Never Mind The Reputation, It’s All Show Biz

Michael Hedges October 4, 2021 Follow on Twitter

Digital natives are often thought of as the quintessential 21st Century consumers, unencumbered by technologies from a previous era. They buy new stuff. Businesses are another set of digital natives, beloved and well-funded by investors. They come unconstrained by practices that preceded, a significant part of the appeal. Tens of thousands have popped up over the last two decades.

A week ago, the New York Times (NYT) published (September 26) a withering exposé of Ozy Media by media reporter Ben Smith. Ozy Media came into being in 2013 as a “modern media company” with newsletters, websites, podcasts, TV and events. Among the allegations, detailed over subsequent reporting in the NYT, were attempts to deceive investors, misrepresent financial, audience and traffic figures and, even, bad behavior of founders and executives. A frenzy of reporting ensued, mostly - but not entirely - in US media. By the end of the week (October 1), Ozy Media had closed as employees and investors fled the scene.

Though in business nearly a decade, news reports consistently refer to Ozy Media as a start-up. In the media world - and elsewhere - start-ups have been a fixture of the digital age. Facebook was once a start-up. The business of a start-up is to raise money, usually other people’s money. Entrepreneurs, by common definition, take an idea to investors betting on eventual exit. Some do this well. Some don’t. Some thrive. Some fail.

A spectacular recent failure, though in medical technology rather than the media sector, was Theranos, a consumer healthcare company. It was founded in 2003 by Elizabeth Holmes, who had an idea about automated evaluation of blood tests. Well-healed and well-known investors pour-in US$700 million. Soon thereafter Ms Holmes was featured by highly regarded business publications. She dressed like Steve Jobs in black turtlenecks and made all the right entrepreneurship lists.

Lo and behold, the Wall Street Journal’s John Carreyrou investigated a tip that something at Theranos was awry with technical methods. It was published in October 2015. After that, and subsequent investigations by US Securities and Exchange Commission (SEC), it was all downhill. Investors fled as the SEC charged fraud. The company was dissolved in 2018 and Ms Holmes and others were charged by the US Department of Justice (DoJ). The trial in California is in process.

There has been no suggestion that Ozy Media founder and chief executive Carlos Watson committed or was a party to criminal fraud. The primary charge has been “fake it ’till you make it,” an attribute common to show business and entrepreneurship. The initial NYT exposé revealed that co-founder and executive Samir Rao impersonated a YouTube, subsidiary of Google, executive on an investor conference call in February with Goldman Sachs with US$40 million on the line, so to speak. A strong relationship between YouTube and Ozy Media was seen as a deciding factor in getting the money. Mr. Watson clarified this by saying Mr. Roa had a “mental breakdown.” In 2010 Goldman Sachs settled an SEC securities fraud charge for US$500 million.

Often described as “charismatic,” Mr. Watson is certainly imbibed in show business. His self-produced TV show - The Carlos Watson Show - is quite popular. Well, maybe not so popular as audience estimate discrepancies emerged. Then there was that bit about the Los Angeles billboards claiming a relationship with Amazon Prime and claims the show would be distributed by the A&E network. Just to add the surreal, Sharon Osbourne, wife of Black Sabbath founder Ozzy Osbourne, denied that the Osbourne’s had every been Ozy Media investors. Rats.

It should not pass unnoticed that Mr. Smith joined the NYT as media editor last year from BuzzFeed News, where for six years he’d been chief editor. Mr. Watson, in a separate statement, noted that Mr. Smith worked for BuzzFeed when that company took a run at acquiring Ozy Media in 2019, which failed. In 2017 BuzzFeed News reported that Ozy Media - and others - fabricated web traffic figures. BuzzFeed is another digital native publisher, founded in 2006.

See also...

• Hot Topics - Digital Transition

• Hot Topics - Digital Natives

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