US media firm Ozy Media has announced that it is to close down amid a growing row over its business practices.
“It is.. with the heaviest of hearts that we must announce today that we are closing Ozy’s doors”, the company said in a statement.
It follows reports that Ozy’s chief operating officer deceived potential investors during a conference call and is now being investigated by the FBI.
Some major advertisers subsequently cut ties with the firm.
Ozy’s chairman Marc Lasry and ex-BBC journalist Katty Kay have also quit.
In another twist, Sharon Osborne, the wife of rock star Ozzy Osbourne, alleged the firm’s chief executive, Carlos Watson, falsely claimed the couple had invested in the business.
Mr Watson made the claims in a TV interview with broadcaster CNBC in 2019 after settling a trademark dispute with the couple.
Ms Osbourne told CNBC on Thursday: “This guy is the biggest shyster I have ever seen in my life.”
Neither Mr Watson nor Ozy Media has commented publicly on the claims.
Separating frauds from visionaries
These accusations are outrageous, almost unbelievable – part of a toxic culture of corporate behaviour that exists in parts of Silicon Valley.
It is common here to say your company is bigger, more innovative, more successful, more connected, than it really is. It’s seen as “hustle”, or “hype”.
However, “fake it till you make it” – as it’s sometimes referred to – has led to some of the biggest scandals in Silicon Valley history.
Theranos’ CEO and founder is currently on trial in San Jose – accused of a spectacular fraud involving blood testing.
Selling a dream that will one day be realised is what most companies do. It’s why we have computers and smartphones. But there are countless examples of companies going too far.
Some of the things Ozy Media has been accused of are actually pretty common in Silicon Valley,
Overstating how popular your content is a classic of the genre – something numerous companies have been accused of.
But there are other accusations here that are simply astonishing – that if true may well lead to legal action.
It’s the kind of story that will deeply worry investors, who are in a constant battle to separate the frauds from the visionaries.
‘Mental health crisis’
Ozy Media, which was launched in California in 2013, produces left-leaning podcasts, television series and events, and has won an Emmy for its work.
Last weekend, the New York Times reported that its co-founder and chief operating officer, Samir Rao, impersonated a senior leader at YouTube during a conference call with Goldman Sachs in February. At that point the investment bank was considering making a $40m investment in the media company.
Mr Rao reportedly claimed that Ozy’s videos were highly popular on YouTube.
According to the Times, the investors realised something was wrong and did not go through with the deal. Mr Watson has since apologised and said Mr Rao was suffering a “mental health crisis” at the time.
Yet amid growing scrutiny, Ozy this week said it had begun an internal investigation and Mr Rao had taken a leave of absence.
On Thursday, Mr Lasry, who owns the NBA basketball team the Milwaukee Bucks, stepped down after only three weeks as chairman.
In a statement he said: “I believe that going forward Ozy requires experience in areas like crisis management and investigations, where I do not have particular expertise.”
He added that he remains an investor in Ozy Media.
The same day, major advertisers were reported to be pulling their ad campaigns with Ozy.
Target, Goldman Sachs and AirBnB did not immediately respond to a request for comment. But Ford said “We are pausing our advertising while Ozy Media addresses their current business challenges” and US banking services firm Ally Financial said its relationship with Ozy was on hold “in light of recent developments”.
On Wednesday, Ms Kay announced she had “no choice” but to cut ties, calling the New York Times’ allegations “deeply troubling”. The veteran broadcaster joined Ozy in June after more than three decades at the BBC.
On Friday, the Times published fresh claims about Ozy made by a former producer, Brad Bessey.
Mr Bessey, who was hired this summer to produce a talk show hosted by Carlos Watson, was reportedly told from the start it would appear in a prime time slot on the US cable network A&E.
Yet, he later found out A&E had rejected the show before it began taping, the Times said. Mr Bessey reportedly quit the firm, accusing Mr Watson and Mr Rao of playing “a dangerous game with the truth”.
In the end “The Carlos Watson Show” show appeared on Ozy’s own website and YouTube.
The BBC has contacted Ozy Media for comment.