To get a sense of impact the original NYT reporting did, the first article revealing Ozy's shenanigans was posted on Sunday. (HN discussion then: https://news.ycombinator.com/item?id=28666350 )
It took 5 days from publishing to a complete company shutdown.
I wonder if the company was internally on the brink of collapse for a long time, but could perpetually keep faking it as long as they could keep funding coming in? And then the NYTimes popped the veneer and forced an immediate collapse? Or is that totally off base.
I think the seriousness of their fraud is what prompted the collapse. It’s one thing to cook viewership numbers and another to impersonate a YouTube exec to defraud Goldman Sachs of $40mn. I guess they got so used to fraud they didn’t realise they’d crossed a line, and the resulting scrutiny finally did them in.
> It’s one thing to cook viewership numbers and another to impersonate a YouTube exec to defraud Goldman Sachs of $40mn
And it's an entirely separate thing for the CEO to defend said fraud as a mental health oopsie, and then the chairman of the Board to defend the CEO as having run a tight ship.
Clown car, front to back. Every one of the people involved should be investigated, in their activities pertaining to Ozy Media as well as everything else they're supposedly involved with and/or overseeing.
OZY raised $35M in 2019, totalling $70M in total funding at that point.
In April 2020 the total raised amount grew to $83M.
The company supposedly made $50M of revenue in 2020 and claimed to be profitable.
So from here, why did they try to raise more? Probably because the revenues and profit were not real.
In February 2021 the company tried to defraud Goldman Sachs of $40M.
I've read from another source that OZY was able to raise even more money 2 months after having failed to defraud Goldman Sachs. The total amount of money raised could thus be in the 100 millions.
According to this story [0], a former employee was advised by a doctor to take time off after a panic attack. Samir Rao (the guy whose 'mental health crisis' made him impersonate an executive), called up the hospital saying he was the HR Director, demanding to look at the employee's medical records.
Independently of Ozy, when I see the cascade of bad news for someone/something, I wonder about the timing: Why do all these stories come out at once, even though they've been true for years?
Some possibilities: Some people like to join the angry mob and pile on, stories become more interesting to the news publishers (e.g., what was yet another story about an abusive culture at some unknown company becomes much more interesting now that people care about Ozy), and people who might have hesitated previously now feel safe sharing their stories, now that Ozy is down and impotent.
It's an important question; the phenomenon, IME, has nothing to do with the validity of the target; it happens to good people too.
Probably the NYT article got a lot of views and obviously if that is the case you want to do a follow up.
Same for other news outlets, they want to jump on the train.
All of the sudden OZY employees and former OZY employees get bombarded with messages from journalists on Linkedin, Twitter and Facebook.
That's when people start to talk, and the story gets even bigger.
Usually it’s because people are afraid of exposing someone who is perceived to be powerful and important until someone else goes first. Look at Theranos, look at the #MeToo movement, look at Enron or Madoff.
Carlos Watson set himself out as a very powerful person who interviewed lots of famous and powerful people, had powerful investors, and had hoodwinked a lot of credible institutions (he was supposed to host the News & Documentary Emmys THIS week), it’s completely reasonable for people who work at a place like this to fear reprisal in finding other jobs, and thus choose to stay silent. In fact, staying quiet in a lot of these cases is the most rational choice. The people at Goldman Sachs and the VCs had little reason to speak out, easier to just quietly cut ties rather than face questions about why you backed a scammer to begin with.
It often takes someone who can’t be hurt by the person in power (or can’t be hurt as much), usually backed by an institution that is more/equally powerful as the subject, to break the proverbial dam. In this case, it was Ben Smith and The New York Times. Whatever anyone thinks of The Times, its reputation and stature as an institution is nearly unmatched (The New Yorker and The Wall Street Journal have similar reputations), it employs rigorous fact checkers for this kind of story, and the columnist in this story, has an excellent reputation and his own Rolodex of powerful sources and allies. As soon as he tore the lid off, it was safe for others to come forward.
One former employee went from an anonymous source to Fortune to on-the-record with CNN in less than 24 hours. My own experience tells me that the source was willing to go on the record with CNN after it became clear that Ozy/Watson/Rao was no longer in a position to harm her.
Look at Theranos. The Wall Street Journal was one of the only institutions in the world that could break that story. John Carreyrou had the backing of his editors, but Theranos tried to stop publication, first through thinly veiled threats by their legal counsel (led by the incredibly powerful David Boies) and going as far for Elizabeth Holmes to try to intervene with the owner of Journal (and Theranos investor) Rupert Murdoch. No smaller outlet or whistleblower could have done if. In fact, one of Carreyrou's sources, Tyler Schulz, was threatened by lawyers, his parents nearly bankrupt in legal bills, and cast-out by his grandfather (Theranos board member George Schulz). Imagine if Tyler's parents hadn’t had $500,000 to spend on legal bills or if he hadn’t talked to someone at The Wall Street Journal, does anyone think that story would have come out?
NBC News rejected Ronan Farrow's reporting on Harvey Weinstein, even though Farrow is famous and well-connected, leading him to take his reporting to The New Yorker. The Times was independently pursuing the story too, and the two outlets shared the Pulitzer, but the fact that NBC News turned down a story from a reporter they paid lots of money (and who at one time had a show on one of their networks), shows just how difficult it is to sometimes speak truth to power.
> It's an important question; the phenomenon, IME, has nothing to do with the validity of the target; it happens to good people too.
This can be true, but I think it is less true than you imply. Yes, everyone can enjoy a good pile-on, for good people or bad. But typically when these sort of under-the-radar stories break through, the reason all the stories come out at once is that people were afraid of being unhireable by speaking out against someone in power.
> NBC News rejected Ronan Farrow's reporting on Harvey Weinstein, even though Farrow is famous and well-connected, leading him to take his reporting to The New Yorker.
Because Weinstein was threatening to take Matt Lauer down with him if they broke the story.
Often journalists at several different news organizations have been independently investigating aspects of the same basic story for months, without being aware of each other. They've been trying to cultivate additional sources and verify facts to make a really compelling story. Then when one journalist publishes the rest have to rush to publish as well or end up looking irrelevant. Old news.
From the first NYT article it didn't seem like anyone – including the company getting blatantly defrauded – was interested in pursing that matter, so probably not.
That seems a strange way to compare it. I could sell 1/trillionth share of my Get Rich Quick Startup to someone for $1 but that doesn't make a $1T fraud. The actual amount of the fraud was the investment.
For those like me who'd never heard of Ozy until this past week (I thought the first stories were a misspelled reference to the aging rock star, also know for going off the rails), Wikipedia as usual has a decent overview. It apparently launched in 2013:
Ozy was launched as a digital magazine and daily newsletter in September 2013. The company raised a $5.3 million seed round of funding in December 2013 backed by Laurene Powell Jobs, founder of Emerson Collective. Additional early investors include Louise Rogers and Ron Conway.
In October 2014, Ozy announced that German media giant Axel Springer had invested $20 million in the company. In January 2017, Ozy announced a $10 million Series B round of fundraising, led by Michael Moe's GSV Capital. In November 2019 Ozy announced a Series C round of $35 million, led by businessman Marc Lasry.
I don't think the person you are replying to was saying that this was for sure an instance, but it definitely pays to view even Wikipedia with a critical eye.
Wikipedia has gatekeepers and wikilawyers that keep highly contested/popular and even some niche pages from being altered even with sources. Many have been through it, it happened to me.
It's still more useful to identify specific errors, and point to a better source. Wikipedia isn't perfect, yes, but it's been repeatedly show to be quite good. In particular, it synpsizes longer-term stories well, in ways that the news media often fail to (e.g., neither the linked NYT article nor its earlier expose, despite their length, both of which I'd read before linking Wikipedia).
For the purposes of identifying the basic outlines of the ex-parrot^Wcompany, the passage I've quoted is helpful in esablishing when the firm began operations, etc. Again, I had no information going in.
The meta-discussion of Wikipedia's accurac without identifying specific issues does little for any readers of this thread. It didn't with the first comment on that topic, and it continues to be the case. I'm done.
You seemed to take all of this as an attack against you personally,
I assure you it was not, please calm down.
No one said there was a better source, only that Wikipedia is far from perfect.
No specifics need be given Wikipedia when its a truism that Wikipedia can be edited by anyone.
Nevertheless here[1] is a page from Wikipedia about the reliability of Wikipedia.
And since you are asking for specifics as if none exist, here[2] is an HN thread about issues with Wikipedia in which many examples and specifics are given.
It's up to the person making the claim (in the GGP) to substantiate what they say, not up to others to disprove it. Otherwise, misinformation and disinformation (being intentional misinfo) have a field day - just keep posting and leave it to others to spend the time and do the work. It's a well known tactic for disinformation - the people telling the truth can't keep up.
And look at the Internet - mis/disinfo is having a field day.
Citations and references are better than nothing, but they are limited:
* You need to spend time: First you must find the source; what is provided in Wikipedia often is a dead link, or a book, or something else inaccessible. Then you have to read it; it can take time to find the spot in the entire source that supports the statement. It might require analysis and interpretation (I've often seen claims that relied on shoddy interpretation of evidence), including of the context and the quality of the source. And finally, if the source doesn't support the claim (which I've seen many times) it takes even longer - proving a negative, that the evidence doesn't exist, requires reading the entire source with some care.
* Citations and references don't tell you when important information is omitted. For example, I could write that President X promised reform, in detail, and provide citations; I could easily omit that X had promised reform every year for five years and never delivered. I could write that Adam punched Bob and cite it, and omit that Bob punched Adam first. Another way of saying it: Accuracy is defined in some domains as Correct, Complete, and Consistent. Wikipedia is often (not always) Correct in what it says, but not Complete or Consistent.
On one side, sure this is fraud, but I've got to admit that I enjoy seeing VCs getting ripped off that way.
It literally takes 10 minutes and some free tools to debunk OZY Medias claims.
Yet, big names poured over $70 million at them.
Too bad Goldman Sachs did not fell for it as well.
I did work for a VC myself, and it got ripped off by a founder who had already a criminal record for fraud, was on parole, and was not even allowed to be the CEO of a company...
They gave him over $10 million, and it was more than obvious that his website was fishy, but they were completely fascinated by how much his crappy website was already making...
It’s surprising that companies have their employees do all kinds of background checks (criminal and otherwise), but VC’s deploying millions of capital dont do the same.
Maybe no skin in the game skin they’re just investing LP money? Strange either way.
To be fair, I am in Europe, and background checks are rather the exception than the norm here. In fact there are only very few jobs where companies are allowed to run background checks.
This includes: Banking, security, teaching and government jobs.
After reading about Kim Dotcom and seeing how he had a glorious lifestyle with his "investors's" money and avoided jail, and even ended up an Internet folk hero after the MAFIAA used law enforcement to harass him, I sometimes wonder if it's not easier to be a criminal..
As an example, I worked (as a third party) for a bank once.
The way the system here in Switzerland works is thus:
The government has an office which supplies a certificate that says "this person has not had criminal charges pressed against them for the crimes X, Y and Z for the last N years".
A bank can demand (and did, in my case) this certificate from new employees for crimes like Fraud and violent crimes (I assume).
The job candidate requests the certificate from the government and hands a copy over to the company. Obviously if they know they would fail, they don't have to do this part, and can simply stop pursuing the job instead.
IIRC (this wasn't relevant for me), a company weren't allowed to simply ask for a wildcard certificate, it had to be reasonable for the job.
The difference is those company employees are not expected to bring in profits 10x more than what the company spends on them.
Every dollar I have to spend on longer-term, low risk, reasonable but lower return investments like employees takes away from what I can gamble on shorter-term, high risk, high return bets such as those that leverage "tech" hype.
Thats what happens when I have too much money. I want to gamble. Why not. It's fun.
If we distribute the country's wealth to a small number of individuals, how will they reallocate it.
What describes the character of todays investment decisions. Smart money or dumb money.
On the other hand, though, part of the reason for this is just math.
For a VC, missing out on a "unicorn of unicorns" investment can have dire consequences. IIRC at one point YC said that the vast majority of their value was from just AirBnB, Dropbox and Stripe (may have changed since I remember reading this).
But VCs exist in companies that fail all the time for a myriad of reasons. So putting in 10 million in a company that turns out to be a scam is probably not that big of a deal for most sizable VCs.
With that level of asymmetry it's not surprising that FOMO is the driving force here.
What’s the math on hiring a college kid to sanity check the viewer numbers before wiring the money? It’s not math. It’s a policy of deliberate ignorance. Because the dirty secret of VCs is that a not insignificant portion of their value-add is building the hype train and betting the business will eventually catch up to it.
It’s not that simple because of the quantity and velocity of the deal flow. In depth due diligence can take weeks and considering how rare these situations are, it’s usually not worth possibly missing a deal.
It also depends on getting accurate information in the first place and a private company can hide a lot.
There’s also the condition that VCs might have found out and passed but won’t really make much noise about it. They usually don’t have much to gain in calling out “bad” deals and can even hurt them in the future so they stay quiet, for better or worse.
For many of these VCs their investment was similar to investing in Theranos. The founders' story, and as controversial as it may be to say, their demographic, was what was being invested in.
Similar to how Elizabeth Holmes had money thrown at her for being a #girlboss, Ozy's CEO and COO were both "people of color". It's that last point that's been bandied about in social media a lot over the past few days, claims that the NYT is attacking a business because it's led by people of color.
For instance the Ford Foundation, one of the company's investors, said: "in an increasingly diverse world, it's no wonder a company founded by people of color is so successful." This was after the NYT article. (source: https://youtu.be/1pE9yqE5yMk?t=314). These investors just wanted to increase the number of companies they're invested in that are from people of color, even if the business fundamentals aren't legitimate.
I don't get that impression about Ozy. I think you picked the worst example to highlight something that is also happening.
This is more likely that individuals read about how to play around with metrics because they couldn't believe that other companies were doing so, and they tried it themselves, and to their surprise VCs came out of the woodwork and didn't gatekeep by race at all. This is much more similar to Blazing Saddles when the fronteir town was perplexed that the new Mayor was black and the Mayor realized how dumb they all truly were and played with their emotions with a funny ruse.
There seems to have been so much fraud in crypto. It's a space that seems ripe for grifters.
The craziest story (which sounds a bit like your guy) I encountered was that of Shaun MacDonald [1], founder of two crypto companies called BCT and CG Blockchain. A company I worked for signed a business deal with BTC before they went under in 2019.
MacDonald was later revealed to be a convicted Canadian white-collar criminal with the unlikely name of Boaz Manor, who had stolen millions of dollars from hedge funds and who appears to have absconded with millions worth in diamonds [2] (!).
BCT/CG Blockchain turned out to be a scam, too. [3]
It feels like at this point one can start a boutique streaming service specifically for documentaries about scams. Just from recent years alone I can think of Alex Gibney's Theranos movie, Netflix and Hulu's Fyre Festival movies, Hulu's WeWork movie, Amazon Prime's LuLaRoe documentary, and who is Joe Exotic if not yet another entrepreneurial charlatan and egomaniac from the same cloth of Elizabeth Holmes and Adam Neumann?
Ozy is the problem of their investors, assuming they all are sophisticated (e.g., like Goldman Sachs) and not mom & pop. Professionals at Goldman and the other investors chose Ozy; does it negatively impact their careers?
But a serious issue for the public is whether a culture exists that normalizes this behavior. Someone here said Ozy didn't realize they crossed a line, but did they actually cross a line, by the norms of that culture? Their board defended them. If the story hadn't reached the ears of a NYT journalist, wouldn't Ozy's investors, board, business partners all have accepted it? Fraud is economically very inefficient (resources aren't directed to the most efficient use, but to the most deceitful - not a recipe for economic growth), and breeds other criminality.
Finally, didn't YouTube cut them off after that? Wouldn't that have been a major blow to their business? Maybe that's why Goldman Sachs pulled out.
“Ozy was named after ‘Ozymandias,’ the famous sonnet by Shelley on the theme of the impermanence of all things and people — even the great pharaoh known by that name, whom the ancient Greeks tried to render immortal with a colossal statue, which crumbled.”
Makes one suspect they read the tweet about the poem, and not the poem itself.
TBH It's the second time I'm hearing about Ozy, first time was when the news exploded. Honestly I thought it was a spelling mistake (for Ozzy). It's kind of sad though, not sure why people would do such things...
I understand that it's possible to rack up artificial views by running your full content as pre-roll ads on someone else's video.
What I don't understand is why you wouldn't also purchase a propotional number of "likes" to at least make the data look convincing to an unassuming third party.
100k+ views, 7 likes. A 10-year old could tell you this data looks fraudulent.
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