, saying “this is our Lazarus moment” and insisting that Ozy could survive.
It “will be considered one of the most sudden media meltdowns of all time,” Sara Fischer told Axes – but there were a lot of clues. “Ozy Media was built on years of lies which together have created a woefully false narrative about its business, finances and culture.” The Goldman episode was just the tip of the iceberg. “The company has bought most of its social media subscribers,” including its flagship program YouTube, Carlos Watson’s show, which attracted over 95% of its viewers through paid promotions. When Ozy launched in 2013, it looked like “an oasis in a media industry that for years had cut jobs,” Jeff Wise told new York magazine. Watson was a “charismatic salesman” who offered generous salaries and “the multiracial optimism of the Obama era”. But many former staff members described the workplace as “abusive and cult-like”. Watson “was running around telling advertisers that Ozy had tens of millions of readers.” But “the staff knew the truth.”
The bigger question is why “seemingly sophisticated people fell in love with a company that every social media intern in America had questions about,” Ben Smith told The New York Times. Ozy “strongly appealed to the elites” because he offered “conflict-free diversity”. It was heavy with “serious stories about young people who wanted to change the world and celebrities who were the best in themselves.” This “low conflict, low topicality” journalism with little real content but a lot of talk of “lofty ideas” never wowed the bipartisan audience it purported to reach. But it was “catnip for brand managers”.
The “pretend until you do” attitude has become a hardened Silicon Valley philosophy, Robert Hackett and Declan Harty told Fortune. We have seen too many entrepreneurs, “drunk with a dream, attempting to demonstrate success by any means necessary”. Theranos “was mistaken in an alleged fraud while seeking to resolve health issues.” WeWork provided “pink financial projections that were sheer madness.” And Trevor Milton, the founder of electric truck start-up Nikola, was recently charged with criminal fraud. It may seem that only wealthy investors bear the brunt of the damage caused by this magical thought. But “companies that deceive investors, customers, even their own employees, are diverting attention, energy and effort from more valuable activities.”
This article first appeared in the latest issue of The week magazine. If you want to read more, you can try six risk-free issues of the magazine. here.